18.104.22.168 Waiver of Debt
The operation of the waiver provisions under SSAct Part 5.4 is restricted by section 1236A to:
- debts arising on or after 1 January 1996, and
- amounts of debts outstanding as at 1 January 1996.
SSAct section 1236A(2) provides that section 1237AB (under which the Secretary may waive a particular class of debts) applies to all debts arising under the SSAct or the Social Security Act 1947, whenever the debt arose.
Act reference: SSAct section 1236A Application, section 1237A Waiver of debt arising from error
Application of waiver provisions
In Lee v SDSS (1996), 68 FCR 491, the Federal Court held that section 1236A did not apply retrospectively. This means a decision maker must apply the waiver provisions in force at the time the application for review was first made (or the date that waiver was first considered) in relation to any cases where a request for review was made prior to 1 January 1996.
Cases should be referred to the relevant helpdesk for specific advice, if they involve:
- debts or parts of debts recovered before January 1996, OR
- debts arising under the Social Security Act 1947.
Consideration of waiver where waiver not previously considered
Waiver may be considered by the AAT, where it has not previously been considered in the review process (SDSS v Hodgson (1992) 27 ALD 251).
Waiver of debts where debt fully or partially recovered
Even where a debt has been partially or fully recovered, waiver may still be considered.
Where recovery of a debt is waived but recovery has already commenced, the date of effect of the waiver should be determined under SSAct section 1237(2). In such cases, if the date of effect of the decision to waive the debt is backdated, any amounts recovered after the date of effect must be refunded.
Categories of waiver
SSAct section 1237(1) establishes the Secretary's power to waive debts in the circumstances outlined in sections:
- 1237A - debts arising from administrative error,
- 1237AA - debts relating to an offence,
- 1237AAA - small debts,
- 1237AAB - waiver in relation to settlement,
- 1237AAC - waiver on the basis of debtor's partner's entitlement, and
- 1237AAD - waiver in special circumstances.
SSAct section 1237(2) establishes the date of effect of a decision to waive a whole or part of a debt. A decision to waive a debt may take effect on:
- the date the decision is made, or
- an earlier or later date than the decision, as specified in the waiver decision.
Act reference: SSAct section 1237 Power to waive Commonwealth's right to recover debt, section 1237A Waiver of debt arising from error, section 1237AA Waiver of debt relating to an offence, section 1237AAA Waiver of small debt, section 1237AAB Waiver in relation to settlements, section 1237AAC Waiver where debtor or debtor's partner would have been entitled to an allowance, section 1237AAD Waiver in special circumstances
Effect of waiver
Waiver is a permanent bar to the future recovery of the debt. Once the debt has been waived, recovery of the debt cannot be pursued at a later date.
Note: The decision to waive a debt is subject to review. If, upon review, the decision to waive the debt is set aside and substituted with a new decision, the (previously waived) debt may be recoverable.
Waiver in error
Where a debt has been waived in error, the case should be referred to the relevant helpdesk for specific advice.