May the enforcement be with you: The State Debt Recovery Act 2018 (NSW)

Articles, Procedure + Litigation

On the 27th of August 2018 the State Debt Recovery Act 2018 (NSW) (Act) commenced, giving various state agencies new powers to recover debts without having to commence court proceedings.

The following debts, broadly defined as State Debts (State Debts), are recoverable under the Act:

  • Debts owed to state agencies, such as unpaid council rates, may be declared a “referable debt” (see section 7 of the Act).
  • Debts arising under the Tax Administration Act 1966 (NSW), defined as “tax debts” (see section 8 of the Act).
  • “Grant debts” such as grants under the First Home Owner Grant (New Homes) Act 2000 (NSW) and other rebate / grant legislation (see section 9 of the Act)..

Following the relevant state agency serving the debtor with a notice that the State Debt must be paid within 21 days, the responsible authority may then refer the debt (or any amount of which remains unpaid) to the Commissioner of State Revenue (Commissioner).

As many of our readers may know, it is possible to recover debts by obtaining Garnishee Orders or Writs for the Levy of Property. These options are available only following a judgement being obtained and a further application being made to a court of competent jurisdiction. This would require an originating process, such as a Statement of Claim, being filed and evidence being adduced to prove the claim. Where matters are contested, this will usually result in significant costs, including the costs of a contested hearing. Where the impugned debt is relatively small, this process can be uncommercial and result in the costs of litigation exceeding the debt.

The State Government was in the same position until it the Act was passed. Now, seven (7) days after a final payment date given in the required notice the Commissioner may seize the debtor’s property or make a Garnishee Order without having to go to court. The Commissioner can do this for outstanding State Debts. To exercise this power the Commissioner must give the debtor notice and an opportunity to pay the debt off. This could include a payment plan if the debtor is unable to pay the full amount up front.

Despite this new development our opinion is relatively simple. Pay your State Debts as soon as you can. If you can’t, seek advice and communicate with the Commissioner. State Debts are no longer just debts that sit in abeyance until formal court proceedings are commenced. The property you own or the salary you earn is now susceptible to the new regime for state agencies recovering the debts owed to them!

If you have a State Debt or have been served with a notice by the Commissioner, ERA Legal can assist you with liaising with the Commissioner to resolve the matter before a Garnishee Order or Writ for Levy of Property is issued.


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