As the end of the financial year approaches, many look forward to receiving a tax refund, a little financial boost that can make all the difference. However, for some, this year's tax time might bring a surprise.

Taxpayers are being cautioned that the Australian Taxation Office (ATO) may automatically use tax refunds to pay off outstanding debts with Services Australia.

This measure could affect those already making repayments to Services Australia, including debts related to Family Tax Benefit (FTB), Child Care Subsidy (CCS), and Child Support.

Even if you have a repayment plan in place, don't be surprised if your expected tax return has been significantly reduced.

Taxpayers are warned that the ATO may automatically use tax refunds to pay off outstanding debts. Credit: Shutterstock

Services Australia has been upfront about this process, stating on social media, 'If you have an outstanding debt with us, we may take money from your tax refund to repay it.'

‘Legally, we have to recover money that’s owed to us.’

‘Sometimes we’ll use your tax refund to reduce the amount you owe us—even if you have a repayment arrangement in place.’

This recovery method targets specific groups: those receiving FTB or CCS, individuals with overdue Child Support debt, and former customers who have stopped making repayments on debt. However, there are exceptions.

For instance, if your debt repayments have been paused due to a disaster or emergency event, or if you're awaiting a formal review, your tax refund will not be used for debt recovery.

For families receiving assistance payments, it's important to note that Services Australia will check for overpayments and debts when balancing your FTB or CCS. This process has already started for FTB and will begin for CCS 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.

Former welfare recipients not currently repaying their debts to Services Australia will be notified of the debt recovery through a ‘letter afterwards to explain it’.

‘It’ll also appear on your Notice of Assessment from the Australian Taxation Office as a “credit offset to Centrelink”,’ Service Australia added.

Key Takeaways

• Services Australia has warned that outstanding debts may be deducted from taxpayers' tax refunds, even if a repayment arrangement is in place.
• Taxpayers are encouraged to familiarise themselves with their debts and understand how recovery processes work during tax time.
• The automatic debt recovery targets those with Family Tax Benefit or Child Care Subsidy overpayments, and former welfare recipients not making repayments.
• Services Australia will inform individuals who have had debts recovered through their tax refund, and this will be indicated on their Notice of Assessment from the Australian Taxation Office as a 'credit offset to Centrelink'.

Have you experienced your tax refund being used to offset debts? Share them with us in the comments below!

 

[richmich.4422@gmail]

Let's all face the facts. As they say, "If U have borrowed from them, then U do have the obligation to repay that debt". We understand that with no probs. But I reckon that it's a bit rich & harsh if U have an installment plan in use & are making the regular payments as required, one shud then be able to keep any tax returns that they are entitled too. In numerous situations, it's the only real time that one gets any sort of a tad of financial relief.

When you think about it, how many upteen thousands of us have been in that situation ? That includes myself in many yrs gone by, & trying to survive living in & on "Struggle Street".

As a well known, now retired, NSW shock jock radio announcer Alan Jones constantly used & quoted his favourite cliche "Living in Struggle Street", i.e., "An empty sardine can on one foot & a holey sandshoe on the other". In many thousands of times, with heaps of people that I know, they'll say, "How'er you going", as a joke, I reply to 'em, "U know what it's like in struggle street" & then say the cliche. In return they'll say, "Yea for sure, I certainly do".

Just how many of the populous are in that situation of life today ? In my estimate, "Millions". Struggle on friends & somehow, survive.

 

[BigAl6164]

Last year's "refund" went towards paying an ATO debt. The ATO had deemed it "uneconomical" to hound me for money I couldn't possibly pay - I was on Jobseeker benefits - but when I gained the refund they "reactivated" my debt and slid the money into it. The good thing is I owe a little less now ...

#OneStepForwardTenStepsBack

 

[kerrikennel]

Your best bet is to ensure you don't incur debt. If in doubt youre much better to get a little less each fortnight than to lose a lot in one lump sum.

 

[Southmelbswans]

I'm sure this has been the practice for many years but at least they do remind everyone of the practice each year.

 

[mylittletibbies]

It was the only way a family member was ever able to get the many thousands of unpaid dollars owed to her in child support.

