Chapter 5: Government debt
5.1 Government debt
If you owe money to a government department, it’s essential to understand the debt recovery processes that apply to your debt. This chapter looks at some common government debt types and how to deal with them. We also encourage you to go directly to the website of the relevant government agency, as they usually contain a wealth of information about your payment options, appeal and review rights. Often you can arrange instalment plans, request reviews and make other applications via online forms.
5.2 Centrelink debt
Services Australia will contact you if you owe money to Centrelink. Their ‘account payable’ letter will include reasons for the debt, amount owing, due date and options for payment. There are various payment and review options available. If you cannot pay the amount owing by the due date, you should contact Centrelink (Services Australia) about a repayment plan you can afford on 1800 076 072. There is a specialist team to assist people from Aboriginal and Torres Strait Islander backgrounds which you can contact on 1800 138 193.
If you don’t pay your Centrelink debt
Centrelink will reduce your payments to pay off the Centrelink debt. If you are no longer on Centrelink payments, you can pay your debts at any time, or set up a repayment arrangement. If you fail to pay or don’t honour a repayment arrangement, then Centrelink can take further action against you, including:
- adding interest to your debt
- referring your matter to an external debt collection agency
- reducing income support payments
- recovering amounts from your wages, other income and assets (including money held in bank accounts)
- referring your case for legal/court action
- issuing a departure prohibition order to stop you travelling overseas.
There are no time limits that apply to the recovery of Centrelink debts — so they never go away.
Review and appeal rights
If you think Centrelink has made a mistake, you can request an internal review of their decision. You must lodge review requests within 13 weeks of being notified of the decision. You can request an internal review by phone, online or at a Centrelink office.
An independent authorised review officer (ARO) will review your file and make a new decision. If you think the internal review decision is incorrect, you can apply to the Administrative Appeals Tribunal (AAT) for an external review. The AAT is an independent tribunal, with two levels of review. You should make applications to the AAT within 13 weeks of the ARO’s decision. If you are unhappy with the AAT’s initial decision, you can seek further review by their appeal panel. You must make applications to the AAT appeal panel within 28 days of receiving the AAT’s initial decision. See the AAT website for further information.
If you’re unhappy with an AAT decision, you can appeal to the Federal Court of Australia within 28 days. You must, however, demonstrate an ‘error of law’ by the AAT (i.e. being unhappy with the decision is insufficient).
You can ask Centrelink to pause repayments until any review processes are complete.
It is advisable to seek legal advice if you are going to request a review of a Centrelink decision. The Welfare Rights Centre, Legal Aid NSW and community legal centres can provide free legal advice in these circumstances. See Chapter 1, Getting help, for more information about your legal advice options.
Debt waiver and write off
Waiver of debt means that Centrelink forgoes the right to recover the debt or part of the debt. Centrelink will only waive debts if:
- the debt was caused solely by an administrative error
- you received the payment in ‘good faith’, and
- recovery would cause severe financial hardship.
Write off stops recovery action, for a defined or undefined period but, unlike waiver, it does not extinguish the debt. Debts may be written off in limited circumstances, including where:
- the debt is irrecoverable
- the debtor cannot repay the debt
- the debtor cannot be located
- it is not cost-effective for the Commonwealth to act to recover the debt.
If you believe these circumstances may apply to you, you should seek further legal advice, or contact Centrelink directly to discuss.
5.3 Tax debt
If you’re having trouble paying your tax bill on time, you should contact the Australian Taxation Office (ATO) as soon as possible. You can arrange a tailored repayment plan by telephone or online.
If you don’t pay your tax
If you fail to pay your tax by the due date, or default on an agreed repayment plan, the ATO may take the following actions against you:
- add interest to your debt
- use tax refunds to reduce debt
- contact you via SMS, MyGov, letter and phone
- refer your matter to an external debt collection agency
- refer your case for legal/court action (including garnishee orders, penalty notices, claims or summonses, bankruptcy notices, creditor’s petition, statutory demand, wind-up action, etc.)
Release from tax debt
In cases of severe financial hardship, the Commissioner of Taxation may release an individual from all or some of their tax debt. The ATO defines ‘serious hardship’ as where payment of your debt would leave you unable to provide food, accommodation, clothing, medical treatment, education or other necessities for yourself, family or others for whom you are responsible. You can make applications for relief, waiver and write off via the online ‘debt release tool’ available on the ATO website.
