Ahmed and Secretary, Department of Social Services (Social services second review)

Ahmed and Secretary, Department of Social Services (Social services second review) [2023] AATA 3923 (28 November 2023)
Division:GENERAL DIVISION
File Numbers: 2022/4109
2022/7545
2022/7546

Re:Saleem Ahmed
Sadia Ahmed
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Emeritus Professor P A Fairall, Senior Member
Date:28 November 2023
Place:Sydney

In matters 2022/7545 and 2022/7546 (Mrs Ahmed), the decisions under review are set aside and substituted with a decision that there is no recoverable debt for overpayment of Austudy or Parenting Payment Partnered.
In matter 2022/4109 (Mr Ahmed), the decision under review is set aside and remitted to the Respondent for reconsideration with the following directions:
(a)Income relating to rent from the granny flat be recalculated to take account of interest on that part of the residential investment loan used to construct the flat;
(b)Income relating to the family day care business be recalculated to take account of appropriate business deductions; and
(c)Should Mr Ahmed wish to provide information to the Respondent relevant to (a) and (b) above, he must do so within 30 days of the date of this decision.

.............[SGD]...........................................................
Emeritus Professor P A Fairall, Senior Member
Catchwords
SOCIAL SECURITY – Parenting Payment Partnered debt – Austudy debt – whether debts recoverable – whether applicant reported business and rental income – where applicant had unexplained bank deposits – whether unexplained bank deposits to be calculated as income – whether business expenditures taken into account – decision under review set aside and substituted
SOCIAL SECURITY – Disability Support Pension debt – whether debt recoverable – whether income reported – where applicant received rental income – where applicant received loans from friends and relatives – where applicant had unexplained bank deposits – whether unexplained bank deposits to be calculated as income – whether debt can be waived
Legislation
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
Cases
Ferreira and Secretary of Social Services (Social services second review) [2018] AATA 1290
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Taleb and Secretary, Department of Social Services (Social services second review) [2021] AATA 4078
Secondary Materials
Social Security Guide
REASONS FOR DECISION
Emeritus Professor P A Fairall, Senior Member
28 November 2023
INTRODUCTION

Mrs Sadia and Mr Saleem Ahmed (the Applicants) are clients of Centrelink. In 2021, they were the subject of an audit by Centrelink which led to the raising of debts against each of them. The Social Services & Child Support Division of the Tribunal (AAT1) found on 13 April 2022 that Mrs Ahmed was overpaid for Austudy and Parenting Payment Partnered (PPP), Mr Ahmed was overpaid for Disability Support Pension (DSP) and that there was no basis for waiving or writing off the debts under the Social Security Act 1991 (Cth) (the Act).
On 21 May 2022, Mr Ahmed applied to the Tribunal for review of the AAT1 decision.[1] On 14 September 2022, Mrs Ahmed also applied for review of that part of the decision relating to her PPP and Austudy payments.[2] She was granted an extension of time to lodge her application.[3]
[1] T1.
[2] T1.
[3] T1, 5.
The applications were joined and heard together by videoconference on 1 September 2023. The Applicants were not legally represented.
The Respondent was represented by Ms J. Egger, a solicitor employed by Hunt & Hunt lawyers. The Respondent filed a Statements of Facts, Issues and Contentions (RSFICs) for each party, together with separate Tribunal documents (the T docs).[4] The materials before the Tribunal ran to well over two thousand pages, involving overlap and duplication.[5]
[4] Tendered under section 37 of the Administrative Appeals Tribunal Act 1975 (Cth).
[5] I refer to the T docs related to Mrs Ahmed in italics.
The T docs include bank statements provided by Mr and Mrs Ahmed to Centrelink.[6] These include statements for their initial (paid out) home loan account;[7] their current investment residential loan account[8] and its linked offset account;[9] their second joint operating account,[10] and statements for two credit cards operated by Mr Ahmed over several years.[11]
[6] See acknowledgement by Centrelink of receipt of relevant bank statements: T11, 202. This note refers to two further accounts (#446 and #097) in Mr Ahmed’s name only: T11, 203. See statements at T11, 382, 467; and T11, 468 – 575.
[7] Account #428: T11, 139-142; 148, 198, 213-220. This account was paid out in July 2016: T11, 189.
[8] Account #603: T11, 374-381.
[9] Account #581: T11, 158-159, 189-190, 191, 200-201, 221-252.
[10] Account #636: T11, 143-157, 192-194, 199, 253-373.
[11] Account #446: T11, 382, 467; Account #097: T11, 468 – 575.
