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!

 

[gordon1940]

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!

AND!

 

[BeautifulMousey]

AND!

Maybe you can afford it

 

[David567]

If we were to steal to recover debts owed to us by someone, we would be charged, fined and or possibly jailed. What's the difference if the government does it. No matter how you look at it, it's thieving.

 

[Knell]

If we were to steal to recover debts owed to us by someone, we would be charged, fined and or possibly jailed. What's the difference if the government does it. No matter how you look at it, it's thieving.

Who is stealing? A debt is a debt - pay it or dispute it!

 

[evitravel]

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

The same happens to my son too. He religiously pays a high amount of child support because he works 12 hours a day, so he has some money left for himself, while his son's mother works for cash in hand, has her own business which she doesn't declare. I have mentioned that to CSA, but they don't care as long as she doesn't put a tax return in with her earnings my son has to pay child support. Sometimes it is just not fair.... I have reported her to ATO, but as she doesn't earns tens of thousands of dollars, they are not interested, they actually hasn't got the manpower to chase everybody up.

 

[mylittletibbies]

"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.

Exactly, they've got plenty of money to waste. AFL make a fortune, let them pay for their own stadiums or use existing ones. They don't even know if it will be viable in Tasmania as yet
The nuclear submarines will be obsolete by the time we receive them.
They always seem to have enough money to give themselves obscene pay rises and keep the pensioners on a rate below the poverty line.
It doesn't seem to make any difference who we vote in, one lot is as useless as the other.
Might as well vote for myself
I know nothing about running a country, but it appears neither do they.
I don't reckon I could do any worse, at least I have always been able to balance my own finances (not quite so big a scale though, lol).

The same happens to my son too. He religiously pays a high amount of child support because he works 12 hours a day, so he has some money left for himself, while his son's mother works for cash in hand, has her own business which she doesn't declare. I have mentioned that to CSA, but they don't care as long as she doesn't put a tax return in with her earnings my son has to pay child support. Sometimes it is just not fair.... I have reported her to ATO, but as she doesn't earns tens of thousands of dollars, they are not interested, they actually hasn't got the manpower to chase everybody up.

Yes, I know what you mean. Son's ex is on single mums pension also,but has been living with some guy for almost three years. It has been reported, but nothing is done about it, once again not enough staff. Imagine how many thousands of people are doing this.
And yet they slam down on pensioners earning a little extra

 

[Tervueren]

I was raised to always pay off my debtors before lining my own pockets.