Millions of Australians may be eligible for compensation of up to $600 over historic welfare debts calculated under an income-apportionment method that was not consistent with social security law at the time.
Current and former welfare recipients whose eligible debts were affected by income apportionment can apply for a one-off payment under the Income Apportionment Resolution Scheme.
The scheme opened in January 2026 and provides payments of up to $600 for each eligible debt.
Applications close on January 29, 2027. Eligible Australians can apply through their linked Centrelink account on myGov, where any qualifying debts will be listed.
Meanwhile, Centrelink is restarting recovery action on nearly 150,000 outstanding historic debts calculated using income apportionment, after retrospective legislation confirmed the debts as valid and recoverable.
Income apportionment involved spreading a person’s employment income across two or more fortnightly Centrelink reporting periods.
The calculation method was used from the late 1990s until 2020. It affected an estimated three million Australians, with the resulting debts valued at $4.4 billion.
Although millions of the affected debts have already been repaid, about 147,000 remain listed as outstanding as Centrelink resumes efforts to recover the money.
Current and former welfare recipients with eligible debts affected by income apportionment can apply for a one-off payment through the Income Apportionment Resolution Scheme
Many of the remaining debts are understood to involve alleged overpayments of social security benefits issued more than a decade ago.
Recovery action was put on hold during the pandemic and remained paused while questions were examined about whether income apportionment was lawful.
The case of Victorian mechanical plumber Matthew Chaplin became a test of how Centrelink could legally recalculate a debt linked to retail income he received in 2014 and 2015.
In July 2025, the Federal Court ruled that Centrelink could use an alternative calculation method to determine whether a person had incurred a debt.
The Australian Government then passed legislation in December 2025 validating income-apportionment debts and allowing Centrelink to continue recovering unpaid amounts.
The Income Apportionment Resolution Scheme was established at the same time, giving affected welfare recipients the opportunity to claim up to $600 in compensation for each eligible debt.
Mr Chaplin took his challenge to the High Court, which dismissed the appeal in June 2026. The court found that his debt could lawfully be recalculated by counting income in the fortnight when it was received.
Centrelink has since resumed recovery action and begun issuing affected recipients with ‘payment due’ notices.
The High Court of Australia deemed the income apportionment method was unlawful and that Centrelink could use a different method to calculate whether a person had debt
Miles Browne, acting associate director of economic and social rights at Victoria Legal Aid, said the government should cancel all debts calculated using income apportionment.
“There is so much complexity around Centrelink’s debt raising and so many issues the government’s encountered in terms of lawfulness that people just don’t have any confidence that the debt they are paying off is correct,” Mr Browne told Nine News.
‘In our view, a waiver should have been contemplated and would have been appropriate given the debts had not been properly calculated.
‘These debts were all very old, and in our experience, people were not only just confused, but had a lot of trouble finding the evidence to disprove the debts.’
Mr Browne added that many Australians who have repaid these debts remain unaware of the resolution scheme, despite Centrelink informing current debt holders of the available compensation.
He said up to three million Australians who had repaid debts affected by income apportionment could be eligible for compensation.
‘No-one’s been told about it, and we’re concerned people aren’t taking it up,’ Mr Browne said.
A spokesperson for Services Australia explained Centrelink notified affected customers in January 2026 about the resumption of repayments and also informed them of the available compensation through the scheme.
‘We encourage anyone who might have a debt impacted by income apportionment to apply for the Resolution Scheme,’ the spokesperson said.
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