New Zealand Agreement debt reconciliation - action for International Services (CIS) 107-20091055

Under the terms of the New Zealand Social Security Agreement, a debt may be recovered by Australia or New Zealand if a customer has:

• an income support debt with one country, and
• does not get an ongoing payment from that country but gets an ongoing payment from the other country

A different procedure applies to recovery of arrears debts under the Agreement.

Historically, there were three general debt recovery arrangements:

• New Zealand debts recovered by Australia via withholdings from Australian payments (outgoing)
• Australian debts recovered by New Zealand via lump sum from New Zealand payments (incoming - Special Banking Option (SBO))
• Australian debts recovered by New Zealand via withholdings from New Zealand payments (incoming)

From 1 May 2020 however New Zealand no longer recovers debts owed to Australia via withholdings. Recovery from an SBO account is still permitted.

Debt Certificates are sent between Australia and New Zealand via secure electronic liaison to request recovery under the Agreement. The Debt Certificate must certify that the requested recovery meets the agreed terms and conditions. For more details, see New Zealand Agreement debt recovery requests.

New Zealand debts are recovered by Australia via standard Debt Management Information System (DMIS) processes. That is, via withholdings (WHS) from Australian payments.

Australian debts are recovered by New Zealand as a lump sum. These debts can only be recovered where the customer has been paid by SBO for the entirety of the debt period. If the customer was paid into SBO for only some of the period ‘standard’ debt recovery processes apply.

For reconciliation to occur, schedules are sent between Australia and New Zealand via secure electronic liaison each month. This details the amounts retained for the customer. Using these schedules, recovered money is offset against customer debt. For amounts:

• withheld from Australian payments, CIS send the schedule to the NZ authorities and authorise the finance team in Zone Tasmania to pay the bulk amount to New Zealand
• received from New Zealand, CIS check the schedule, and update DMIS after the Finance Team have receipted the funds and advised the exchange rate

Withholdings for New Zealand debts cannot be applied, or existing withholdings must be suspended, when the customer:

• has, or incurs an Australian debt
• is repaying, or is granted an Australian advance payment, or
• has their Australian income support payment suspended or cancelled

Debt recovery cannot however be paused indefinitely. If recovery is interrupted for a period of 3 months, the debt must be finalised and Services Australia need to advise New Zealand debt authorities that no further recovery will occur.

Australian debts are converted into New Zealand dollars (NZD) to enable recovery by the NZ authorities. Amounts recovered are converted back to Australian Dollars (AUD) when received. Due to fluctuations in exchange rates, the amount the agency gets will never exactly match the requested debt amount. There are other situations where the requested/received amounts will not match, such as when a customer makes a one-off payment.

The debt may be considered to be fully repaid regardless of any shortfall or excess if the delegate:

• is satisfied that the variation between the amount requested by Australia, and
• the total amount received from New Zealand is solely due to exchange rates

A variation in the range 0-10% is acceptable and does not need more investigation if the variation is due to exchange rates.