Centrelink is ordering almost 150,000 Australians to pay back millions using an “income apportionment” method that was once declared unlawful.
The method was used by averaging income when someone’s pay slips or work dates did not correctly match data in Centrelink’s fortnightly reports.
During these instances, Services Australia would evenly divide or “apportion” the person’s income across two or more Centrelink fortnightly reporting periods.
The system, which was similar to the one used in Robodebt, was in place for Centrelink between the 1990s and 2020 and tallied up three million debts totalling about $4.4m.
A 2025 test case in the Federal Court found the apportion method relating to Victorian plumber Matthew Chaplin was unlawful, with an alternative method to calculating owed funds confirmed in July 2025.
However, in December the same year, new legislation was passed to validate all income apportionate debts.
That meant Services Australia could pick up where it left off in chasing debts down.
“We wrote to customers with paused debts a number of times to let them know about the pause, their review rights and options for voluntarily continuing debt repayments,” a Services Australia spokesman told NewsWire.
“The letters we sent explained that the debts wouldn’t be visible in customers’ money you owe and gave instructions on how customers could view the debt information in their statement of debt.”
Although millions have paid off the debts, about 147,000 Australians received notices from Centrelink earmarked as still owing funds.
“Since 2023, we paused repayments on approximately 147,000 debts potentially impacted by income apportionment,” the spokesperson said.
“Now that legislation has passed to validate the use of income apportionment, we’re progressively restarting repayments for paused debts.”
However, some argue the debts aren’t accurate.
Some are allegedly linked to back payments from social security payments that were received more than a decade earlier.
Jodie, a single mum from Adelaide, told 9News she was horrified when she was hit with a notice from Services Australia saying she still owed money despite six years passing since she was last informed of the debt.
She claimed to have earlier reached out to Services Australia to dispute the debts, of which one was halved after being reviewed by Centrelink.
When the repayments were paused temporarily in April 2020 due to Covid-19, Jodie said she stopped disputing the debts.
“These debts have just reappeared after six years,” she said.
“All of a sudden, they are hounding me to pay it. What the hell?”
She claimed the reported debts were inaccurate, as she had “over-estimated my income back then by $100 a fortnight just so I wouldn’t get a debt”.
Six years later, the debt has returned, with Jodie arguing it would be almost impossible to track her work pay slips back to 2014 as requested by Services Australia.
“How can I prove what my income was in 2014? This is a disgrace,” she said.
The Services Australia spokesman told NewsWire that Australians were contacted in January this year about the unpaid debts.
“In January, we wrote to affected customers about the change, the resumption of repayments and to let them know they could apply for a compensation payment under the Income Apportionment Resolution Scheme,,” they said.
“We’ll write to customers 28 days before their debt repayments are due to resume.”
Despite residents being informed of the repayments, Jodie said she dismissed the letter, as her online dashboard showed no sign of owing funds.
She was also a victim of Robodebt, the automated debt assessment and recovery scheme established by the Liberal government from 2015 to 2019.
Robodebt was found to be unlawful, with $1.76bn in debts wiped by the federal government in 2020.
“I don’t have any faith in Centrelink because of what they have put me through, and now they are doing it to me again,” Jodie said.
However, the Services Australia spokesman told NewsWire the income apportionment scheme was not Robodebt.
“Income apportionment debts aren’t robodebts,” they said.
“They were calculated using actual earnings information provided by customers, not averaged ATO income information.”
A compensation scheme was introduced for recipients with income apportioned debts that allowed them to claim up to $600 in reparations – with applications available until January 29, 2027.
The spokesman said anyone who believed they were wrongfully contacted about the debts should contact Services Australia “for an explanation or review”.