Under Australia's Privacy Laws, there are very few entities who are entitled to have your TFN and/or Centrelink no. - and PayPal is not one of them.

You really do need to lodge a complaint with the Financial Ombudsman Service - and hey! it will cost PayPal $1500 in fines.  Apart from the fact that you will get the funds unfrozen, there's poetic justice in causing PayPal to suffer another financial loss.  One word for it - Payback!!.

PS : Can I have permission to post a link for this thread on the People versus PayPal FB page (the one started by members here).