7.3.1.20 Legally Irrecoverable Debts

Summary

This topic provides information about the circumstances in which a debt (1.1.D.60) may not be recoverable at law. A debt that is not recoverable at law may be written-off.

Legally irrecoverable debt

An FA debt is irrecoverable at law if:

• the debt is unlikely to be recovered as a result of legal proceedings, or
• the debtor is discharged from bankruptcy, and the debt was incurred before the discharge but not as a result of fraud, or
• a debtor has died leaving no estate or there are insufficient funds in the debtor's estate to repay the debt, or
• the relevant time limit has expired for recovery of the debt by:
  • deductions from the debtor's FTB instalments, or
  • deductions from the debtor's pension, benefit or allowance, or
  • setting off FA against debt owed, or
  • using the debtor's income tax refund, or
  • setting off debts of an approved child care service against amounts of one or more enrolment advances to be paid to an approved child care service under section 219RA, or
  • setting off debts of an approved child care service against amounts to be paid to the approved child care service in respect of fee reduction under section 219Q or 219QA, or
  • legal proceedings, or
  • a garnishee notice (1.1.G.10).

Act reference: FA(Admin)Act section 95(3) Secretary may write off debt, section 84 Deductions from debtor's FTB, section 84A Setting off FA against debt owed, section 87 Application of income tax refund owed to person, section 87A Setting off debts of an approved child care service against child care service payments, section 88 Legal proceedings, section 89 Garnishee notice

SSAct section 1231 Deductions from debtor's pension, benefit or allowance

Policy reference: FA Guide 7.3.1 Writing-off a Debt

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Last reviewed: 30 April 2012