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7.11.5 Recovery from tax refund

7.11.5.1DVA has a Memorandum of Understanding (MOU) with the Australian Tax Office (ATO)which covers the process of payment notices (garnishee notices) issued against a DVA client's tax refund. The MOU covers the financial years 2006-2008.

7.11.5.1Only DVA clients with a total outstanding debt amount equal to, or greater than $100.00 will be selected for referral. DVA will limit the selection to a maximum of 200 referrals nationally for the period covered by this MOU.

7.11.5.1A contact list will be established for ATO and DVA OMU.  The Team Manager in each OMU will be responsible for authorising DVA requests to garnishee a client's tax refund.

7.11.5.1For each client DVA requests to be garnisheed, DVA will issue the ATO with an 'Intention to Garnishee' notice through an e-mail attachment that includes the following details for each client:

  • family name
  • first name
  • middle name
  • date of birth
  • address and
  • DVA File number

Notices will be sent to the ATO periodically throughout the year.

7.11.5.1The ATO Contact Officer will advise the Team Manager at each OMU in writing via e-mail if a match cannot be found.

7.11.5.1Once the ATO has received the 'Intention to Garnishee' notice, the ATO will match the DVA data with information on the ATO's client database. An 'intercept indicator' will only be input onto a client's ATO record in cases where there is a complete match of all of these listed details:

  • the family name and at least one of either the first, or middle names;
  • the date of birth; and
  • the postcode.

7.11.5.1Where a matched client becomes eligible for a tax refund, the Intercept Indicator will report on the ATO system for action. Where a credit is available to garnishee, the ATO staff will contact the appropriate DVA office to advice of a pending refund.

7.11.5.1Once notified of a pending refund, DVA staff will decide if a garnishee notice is to be issued to the ATO to recover part, or all of any outstanding DVA debts.

7.11.5.1If the DVA delegate decides to proceed with a garnishee, they will issue a garnishee notice to the ATO requesting the interception of a specified amount.

7.11.5.1The recovery action should be updated in the client's debt record as per the DMRS guide on How to add a “Payment Notice” on DMRS. A full copy of DMRS may be obtained from the DVA intranet.    

7.11.5.1Where a DVA customer has a current payment arrangement with DVA, a garnishee notice should not be issued.

7.11.5.1Where the payment arrangement has been entered into after DVA has issued an 'Intention to Garnishee' notice to the ATO, DVA must notify the ATO in writing (by return facsimile) that this is a case where a garnishee will not be requested.

7.11.5.1Payments of amounts garnisheed by the ATO on behalf of DVA will be made to DVA by cheque.

7.11.5.1When the ATO garnishees all, or part of a client's refund, relevant data will be posted to DVA in the form of a cheque with an attachment. This cheque will contain sufficient information to allow DVA to accurately identify the customer and the amount intercepted for each client.

7.11.5.1DVA clients who have been garnisheed and contact the ATO for more information will be advised to contact their local DVA OMU for more information.

7.11.5.1Where a client's refund has been garnisheed by the ATO on behalf of DVA, the Notice of Assessment will show:

  • the amount garnisheed by the ATO on behalf of DVA, which will also form part of the amount included on the notice as 'Other Amounts Payable'
  • under 'Additional Information', advice relating to other liabilities the client has to the Commonwealth.

7.11.5.1DVA will notify the client separately about the tax refund amount applied against their debt.

7.11.5.1In the event of a duplicate payment made by the ATO to DVA, the ATO will:

  • contact the DVA Contact Officer with the details of the overpayment by telephone in the first instance
  • issue DVA with a credit notice, and
  • withhold all further payments to DVA until enough funds become available to recover the duplicate payment.

7.11.5.1DVA is responsible for reconciling the deposits with its records. The ATO will, however, make every effort to assist DVA with any queries arising from the reconciliation.

7.11.5.1ATO staff are required, where possible, to facsimile a list of ATO clients eligible for a tax refund to the appropriate DVA office by 11.00am each day to allow DVA staff to respond within the specified timeframes.

7.11.5.1Once DVA recovery staff  have confirmed a debt and have requested the ATO to garnishee the refund, they are required to facsimile the garnishee notice within 3 hours to the ATO staff member who advised of the pending refund.

7.11.5.1Where the faxed list of clients is not received by DVA by 11.00am, DVA will make all reasonable attempts to confirm the debt and respond within 3 hours, or by 11.00am the following working day at the latest.

7.11.5.1If DVA staff are unable to meet these timeframes, they are required to immediately advise the ATO Contact Officer of the delay and expected response time.

7.11.5.1Faxed garnishees must be a full copy of the garnishee, not just an amount, name or reference number. There are legal ramifications for the ATO if DVA does not adhere to this requirement.

7.11.5.1Should DVA not forward, when requested, the faxed copy of the garnishee within the agreed timeframe, the ATO will release the refund to the taxpayer. This rule is implemented to ensure that the ATO will continue to meet its Taxpayer's Charter requirements and operational standards.

7.11.5.1In the event that a DVA client has been incorrectly garnisheed and the garnished amount has already been sent to and received by DVA, then it is the responsibility of DVA to reimburse the client within 72 hours from the error being identified.

7.11.5.1In the event that a ATO client has been incorrectly matched and garnisheed, then the ATO and DVA must validate if an identity mismatch has occurred.

7.11.5.1Where a mismatch is confirmed, the ATO will notify DVA of the amount to be repaid, the DVA File Number that was provided in the garnishee notice and the ATO financial institution details. DVA will return the garnisheed refund to the ATO within 48 hours of receiving the request and the ATO will refund any available credit to the client. The ATO will immediately remove the intercept indicator and input a note on the client's record to prevent any future mismatches occurring.

7.11.5.1DVA will update the client's debt record in DMRS to record the recovery transactions.  In the event of a mismatch being identified after a credit transaction has already been recorded, DVA will adjust the client's debt record and note in the comments field that a mismatch as the reason for the corrective action taken.