Mr and Mrs Ahmed filed a joint witness statement dated 15 March 2023, various supporting documents (9 pages), including statements by four individuals,[12] and a statement headed “Response to the Respondents Hearing Certificate” relating to the availability of witnesses.
[12] Statutory declaration from Naeem Ahmed (Saleem’s brother); an affidavit from Khizar Abbas (family friend), and Statements from Zulkaif Ahmed (Saleem’s father); and Sajjad Ahmad (President, of AUSPAK Youth Welfare Cultural Association).
In their joint witness statement dated 15 March 2023, Mr and Mrs Ahmed stated:
We request to the tribunal to direct the department to correctly calculate the debt payments raised against us, as department is not considering facts, appropriate method of calculation, partner income, income, source of income, deposits in account as income, withdrawal and deposits from accounts, true understanding of employment and self-employment (business), income from investments, liabilities and assets, income and net income including interest, breach of privacy, obtaining personal information not relevant to Department, conduct of Department staff and investigation officer in gathering information and derogatory remarks and observations of tribunal member in making decision on 13 April 2022 for the hearing conducted on 30 March 2022.
BACKGROUND
Mr and Mrs Ahmed are married with four children, aged 22, 21, 17 and 12 years old.[13] They purchased a home in Liverpool with a 10% deposit in 2008, and have lived there ever since.[14] The Respondent indicated that the home has a present value slightly over $1m.[15] The house is subject to a mortgage.[16]
[13] T2, 12.
[14] T11, 188.
[15] RSFIC, 43.
[16] T12, 120, 143.
On 13 November 2012, Mr Ahmed started to receive DSP, having been injured in 2012. On 22 October 2013, he received a lump sum payment of $28,868.70 from Australian Super representing arrears of income protection payments for the period 18 August 2012 to 17 October 2013. He also started to receive income insurance payments of $2,227.05 per month from Australian Super. On 28 October 2013, he told Centrelink about the lump sum and ongoing payments, and on 3 December 2013 his record was updated.
Mrs Ahmed received PPP from 4 July 2012 until 8 June 2016, when her youngest child turned six years of age.[17] The amount of her PPP payment varied, although it was mostly around $450.00 per fortnight until 19 November 2013, when it reduced to around $200 until October 2014, when it reduced to around $100 until terminating on 8 June 2016.[18]
[17] T19, 674, 678.
[18] T19, 674-678.
In March 2014, she set up a family day care business (called Kids Link) at her home in Liverpool.
In July 2015, she enrolled in a first aid training course offered by “Australian Lifesaver” a registered college operating in Tweed Heads, NSW.[19] She appears to have been enrolled as a student from 15 July 2015 to 15 December 2016.[20] Between July 2016 and December 2016 she was enrolled in a Diploma in Early Childhood Education and Care.
[19] T19, 673.
[20] T19, 672.
On 10 May 2016 she informed Centrelink that her family day care business was no longer operating and was asked to provide a letter from her accountant to that effect.[21] According to information provided to her accountant and Centrelink, Kids Link operated from 31 March 2014[22] until 1 March 2016.[23]
[21] T18, 636.
[22] T5, 42.
[23] T7, 56.
On 16 May 2016, her PPP was cancelled,[24] although it appears to have been reinstated briefly before its final termination.[25]
[24] T22, 1100.
[25] T19, 678.
On 13 July 2016 an application for Austudy was rejected because of “excessive income”.[26]
[26] T19, 667.
On 14 July 2016, she contacted Centrelink and said that she had claimed Newstart Allowance as she was studying full time. She was advised to withdraw her Newstart claim and apply for Austudy, because the Diploma she was studying was an approved course.[27] This appears to have been confirmed in a further conversation on 18 July 2016 with a recommendation that she be paid from 13 July 2016.[28] This date is consistent with that found by the authorised review officer.[29] However, the spreadsheet included in the T docs indicates that Austudy was paid for the period 9 August 2016 to 15 December 2016.[30]
[27] T18, 644.
[28] T18, 646
[29] T15, 585.
[30] T19, 679.
In July 2016, Mr and Mrs Ahmed set about improving their Liverpool home by constructing a granny flat. Mr Ahmed said that he built the flat as an “owner-builder”.[31]
[31] Transcript, 1 September 2023, 27.
On 8 July 2016, they obtained a residential investment loan (#603) of $285,000 secured against the property.[32] On 18 July 2016, the existing home loan ($160,950.22) was paid out and the loan closed.[33] An amount of $124,037.08 (being the balance of the investment loan) was paid into account (#581). Drawings against this account reduced the available funds to approximately $5,000 by the end of 2017.[34] These drawings were the subject of considerable interest at the hearing.
