What Happens If I Have My Debt Reviewed?

When reviewing a Centrelink debt, the decision maker will usually consider the following:

• Whether you have been overpaid and whether the debt amount is accurate.
• If recovery should be ‘written off’ for a time.
• If recovery should be waived.
• Whether the debt has been caused by fraud or should be investigated further

We will explain each of these below.

Not all of these things will be relevant to every debt, and in for some debts there may be other things the decision maker needs to consider. Legal advice about your individual circumstances will help clarify what is most relevant for you.

Centrelink calculates payments and debts using the information available to them. A debt based on wrong or incomplete information may be calculated incorrectly. If you correct the information, Centrelink may decide you were not overpaid after all.

Example 1: Centrelink receives information about your income. They use this to recalculate how much you should have been paid, and they find that you have been paid too much. They ask you to repay a debt.

You may be able to challenge this kind of debt by giving more accurate or up to date information about your income (such as payslips). Centrelink may recalculate how much you should have been paid. This may mean the debt is recalculated to $0. It could also mean that your debt is recalculated to a higher amount, or to the same amount originally thought.

Example 2: Centrelink receives information about your past study arrangements. They find you were not eligible for a student payment you received because you weren’t undertaking full time study. They ask you to repay a debt.

You may be able to challenge this kind of debt by giving Centrelink more accurate or up to date information about your study (such as records from your school, TAFE or university). Centrelink may recalculate how much you should have been paid. This may mean the debt is recalculated to $0. It could also mean that your debt is recalculated to a higher amount, or to the same amount originally thought.

A ‘write off’ is where the decision maker decides not to recover a debt for a period of time. A write off might be applied until a specific date, or it could be applied with no end date. If there is no end date, Centrelink may later decide to start recovering the debt again.

A write off may be applied where:

• The debt is irrecoverable at law.
• You currently have no capacity to repay the debt.
• Your whereabouts are unknown and Centrelink cannot find you.
• It is not cost effective for Centrelink to pursue the debt.

A debt may be ‘irrecoverable at law’ where you have been discharged from bankruptcy, if the debt was from a time before you declared bankruptcy and the debt was not incurred by fraud. If you have been discharged from bankruptcy and are still paying back a Centrelink debt, you should get legal advice.

It’s rare for a person to have no capacity to repay a Centrelink debt. Usually Centrelink will take a small amount from a person’s Centrelink payments each fortnight. This could be as little as $20 each fortnight. If you are unable to pay this amount, or have no income at all, Centrelink may consider writing off your debt.

‘Administrative error’ is another way of saying Centrelink has made a mistake or error. If this error is the only reason you have been paid too much, Centrelink may have to waive recovery of the debt. This is usually called the ‘Administrative Error Waiver’.

This waiver is only available where you have received the money in ‘good faith’, which means you did not know you were receiving the wrong amount. If you knew you were not entitled to the money you received Centrelink can’t give you this waiver.

If Centrelink notices their mistake within six weeks of when they made the error, the administrative error waiver may not apply.

The rules for this waiver are different for Family Tax Benefit, Child Care Subsidy, and some other family assistance payments. We recommend you get legal advice to help you understand your individual circumstances and whether this waiver might apply to you.

The decision maker may waive recovery of a debt if there are ‘special circumstances’. Special circumstances mean the situation is unusual, uncommon, or exceptional, and this makes it unfair for Centrelink to ask you to repay the money.
 
Some circumstances you may wish to raise for Centrelink to consider are:

• Family violence.
• Mental, physical and other health issues.
• Disability.
• Financial hardship.
• Homelessness or insecure housing.
• Language and literacy barriers.
• Substance misuse issues.
• Imprisonment.
• Family instability.
• Refugee and migrant status, and reasons for fleeing/migrating such as civil unrest, violence, and persecution.
• Child protection involvement.
• Impacts of a disaster.
• Difficulty engaging with Centrelink and their systems.
• Entitlement to another Centrelink payment (this is referred to as ‘notional entitlement’).
• Centrelink mistakes (these may also contribute to special circumstances, even if the administrative error waiver doesn’t apply).
• Any other factors that make your situation unusual, uncommon, or exceptional.

Financial hardship can be a special circumstance, and you will usually need to be experiencing financial hardship before Centrelink will waive a debt. However, it can’t be the only special circumstance.
 
The special circumstances waiver is not available where the debt was caused by someone ‘knowingly’ misleading Centrelink or failing to comply with social security legislation. This means if you or someone else gave Centrelink information knowing it was wrong, or didn’t give Centrelink information knowing the information was required, you might not be able to have your debt waived under these rules.

You may be able to explain to Centrelink what you knew at the time, or why you thought the information you gave was right. However, providing new information to Centrelink has risks. This is because Centrelink may use the information in a way you don’t expect, such as to raise a further debt, increase the debt amount, or for a fraud investigation. We recommend you get legal advice before seeking special circumstances waiver or providing Centrelink with new information.

You can seek a pause on your debt repayments whilst your debt is being reviewed. This isn’t automatic, you will need to call Centrelink’s Debt Recovery Line and ask for recovery of the debt to be paused whilst you await the review outcome.

Centrelink will usually pause recovery for a number of months, often for three months. You should diarise the date the pause ends. If you have not received the review outcome by the time the pause ends, you can call Centrelink and ask them to pause the debt again.

You can seek legal and/or financial advice if you want to understand any benefits and disadvantages for you, in pausing recovery of debt whilst awaiting a review outcome.

Risk of fraud investigation and prosecution

If Centrelink believes a debt was caused by fraud – that is, they think you deliberately lied in order to gain a benefit – they may investigate you. This could lead to criminal charges against you. It is possible to receive a prison sentence if you are convicted of fraud.

You should be aware that any information and evidence you give Centrelink can be used against you.

You can seek legal advice about your individual circumstances before challenging a Centrelink debt.

If you have been dishonest with Centrelink, or Centrelink might think you’ve been dishonest, we strongly recommend you seek legal advice before challenging your debt. We also recommend seeking legal advice if the amount you owe is large.

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Risk of the amount you owe increasing

Challenging a Centrelink debt involves a decision maker looking closely at your situation and the circumstances of your debt. They may discover errors in how the debt was calculated. They may recalculate the overpayment and find you owe more money than originally thought. If this happens, the decision maker will likely change the decision and ask you to repay more money.