 

[Veggiepatch]

It was the only way a family member was ever able to get the many thousands of unpaid dollars owed to her in child support.

The Child Support Agency is a bunch of bottom dwelling scumbags!

In 2015, two weeks before my son's 18th birthday, I withdrew a substantial sum from my superannuation for a house deposit. A few years later, I received notification from the CSA that I owed over $13000 in "unpaid" child support as superannuation is deemed to be income! WTF! Had I waited two weeks, I wouldn't paying a cent as child support ceases after a child turns 18 years of old.

After an embattled negotiation, I managed to have a payment plan put in place, deducted from my Centrelink benefit on a fortnightly basis, which is steadily creeping up, possibly due to being linked to the consumer price index.

To rub salt into the wound, the CSA took the whole of my 2017-18 tax refund, amounting to several thousand dollars. No warning or notification. So much for those little luxuries I was going to purchase with the refund!

The CSA operates totally above the law in all respects. Maggots!

 

[mylittletibbies]

The Child Support Agency is a bunch of bottom dwelling scumbags!

In 2015, two weeks before my son's 18th birthday, I withdrew a substantial sum from my superannuation for a house deposit. A few years later, I received notification from the CSA that I owed over $13000 in "unpaid" child support as superannuation is deemed to be income! WTF! Had I waited two weeks, I wouldn't paying a cent as child support ceases after a child turns 18 years of old.

After an embattled negotiation, I managed to have a payment plan put in place, deducted from my Centrelink benefit on a fortnightly basis, which is steadily creeping up, possibly due to being linked to the consumer price index.

To rub salt into the wound, the CSA took the whole of my 2017-18 tax refund, amounting to several thousand dollars. No warning or notification. So much for those little luxuries I was going to purchase with the refund!

The CSA operates totally above the law in all respects. Maggots!

I agree they seem to be a law unto themselves.
My son, who I am proud to say, never shirked his responsibilities to his children discovered that his eldest daughter had been on jobseeker payments and living with her boyfriend since she turned 16, meaning that his wife had not been entitled to these quite substantial child support payments.
This amount ran into many thousands of dollars as my son earns good money.According to the Child Support Agency they don't recover over payments.They sure chase the money when the boot is on the other foot though.
I'm not saying that deadbeat dad's shouldn't be chased for unpaid child support, but they should also chase recipients for overpayments to be returned.
What's good for the goose is good for the gander

 

[Rob44]

The Child Support Agency is a bunch of bottom dwelling scumbags!

In 2015, two weeks before my son's 18th birthday, I withdrew a substantial sum from my superannuation for a house deposit. A few years later, I received notification from the CSA that I owed over $13000 in "unpaid" child support as superannuation is deemed to be income! WTF! Had I waited two weeks, I wouldn't paying a cent as child support ceases after a child turns 18 years of old.

After an embattled negotiation, I managed to have a payment plan put in place, deducted from my Centrelink benefit on a fortnightly basis, which is steadily creeping up, possibly due to being linked to the consumer price index.

To rub salt into the wound, the CSA took the whole of my 2017-18 tax refund, amounting to several thousand dollars. No warning or notification. So much for those little luxuries I was going to purchase with the refund!

The CSA operates totally above the law in all respects. Maggots!

Yes. A rather nasty organisation even if one is an honest bloke whose wife happily fornicated with others.

 

[Veggiepatch]

Yes. A rather nasty organisation even if one is an honest bloke whose wife happily fornicated with others.

That why the CSA operates without a physical office where you can negotiate issues in person.

If this were the case, there would be more than a few torched or firebombed government offices around the country.

 

[Ellev]

It was the only way a family member was ever able to get the many thousands of unpaid dollars owed to her in child support.

And that's because they do not do their job properly they are absolutely useless. Some parents are not doing the right thing other parents doing the right thing and being treated like dirt because of it.

 

[Ellev]

The Child Support Agency is a bunch of bottom dwelling scumbags!

In 2015, two weeks before my son's 18th birthday, I withdrew a substantial sum from my superannuation for a house deposit. A few years later, I received notification from the CSA that I owed over $13000 in "unpaid" child support as superannuation is deemed to be income! WTF! Had I waited two weeks, I wouldn't paying a cent as child support ceases after a child turns 18 years of old.

