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11.6.1 Write off an overpayment

Note : refer to the Chief Executive Instructions, Chapter 7 “Debt Management”

Section 428 allows the MRCC to write off a debt due to the Commonwealth. However, the debt still exists at law and may be pursued at a later date. For example, if a person's financial situation improves or the person becomes eligible to receive a lump sum or weekly PI payment.

The power to write off an overpayment debt will generally be used when it is regarded as too costly or sensitive to pursue the debt at that time.  Examples, where a write off might be appropriate include:

  • where a person's financial circumstances show a high level of debt with numerous accounts payable and limited ability to repay now or in the foreseeable future;
  • where the debt has arisen because of a departmental error and pursuing the debt would result in financial hardship for the person; or
  • where a person's spouse or dependants are suffering a terminal illness.

A decision to write off an overpayment does not necessarily mean the debt will be pursued later.  That may never be a realistic option.  However, with a write off there is always the possibility of recovery should the person's financial circumstances change significantly in the future.

A person's financial circumstances should be established through the use of the D2708 Statement of Financial Circumstances form.  Financial hardship is generally considered to exist where payment of the amount owing to the Commonwealth would result in the applicant being left without the means to achieve reasonable acquisition of food, clothing, medical supplies, accommodation, education and other basic needs.  A person's assets, future income earning capacity, health, family and other relevant circumstances should be taken into consideration.

http://www.finance.gov.au/publications/finance-circulars/2009/09.html

Subsection 428(2) allows the delegate to nominate a date on which the write off takes effect.  This allows the MRCC to apply the write off on the date of the decision, backdate or postdate the write off, effectively allowing the write off to start on any desired date.  If no date is specified in the write off decision, the date of the decision is the date of effect.