10.1.8.20 Embargoes on Arrears of Comparable Foreign Payment

Embargoes

The embargo provisions of agreements allow the rate of an Australian social security payment to be adjusted and any excess of Australian payment recovered from the other country's arrears. These provisions allow Australia to advise the agreement country at the time an Australian pensioner or claimant lodges a claim for pension from that country, that Australia may have a claim on any arrears payment. This process is called 'embargoing the arrears'.

Centrelink International Services is responsible for arranging the embargoes with agreement countries.

Even though the adjustment of the recipient's Australian social security payment can be recovered under embargo provisions, their partner (if applicable) may still have a recoverable debt under SSAct section 1228A because half of the recipient's arrears payment is counted as the partner's income.

In these circumstances, it would not be inconsistent with the embargo provisions in an agreement or section 1228A to seek the recipient's fully informed and free consent to satisfy the partner's debt from the CFP lump sum arrears payment. Should a recipient choose not to satisfy the partner's debt from the CFP lump sum arrears payment, the methods of recovery available for section 1228A debts specified in SSAct item 15A of the 'Recovery methods table' in subsection 1222(2) remain the only methods available for recovery.

Section 1228A has the effect of treating any CFP lump sum arrears payment as periodic income paid to a Centrelink recipient who is granted a CFP, irrespective of whether the lump sum payment is received from an agreement or non agreement country.

Note that embargoes can be processed only under the terms of an Agreement because section 1228A, while creating a debt for the person and their partner (if applicable), does not provide authority for the debt to be recovered from foreign payment arrears.