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7.16.1 Overview debt is normally written off where it is not possible or cost effective to recover it. Write-off action may be taken where it is considered that action to recover an overpayment should stop without affecting the Commonwealth's right to recover at a later date. Write-off action should only be taken if all appropriate recovery action has been taken and recovery is not possible. The authority to write-off a debt arising under, or as a result of the VEA must be determined under paragraph 206(1) VEA. an amount can be written off, the delegated officer must be satisfied on the following points:

  • there is a debt due to the Commonwealth under, or as a result of, the VEA
  • where appropriate, the penalty interest and administrative charge have been applied
  • recovery action has been unsuccessful
  • it would not be cost effective to pursue recovery at the current time
  • it would not be appropriate to recommend waiving the debt
  • where prosecution action is possible, the decision not to prosecute has been made. circumstances in which a delegate may exercise the discretion to write-off the whole, or part, of a debt are as follows:

  • the debtor is deceased and there is no estate. An appropriate period of three to six months should be allowed for the surviving spouse or next of kin to make a voluntary repayment of the debt. If a voluntary payment is made, the outstanding amount is recovered and the debt finalised. If not, and there is little chance of the debt ever being recovered, waiver becomes the appropriate treatment in order to finalise the debt.
  • the debtor is deceased and there is insufficient estate. Where it is cost effective to recover a portion of the debt, that portion should be recovered. The remainder of the debt should be written-off for a period of three to six months allowing any family member who feels a moral obligation to repay the debt. If after the review period the debt has not been repaid, and there is no likelihood of the debt ever being recovered, the debt should be waived.
  • the debtor does not have the capacity to repay the debt, and it is unlikely that the financial position will improve
  • the debtor's whereabouts are unknown and all reasonable efforts have failed to locate the debtor
  • recovery action would not be cost effective
  • the debt is irrecoverable at law, i.e. recovery is statute barred
  • the debtor is no longer in payment, but is likely to be so in the future; and the overpayment is less than $50. an amount is written off, an acknowledgment of the debt should be obtained where possible. a case is irrecoverable at law, the debtor's circumstances should be reviewed every 12 months, or more frequently as appropriate, in case the debtor's capacity to repay improves. written off debt can be re-raised at any time where a debtor's capacity to repay improves. For example, when the debtor lodges a successful claim for income support or receives a lump sum from an estate, recovery action should commence. However, any such recovery action is constrained by the 6-year statute of limitations contained in subsection 206(2) VEA.

Note:For more information refer to this manual's Section 7.3 Statute of Limitations at the beginning of this chapter. certain cases where the departmental delegate for particular reasons has accepted a partial repayment and written off a portion of the debt because it is not possible or cost effective to pursue full repayment, the debtor may request a Deed of Release to be signed by both parties. The Deed of Release is a release from all liability and effectively prevents both parties from taking any further action in relation to the debt. The delegation to sign a Deed of Release is at the Director level.