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SSAct section 1232 provides that the Commonwealth may take legal proceedings in a court of law to recover debts under the SSAct.
SSAct subsection 1232(2) provides that recovery through legal proceedings cannot be commenced after the end of the period of 6 years starting on the day on which the debt or overpayment arose.
SSAct subsections 1232(4), (5) and (6) provide different commencement dates for this 6 year period according to the circumstances of the case.
Where recovery action takes place within the initial 6-year period, a new 6-year period automatically commences from the last date of that action. Each subsequent action, within a 6-year period, extends the limitation period by a further 6 years. Although this has the potential to provide unlimited time for debt recovery, the onus is still on Centrelink to recover the debt within the shortest possible timeframe.
If a file review or departmental activity as described in subsections 1232(6)(ii) and (iii) commence within the initial limitation period, the limitation period should be extended by a further 6 years. However, if the departmental activity is the only action taken during the extended limitation period, or does not result in the whole of part-recovery of the debt, the extended limitation period would be seen as lapsed. The debt for these cases would be written off as irrecoverable under social security law.
However, if recovery action or debt repayment does result from the departmental activity during the extended period of time, the limitation period would then continue to be extended with each recovery action.
Act reference: SSAct section 1232 Legal proceedings
A complex situation arises where money has been recovered from a bankrupt by way of legal proceedings. This situation should rarely arise, as any legal proceedings should be discontinued once a debtor enters into bankruptcy. Cases involving recovery in these circumstances should be referred to the relevant helpdesk for specific advice.
Act reference: SSAct section 1232 Legal proceedings
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Last reviewed: 16 May 2011
