Nick Bruining: When you need to tell Centrelink of changes to finances to avoid letter from debt collectors

It’s the letter no one wants to see: a debt notice raised by Services Australia, typically because of an overpayment of an income-support payment such as JobSeeker or an age pension. Debt notices like these have become infamous thanks to the robodebt scandal that continues to play out in the courts. Overpayment debts typically arise because Services Australia wasn’t aware of your total financial circumstances — either when you claimed the benefit, or while you were receiving it. The rules are clear and strict. If your circumstances change in any way, you are obliged to notify Centrelink within 14 days. That can include a new job, a change to the amount you are paid for work, someone moving in or out of your home, or changes to assets of more than $2000 or more. This might include a windfall payment like an inheritance, winnings, or a gift. Independent Centrelink adviser Annette Sinclair said the list was broad but could be easily simplified. “Basically, anything that is likely to impact your ongoing payment or the eligibility for a concession card needs to be passed on to Centrelink,” Ms Sinclair said. If you’re not sure, do it anyway. The easiest method is via the myGov portal where you have been linked to the Centrelink service. The common excuse of “I didn’t know”, or “I thought you had access to that information already” doesn’t cut it. While Services Australia can and does access that data if it needs to, it’s not done routinely. Requisitioning the information directly from a bank or other institution tends to occur when it suspects fraud or something else. The other common occurrence is when people fail to disclose overseas income or assets. Assuming Centrelink won’t find out, some will redirect payments to overseas bank accounts to be used when they travel, or just “forget” to notify Centrelink of an inherited property or other asset they may acquire. Being unaware of the extensive data-sharing and data-matching that’s now done with almost every country on Earth, it’s a letter from Centrelink that puts an end to the matter. “In some cases, they’ve been receiving an incorrect payment for years,” Ms Sinclair said. “When it’s eventually discovered, the Government will demand repayment of the full amount. In many cases, the debt can be tens of thousands of dollars and can wipe out someone’s savings.” Interest is applied from the date the debt is raised if it is unpaid or you fail to enter a payment arrangement with Services Australia. In the worst-case scenario, you may be referred to the Commonwealth Director of Public Prosecutions. While there are no published guidelines, rorting the public purse is considered a criminal offence. If the evidence is there that you deliberately tried to hide assets or income, you may end up being charged and convicted. You could face jail time, which was probably not part of your retirement plan. Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association