Objections
If you think your tax assessment is wrong, you have four years (from the date of lodgment of your tax return) to ‘object’ to a tax assessment. An ‘objection’ is essentially a formal request for an internal review of the decision. You have a further 60 days to object to any amended tax assessment. After this, you can appeal to the AAT, and after that, the Federal Court of Australia. Strict time limits apply to AAT and court appeals, and you should seek further legal advice in these circumstances. Objections must be lodged in writing, either online, or via mail, fax or lodgment at an ATO shopfront.
5.4 Child support debt
In Australia, parents are legally liable to provide financial assistance to their minor children. The Child Support Agency (CSA) assesses and collects child support payments where parents are unable to agree to informal arrangements. Failure to pay child support, as assessed by the CSA, can result in arrears and significant debt. Child support arrears do not disappear when your child turns 18. Instead, they remain payable indefinitely. If you’re having trouble paying your child support debt, you should contact the CSA as soon as possible to explain any change in circumstances or to try to arrange payment by instalments.
If you don’t pay your assessed child support
If you fail to pay your child support as assessed, the Child Support Agency may take the following actions:
- impose late payment penalties
- garnish wages
- enforce tax return lodgment
- intercept tax refunds
- issue overseas travel bans
- commence legal/court action
- criminally prosecute matters that involve fraud or criminal conduct
- impose bank account deductions
- reduce Centrelink income support payments
- refer your matter to an external debt collection agency
- investigate an alleged child support fraud.
Reassessment of child support
If you are unable to meet child support commitments because your income has changed, the CSA can reassess child support. Some ‘special circumstances’ may also warrant a reassessment of child support. For example, you may request reassessment where:
- the child support assessment is unfair because of a child’s income, earning capacity, property or financial resources
- the child support assessment is unfair because you’ve already paid or transferred money, goods or property to your child, the receiving parent or a third party for the child’s benefit
- your necessary expenses significantly reduce your capacity to support the child
- the child support assessment is unfair because of the income, earning capacity, property or financial resources of one or both parents
- your ability to support the child is significantly reduced
- your responsibility to support a child living with you makes it difficult to support another child.
Objections
If you believe your child support assessment or reassessment is wrong, you can object and seek review of the decision. You have 28 days to lodge a written objection. If you are still unhappy with an objection decision, you can appeal to the AAT within 28 days (see the AAT website for further details).
You should seek legal advice or visit the Services Australia website for further information and assistance.
5.5 HECS-HELP and other student loan debt
When you attend university, or an approved higher education course, you can get a HECS-HELP loan from the Australian government to pay for your studies. If you incur a HECS debt for a unit you withdraw from, you have 28 days to lodge an internal review request with the course provider. Student loan debts become payable when you meet a set income threshold (at the time of writing it’s $47,014 per annum). The ATO calculates repayments when you lodge your tax return. You can request a deferral of repayments if you believe repayment will cause severe hardship. If you do this, you should provide evidence of your household income/expenses and reasons why you can’t pay straight away.
The ATO will write to say whether your application is successful. If you are unhappy with the initial decision, you may apply to have it internally reviewed within 28 days of receiving the notice. If you are also unhappy with the ATO’s internal review decision, you have a further 28 days to appeal to the AAT.
Contact the ATO for more information on applying to defer a compulsory repayment.
5.6 NSW victim restitution debt
In NSW, victims of violence can apply for victim support payments from NSW Victims Services. Where the offender has been convicted of a violent offence against a victim/applicant, Victims Services will seek to recover the debt from the offender. This process is called ‘restitution’, and it is separate to any ‘victims support levy’ which may have been issued by a court upon a criminal conviction. As a first step, Victims Services send a notice of a ‘restitution order’, which includes information about the offence, victim(s) and amount payable. If you receive notice of a restitution debt, you can either pay in full, object or request a payment plan (via Revenue NSW).
