Trouble with Work and Income: Penalties, investigations and overpayments
Being accused of benefit fraud: Work and Income investigations
When Work and Income might begin an investigation
Through its Fraud Investigations teams, Work and Income investigates information or accusations that beneficiaries may have received income support that they’re not entitled to.
The two most common areas that are investigated are undeclared income and relationship status.
An investigation might begin after information-sharing between Work and Income and the Inland Revenue Department has shown that a beneficiary hasn’t declared income to Work and Income (see below, “Information sharing and matching between Work and Income and other government agencies”). Work and Income may also randomly select cases for investigation, or it may simply have a suspicion that a beneficiary is not in fact entitled to what they are receiving.
What is relationship debt sharing?
Social Security Act 2018, ss 291, 360, 361
Historically, if a Work and Income client was found to have dishonestly claimed a single benefit while in a relationship, that client was solely responsible for paying back the fraud debt. From 7 July 2014, a “relationship debt sharing” law has allowed Work and Income to investigate and prosecute both the client and their partner for benefit fraud. This applies to all debt where an investigation clearly shows that the partner has knowingly benefitted from benefit fraud.
Note: The debt shared between you and your partner is debt from when you’re together as a couple. If you split up, the debt remains shared until it’s paid in full. Any debt you have stays with you and your partner until it’s paid off.
The investigation process
Social Security Act 2018, ss 6, 411–415, Sched 1, cl 10, Sched 2, Sched 6, cls 2–5
Work and Income has very specific protocols (rules) for its investigations. This includes explaining to you at the beginning of any interview that anything you say can be used as evidence against you, that you have the right to remain silent, and that you can stop the interview at any time.
The investigation unit must initiate the investigation in writing, giving you at least five working days’ written notice (sometimes referred to as a “Section 11 letter”) so that you have time to provide them with the information they’re seeking. This information can include:
- bank records
- employment details
- copies of any contracts – for example, with phone and power companies
- tenancy agreements
- school enrolment records, and
- a variety of other forms of evidence about your circumstances.
Note: If Work and Income sends you a section 11 letter telling you it’s beginning an investigation, you should get advice and assistance immediately from a benefit-rights group or Community Law Centre (see “Where to go for more support” at the end of this chapter).
Information sharing and matching between Work and Income and other government agencies
Social Security Act 2018, s 6, Sched 2, Sched 6, cl 13, cl 14, cl 15; Privacy Act 1993, Part 9 & Sched 2A, Part 10 & Sched 3; Privacy (Information Sharing Agreement between Inland Revenue and Ministry of Social Development) Order 2017
Work and Income (as part of the Ministry of Social Development) regularly shares or matches information about beneficiaries with other government agencies under a range of “information sharing” and “information matching” agreements with those other agencies. For the difference between the two types of agreements, see the chapter “Privacy and information”, under “Restrictions on people using and giving out your information / Information-sharing and information-matching between government bodies”.
- Inland Revenue (tax information) – Work and Income has both information-sharing and information-matching agreements with Inland Revenue (IRD). It regularly receives tax details from IRD so that it can check whether a beneficiary has been in paid employment and whether they have declared the relevant income to Work and Income. If you haven’t declared income, Work and Income will probably notify you that you’ve been overpaid. There are specific rules as to how soon Work and Income must take action in these cases (see below, “Overpayments: When you’re paid too much by mistake”).
- Customs (departures from NZ) – Through information matching with the New Zealand Customs Service, Work and Income can find out when a beneficiary leaves New Zealand. Beneficiaries on work-tested benefits are not entitled to the benefit while absent from New Zealand. However, absences are permitted on compassionate grounds or if the absence is required for medical reasons. People receiving New Zealand Superannuation can be absent for six months before their income support stops (see “You’re 65 or older” under “Types of benefits”).
- Ministry of Justice (prison terms) – Your income support will usually stop if you’re serving a prison sentence or are being held in prison on “remand” (waiting for the next step in your case). The Ministry of Justice provides Work and Income with this information under an information-matching agreement. Work and Income has the discretion to continue income support in some cases.
- Other agencies – Other information-matching agreements provide for Work and Income to give information about beneficiaries to other government agencies – for example Work and Income passes on beneficiaries’ addresses and phone numbers to the Ministry of Justice if they have unpaid fines.