7.2.2 Debt Recovery by Deduction

Summary

This section contains information relating to debt (1.1.D.60) recovery by deductions from FA payments, and covers deductions from:

• the debtor's FTB instalments,
• another consenting person's FTB instalments, and
• CCB advances paid to an approved child care service (1.1.A.90).

A time limit applies to recovery under these provisions.

Policy reference: FA Guide 7.2.1 Debt Recovery - General Provisions

Deductions from debtor's instalments of FTB

Debts arising under the provisions of the following acts can be recovered by deductions from a debtor's FTB instalments:

• A New Tax System (Family Assistance) (Administration) Act 1999,
• Social Security Act 1947,
• Social Security Act 1991,
• Veterans' Entitlements Act 1986,
• Data-matching Program (Assistance and Tax) Act 1990,
• Farm Household Support Act 1992,
• Student Assistance Act 1973,
• Military Rehabilitation and Compensation Act 2004, or
• Student and Youth Assistance Act 1973 (see Part 8) as in force before 1 July 1998.

The debt can be recovered until it is fully repaid, by deductions from the debtor's:

• fortnightly instalments, or
• social security payment (1.1.S.80), if they receive one.

The sum of all deductions is used to reduce the amount of the debt.

However, the actual amount of the deductions is determined by the FAO in consultation with the individual, taking into account the individual's circumstances.

Act reference: FA(Admin)Act section 84 Deductions from debtor's FTB

SSAct section 1231 Deductions from debtor's social security payment

Withholding rates

The following table details the standard withholding rates that are automatically applied to FTB recipients with a FAO reconciliation debt. If the person is not receiving FTB, the standard withholding rates apply to their income support payments.

FAO non-reconciliation withholding rates

If an individual has a FAO reconciliation debt in addition to another type of debt (including a qualification, circumstance, non-lodger debt, or a non-FAO debt) different withholding arrangements may apply. If the individual is:

• receiving an income support payment (e.g. PPS) the withholdings apply to that payment,
• not receiving an income support payment, the withholdings apply to their FTB payment, at the rates detailed in the table below.

FAO minimum acceptable withholdings rates (all debt types)

Individuals may request reduced withholdings. The FAO may accept the individual's offer if it meets or exceeds the minimum acceptable withholding levels in the table below. Any decision to apply a rate less than the minimum acceptable withholding level must be referred to the FAO's debt recovery team.

Act reference: FA(Admin)Act section 91 Arrangements for payment of debt by instalments

Policy reference: FA Guide 7.2.4 Debt Recovery by Cash

Deductions from another consenting person's FTB

Debts arising under the provisions of the following Acts can be recovered by deductions from another person's FTB instalments:

• A New Tax System (Family Assistance) (Administration) Act 1999,
• Social Security Act 1947,
• Social Security Act 1991,
• Veterans' Entitlements Act 1986,
• Data-matching Program (Assistance and Tax) Act 1990,
• Farm Household Support Act 1992,
• Student Assistance Act 1973,
• Military Rehabilitation and Compensation Act 2004, or
• Student and Youth Assistance Act 1973 (see Part 8) as in force before 1 July 1998.

The person must consent to the deductions from their FTB instalments, and they may revoke the arrangement at any time.

The amount deducted from the person's FTB is paid against the debtor's debt.

Act reference: FA(Admin)Act section 92 Deduction by consent from a person's FTB to meet another person's debt

Deductions from CCB advances paid to service

If an approved child care service owes a debt, the debt may be recovered by offsetting the debt against advances paid to the service under Family Assistance Act section 219R. The amount deducted is paid against the CCB debt.

The amount of the deductions is determined by the FAO. The amount can be varied by the FAO.

Act reference: FA(Admin)Act section 87A Setting off debts of an approved child care service against enrolment advances to be paid to the service

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Last reviewed: 3 January 2012