[32] T12, 139-140; T11, 184, 189.
[33] T11, 220.
[34] T11, 230.
Mr Ahmed also provided statements from two friends, Mr Sajeed Ahmed, who stated that a cultural association (of which he was President) had advanced $11,770.00 to Mr Ahmed by way of loan for “house construction needs”,[35] and Mr Khiza Abbas, who stated that he had lent Mr Ahmed $10,500 in March 2016 for the “construction and renovation of his house”.[36]
[35] Applicant’s Supporting Documents, at 6.
[36] Applicant’s Supporting Documents, at 8.
The flat was constructed in the second half of 2016 and rented out for the first time in 2017.[37] The granny flat produced rental income from 5 December 2017.[38]
[37] T22, 670.
[38] T11, 229.
I digress to refer to a separate dispute between Mr Ahmed and Centrelink. On 31 January 2017, Centrelink advised Mr Ahmed that he had Newstart allowance and DSP debts arising from the superannuation lump sum payment received in 2013. After internal review, the debts were confirmed at $4,716.09 for overpayment of DSP and $2,801.98 for overpayment of Newstart. Mr Ahmed applied to the Tribunal for review of the ARO decision. On 7 July 2017, the Tribunal reduced the debt owed by 50%, noting a three-and-a-half-year delay by Centrelink in responding to a situation that he had reported in a timely manner. The Tribunal described this as poor public administration and held that the debt should be reduced by 50% under section 1237AAD of the Act.[39]
[39] T6, 43: 2017/S108628.
The Tribunal described the circumstances of Mr Ahmed as “special”:
30. The Tribunal considered the evidence Mr Ahmed provided demonstrating his difficult financial situation and notes that there is limited prospect of this improving given that Mr Ahmed has significant disabilities. As a result, his capacity to work or improve his financial situation is very limited. He said that he is completing a course to become a migration agent and that he hopes that he will be able to do some work in this capacity. However he has some concerns about this because the strong pain medication he takes for his orthopaedic conditions does affect his memory, clarity of thought and his energy.
31. On balance, the Tribunal has decided that Mr Ahmed’s circumstances overall can be described as “special”. Given this, the Tribunal considers there would be some injustice in expecting Mr Ahmed to repay the whole of these debts. In the interests of striking a balance between injustice to Mr Ahmed and injustice to the public, the Tribunal considers that it is fair and appropriate to waive 50% of the total of the debts.
On 25 October 2017, Centrelink wrote to Mr Ahmed asking for his 2015/16 tax return and the balance sheet from the company Secure Migration Services Pty Ltd (the Company) for 30 June 2016. On 20 November 2017, Centrelink issued a notice under section 63 of the Administration Act requiring information about earnings from the Company. There is no further mention of these proceedings in the present file.
THE INVESTIGATION
Between 2019 and 2021 Centrelink wrote to the Applicants on several occasions seeking information relevant to their social security entitlements, including Mrs Ahmed’s income tax returns.[40] On 23 February 2021, Centrelink sent Mrs Ahmed a notice requesting the following information:[41]
•    Please provide your full income tax returns for the 2013/2014, 2014/2015, 2015/2016, 2016/2017, 2017/2018, 2018/2019 and 2019/2020.
•    Please provide all profit and loss statements pertaining to your employment and/or income as Family Day Care educator and/or other position with Kids Link, Razaan, Francisco Lumsit, Naz Chaudhry, Galaxy, Diversity and Kitty Kitty.
•    Please provide evidence of all expenses claimed for each Family Day Care or employer you worked for, including copies of all receipts.
[40] T33, 1176.
[41] T11, 102.
Mrs Ahmed completed the information sheets and returned them to Centrelink.[42]
[42] T11, 134-135.
On 9 March 2021, Centrelink issued a notice to Mr Ahmed requiring the completion of a Mod R form, applicable in cases in which a home property is used for business purposes.[43]
[43] T12, 123; T11, 168.
The same day, Centrelink also issued two further notices to Mr Ahmed relating to unexplained bank deposits.[44] These notices required the completion of schedules headed “Unexplained Bank Deposits – Verification Schedule”. The first listed 35 bank deposits to a joint account held with his wife (#636) made between 2013 and 2019.[45] The second listed 102 deposits to a separate joint account (#581) for the period 2017 to 2021.[46]
[44] Pursuant to section 63 of the Social Security (Administration) Act 1999 (Cth) (the Administration Act).
