The Aged Care Act explains how the System Governor, supported by the department, handles debts – money that people owe the government. It explains when and how the department can recover money owed to the government. The Aged Care Act also explains what happens when the department can’t get this money back.
When a person or organisation receives a subsidy or grant payment under the Aged Care Act that they are not entitled to, they have to pay that money back to the government. In the Aged Care Act, these are called recoverable amounts. A recoverable amount is a debt due to the government.
This could happen if a payment was made because:
- of a computer or administrative error
- a provider gave false or misleading information
- a provider did something that went against the Aged Care Act.
Recovering debts
[Chapter 6 – Part 13 – Division 2]
There are several ways the government can get back – recover – debts.
Legal action
The government can recover debts through legal action. Legal action usually needs to start within 6 years of when relevant government staff:
- become aware of the debt
or
- could reasonably be expected to have become aware of the debt – for example, where the department is delayed in identifying a debt due to a departmental error or oversight.
These relevant staff are:
- the System Governor
- any APS staff member of the department
- any APS staff member of Services Australia
- any APS staff member in the department of the minister who oversees the Data-Matching Program (Assistance and Tax) Act 1990.
The 6-year timeframe can reset for a number of reasons, such as if a person:
- agrees they owe the government money
or
- repays part of the recoverable amount.
Agreements with a debtor
On behalf of the government, the System Governor can make an agreement with a debtor – the person or organisation that owes money. The agreement will include how they will make the payments. For example, by paying the amount in instalments or in one lump sum.
The debtor has to be honest about their ability to repay the money. If they give misleading information, or don’t give relevant information, the System Governor can change or end the agreement.
Recovery from a financial institution
If a recoverable amount is paid to a financial institution, such as a bank, the System Governor can recover this debt in certain situations. The System Governor must tell the institution about the recoverable amount in writing. The notice must include how much money the institution needs to pay back and when.
The System Governor can recover debt from an institution if a payment was made:
- into the wrong account
or
- to someone who died before the payment was sent.
If money is paid to someone after they die, the System Governor has to tell that person’s estate about the action it is taking to recover the debt.
If the financial institution doesn’t follow the directions of the notice, they may need to pay a fine.
Deductions from other payments
The amount owed may also be taken from other payments the debtor is entitled to receive under the Aged Care Act. For example, if a provider that owes money is claiming subsidies for services they’ve delivered, they may get less of a subsidy payment to make up for the money they owe.
Non-recovery of debts
[Chapter 6 – Part 13 – Division 3]
There are some cases where the System Governor can’t or doesn’t want to recover a debt.
Write-off
On behalf of the government, the System Governor can write off a recoverable amount and not try to get it back. It can only write off debt in these cases:
- It can’t be recovered under law – for example, the timeframe for legal action has passed and it cannot be recovered through deduction of future payments.
- The debtor can’t repay the amount.
- The department doesn’t know where the debtor is.
- It’s not cost effective for the government to take action to recover the debt.
Even if the System Governor writes off a recoverable amount, it can still take steps to recover the amount in the future.
Waive the right to recovery
On behalf of the government, the System Governor can waive the government’s right to claim a recoverable amount. It can waive either the whole amount or part of it. If the System Governor waives this right, the department can’t try to recover that amount in the future.
The System Governor can only do this in certain cases:
- If the amount is less than $200 and it’s not cost effective to recover it.
- If the debtor agrees with the department to pay back part of the debt and the rest is waived.
- In other special situations, decided by the System Governor.