Small debt waivers 107-05120020

Provisions to waive small debts under $200 are contained within the:

• Social Security Act 1991
• Family Assistance (Administration) Act 1999, and
• Paid Parental Leave Act 2010

These provisions allow delegated staff to waive small debts where it is not cost effective to pursue recovery.

Debts raised under the Student Assistance Act 1973 are limited to a waiver amount of $50. This applies to these debt types:

• ABSTUDY
• ABSTUDY Pensioner Education Supplement (PES)
• Assistance for Isolated Children (AIC) Scheme
• Financial Supplement Loan (FSL) for ABSTUDY or ABSTUDY PES students

Raise debts over $50 unless other waiver provisions are applicable.

When determining if it is cost effective to pursue recovery of the debt, staff should consider the:

• likelihood of recovering the debt, either via withholdings or an existing payment arrangement
• value of all outstanding debts on the record
• cost of staff calculating, raising and explaining the debt, and
• cost of sending account payable letters and subsequent contact attempts to recover the debt

A customer cannot receive an Advance payment while owing a debt to the Commonwealth. If a customer requests an advance and a small amount is still outstanding staff do not waive the balance:

• the debt cannot be legally waived
• the customer can pay the remainder of the debt to allow approval of the new advance

The system may automatically waive small debts for certain payment types. Debts that require further investigation or actions will require manual action. For example, see Cancellation of Pensioner Education Supplement (PES) and ABSTUDY PES. Generally for the system to waive a small debt, the debt will need to meet 3 criteria:

• a reassessment produces a 'negative adjustment' on the Assessment Results (AR) screen
• the debt is not for Family Tax Benefit (FTB), and
• the amount is under $50

The system may also waive a small debt if:

• a customer's payment is cancelled and they have received an advance. The amount outstanding is under $50. The amount will be auto waived (any amount $50 and over will be automatically raised)
• after FTB reconciliation occurs, any debt confirmed to be under $50 is automatically waived. Manually action small FTB amounts if they are generated outside of the reconciliation process (see below)

A debt recalculation may include a period for a previously waived debt (for example, because it was under $50). See Reversal of waivers

Waivers, like any other decision, can be reviewed and changed.

When waiving a debt under $50, either automatically or manually, no Recovery Fee is applied.

Note: there is no requirement to record the legislative reason for a waiver on a DOC when the waiver is automatic. This is contained in Section 6A of the Social Security (Administration) Act 1999.

A debt under $50 may be manually added (via the Add Debt (OPAD) screen). The Debt Management and Information System (DMIS) will automatically go to the Add Waiver (OPWAA) screen. Waive the debt with a reason code of ‘LTF’ (less than fifty).

Record the details on a DOC as per minimum DOC standards for debt waivers.

If a customer pays the balance of all outstanding debts (including any interest payable), the residual interest calculated for the final period will waive automatically if it is under $200.

For example, when a debtor has paid their debt in full, and the final residual interest is:

• under $200, the system will automatically waive it
• over $200, the system will create a Manual Follow-up (MFU) for Debt Recovery staff. The customer is contacted to recover the residual amount outstanding

If a 'negative adjustment' of under $50 is created for FTB, the screen flow will go from the Assessment Results (AR) screen to the Assessment Consequences (ASC) screen.

Once on the ASC screen, before finalising the reassessment activity, staff can decide to manually:

• waive the debt if it relates to qualification, or
• refer it for investigation if not qualification-related (so Work Optimiser can allocate the undetermined debt shell generated to Debt Staff for action)

An FTB debt under $50 can only be waived if it is a qualification debt.

Debt shells for small amounts not relating to qualification should be 'finalised, no debt' with a reason code of 'FAM', to include the amount in reconciliation.

Do not apply a recovery fee when waiving a working age payment debt under $50. This is for debts with a debt reason of:

• IES (own earnings undeclared/coded)
• ISI (own earnings wrongly declared/coded), or
• UCE (undeclared cash earnings (customer portion only)

The debt waiver reason code 'LTW' (less/likely under $200) is only for PPL. The waiver may be applicable when it is not cost effective to recover the remaining amount, where the debt is:

• $50 or more, and
• under $200

Only Debt Staff can use this waiver reason. Do not use this during general debt raising as a waiver reason.

There is no legislative basis to waive PGPA debts.

The PGPA replaced the Financial Management and Accountability Act 1997 (FMA) from 1 July 2014.

Treat these debts the same as other customer debts under $50 as per the:

• Social Security Act
• Family Assistance Act
• Paid Parental Leave Act, or
• Student Assistance Act

Referral to Services Australia social workers within Payments and Integrity may be appropriate. They provide support to customers who are:

• vulnerable 'at risk'
• have complex needs, or
• have barriers to economic and social participation

The additional problem of managing multiple debts from Services Australia and other institutions can be overwhelming. This can result in a greater risk of non-compliance. See Social workers' role in debt, payment assurance and compensation.