Compensation Payments and Centrelink

Did You Know Compensation Preclusion Periods can only be reduced by the Secretary in ‘unusual, unforeseen or exceptional circumstances’?

Maybe your client has been injured in a car accident and has been unable to work since; perhaps they’ve experienced a workplace accident. There are many reasons why someone might receive lump sum compensation and if they do, it’s important that they understand how this is going to impact their Centrelink payments.

It is quite common for us to receive phone calls from financial counsellors who are supporting clients who have had a compensation preclusion period (CPP) implemented after receiving a lump sum compensation payment. A CPP means that you are precluded from receiving Centrelink for a period of time into the future, due to the compensation for economic loss that you have received. Typically, this would be a lump sum compensation payment from WorkCover, the TAC or in some instances, income protection insurance.

If an individual has ‘unusual, unforeseen or exceptional circumstances’, they may be able to have the length of the CPP reduced. However, this is a high bar and it can be challenging to get a successful outcome.

SSRV sees many clients who are in very difficult circumstances and are seeking reduction of their CPP. Whilst SSRV has helped clients reduce their CPP, the issue of how the individual spent their compensation money will be carefully considered by Centrelink and the Tribunal. It cannot be relied upon that the CPP will be reduced once the money is spent. 

SSRV endeavours to will focus on this area over the coming months and to raise awareness about compensation payments and Centrelink preclusion periods. We believe it is crucially important that people who receive a compensation lump sum receive financial advice at the outset, to assist them to understand how to make their lump sum last for their preclusion period and make sound financial decisions. 

Below is an example of a matter that SSRV has run recently where a CPP was successfully reduced due to the ‘special circumstances’ that the individual experienced. This matter highlights and reiterates that to be successful in getting a CPP reduced the individual must be experiencing ‘unusual, unforeseen or exceptional circumstances.’

Fiona’s Story

Fiona had a workplace accident and received lump sum compensation from Work Cover. Centrelink then cut off her payments and raised a CPP. Fiona was married, and her spouse perpetrated severe family violence towards her. Her husband unexpectedly became very ill and required medical treatment. He coerced Fiona to spend a large amount of her compensation money towards his medical treatment, rent and living expenses by threatening to harm or kill her if she refused. 

Fiona quickly found her compensation money had run out entirely, and was unable to return to Centrelink payments due to the CPP. Fiona lived in government housing and fell into rental arrears as she had no money to pay rent, her housing provider issued a notice to vacate and she faced homelessness. SSRV assisted Fiona at the Administrative Appeals Tribunal to have her CPP reduced, and to return to payments.

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