The government has announced a resolution scheme to address millions of potentially miscalculated social security debts resulting from income apportionment. Income apportionment is an unlawful method used to calculate social security debts for payment recipients with employment income prior to December 2020. The Department of Social Services (DSS) estimates that use of the unlawful method dates back more than 30 years and could affect 5.3 million debts held by 2.9 million people totalling $4.3 billion. Legislation will be introduced to establish the scheme allowing those with historical debts affected by income apportionment to apply for a resolution payment worth up to $600.

What is income apportionment?

Before changes were made in December 2020 to the way Services Australia assesses employment income, social security recipients had to report their gross earnings on days that fell within their social security payment fortnights – known as ‘instalment periods’.

Income apportionment was applied when Services Australia reviewed a person’s social security entitlement, and it was unclear exactly when income was earned, or their work period did not line up with their instalment period (p. 10). Employment income was ‘apportioned’ or averaged across the days in 2 or more payment instalment fortnights. The method was applied in situations where social security law did not permit averaging across instalment fortnights.

Figure 1 shows a hypothetical JobSeeker Payment recipient with casual employment paid fortnightly, as an example of how income apportionment worked. The 28-day period depicted includes 2 JobSeeker Payment instalment fortnights, overlapping with 3 employment fortnights.

Figure 1           Example of how income apportionment was applied

Source: Parliamentary Library estimates based on examples in Commonwealth Ombudsman, Lessons in lawfulness (Canberra: Commonwealth Ombudsman, August 2023), 9–11.

Applying the settings in place on 20 March 2020 to the 2 instalment fortnights in Figure 1:

• reported earnings would have calculated a total JobSeeker Payment rate of $526.50
• apportioned earnings would have calculated a total JobSeeker Payment rate of $463.80.

If a review applied the apportioned earnings method, it would have calculated an overpayment of $62.70 across these 2 instalment periods.

Income apportionment is not the same as Robodebt. Robodebts were debts raised under different income compliance programs between 2015 and 2019 using averaged Australian Tax Office (ATO) income information. While the debts raised using averaged ATO data were unlawful and have been refunded or reduced to zero, some debts raised as part of the same compliance programs were calculated using other information (pp. 4, 6) such as payslips and bank statements. Services Australia’s sampling indicates that the majority of historical debts involving employment income are affected by income apportionment (p. 3). This means many of the debts raised under the Robodebt scheme using information other than ATO data are likely to have been calculated using income apportionment.

Government response

Identification of the issue

Government agencies became aware [p.104] of the income apportionment issue following questions raised in a Senate Estimates hearing in October 2020 and several Administrative Appeals Tribunal (AAT) decisions in early 2021 [p. 7]. DSS and Services Australian first sought external legal advice on the issue in March 2021 [p. 95].

The unlawfulness of the practice became public in August 2023 when the Commonwealth Ombudsman published a statement. The Ombudsman found that apportionment involved an ‘incorrect application’ of a provision in effect from 2003 to 2020 (pp. 9–10). DSS officials have since advised that unlawful use of the method dates to at least 1991 and they have been unable to determine when or why it started (p. 100).

Developing a lawful method

A separate legal issue arose while the government was developing a lawful method to recalculate affected debts. A 2024 AAT decision conflicted with DSS’s preferred interpretation of key income test provisions, and was appealed to the Federal Court. The Federal Court’s judgment on 15 July 2025 rejected the AAT’s interpretation and endorsed DSS’s.

The method used for recalculating debts affected by apportionment involves gathering updated income information. Services Australia will prioritise payslips showing daily income, followed by evidence of when the individual was paid, and then what the individual previously reported.

The method will not apportion income across multiple instalment periods but does not necessarily assess income in the fortnight in which it was ‘first earned, derived or received’, as specified in the Social Security Act 1991 (e.g. point 1068‑G7A prior to December 2020). The method allows for the assessment of income when it was received, even if this clearly occurred after the income was earned.

Debt review and recovery pauses

Some reviews and explanations of debts affected by apportionment were paused in July 2021 (p. 2). Debt recovery on income apportionment-affected debts was paused in October 2023 [p. 311]. More affected debts were identified in April 2024 [pp. 311–312]. As at November 2024, debt recovery for 100,360 people, and reviews/appeals for 11,451 people, were paused. There were also around 90,000 ‘undetermined debts’ paused (FOI document LEX 82372, p. 89).

Following the Federal Court decision in July 2025, DSS and Services Australia announced they would ‘restart’ work on income apportionment matters.

Dealing with historical cases

The government has contacted some individuals whose criminal prosecutions were affected by apportionment and examined samples of historical records to determine the extent of affected debts. Most sampled records with employment income were affected (Services Australia FOI release LEX 76245 and LEX 78943). Only a small proportion of these cases could be recalculated. Most recalculations resulted in lower debts and a small number resulted in individuals being owed money.

On 27 August 2025, the government announced it will introduce legislation to establish a resolution scheme to deal with the millions of potentially miscalculated historical debts. Those with affected debts from 2003 to 2020 will be able to apply for a resolution payment worth up to $600. The legislation will ‘include a measure to provide legal clarity to the historical practice of income apportionment’.

The government will also increase the threshold for waiving small social security debts from $200 to $250. This change could benefit some individuals with outstanding income apportionment affected debts.