Parental Leave Pay (PPL) debt raising, debt offsetting and recovery 107-04070010

Services Australia may request a refund of payments made to a recipient who has incorrectly received an amount of PPL.

The agency may deduct money from a partner or other secondary claimant's PPL claim for a child born or entered care before 1 July 2023, to repay a debt owed by the primary claimant. This is for cases where payments are retrospective. This must be for the same child and the secondary claimant must consent in writing.

If an employer was paying PPL to a customer (employee), they are responsible for advising where the excess funds are. This ensures the agency raises the debt against the person who received the money. The employer will do this by completing a Q318. This employer can only supply this information in writing.

Paid Parental Leave Employer Processing Teams (PPLEPT) are responsible for:

• issuing a Q318 letter to the employer
• identifying if a PPL debt is raised against:
• the employer,
• the employee, or
• both employer and employee
• raising employer debts. See Parental Leave Pay (PPL) debts between employers and employees

Debt staff are responsible for:

• raising employee debts
• recovering debts. See General Centrelink debt recovery information

The system will offset PPL arrears if a reassessment or PPL grant activity results in both the payment of PPL arrears and an overpayment. The offset will occur so the agency does not issue a payment and raise a debt on the same day.

Offsetting will apply to overpayment of:

• PPL, or
• Income Support Payment (ISP), where the overpayment occurred due to customer receiving PPL for the same period

If PPL arrears offsetting can apply to an ISP debt, do not waive the ISP debt under the small debt waiver provision.

Partial or full PPL offset amounts can be refunded if there are exceptional and/or unforeseen circumstances which may cause the customer to suffer severe financial hardship.

IC applies to:

• PPL debts with a Determined (DET) status
• former Centrelink customers, no longer receiving Centrelink payments, or
• employers who are not in an acceptable payment arrangement

Apply IC following successful contact or confirmation the customer has engaged with the Agency regarding their debt.

Customers who only receive PPL are a current Centrelink customer. IC applies unless there is an exclusion. See Interest Charge (IC) for Centrelink debtors no longer receiving payments.

The standard withholding amount for PPL is 100%. A PPL withholding arrangement is broken if the customer does not receive PPL over 28 days. If the customer receives PPL more than 28 days after their last PPL, the withholding will not restart. The customer must make a new arrangement.

See Standard withholdings for debt recovery.

Debt finalised in the current financial year

For payments delivered by the agency, customers can request a refund of the PAYG withholding from the agency. See Refunding Australian Taxation Office (ATO) excess tax deductions.

For payments delivered by their employer, customers can request a refund of the PAYG withholding amount from their employer. On their income tax return, customers must report the total PAYG withheld and total taxable income, see Parental Leave Pay (PPL) debts between employers and employees.

If portions of the debt were delivered by both the agency and their employer, see Parental Leave Pay (PPL) debts between employers and employees.

Debt finalised after the end of the financial year in which it occurred but tax return not lodged

The customer will need to:

• recover the PAYG amount from the Australian Taxation Office (ATO) when they complete their tax return
• make an agreement with the agency allowing them to repay the PAYG amount upon receipt from the ATO, and
• report the amended total PAYG withheld and total taxable information from the revised payment summary

Debt finalised after the end of the financial year in which the tax return has been lodged

The customer will need to lodge an amended assessment application to the ATO advising of the revised payment summary.

Note: when the agency does not provide the payment the employer is responsible for amending the payment summary. The Initial Notice of Debt states this information on it.

For more information, see Parental Leave Pay (PPL) debts between employers and employees.