The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. The information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia.

7.2.3 Debt recovery from FA entitlement

Summary

This topic provides information about using the use of FA (1.1.F.02) entitlements to recover a debt (1.1.D.60).

Available FTB top-ups (including supplements or lump sum payments) can be used to offset any outstanding FA, social security, and/or other applicable debts due to the Commonwealth. When using this type of offsetting, it is open for the decision maker to apply only part of an amount of FA against a debt to offset it partially, or in full. Such a decision will be guided by the circumstances of the case.

Act reference: FA(Admin)Act section 84A Setting off family assistance against debt owed

Top-up payments

A top-up is the balance of an entitlement due to an individual (1.1.I.90), generally individuals who receive FTB by fortnightly instalments. Top-up payments include any supplements to which an individual is eligible.

Available FTB top-ups can be used to offset any outstanding FA, social security, and/or other applicable debts due to the Commonwealth.

Note: CCS or ACCS top-ups can only be used to offset other CCS or ACCS debts. Any possible top-up will be determined after reconciliation (1.1.R.10) has occurred for the individual.

FTB lump sum payments

Lump sums are the total FTB entitlement, including supplements, due to an individual who chooses to receive FTB in annual payments.

For debt recovery purposes, FTB and/or SIFS lump sum entitlements are treated similarly to top-up payments. Individuals who receive FTB by lump sums will receive the balance of entitlements, if any, after all FA, social security, and/or other applicable debts due to the Commonwealth have been recovered.

Act reference: FA(Admin)Act section 70 Debts due to the Commonwealth

Policy reference: FA Guide 7.2.1 Debt recovery - general provisions

FTB arrears payments

An FTB arrears payment is a lump sum amount that arises when a reassessment of an individual's entitlement (1.1.E.30) occurs with retrospective effect. This can occur when an individual provides some additional information or does something that gives rise to additional entitlement (for example, resolving their non-lodger status and having a prohibition on instalment payments lifted). These arrears amounts can be used to offset any outstanding FA, social security, and/or other applicable debts due to the Commonwealth.

Act reference: FA(Admin)Act section 84A Setting off family assistance against debt owed

Refunding offset amounts

Centrelink may review a decision to offset an individual's FA, social security and/or other applicable debts due to the Commonwealth against their FA entitlement where Centrelink is satisfied there is sufficient reason to do so. Centrelink may choose to refund the whole or a part of the offset amount as a result of the review.

Example: Frankie’s FTB top-up is used to offset their existing FA debt. However, Frankie’s father, who is residing in another state, becomes critically ill and Frankie is required to travel to assist them. Frankie is managing their regular expenses, but cannot afford the additional expenses associated with travelling to and assisting their father. Centrelink reviews the decision and determines that the offset amount can be refunded.

Example: Tillie’s favourite sporting team is competing in the grand final after more than half a century without winning a premiership. Tillie approaches Centrelink to review the decision to offset their FTB lump sum payment against their FTB debt so that they can buy tickets to the final. However, Centrelink determines this is insufficient reason to review the offsetting arrangements.

Example: Lou requires emergency surgery after injuring their knee on a recent ski trip. Lou’s private health insurance provider will cover most of the costs of the surgery. To help pay for the remaining cost, Lou asks Centrelink to refund all of their FTB top-up, which was used to offset an existing FA debt. Centrelink finds that Lou has other funds available that can cover the remaining costs of the surgery, and does not refund the offset amount.

Example: Kit’s child requires emergency surgery after an accident at school, but Kit cannot fully afford the upfront costs of the surgery. To help with surgery costs, Kit asks Centrelink to review the arrangement to offset their fortnightly FTB entitlement against their FTB debt. Centrelink reviews the offsetting arrangement and determines that part of the offset amount may be refunded to cover Kit’s shortfall.

Example: The majority of Lav’s FTB top-up was used to fully offset their existing FA debt. Lav contacts Centrelink requesting that the offset amount be refunded as they have an overdue utility bill, they are falling behind in their credit card and personal loan repayments, and have run out of food. Centrelink reviews the decision and decides not to refund the offset amount, and instead provides Lav with a referral to an emergency relief provider, who supplies a grocery pack and a utility voucher. Centrelink also discusses the option of applying for an FTB advance payment, and provides Lav with a referral to a financial counselling service to assist with debt consolidation.

Act reference: FA(Admin)Act section 105 Secretary may review certain decisions on own initiative, section 108 Decisions that may be reviewed under section 109A

Offsetting debt against FTB entitlement owed to a consenting person

Debts arising under the provisions of the following Acts can be recovered by offsetting the debt against another individual's entitlement to FTB top-ups, lump sum amounts and/or arrears:

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

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

Act reference: FA(Admin)Act section 92A Setting off family assistance of person against another person's debt

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