Thousands of Centrelink customers owed refunds after overpaying debts

Tens of thousands of Australians may be entitled to refunds after unknowingly overpaying their Centrelink debts, with automatic payments like BPAY continuing even after balances were cleared.

Services Australia has confirmed it is probing more than 40,000 cases where customers paid more than they owed, with refunds still outstanding.

“Services Australia is investigating approximately 44,000 records where customers paid more money toward a Centrelink debt than they owed and a refund may still be owing,” a spokesperson told 7NEWS.com.au

“Of these records, 50 per cent of the potentially owed refunds are less than $50, 80 per cent are less than $500 and 2 per cent are for $5000 or more.

“In most cases when people overpay their Centrelink debt, we refund the money or transfer the balance to another debt, if they have one.

“We process hundreds of thousands of refunds like this every year. The vast majority are processed correctly and in a timely manner.

“In some instances, the correct process to issue the refund didn’t occur and a refund may still be owing to the customer.”

‘This needs to change’

The agency said overpayments often happen when customers forget to cancel automatic payments like BPAY, which can only be stopped by the customer, or when debts are later reduced following a review.

“Family Tax Benefit debts that have been reduced after the customer lodged outstanding tax returns. This is generally where large overpayments arise when people lodge several years of tax returns at once.”

Impacted customers will be contacted from late October 2025 via phone or letter, with refunds issued directly.

But advocates say the problem runs deeper.

Kate Allingham, CEO of Economic Justice Australia, told 7NEWS.com.au the system itself is failing vulnerable Australians.

“This is difficult as currently there is no easy way to see how much your Centrelink debt is, how much has been paid and how much is still owing,” she said.

“Centrelink does not provide any type of regular statement, and unlike most other debts you can’t just log on and check.”

“Debt amounts can also vary and so people are incredibly reliant on being told by government when the debt has been paid. This needs to change.”

“It seems that the social security system is now so complex that the government is struggling to administer it lawfully and effectively. There are several remediation processes happening concurrently in social security due to unlawful decisions and defective administration.”

“The Commonwealth government is supposed to be a model litigant and yet it continues to behave unlawfully and has not found an adequate way to rectify both the systemic issues nor implement a fair and accessible remediation process.”

“If the Government makes an administrative error or unlawful decision then the onus should be on the government to fix it, not the person who has been put into an even more vulnerable position due to that error.”