[45] T12, 90-93; T11, 136-138.
[46] T12, 132-138; T11, 177-183.
On 16 July 2021, Centrelink raised a debt of $5,479.44 against Mrs Ahmed for overpayment of Austudy over the period 13 July 2016 to 15 December 2016.[47] This was confirmed by letter dated 19 July 2021:
This is because the amount of income you received from rent received, undisclosed bank deposits and Family Day Care self employment income was not taken into account in the AUSTUDY payments made to you from 13 JUL 2016 to 15 DEC 2016.[48]
[47] T14, 583; (Debt X2552260).
[48] T10, 98-99.
On 20 July 2021, Centrelink raised a second debt of $15,242.82 against Mrs Ahmed for overpayment of PPP for the period 21 May 2013 to 8 June 2016.[49] She received notice by letter dated 21 July 2021.[50]
[49] Debt X2552541: T14, 583.
[50] T12, 576.
On 10 September 2021, Mrs Ahmed’s Austudy debt was reduced from $5,479.44 to $828.69 (for the period 13 July 2016 to 15 December 2016), and her PPP debt was reduced from $15,242.82 to $12,764.75 (for the period 21 May 2013 to 8 June 2016).[51]
[51] T15, 585.
Meanwhile, on 20 July 2021, Centrelink raised a debt of $100,096.08 against Mr Ahmed for the period 21 May 2013 to 5 July 2021 (debt number X2552261).[52] A file note records:
This debt was calculated using Multical for the period 21 May 2013 to 15 May 2016 for an amount of $22,181.63. This was due to limiting date restrictions.
The remainder of the debt was calculated using ADEX for the period 16 May 2016 to 5 July 2021 for an amount of $77,914.45.
These two debts were then amalgamated providing a final total of $100,096.08 for the period 21 May 2013 to 5 July 2021 for Debt ID X2552261 which was raised on 20 July 2021. The final debt was quality control checked by an independent QOL checker and was found to be correct.[53]
[52] T24, 755, 765.
[53] T24, 766.
On 23 July 2021, Mr Ahmed asked for a review.[54] He spoke to Centrelink on 23 July 2021, 12 August and 23 August 2021.[55] On 17 August 2021, Centrelink advised him that his DSP and concession card had been cancelled from 24 February 2020.[56] The letter states:
A review on your circumstances has established you have failed to declare bank deposits, rental income and your partner's Family Day Care self-employment income. These amounts have now been recorded and assessed and your income is too high for you to have any entitlement to Disability Support Pension.
[54] T24, 763.
[55] T24, 765, 765, 767.
[56] T17, 577, 580.
On 10 September 2021, Centrelink informed him that its previous decision was not correct.[57] The letter states:
[57] T18, 580.
I have found that your combined income from unexplained bank deposits, rental income and your partner’s Family Day Care self-employment income was not taken into account in the Disability Support Pension payments made to you from 21 May 2013 to 5 July 2021, however I have found that the correct debt amount is $69,758.90 and that your Disability Support Pension remains payable.
Key findings:
·     Your partner was in receipt of Parenting Payment from 4 July 2012 and you were in receipt of Newstart Allowance from 11 July 2012.
·     You transferred to Disability Support Pension from 13 November 2012.
·     Your partner commenced a Family Day Care (FDC) business on 7 April 2014 and reported profits from this business were taken into account in the calculation of your payment rates.
·     On 10 May 2016 your partner told us that she had ceased operating her FDC business and she provided a letter from her accountant confirming that she had not received any income from the business since 1 March 2016.
·     Your partner’s Parenting Payment cancelled from 9 June 2016 and she was granted Austudy from 13 July 2016 to 16 December 2016 after commencing full-time study.
·     Neither you nor your partner reported any business income from her FDC in the period from March 2016 to January 2017.
·     You reported some employment income for your partner from January 2017 to September 2019 however bank statements and income tax returns for your partner show that she earned more income from her business than you reported.
·     You purchased your home at 27 Apex Street Liverpool on 25 June 2008 for $350,000 and you had a home loan with ANZ Bank which you closed on 18 July 2016 and converted to a $285,000 Residential Investment Loan to renovate your home and build an investment property (granny flat at 27 Apex Street).
·     You received rent for your investment property from 2017 which you did not tell us about.
·     In the period from 30 May 2013 to 15 October 2021 you received multiple undisclosed deposits into your bank accounts many of which you have not been able to verify.
·     You received more Disability Support Pension than you were entitled to in the period from 21 May 2013 to 5 July 2021 as you failed to disclose the receipt of multiple bank deposits and you failed to fully declare your partner’s business income and rent received from your investment property.[58] (Emphasis added)
[58] T18, 580-581.
