Government lawyers warned the tax commissioner the controversial "robodebt" program could be illegal on the same day the Federal Government suspended the scheme.

Key points: Lawyers in the Department of Social Services wrote to the tax commissioner saying debts were unlawful

Lawyers in the Department of Social Services wrote to the tax commissioner saying debts were unlawful The scheme was suspended the same day

The scheme was suspended the same day The emails were released as part of a Senate investigation into the scheme

Emails forming part of a Senate investigation into the program were released on Thursday morning, showing the warning was issued to the Australian Taxation Office (ATO) on November 19, 2019.

The general counsel for the ATO, Jonathan Todd, wrote to tax commissioner Chris Jordan about the advice from the Department of Social Services (DSS).

"[DSS] have advised you that they have received legal advice that debts based solely upon DSS's own income averaging of ATO annual tax data are not lawful debts," he said.

"They have also suspended the raising and recovery of robodebts as of today."

The robodebt program has been widely criticised for its method of calculating debts from the overpayment of social security payments, using computer algorithms to match data from the tax office with income reported to Centrelink with little to no human oversight.

This led to many people being issued with debt notices for money they did not owe the Federal Government.

Lawyers had argued the scheme had reversed the onus of proof, forcing people issued with debt notices to prove they did not owe money.

The ATO had come under fire for using garnishee notices, which allow tax officials to seize money from individual tax returns in a bid to repay debts.

"You are not in a position to garnish robodebts … as the notice would not be in respect of a valid legal debt," Mr Todd wrote.

Government reviewing scheme

Minister for Government Services Stuart Robert was asked about the legal advice in Question Time and said the Government was reviewing the system.

"We'll no longer raise a debt where the only information we're relying on is the averaging of ATO," he said.

"For those debts raised to date, the statement was made that Services Australia will be carefully and methodically working to identify those customers whose debts may have been calculated using apportioned … employment income data.

"It's complex to do that, it's a highly manual process. It's not appropriate to pre-empt the outcome of this process."

He did not reveal when the Government received the legal advice.

Greens senator Rachel Siewert has slammed the process.

"How long did Mr Morrison and the Minister know that this scheme was illegal?" she asked.

"People in our community have been traumatised and harassed for years and years.

"Many have large debts they don't owe and are being forced to pay with interest and they want and deserve answers."

Shadow Minister for Government Services Bill Shorten argued the Government's position was untenable.

"The Federal Government has been illegally, unjustly enriching itself, saying 'we're the Government so we're allowed to get money back'. They don't have the power to do it," he said.

"So the fact [is] that they're still running a legal action when their own public servants have already privately said it is not legal.

"This is a waste of money. The interest bill is ticking over, because if you owe someone money that you have taken, you owe them the interest on that lost income, they're paying lawyers to fight it, they shouldn't have taken the taxpayers money, they're spending more taxpayers money to get it, and now they're spending more taxpayers money to justify their mistake."