The partnership between FCVic and Social Security Rights Victoria (SSRV), the Integrated Services Project (ISP), aims to improve client outcomes through financial counsellors and social security lawyers working together more effectively.
End Of Financial Year
Our friends at the ATO like to celebrate New Year’s Eve on June 30 instead of in December and that has a knock-on impact on us all, notably the many of your clients receiving Centrelink benefits.
For Services Australia, there is a very simple directive: If you receive a Centrelink payment or pay or receive Child Support, then you should check to see if you need to lodge a tax return. (See webpage: Do I need to lodge a tax return? | Australian Taxation Office (ato.gov.au)) It is worth clients then following through to ensure no miscommunication even when no lodgement is required. (See webpage: What happens after you lodge your tax return at tax time – Managing your money – Services Australia)
Debt Recovery and Tax Refunds
Clients frequently build an expectation concerning tax refunds. Our counterparts at Economic Justice Australia (EJA) have recently reminded us that Services Australia is likely to spoil any ‘cheque in the post’ experience for those who are subject to outstanding debts, but who have failed to put in place payment plans.
The ATO will be sending out communications regarding debt recovery and garnishing tax refunds in the lead-up to tax time. They’ll be sending out an SMS to former customers who had debts raised after 1 July 2022, and who do not currently have a payment plan in place. The text is below:
A current repayment arrangement with Services Australia may help prevent your tax refund being used to recover money you owe. If you do not have a repayment arrangement in place, go to our website and search ‘Money You Owe’ to find out how to set one up. Do not reply by SMS.
We’re aware of clients reporting having their tax refund taken even when they’re actively paying a debt back, and that these clients have a really tough time getting that refund paid to them once it’s been applied to a debt, so we asked for some clarification around what happens if they enter a payment plan. Services Australia have told us:
- Where a repayment plan is in place the tax refund will not be garnished, but it may be used for debt offsetting.
- Debt offsetting is different to garnishing, and can occur for family assistance customers as the result of yearly balancing, and can still happen even when a repayment plan or recovery pause is in place.
- Debt offsetting will not happen where recovery is paused because of a disaster, emergency event, or pending formal review.
- There is a chance someone has their tax refund garnished if they are setting up the payment plan at the same time the garnishing is happening. If this happens Services Australia can use the “beneficial refund” process to repay the tax refund.”
(Source: EJA, 24 June 24 2024)
This might well be confusing and upsetting for the client. Please let us know at SSRV if you have clients whose experience is inconsistent with this arrangement or who are unclear. That would mostly be clients who have their tax refund taken, while they have a payment plan in place, and that recovery can’t be attributed to balancing Family Tax Benefit or Child Care Subsidy.
Further information is available on the Services Australia website: https://www.servicesaustralia.gov.au/how-we-recover-debts-tax-time
Keep in touch
We are active on the FCVic ‘Centrelink Working Group’ where financial counsellors, community advocates and social security lawyers meet to discuss policy concerns, trends in casework and challenges/successful outcomes. You can join through the FCVic membership portal or by emailing [email protected]. The next meeting is scheduled for Tuesday, 23 July at 2:00pm.
SSRV is now producing a regular newsletter. If you aren’t already receiving it, you can subscribe using the link at the bottom of our website. We regularly post news and other updates. You can also follow up on Facebook.
Website: https://www.ssrv.org.au/
Facebook: https://www.facebook.com/SSRVlaw
Email: [email protected]
General Enquiries : 03 9481 0299
Worker Help Line: 03 9481 0655