Income apportionment was a long-standing practice of the Australian Government, dating back to the early 1990s, adopted to calculate social security debts for some people who earned employment income and received a social security payment. Use of the practice ceased in December 2020, when legislative changes made assessing employment income much simpler. The historical use of income apportionment is now understood to be generally unlawful.

This Impact Analysis (IA) considers a number of options for resolving historical debts calculated using income apportionment:

• status quo
• waiving all potentially affected debts
• identifying and recalculating all affected debts
• retrospectively validating income apportionment
• retrospectively validating income apportionment and a partial waiver of debts subject to the income apportionment-related pauses
• retrospectively validating income apportionment and a resolution scheme for those affected.

The analysis of available options in the IA supports an approach that involves legislation to retrospectively validate income apportionment and a resolution scheme for people affected by this issue. 

Around 5.5 million social security debts, held by around 3 million people and worth a total of $4.4 billion, are potentially affected by income apportionment. The Department of Social Services estimates the Resolution Approach for Income Apportionment will increase average regulatory costs by $5.87 million per year, over ten years.

Assessment of the impact analysis: adequate.