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Write-off debts

What is a write off of a debt?

A write off is where Centrelink agrees to suspend, either for an indefinite or a specified period, all action to recover the debt.

Under what circumstances will Centrelink write off a debt?

Debts can only be written off where:

  • the debt cannot be recovered at law e.g. a debtor has died leaving no estate or insufficient funds in the estate to pay their debt
  • the person has no capacity to repay the debt - a person will be taken to have the capacity to repay the debt unless they can demonstrate severe financial hardship if deductions are made from Centrelink payments
  • the person cannot be found
  • it is not cost effective for Centrelink to take action to recover the debt

[See Social Security Act 1991 (Cth) s 1236(1A)]

Does a write off completely cancel the debt?

Contrary to its name a write off does not completely extinguish a debt. The debt remains enforceable but a decision has been made not to pursue it, either indefinitely or for a specified period. In either case the decision can be reversed and debt recovery proceedings can recommence at any time in response to a change in the debtor's circumstances.

However once a debt is written off compulsory recovery cannot be recommenced after the expiration of the limitation period (usually six years).

Clients' Responsibilities  :  Last Revised: Tue Sep 18th 2018
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