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!

 

[Rob44]

Choose better next time

Alas, a lass; but that the price of true love should be so cruel. As for the next time, I most certainly did.

Once bitten by a snake one learns to recognise them easily.

 

[marni]

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.

If you owe money to anyone you should always pay it back. Government has no money, so they are working for taxpayers to clear any debt owed

 

[Luckyus]

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.

Government and the ATO have a in common with Robin Hood only they are Robin Bastards.

 

[Rob44]

Government and the ATO have a in common with Robin Hood only they are Robin Bastards.

Governments that dole out $750 000 000 of our money to such wealthy organisations as the AFL are certainly bastards; the ATO merely obey ordures. In such cases the AFL are the hoods.

 

[Luckyus]

Governments that dole out $750 000 000 of our money to such wealthy organisations as the AFL are certainly bastards; the ATO merely obey ordures. In such cases the AFL are the hoods.

Some Germans said the same thing?

 

[Rob44]

Some Germans said the same thing?

The Nuremburg Defence as it was known. Some who offered it were hanged, some were jailed. The argument being that a moral authority higher than the The Law holds sway. An interesting concept, ignored these days in a number of different facets of modern life.

 

[Luckyus]

The Nuremburg Defence as it was known. Some who offered it were hanged, some were jailed. The argument being that a moral authority higher than the The Law holds sway. An interesting concept, ignored these days in a number of different facets of modern life.

I know thats why over the years working I've had the arse more times than a Greek stoker?

 

[Cheezil]

We the people are controlled in every aspect of our lives it seems! Yes recover the debt, but a bit unfair on the ones that are doing their best to repay already on payment plans!
It's a fight for survival these days & big business & govt don't give a crap while they line their pockets with huge payrolls & profits

 

[BigAl6164]

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 ATO caught me in a similar ambush. Unemployed, the only way to save my home was to draw on Super. Same deal: it was "income" and to rub salt into the wound, it put me into a higher tax bracket. So there I was, surviving below the p[overy line, owing $7k to the ATO while billionaires and multinationals paid $0.00 tax ...

 

[Luckyus]

The ATO caught me in a similar ambush. Unemployed, the only way to save my home was to draw on Super. Same deal: it was "income" and to rub salt into the wound, it put me into a higher tax bracket. So there I was, surviving below the p[overy line, owing $7k to the ATO while billionaires and multinationals paid $0.00 tax ...

Called kicking you, while your down?

 

[mylittletibbies]

The ATO caught me in a similar ambush. Unemployed, the only way to save my home was to draw on Super. Same deal: it was "income" and to rub salt into the wound, it put me into a higher tax bracket. So there I was, surviving below the p[overy line, owing $7k to the ATO while billionaires and multinationals paid $0.00 tax ...

What a Rort. Money being paid into super has already been taxed and if you draw it out you pay tax again.
Same as the interest on your bank account. Is there any way that they don't get at you?

 

[Rob44]

The ATO caught me in a similar ambush. Unemployed, the only way to save my home was to draw on Super. Same deal: it was "income" and to rub salt into the wound, it put me into a higher tax bracket. So there I was, surviving below the p[overy line, owing $7k to the ATO while billionaires and multinationals paid $0.00 tax ...

The rain it rains upon the just,
And on the unjust fellah,
But most of all upon the just,
As the unjust steals the just's umbrella'.
Courtesy of, I believe, Hilaire Belloc.

 

[Rob44]

What a Rort. Money being paid into super has already been taxed and if you draw it out you pay tax again.
Same as the interest on your bank account. Is there any way that they don't get at you?

Interest is income.
Were not superannuation earnings taxed at 15% on condition that superannuation and its earnings were held in the fund until you retired after 60 years old. And that if one added to superannuation voluntarily, that allowed some tax deduction when it came income tax returns. That was a rort (thanks, Paul Keating) designed so that government wouldn't have to pay Old-age pensions and thus could win elections by offering tax cuts, which is what everyone wants..

 

[Greg350]

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.

When in super it's not income, it's an investment. If you take it out early that's when it's determined to be income. There is a big difference there.

 

[mylittletibbies]

When in super it's not income, it's an investment. If you take it out early that's when it's determined to be income. There is a big difference there.

I thought that superannuation was for your old age, as the government would not be able to meet the cost of pensions in the future.
Doesn't it defeat the purpose if they allow people to continually draw on it.
I know that most people think that they pay their super,but actually the boss does. When it was started it was an extra charge, added onto people's wages,and the main reason lots of small businesses, including mine, closed down.
Just one more cost that a lot of businesses couldn't absorb and pass on.
Super IMO should be left where it is and used for the purpose it was intended.

 

[Mark@Home]

Choose better next time

Was that really necessary?

 

[Milica]

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.

Choose better next time

I think we all thought we choose right the first time, young and full of hope for the future.

 

[Milica]

Choose better next time

Alas, a lass; but that the price of true love should be so cruel. As for the next time, I most certainly did.

Once bitten by a snake one learns to recognise them easily.

So true Rob!

 

[Rob44]

I thought that superannuation was for your old age, as the government would not be able to meet the cost of pensions in the future.
Doesn't it defeat the purpose if they allow people to continually draw on it.
I know that most people think that they pay their super,but actually the boss does. When it was started it was an extra charge, added onto people's wages,and the main reason lots of small businesses, including mine, closed down.
Just one more cost that a lot of businesses couldn't absorb and pass on.
Super IMO should be left where it is and used for the purpose it was intended.

"I thought that superannuation was for your old age, as the government would not be able to meet the cost of pensions in the future."

But "government"t can meet the costs of buying a a $750 000 000 stadium in Tasmania for the AFL and $70 000 000 wrecking a couple of public parks for an AFL training centre in a city centre on Hobart's eastern shore.

What was wrong with government investing for the future of Australia's elderly as was done once for the elderly in the UK? Oh, some politician wanted to buy nuclear-armd nuclear submarines etc etc and stole the old-age pension fund and the money set aside each yea for free school milk for kids.

 

[BeautifulMousey]

"I thought that superannuation was for your old age, as the government would not be able to meet the cost of pensions in the future."

But "government"t can meet the costs of buying a a $750 000 000 stadium in Tasmania for the AFL and $70 000 000 wrecking a couple of public parks for an AFL training centre in a city centre on Hobart's eastern shore.

What was wrong with government investing for the future of Australia's elderly as was done once for the elderly in the UK? Oh, some politician wanted to buy nuclear-armd nuclear submarines etc etc and stole the old-age pension fund and the money set aside each yea for free school milk for kids.

Yeah., they don't have that free milk for kids at school now.