A payback to Centrelink is to be made if you receive a lump sum compensation payment that includes a claim for economic loss.
Centrelink may actually cut off your payments before you receive the lump sum compensation payment. This is because, if your matter was:
Arbitrated or decided by court:
The lump sum is deemed to have been received on the date of the decision
The lump sum is deemed to have been received after the agreement has been finalized. For example, the deed of settlement has been signed or the Consent Judgement has been filed in Court.
Before an insurer pays lump sum compensation it needs a clearance or charge from Centrelink. Once the insurer receives this clearance or charge, it generally has 28 days to pay the compensation.
Payments that are included/considered
The types of payments that Centrelink considers when determining whether a payback is required includes the following:
Pension eg Carer’s payment, Aged pension, Newstart, Youth Allowance etc;
Family Tax benefit payments – these are not generally considered/affected but could be since the entitlement to these benefits are means tested.
The pension of a spouse/partner should not be affected however this depends on how the settlement monies are invested and the total amount of assets the couple has.
Formula for estimating the Centrelink payback
settlement amount ÷ 2 = $x (50% rule)
$x ÷ multiplier of $1020.40 = y (preclusion period)
y x $weekly figure you receive from Centrelink
= PAYBACK estimate
Please note that in relation to step 1 of the formula above, If the claim is determined by a court or tribunal and the decision specifies the amount that has been awarded for economic loss then the 50% rule does not apply. That is, Centrelink goes straight to step two of the formula using the amount that has been awarded for economic loss.
The multiplier outlined at step 2 of the above formula, changes regularly. Centrelink uses the income test that is applied for pensioners to determine the multiplier for payback calculations which can be found on the Centrelink website.
From this formula you can ascertain the preclusion period. This is the amount of weeks a person is unable to receive Centrelink payments because of the lump sum compensation.
If you have special circumstances, you may apply to have the preclusion period shortened or even waived but only if you are in severe financial hardship for instance.
If this applies to you and you would like to make an application to shorten or waive the preclusion period, you can:
If doing so however, you will require evidence detailing the following: