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Post by Banker on Jan 19, 2012 15:57:32 GMT 7
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Post by Banjo on Jan 19, 2012 16:35:22 GMT 7
Debt recovery by garnishee
This guide discusses Centrelink’s power to recover debts owed to Centrelink by issuing a garnishee notice and situations in which a garnishee may be reversed.
What is a garnishee notice?
Centrelink can recover a person’s debt by issuing a garnishee notice. A garnishee notice is a notice Centrelink issues to a third party, such as a person’s employer or bank, requiring it to transfer a person’s money to Centrelink.
A common example is when Centrelink issues a garnishee notice to the Australian Taxation Office (ATO), requiring the ATO to direct a person’s tax refund to it. This often occurs when a person has a Family Tax Benefit debt and the person is expecting to receive a tax refund only to find that Centrelink issued a garnishee notice to the ATO.
It is an offence for the third party not to comply with the notice.
When can Centrelink issue a garnishee notice?
Centrelink may issue a garnishee notice only if it has first tried to recover the debt by withholdings from a person’s social security payment or by entering into a repayment plan with them. It must then establish that the person has failed to enter into a reasonable repayment arrangement or, if there is an arrangement in place, that the person failed to abide by it.
If these requirements are met, Centrelink may issue a notice, but the notice itself must meet certain additional requirements under social security law: it cannot require the third party to pay an amount more than the person’s debt or more than the amount of the person’s money held by the third party; and it must give the third party at least 14 days to make the payment.
Finally, Centrelink must send a copy of the notice to the person.
Steps which may prevent a garnishee notice being issued
Centrelink garnishee notices may cause significant hardship, as many people rely on lump sums such as an annual tax refund.
When helping a person with a Centrelink debt, one of the first things to do is make sure they are repaying it. If a person is on a social security payment, this happens automatically by deductions or withholdings. But if a person is no longer on a social security payment, they may not have made arrangements to enter into a repayment plan.
Once Centrelink has sent a letter telling a person they have a debt, the onus is on the person to set up a repayment plan by calling Centrelink’s debt recovery number on 13 63 30.
If a person is already repaying a debt, but is having trouble affording it, they are entitled to renegotiate the amount they repay if they are in hardship. This is also important as failure to keep to a repayment plan is a trigger for Centrelink’s garnishee power.
Reversing a garnishee notice
A person can challenge garnishee action by Centrelink. There are two main grounds, which are: Centrelink did not have the power to issue the notice, or issued a notice that did not comply with the legal requirements (for example, the amount on the notice was higher than the amount of the debt owed by the person or the person has not failed to enter into a reasonable repayment plan); or The person is in real financial hardship because of exceptional and unforeseen circumstances (Centrelink policy with respect to garnishee action).
The Welfare Rights Centre
January 2012
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