43EWaiver in relation to settlements

43E Waiver in relation to settlements

Settlement of civil action (1) If the Commonwealth has agreed to settle a civil action against a debtor for recovery of a debt for less than the full amount of the debt, the Secretary must waive the right to recover the difference between the debt and the amount that is the subject of the settlement. Settlement of proceedings before the ART (2) If the Secretary has agreed to settle proceedings before the ART relating to recovery of a debt on the basis that the debtor will pay less than the full amount of the debt, the Secretary must waive the right to recover the difference between the debt and the amount that is the subject of the settlement. Waiver where at least 80% of debt recovered and debtor cannot pay more (3) If: (a) the Commonwealth has recovered at least 80% of the original value of a debt from a debtor; and (b) the Commonwealth and the debtor agree that the recovery is in full satisfaction of the whole of the debt; and (c) the debtor cannot repay a greater proportion of the debt; the Secretary must waive the right to recover the remaining 20% or less of the value of the original debt. Agreement for part‑payment in satisfaction of outstanding debt (4) If the Secretary and a debtor agree that the debtor’s debt will be fully satisfied if the debtor pays the Commonwealth an agreed amount less than the amount of the debt outstanding at the time of the agreement (the unpaid amount), the Secretary must waive the right to recover the difference between the unpaid amount and the agreed amount. Limits on agreement to accept part‑payment in satisfaction of outstanding debt (5) The Secretary must not make an agreement described in subsection (4) unless the Secretary is satisfied that: (a) the debtor cannot repay more of the debt than the agreed amount; and (b) the agreed amount is at least the present value of the unpaid amount repaid in instalments whose amount and timing are determined by the Secretary; and (c) it would take at least 12 months to recover the unpaid amount under this Part if subsection (4) did not apply. Formula for working out present value of unpaid amount (6) For the purposes of subsection (5), the present value of the unpaid amount is the amount worked out in accordance with the following formula: Start formula start fraction Annual repayment over Interest end fraction times open square bracket 1 minus start fraction 1 over open round bracket 1 plus Interest close open bracket start superscript Repayment period end superscript end fraction close square bracket end formula where:

annual repayment is the amount of the debt that the Secretary believes would be recovered under this Part in a year if subsection (4) did not apply in relation to the debt.

interest is the annual rate of interest specified by the Minister in a written notice.