After an embattled negotiation, I managed to have a payment plan put in place, deducted from my Centrelink benefit on a fortnightly basis, which is steadily creeping up, possibly due to being linked to the consumer price index.

To rub salt into the wound, the CSA took the whole of my 2017-18 tax refund, amounting to several thousand dollars. No warning or notification. So much for those little luxuries I was going to purchase with the refund!

The CSA operates totally above the law in all respects. Maggots!

The Child Support Agency is a bunch of bottom dwelling scumbags!

In 2015, two weeks before my son's 18th birthday, I withdrew a substantial sum from my superannuation for a house deposit. A few years later, I received notification from the CSA that I owed over $13000 in "unpaid" child support as superannuation is deemed to be income! WTF! Had I waited two weeks, I wouldn't paying a cent as child support ceases after a child turns 18 years of old.

After an embattled negotiation, I managed to have a payment plan put in place, deducted from my Centrelink benefit on a fortnightly basis, which is steadily creeping up, possibly due to being linked to the consumer price index.

To rub salt into the wound, the CSA took the whole of my 2017-18 tax refund, amounting to several thousand dollars. No warning or notification. So much for those little luxuries I was going to purchase with the refund!

The CSA operates totally above the law in all respects. Maggots!

Well that's interesting. I've just been informed that PP superannuation can not be used for years of unpaid child support as it's not deemed as income. They must make up the rules as they go along.

 

[Veggiepatch]

All that's interesting because being on the other end bang the receiving parent superannuation is not deemed to be income for back pain

Well that's interesting. I've just been informed that PP superannuation can not be used for years of unpaid child support as it's not deemed as income. They must make up the rules as they go along.

What is PP superannuation?

EDIT: If it is PP Superannuation Fund, then its ABN status was cancelled from 1 June 2013.

 

[Ellev]

What is PP superannuation?

Sorry Paying parents superannuation.

 

[mylittletibbies]

Yes. A rather nasty organisation even if one is an honest bloke whose wife happily fornicated with others.

Obviously, it wasn't your children's fault what your wife did and the maintenance is paid for them.

 

[Luckyus]

Yes. A rather nasty organisation even if one is an honest bloke whose wife happily fornicated with others.

I remember a shipmate of mine gave me his complete payoff money? at the time I wondered why he had asked me to change places with him, so that he could payoff before me? I soon found out less than a minute after he'd given me the money he got his collar felt for child support. They tried to get the money off me to no abusive good? he was repaying a debt to me end of. I visited him in Canterbury nick, where he told me the story, he had one child with his missus he was sure of hence the marriage, the other three weren't. The court deemed they were his? he begged differently which I agreed with him. As far as I'm concerned your not on the hook for grudge births? by the way he happily paid out for his own kid, paid the money to his wifes mother for his welfare. Some of the money he gave me he asked to give his mother-in-law, the rest I gave him in bank cheque as I had to go back to sea. Bit of a bugger that as quoted by Samuel Johnson, No man will be a sailor who has contrivance enough to get himself into a jail; for being in a ship is being in a jail, with the chance of being drowned... a man in a jail has more room, better food, and commonly better company. Still a shitty way of spending your leave?

 

[Rob44]

Obviously, it wasn't your children's fault what your wife did and the maintenance is paid for them.

Indeed..........and I am simply a bloke daft enough to have worked hard whilst the ex-wife has her fun.

 

[marni]

Yes. A rather nasty organisation even if one is an honest bloke whose wife happily fornicated with others.

Choose better next time

 

[marni]

They didn’t even try for my grand daughter. The malingerer only worked cash in hand jobs, when he did work. My grand daughter was better off to be honest.

 

[David567]

Sounds like the government has just admitted to be thieves. If the pubic thieves from people, it's a criminal offence so why is not an offence for the government. People get letters that the government stating they will posess cars and other posessions or remove money from bank accounts etc for a $200 debt. That to me is nothing short of theft and a criminal activity.
Do as we say, not as we do attitude.