7.2.2 Debt recovery by deduction

Summary

This section contains information relating to debt (1.1.D.60) recovery by deductions from FA (1.1.F.02) payments and covers deductions from:

• the debtor's FTB instalments and CCS entitlement payments, and
• another consenting person's (1.1.P.80) FTB instalments.

Deductions from debtor's instalments of FTB

Debts arising under the provisions of the following acts can be recovered by deductions from a debtor's FTB instalments:

• A New Tax System (Family Assistance) (Administration) Act 1999
• Social Security Act 1947
• Social Security Act 1991
• Veterans' Entitlements Act 1986
• Data-matching Program (Assistance and Tax) Act 1990
• Farm Household Support Act 2014
• Student Assistance Act 1973
• Military Rehabilitation and Compensation Act 2004, or
• Student and Youth Assistance Act 1973 (see Part 8) as in force before 1 July 1998.

The debt can be recovered until it is fully repaid, by deductions from the debtor's:

• fortnightly instalments, or
• social security payment (1.1.S.80), if they receive one.

The sum of all deductions is used to reduce the amount of the debt.

However, the actual amount of the deductions is determined by Centrelink in consultation with the individual (1.1.I.90), taking into account the individual's circumstances.

Deductions from debtor's instalments of CCS

Debts arising under the following provisions of the FAAct can be recovered by deductions from a debtor's CCS payments:

• section 82(1)(b)
• section 84A(3).

The debt can be recovered until it is fully repaid, by deductions from the debtor's:

• fortnightly instalments, and/or
• fortnightly CCS entitlement payments made to the child care service (default 20%).

Individuals with a CCS debt will be issued a debt notice. If an individual has not engaged with the debt notice within 28 days, it may result in automatic recovery of the debt via offsetting (default 20%) from future CCS payments, and/or interest being applied.

CCS entitlement payments can only be used to offset an individual's CCS debt.

Withholding rates

The following table details the standard withholding rates that are automatically applied to FTB individuals with a Centrelink reconciliation debt. If the person is not receiving FTB, the standard withholding rates apply to their income support payments.

Centrelink non-reconciliation withholding rates

If an individual has a Centrelink reconciliation (1.1.R.10) debt in addition to another type of debt (including a qualification, circumstance, non-lodger debt, or a non-Centrelink debt) different withholding arrangements may apply. If the individual is:

• receiving an income support payment (for example, PPS) the withholdings apply to that payment
• not receiving an income support payment, the withholdings apply to their FTB payment, at the rates detailed in the table below.

Centrelink minimum acceptable withholdings rates (all debt types)

Individuals may request reduced withholdings. Centrelink may accept the individual's offer if it meets or exceeds the minimum acceptable withholding levels in the table below. Services Australia may agree to a customer request for a rate below the minimum acceptable withholding level, after taking into consideration the customer’s circumstances.

Deductions from another consenting person's FTB

Debts arising under the provisions of the following Acts can be recovered by deductions from another person's FTB instalments:

• A New Tax System (Family Assistance) (Administration) Act 1999
• Social Security Act 1947
• Social Security Act 1991
• Veterans' Entitlements Act 1986
• Data-matching Program (Assistance and Tax) Act 1990
• Farm Household Support Act 2014
• Student Assistance Act 1973
• Military Rehabilitation and Compensation Act 2004, or
• Student and Youth Assistance Act 1973 (see Part 8) as in force before 1 July 1998.

The individual must consent to the deductions from their FTB instalments, and they may revoke the arrangement at any time.

The amount deducted from the person's FTB is paid against the debtor's debt.