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This section provides information about offsetting an income tax refund of the debtor or another consenting person to recover an FTB debt (1.1.D.60) or a CCB debt. It also discusses circumstances under which it may be appropriate to refund part or all of the offset amount to the debtor or the other consenting person.
FTB debts may be recovered from the debtor's or another consenting person's income tax refund.
From 1 July 2007, available income tax refunds are also used to offset CCB and CCR debts determined on or after 1 July 2006.
The following table outlines the conditions under which a debt can be recovered from a debtor's, or another consenting person's, income tax refund.
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Debts under Part 4 can be recovered from a tax refund owed to... |
Under the following conditions... |
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a debtor, |
- up to the whole amount of the income tax refund can be used to repay the debt, - the amount deducted from the refund is the amount applied to the debt, - a statutory time limit applies to the recovery of debts under this provision, - income tax refunds may automatically be offset against any category of FA and other Commonwealth debts. |
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another consenting person, |
- the person must consent to the deduction from their income tax refund, and - they may revoke the arrangement at any time, - the amount deducted from the person's income tax refund is applied to the debtor's debt, - the income tax refund may be offset against any category of FA debt. |
The Secretary may review a decision to offset an individual's FA debts against their income tax refund 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 income tax refund 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 unforeseen event and the individual will experience financial hardship if they are forced to use monies allocated to regular expenses, the FAO should determine if some or all of the offset amount can be refunded.
Act reference: FA(Admin)Act section 87 Application of income tax refund owed to person, section 93 Application of income tax refund owed to another person
Policy reference: FA Guide 7.2.1 Debt Recovery - General Provisions
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Last reviewed: 16 May 2011
