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 In Road Accidents
How does a TAC claim affect my Centrelink entitlements?

It is important for anyone injured in a motor vehicle accident in Victoria, to understand how their TAC claim can affect current or future Centrelink entitlements.  Here are 5 things you need to know about Centrelink benefits and your TAC claim.

1.  You must tell Centrelink about your TAC weekly benefits for loss of income

If you are receiving Centrelink benefits at the time you are injured in a motor vehicle accident, you must report to Centrelink within 14 days of TAC weekly income support payments (i.e. loss of earnings benefits) starting.

2.  Receiving Centrelink and TAC benefits at the same time can cause legal and financial problems

Mistakes happen, and there are occasions where a person’s Centrelink entitlements and TAC benefits overlap. If this happens to you, you should immediately get legal advice about the best way to correct the record.

“Double dipping” is where TAC claimants either work (in paid employment) or receive Centrelink benefits while also receiving TAC benefits, without both organisations being advised.

People suspected of double dipping can face criminal penalties, be required to repay money to Centrelink and/or TAC and can severely impact their potential entitlements to lump sum compensation. Courts, insurers and lawyers look very dimly on any person trying to “game the system” or “double dip”.

Anyone suspected of double dipping should immediately obtain advice from a TAC lawyer and a criminal lawyer about correcting the record and limiting the legal damage which can flow from their error of judgment.

3.  Centrelink can seek repayment of benefits and debts from TAC weekly benefits

Centrelink can seek repayment of benefits paid (as a result of overpayment, double dipping or error), or government debts owed (including debts such as child support), from a person’s TAC income benefits.

These repayments can be sought from the TAC, or directly from the injured person.

However, repayment to Centrelink is not allowed to be taken from reimbursement of an injured person’s medical expenses.

4.  Lump sum TAC compensation can result in a payback of past Centrelink benefits (or debts) and can also result in a “preclusion period”.

TAC claims for lump sum compensation can include both compensation for pain and suffering (or loss of enjoyment of life) and also for economic loss where a person’s capacity to work has or may later be impacted by their accident injuries.

Where a TAC claim for compensation includes a component for economic loss, Centrelink may be entitled to repayment of past payments and debts and, depending on the amount of compensation, may also “preclude” a person from receiving Centrelink benefits for a set period into the future.

This is because, from Centrelink’s perspective, the compensation paid by the TAC for lost earning capacity is likely to have been compensation for the same periods of lost income that Centrelink benefits were being paid. That is, if previously paid Centrelink benefits weren’t taken into account, a person would have been paid twice (by both Centrelink as a weekly benefit and TAC in a lump sum) for the same period of lost income.

Clear as mud?

Calculating the amount of Centrelink repayments and future preclusion relies on complicated formulas and depends on the amount of TAC compensation being offered in a lump sum payment.

This is one of the most complex aspects to TAC compensation and its impact on Centrelink entitlements. It is important that before you agree to settle a TAC claim for lump sum compensation, that you get legal advice on any Centrelink repayments or future preclusion for Centrelink.

Do not sign anything until you have spoken with a lawyer experienced in TAC claims.

5.  Lump sum TAC compensation can make you “too wealthy” for Centrelink benefits

In some claims for TAC compensation, there is no claim made for economic loss, with compensation instead awarded just for a person’s pain and suffering or loss of enjoyment of life.

Even in these cases, lump sum compensation can still impact on Centrelink entitlements. TAC compensation will count towards the assets which Centrelink include when determining a person’s entitlement to Centrelink benefits.

To find out whether potential TAC compensation will affect your Centrelink benefits because of the “assets test”, it is important that you take careful advice about the impact of that compensation before agreeing to any settlement proposed by the TAC.

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