After you receive notice of the restitution order, you have 28 days to file a written objection. Victims Services may choose to confirm, set aside or reduce the amount payable. You may object if you did not commit the offence, you were very young when the offence occurred, there were extenuating circumstances, you were not the only person involved, or you are experiencing severe financial hardship. If you disagree with the objection decision, you have 90 days to file an administrative appeal with the NSW Civil and Administrative Tribunal.
If you don’t pay or object within 28 days, or an objection is rejected, then your restitution debt will be transferred to Revenue NSW and treated in the same way as unpaid court fines. After referral to Revenue NSW, any unpaid debts will be subject to ordinary recovery mechanisms. See Chapter 4 for further information about your fine options.
5.7 Unpaid council rates
Councils will charge interest if you don’t pay rates on time. Councils can also impose a ‘charge’ on any real property you own (to secure payment upon property sale) or commence court action to recover the debt. If you’re having trouble paying your rates, contact your local council as soon as possible to access their financial hardship program. Your options may include an extension of time to pay, setting up an instalment plan or waiver of interest charged. If you think your council has miscalculated your rates, you can ask the NSW Ombudsman to review the council's rate calculation processes.
5.8 Ambulance bills
Medicare does not cover ambulance service fees, which are based on a call out charge plus a per-kilometre charge for the round trip. In NSW, you are only billed for 51% of the actual cost, as the NSW government subsidises the service. Ambulance services are provided free of charge in NSW if you are a pensioner or concession card holder or fall into another exemption category. Medical insurance policies sometimes cover ambulance bills (contact your insurer to check). In other circumstances, you will need to pay.
If you’ve received an ambulance bill and you’re experiencing financial hardship, you can ask Ambulance NSW for a payment plan, an extension to pay, or a fee review. In cases of severe financial difficulty, a fee review may result in the fee being waived in full or in part.
NSW Ambulance transfers unpaid bills to Revenue NSW for enforcement action. If this happens, you will also be charged additional enforcement fees. See Chapter 4 Fines for further information about Revenue NSW recovery procedures. Recovery action by Revenue NSW could include taking money from your bank account or wages, ordering the sheriff to take your goods or property and sell them to pay the amount you owe, or registering an interest on any land or property you may own. You can make payments, seek exemption (if you’re a pensioner or concession card holder), or check balances via the Revenue NSW website.
If you want further information about ambulance bill options, contact the NSW Ambulance service or Revenue NSW (if already referred).
5.9 Road tolls
If you use a toll road, you must pay a toll. Generally, this is done electronically, by entering an agreement with a toll operator, having an e-tag installed in your car (which tracks toll use) and paying the provider electronically for each use (usually via regular bank account deductions). If you don’t have a toll account or e-tag, you have three days to pay the toll operator for the use of their road. If you’ve travelled on a toll road without an e-tag, you should go to the Service NSW website, find the relevant toll operator and make an online payment. Tolls are payable by the registered owner of a vehicle. Contact the toll provider immediately if you think there has been a mistake. If you’re using a hire car, you are responsible for tolls incurred during the period of hire.
WARNING — You are liable for EVERY unpaid toll; this can result in significant additional charges, infringement notices and Revenue NSW recovery actions.
No toll account
The following steps will apply if you don’t pay tolls:
- Toll notice — you must pay the toll AND an administration fee.
- Final toll notice — if the toll notice remains unpaid, an additional fee is added.
- Fine notice — if the final toll notice remains unpaid, Transport NSW (TfNSW) transfers it to Revenue NSW to issue a fine notice.
- Overdue fine — if the fine notice remain unpaid, an overdue fine notice is issued and additional costs are added.
- Recovery action — if the enforcement notice remains unpaid Revenue NSW will commence its standard recovery processes (see Chapter 4 for further information about your options).
Unpaid toll accounts
If you do have an account/e-tag with a specific toll operator, you have essentially entered a private contract with them to pay your toll to them every time you use a toll road. If you continue to use a toll road, but don’t pay your toll accounts, the toll operator will start regular debt collection processes. That is, they will request immediate payment and, if this is not forthcoming, they can issue a statement of claim against you in the Local Court (to obtain a judgment debt against you, and so on). Toll operators will often refer this work to debt collection agencies, who are ruthless in collecting debts. See Chapter 3, Debt collection and Chapters 9 to 16 covering Local Court action and bankruptcy, for further information.