NLIS 5
February 11, 2005
(Executive Council)
(Finance)


Province announces initiative to collect outstanding debts

Loyola Sullivan, Minister of Finance and President of Treasury Board, today announced a new initiative to collect outstanding debts owed to government. Joining six other provinces and the Northwest Territories, Newfoundland and Labrador is now a participant in the Federal Refund Set-off Program.

Under the program, when the province has been unable to collect outstanding debts from individuals, personal income tax refunds may be intercepted on behalf of the province. Any intercepted funds are sent to the province and applied against outstanding debts. The Federal GST Credit is also included in this program; however, provincial benefits paid under the Newfoundland and Labrador Child Benefit, the HST Credit and the Seniors� Benefit will not be intercepted to pay provincial government debts.

"Most people do honour their financial commitments to the province; however, there are instances when individuals ignore outstanding debts. The province is owed millions of dollars in outstanding debt, and we have an obligation to do our utmost to collect that money. The Refund Set-off Program will help ensure that all people meet their financial responsibilities to the province," said Minister Sullivan. "This new initiative will also help to address concerns repeatedly raised by the Auditor General about government�s collection efforts."

Outstanding accounts are referred to the Canada Revenue Agency (CRA), which offers the program on behalf of the provinces. Once the CRA receives the accounts, the agency will issue notification letters, on behalf of the province, to affected individuals to inform them of the intended action. Individuals may contact the provincial government, through the contact information indicated in the letter, to discuss the validity of the debt or to make repayment arrangements. If an individual makes appropriate re-payment arrangements, government will notify CRA to stop the interception process.

This program gives the province the ability to recover debt through personal income tax refunds, regardless of where a person lives in Canada. In some instances, individuals have relocated from the province, and government no longer has current contact information. If a debtor files an income tax return anywhere in Canada, and that individual has an outstanding account with the provincial government, his or her tax refund will be eligible for interception.

Minister Sullivan explained government will only refer accounts to the Refund Set-off Program once all other collection methods have been exhausted. "An outstanding account can be only referred to CRA once the province has taken all reasonable actions to collect the debt," he explained. "Government does not want to cause any undue financial hardship in trying to collect outstanding debt. Once a notification letter is received, an individual may contact government, and the case will be reviewed. We have committed to review economic hardship instances on a case-by-case basis."

Initially, government will forward outstanding accounts from three areas: student loans, income support overpayments, and school tax arrears. Government will assess the results and determine whether outstanding accounts from additional departments will be included in the program..

Media contact: Diane Keough, Communications, (709) 729-6830, 685-4401

2005 02 11                     2:55 p.m.


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