This section provides information about using FA entitlements to repay a debt (1.1.D.60). It also discusses circumstances under which it may be appropriate to refund part or all of a top-up amount that has been used to offset a debt (explained below).
A time limit applies to the recovery of debts under FA legislative provisions.
Act reference: FA(Admin)Act section 84A Setting off FA against debt owed, section 86 Time limits on recovery action under sections 84, 84A, 87A and 87B
A top-up is the balance of an entitlement due to an individual, generally individuals who receive FTB by fortnightly instalments or CCB as reduced child care fees. Top-up payments include supplements to which an individual is eligible.
Available FTB top-ups can be used to offset any FTB or CCB debt. Any remaining amount may also be used by the ATO to offset other outstanding Commonwealth debts.
Note 1: As an FTB top-up is just an entitlement to FA, all debts under the A New Tax System (Family Assistance) (Administration) Act 1999 and Social Security Acts, plus a range of other Acts, can be recovered from a top-up.
Note 2: CCB and CCR top-ups and lump sums can be used to offset CCB reconciliation debts determined on or after 1 July 2006 and CCR debts. CCB and CCR top-ups and lump sums cannot be used to offset FTB or other Commonwealth debts.
Lump sums are the total FTB entitlement, including supplements, due to a recipient who chooses to receive FTB in annual payments.
For debt recovery purposes, FTB lump sum entitlements are treated similarly to top-up payments. Recipients who receive FTB by lump sums will receive the balance of entitlements, if any, after all applicable debts have been recovered.
Policy reference: FA Guide 7.2.1 Debt Recovery - General Provisions
The Secretary may review a decision to offset an individual's FA debts against their FTB top-up if exceptional and/or unforeseen circumstances arise that may create severe financial hardship. In that instance, the Secretary may choose to refund part or all of the offset amount. Offset amounts should not be refunded for the purposes of meeting regular living expenses, such as car registration or insurance premiums.
Example: An individual's FTB top-up is used to offset their existing FA debt. However an immediate family member residing in another state becomes critically ill and the individual is required to travel to assist them. As this is an exceptional and unforseen event and the individual will experience financial hardship if they are forced to use monies allocated to regular expenses. The FAO may determine that some or all of the offset amount can be refunded.
Debts arising under the provisions of the following Acts can be recovered by offsetting the debt against another person's entitlement to arrears of FTB:
The person must consent to the deductions from their arrears payment, and they may revoke the arrangement at any time.
The amount deducted from the person's arrears is paid against the debtor's debt.
Act reference: FA(Admin)Act section 92A Setting off FA of person against another person's debt
Only a CCB or CCR debt can be recovered by withholding from an arrears payment of CCB owed to a debtor. The debtor may be either an individual (1.1.I.90) or an approved child care service provider (1.1.A.90). Up to 100% of the arrears payment can be used to repay the CCB or CCR debt. The amount withheld from the arrears payment is applied to the debt.
There are 2 CCB debt recovery processes implemented since 1 July 2007:
Arrears of CCB cannot be used to repay another person's debt. Arrears of CCB cannot be used to repay an FTB debt.
Act reference: FA(Admin)Act section 84A Setting off FA against debt owed (see subsection 3), section 92A Setting off FA of person against another person's debt (see subsection 2)
Last reviewed: 16 May 2011