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Legally, we have to recover money that’s owed to us. Understanding how we recover debts at tax time can help you plan ahead and minimise financial impacts.
We can use your tax refund to repay your debt at tax time in any of these situations:
- you get Family Tax Benefit (FTB) or Child Care Subsidy (CCS).
- you’re a former customer and you’re not making any repayments on your debt.
- you have an overdue Child Support debt.
Balancing family assistance payments
We’ll check for overpayments or existing Centrelink debts when we balance your FTB and CCS.
We’ll recover any overpayments or existing debts you owe us before paying you any top ups, supplements or lump sums.
This can include existing debts for income support payments. We do this even if you have a repayment arrangement in place. We call this process offsetting.
We’ll only ever use your CCS to recover any CCS overpayments or existing childcare debt amounts. This includes using any top ups, arrears or your current CCS payment.
If you still have a debt after available supplements or top ups have been paid, we can use your tax refund to recover the outstanding amount.
Read more about understanding your FTB balancing outcome or CCS balancing outcome.
Overdue child support debts
We can use a tax refund to pay any outstanding child or spousal support amounts. This includes if you owe child support or if you’ve been overpaid child support.
If this would cause you hardship, call us on the Child Support enquiry line. Do this before you lodge your tax return.
Read more about recovering overdue child and spousal support payments.
Tax refund garnishee
This is different to the yearly balancing process for family assistance customers.
We can use your tax refund to repay your debt. This is known as a tax refund garnishee. We may do this if both of the following apply:
- you’re not getting a payment from us
- you haven’t made an arrangement with us to repay your debt.
We may not do this if your debt repayments have been paused due to a disaster or emergency event or a pending formal review.
If we do take money from your tax refund to pay a debt, we’ll send you a letter afterwards to explain it. It’ll also appear on your Notice of Assessment from the Australian Taxation Office as a ‘Credit offset to Centrelink’.
Read more about action we take if you haven’t started repaying your debt.
If you do not have a repayment arrangement in place, use your Centrelink online account to set one up. Read more about how to manage the money you owe online.
If you’re concerned about your tax refund being garnished, call our Debt Recovery line to speak to a staff member about your situation.
Why we recover debts from FTB top ups, supplements, lump sums and tax refunds
We deliver payments on behalf of the Australian Government, according to policy and legislation. The policies and legislation also determine how we must raise and recover debts.
FTB and CCS are paid under family assistance law. The legislation is set out in the Family Assistance Act 1999, and the Family Assistance (Administration) Act 1999.
Child Support assessments and collection decisions are made under Child Support law. This legislation is set out in the Child Support (Assessment) Act 1989 and the Child Support (Registration and Collection) Act 1988.
Income support payments are paid under social security law. The legislation is set out in the Social Security Act 1991, and the Social Security (Administration) Act 1999.
These legislations have different rules about how we need to raise and recover debts.
You can read more about policies for FTB and CCS debts in Section 7 of the Family Assistance Guide.
You can read more about policies for collecting child support in Section 5 of the Child Support Guide.
You can read more about policies for income support payment debts in Section 6 of the Social Security Guide.
When we won’t recover your Centrelink or family assistance debt at tax time
We won’t recover money from your FTB top ups, supplements, lump sums or tax refund if your debt repayments are paused due to a disaster or emergency event or a pending formal review.