Last updated 5 August 2016

Debts arise when a person is considered to have been overpaid by Centrelink (s 1223 Social Security Act 1991 (Cth) (Social Security Act)). Debts can relate to payments received a number of years previous. If Centrelink believes a debt is owed, it will send a letter out to the person detailing the debt and requesting repayment.

If the person thinks there has been a mistake in the raising or calculation of the debt it can be appealed (see Appealing a Centrelink Decision).


If the person is still receiving social security benefits, the repayments can be deducted from their regular benefit. If the person no longer receives any Centrelink payments, they can negotiate a repayment schedule with Centrelink’s Debt Recovery Unit. If a person is no longer able to afford the repayments on the repayment schedule, they should contact Centrelink’s Debt Recovery Unit as quickly as possible to organise a new repayment schedule. If Centrelink will not agree to reduce a repayment rate then this decision can be appealed.

If a person is unable or unwilling to make repayments, Centrelink can also take steps to garnish the person’s wages, their bank account or their tax return without their consent. If Centrelink is still unable to recover the debt, it may take the person to court and the court can make an order about how the debt is to be repaid (s 1230C Social Security Act).

Write off or waiver

A ‘write off’ means that the debt recovery is temporarily suspended for a specified period of time. Centrelink will recover the debt after the write-off period expires. There are limited circumstances where a write off will be granted (s 1236 Social Security Act).

A Centrelink debt can be waived in whole or in part (s 1237 Social Security Act). If a debt or part of a debt is waived, it no longer exists. The grounds for seeking a waiver of a debt are strictly limited. The two main grounds for waiving a debt are a sole administrative error, where the error must be solely Centrelink’s and the person owing the debt must not have contributed in any way to the debt and the person must have received the payments ‘in good faith’ (s 1237A Social Security Act), that is the person believed they were entitled to the payments. A special circumstances waiver, which only applies in unusual, uncommon or exceptional circumstances (s 1237AAD Social Security Act), may apply where the person or someone else did not ‘knowingly’ make a false statement, or ‘knowingly’ failed to comply with social security law.


In some instances the overpayment may lead to prosecution for fraud. It is a criminal offence to intentionally mislead Centrelink in order to obtain a payment or a higher rate of payment. Centrelink links with other government departments to ensure that people are honest in their reporting (this process is known as data matching). If Centrelink suspects that you have knowingly received a payment to which you are not entitled and fraud is suspected, it will pass the details to the Commonwealth Director of Public Prosecutions to make a decision whether or not to prosecute.

A person suspected of fraud will receive a letter stating that the case is being considered for prosecution. The person may be asked to attend an interview. They are not required to attend the interview or say anything to Centrelink. Non-attendance at an interview will have no adverse consequences on current payments. It is advisable to get legal advice from a criminal lawyer before attending any interview or making any statement.

Compensation payments

If a person receiving social security benefits receives a compensation payout as a result of injury, this must be reported to Centrelink. Centrelink applies specific rules to compensation payments, and they may prevent eligibility for payments of social security benefits for extended periods of time (these are referred to as preclusion periods). Periodic compensation can result in a reduction in the rate of payment a person receives (s 1173 Social Security Act). Some compensation payments may not impact on eligibility for payments, however, they can still be considered as an asset or income (including for the partner of the person in receipt of compensation) (s 1174 Social Security Act) and must also be reported to Centrelink.

Centrelink has a formula to calculate the compensation preclusion period where the person is not entitled to receive their social security benefit (s 1170 Social Security Act). If the person received social security benefits after their injury and while their compensation issue was being resolved, they would be required to pay back the amount out of their compensation payout.

Special circumstances to disregard compensation

It is important for a person seeking compensation for personal injury to advise their lawyer what social security benefit they are receiving and ensure that Centrelink is aware of any compensation benefits. A compensation payout can only be disregarded or a compensation preclusion period reduced in special circumstances (s 1184K Social Security Act). These include financial hardship, poor health, high medical expenses, high legal costs and incorrect advice from Centrelink about the effect of the person’s compensation.

If the person believes that Centrelink should disregard the compensation payout or the period of compensation preclusion should be reduced, the person should appeal the decision (see Appealing a Centrelink Decision).