The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. TheĀ 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. Capacity to pay a debt


This topic provides information on how a debtor's capacity to repay a debt (1.1.D.60) may affect its recovery. If repaying the debt will cause severe financial hardship (1.1.S.45), then the debt may be written-off.

Policy reference: FA Guide Writing-off a debt

Capacity to pay a debt

Unless recovering a debt will cause severe financial hardship, a debtor is considered to be able to repay the debt if it can be recovered using any of the following methods:

  • deductions from the debtor's FTB instalments
  • deductions from the debtor's pension, benefit or allowance
  • setting off FA against debt owed
  • using the debtor's income tax refund, or
  • setting off debts of an approved provider (1.1.A.90) against one or more child care service payments.

Act reference: FA(Admin)Act section 84 Deduction from debtor's FTB, section 84A Setting off family assistance against debt owed, section 87 Application of income tax refund owed to person, section 87A Setting off debts of an approved provider against child care service payments, section 95(4) For the purposes of paragraph (2)(b), if a debt is recoverable ā€¦

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