Taxpayers are being reminded the Australian Taxation Office (ATO) will siphon money from their tax returns to pay off any outstanding Services Australia debts.
Even those people who have existing repayment arrangements with Services Australia could discover a chunk of their tax return missing.
“If you have an outstanding debt with us, we may take money from your tax refund to repay it,” Services Australia tweeted on Monday.
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The government agency urged taxpayers to become familiar with their debts and how they will be recovered at tax time, to help reduce the negative impacts of the measure.
“Legally, we have to recover money that’s owed to us,” Services Australia said.
“Sometimes we’ll use your tax refund to reduce the amount you owe us — even if you have a repayment arrangement in place.”
The recovery method will specifically target people who receive Family Tax Benefit (FTB) or Child Care Subsidy (CCS), people with an overdue Child Support debt, and former customers no longer making repayments on a debt.
Services Australia will avoid recovering debts with tax return funds only if debt repayments have been paused due to a disaster or emergency event or are pending a formal review.
For recipients of the family assistance payments, Services Australia will check for overpayments and debts when balancing recipients’ FTB or CCS.
FTB balancing has already begun this month, and CSS balancing will begin from mid-August.
“We’ll recover any overpayments or existing debts you owe us before paying you any top-ups, supplements or lump sums,” Services Australia said.
For people who owe child support, or recipients of child support who have been overpaid, the tax refund will be used to pay the outstanding amounts directly.
But Services Australia advised any parents who would be in financial hardship as a result should contact the child support enquiry line before lodging their tax returns.
For former welfare recipients who are neither receiving payments, nor paying off their Services Australia debts, they’ll be made aware of the debt recovery with a “letter afterwards to explain it,” Services Australia said.
“It’ll also appear on your Notice of Assessment from the Australian Taxation Office as a ‘credit offset to Centrelink’.”
