Your tax return MAY be used to repay any debts owed to the commonwealth. There is a period of washup between ATO and FAO in which money owed to you from either party is put into a pool and both get to withdraw from it if necessary. There is a limit to the time this is held up before funds are released back to the respective departments though, so there are some times in which it doesn't occur. Generally speaking though, I would say its safe to assume that it will be held to repay the debt
Long answer short, this doesn't mean anything. If you ow money to the commonwealth you owe the money and it will be withheld. You can speak to debt recovery if there. Has been an unforseeable situation arise though and appeal that. But it would have to be seething unforeseen. And you'd have to prove that the only way to deal is with that money. Any regular expense (normal bills, rent, mortgage arrears) would not be deemed unforeseen and wouldn't be considered when addressing any sort of appeal to have funds returned that have been paid against a debt.





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