Emails between senior tax office officials reveal advice came on the same day the government announced it was overhauling the scheme

This article is more than 7 months old

This article is more than 7 months old

The government received legal advice that debts issued under the botched robodebt scheme were unlawful, confidential documents provided to a Senate committee have revealed.

Emails between top tax office officials published on Thursday show that the agency was told by the Department of Social Services that debts based solely on the controversial “income averaging” method were “not lawful debts”.

The 19 November email, from the Australian Taxation Office’s general counsel, Jonathan Todd, to the ATO commissioner, Chris Jordan, was marked “Sensitive: Legal”, and was sent on the same day the Morrison government announced it was overhauling the scheme.

“In further discussion with DSS, it appears that what you need to raise is: they have advised you that they have received legal advice that debts based solely upon DSS own income averaging of ATO annual tax data are not lawful debts (‘robodebts’),” the email stated.

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

In the email, Todd told Jordan that “in view of that legal advice … it appears that ‘robodebts’ are not debts due to the commonwealth”.

The email did not say when the government received the advice. On 27 November, a federal court judgment was published revealing that the government had settled a court challenge brought by Victoria Legal Aid to a debt issued against a Melbourne woman. Legal Aid said the decision – which stated that the debt was “not validly made” – represented a rebuke to the legality of all debts raised under the process.

The ATO was drawn into the saga because it was asked to garnishee tax refunds to recoup money over alleged debts, a practice that Guardian Australia revealed Services Australia was accelerating last year, and because alleged debts are partly identified using welfare recipients’ tax returns.

Todd told Jordan he was “not in a position to garnish robodebts when served a notice under s 1233 of the Social Security Act, as the notice would not be in respect of a valid legal debt”.

The government overhauled the program and is now reviewing hundreds of thousands of debts, but it has never publicly conceded that the entire scheme was unlawful. It is also facing a class action from Gordon Legal that has garnered nearly 10,000 interested parties.

The email was one of six published by the Senate inquiry into the robodebt scheme following a request from senators to the ATO for correspondence discussing the government’s decision to overhaul the program.

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Labor’s government services spokesman, Bill Shorten, said the emails showed the government put the “emergency brakes on its pet scheme because it knows it is unlawful” while the inquiry chair, Greens senator Rachel Siewert, said the public deserved to know when it received the advice.

“In junking the scheme, [the minister] Stuart Robert referred to the changes as a ‘refinement’,” Shorten said.

“Since the government maintains it has done nothing wrong then it should have nothing to fear from openly revealing what it knew about robodebt’s legality and when.”

Siewert said: “This is a fundamental question and with the government making a claim of public interest immunity over the release of legal advice it is clear that they don’t want Australia to know.”

The government services minister, Stuart Robert, declined to address the legality of the scheme during Question Time on Thursday, reiterating his claim that the overhaul represented “refinements” to make the program more “robust”.

Robert said his department, Services Australia, was “carefully and methodically working to identify those customers whose debts may have been calculated using [averaged] income data.

“It’s not appropriate to pre-empt the outcome of this process and we’ll advise the House in the future when that process comes to its conclusion,” he said.

Guardian Australia revealed on Wednesday that Robert, the government services minister, had declined to provide the committee with any legal advice the government had about the scheme, citing a precedent set by past Coalition and Labor governments.

In a less common move, he also declined to state when any advice might have been received, noting that the government was still defending the class action.

Since 2017, the government had defended the robodebt scheme as a legitimate method of recouping money owed by welfare recipients, despite a string of cases in which inaccurate debts were issued.

Until November, it had sought to improve the scheme, but stood by its general premise.

The tax office and Robert have been contacted for comment.