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Who it applies to
A compensation payment can affect a Centrelink payment. The effect on the payment depends on the type of compensation payment they get.
You need to tell us about a compensation case you’re handling if the person gets a Centrelink payment from us and you’re any of these:
- a lawyer
- an insurance company
- someone paying compensation.
What to tell us
You need to tell us if the compensation case, whether in Australia or overseas, is for any of the following:
- a work related illness
- an injury from a car accident
- an injury from slipping or tripping
- an injury because of the negligence or fault of someone else
- getting less sickness or accident policy payments because of payments from us.
You don’t need to tell us if the compensation case is for any of the following:
- statutory criminal injury compensation payments
- payments to dependants for the death of a person
- unlawful dismissal payments
- anti-discrimination payments
- payments they get if they’re affected by a natural disaster.
Information for Compensation payers
A preliminary notice issued under section 1182 of the Social Security Act 1991, requires a compensation payer to tell us before the release of compensation.
A preliminary notice continues to have effect until your full liability is disclosed. You’ll need to tell us of any further compensation payments that contain economic loss.
Periodic compensation payments
A person covered by a preliminary notice must tell us when they start getting payments. This includes restoration of periodic and lump sum payments.
A recovery notice issued under section 1184 of the Social Security Act 1991, requires your client to refund the full amount stated in the notice to us.
A recovery notice may still be issued provided it is served before the release of the compensation payment.
A garnishee notice is not a charge notice. It can occur when the compensation recipient has another debt not related to the compensation debt. We can seek to recover this from any third party that has funds the customer is entitled to.
Information for plaintiff solicitors
Periodic compensation payments
If they get a periodic compensation payment such as workers compensation, it will reduce a Centrelink payment by a dollar for every dollar of compensation received. This could also affect their partners’ Centrelink payment.
Arrears of periodic compensation payment
If they got a lump sum amount of arrears for a periodic compensation payment and a Centrelink payment for some or all of the same period, they must pay the money back. The amount they pay back is the difference between any of the following:
- the total amount they or their partner got
- if the periodic compensation payments had been made throughout that period.
Example of arrears of periodic compensation payments and how they impact Centrelink payments
Doug got $1,250 in Centrelink payments while he was waiting for his regular compensation payments to begin. When Doug’s regular compensation payments started, the compensation payer owed him a compensation arrears payment of $2,000 for the same period he got Centrelink payments. Doug’s compensation payer had to repay $1,250 of the compensation to us because of the dollar for dollar rate reduction. Doug got to keep the remaining $750.
Lump sum compensation payments
They may get more than one lump sum payment for the same compensable event. If any of the lump sums have an economic loss component, we’ll treat them as if one lump sum was paid. We’ll then use the combined total to calculate the preclusion period.
They may get a lump sum by consent, as settlement of a claim about lost earnings or lost capacity to earn. In this case, 50% of the gross lump sum payment will be the compensation part. We’ll then use this to calculate the preclusion period.
A court or tribunal may award compensation after a full and contested hearing. We’ll use the court’s ruling of the lost earnings or lost capacity to earn, to determine the compensation part of the lump sum.
Compensation preclusion period
A person may get a lump sum payment of compensation, which contains economic loss for past or future wages. We apply a formula to the lump sum to calculate a ‘preclusion period’.
We use a formula to calculate the number of weeks in a preclusion period. We start with the compensation part of the lump sum payment, which is usually 50% of the lump sum. We divide this by the cut off limit for a single rate pension under the income test that applies at the date of settlement.
During the preclusion period they are not able to get a Centrelink payment from us.
Financial Information Service Officers
Our Financial Information Service Officers offer a free and confidential service, providing education and information. This service helps people make informed decisions about their investments and financial situation. Your client can contact our Financial Information Service Officers to discuss their options.
Information for defendant solicitors
Centrelink is legally required to issue preliminary and recovery notices to compensation payers. Centrelink does not issue courtesy letters to defendant solicitors. You should liaise with the compensation payer to get details of relevant compensation notices.
How to access the Compensation estimator
You can estimate the impact of a pending compensation claim for someone who gets a Centrelink payment from us using the compensation estimator.
How to tell us
Compensation payers or insurers can tell us by completing either:
- Advice of lump sum compensation payments form for lump sum payments
- Advice of periodic compensation payments form for periodic payments
- Compensation Personal Sickness and Accident Claim form for information about a payers compensation policy.
If you’re paying periodic payment arrears with a lump sum, use the advice of periodic compensation payments form.
What legislation applies
We have legislation about compensation for people that get Centrelink payments from us.
Read the Social Security Act 1991 - Section 17, Part 3.14: Compensation Recovery on the Department of Social Services website.
How to use Organisational Nominee Online Services
You can use our online services to do your business with us. You can also do business with us for someone you act as a nominee for. This can be either a payment nominee or a correspondence nominee.
Read more about the Organisational Nominee Online Services.