Both Applicants then applied to the Tribunal for review of the debt decisions made by Centrelink in their respective cases.
THE AAT1 DECISION
On 13 April 2022, the AAT1 set aside the decision under review and remitted the matter to Centrelink for reconsideration in accordance with certain directions.[59] The AAT1 made the following key findings:
·Mrs Ahmed was overpaid $828.69 in Austudy (for the period 13 July 2016 to 15 December 2016),[60] and $12,764.75 in PPP (for the period 21 May 2013 to 8 June 2016), and that these were debts owed to the Commonwealth. This affirmed the decision of the ARO.
·Mr Ahmed was also overpaid for the period 21 May 2013 to 5 July 2021, but certain deposits did not amount to “income”.[61] The debts needed to be recalculated without these amounts.
·There was no basis for waiving or writing off the debts owed.[62]
[59] T2, 5.
[60] The ARO decision for the Austudy debt referred to the period 15 November 2016 to 15 December 2016 identified in the original Centrelink decision of 16 July 2021, but nothing turns on this: see T2, 6.
[61] $89,000.00 made on 23, 24 and 25 February 2020, and for $90,000.00 made on 14 and 15 October 2020: T2, 5.
[62] T2, 13.

On 31 May 2022, Centrelink advised Mr Ahmed that the AAT1 decision had been implemented but did not result in any change to the debt amount because the two deposits found by the AAT1 not to be “income” had been excluded in a debt recalculation flowing from the ARO review on 10 September 2021.
THE EVIDENCE
As noted, the hearing was conducted on 1 September 2023.
Mr and Mrs Ahmed gave oral evidence and were cross-examined by Ms Egger. At the request of the Tribunal, Mrs Ahmed absented herself during Mr Ahmed’s oral testimony. At their request, he was permitted to remain as a support person when she gave evidence.
Ms Egger cross-examined Mr Ahmed with respect to three deposits into a joint account he operated with his wife.
In his closing submissions, Mr Ahmed accused Centrelink of changing its position on the basis of “ruthless calculations” that every deposit in his bank accounts was to be treated as income. He stated:
Every single deposit made in my bank account, from one account to other, from my home loan account to my savings account for the purpose of repaying the loan, is considered as income or considered as money available, and my entitlements are calculated on that basis.
He noted that Ms Egger had only asked questions about three deposits to his joint account. He provided an explanation for those transactions. He did not accept that some of the transfers were for rent, and if rent, should not be regarded as “income”. He added:
And my every single penny, every single dollar, paid to me is claimed back. From 2017 – 2013 to 2020, Centrelink paid me $100,000 – over $100,000, and every single cent is claimed back. Why? Because there are three unexplained – Department has come to the – there are three unexplained deposits in my – in my account. And on the basis of my wife’s income, which is business income, it leaves to some expenses. We borrowed money to – when my wife started this business, we had to – we had to order our house to comply with the – with the – with the requirements, safety issues. We had to build a wall, we had to – we spent $20,000. And to start a business to earn this money, all this spending is not regarded.
He also referred to the financing of the granny flat:
Initially the loan was taken on interest only for one year, due to building of the granny flat, so that year, the interest paid was $8,528, and there is no income. It is actually considered as loss, so if my wife and I, we jointly owned the property, my wife should have claimed this loss from her business as again business, if the income is from business, business is entitled to claim some interest.
He added:
The granny’s, if the money Centrelink is such a ruthless calculating, that, yes, granny – the income – that this rent is generating income, but where are the expenses? Okay, please be fair. 2,000, we are paying council rates. We are paying water charges. We are paying rubbish removal. We are maintaining the property. We are paying interest. And what is considered one-third is because this goes towards the – every other thing, the dual income, which is please, please have some – have some pity and look at our actual income. We cannot even afford to pay that interest back. And this is all I – I’m sorry, I’m getting bit – I’m sorry.
He denied that they had intentionally failed to disclose any rental receipts. He said:
When we started receiving a return from granny flat, yes, it was reflected, because it was not enough money even to cover the – cover the actual interest. We – there is no income. Yes, we might have made mistake that we did not change of circumstances. We might have overlooked that. We did not inform Centrelink, but intentionally, it was not to – not to hide any income or not to – not to deceive Centrelink. So just because someone made this one innocent mistake, a ruthless calculations have been made to punish this person, punish this family, that because you might have made this mistake, you might have overlooked some information, and we are going to punish you this way, that every deposit, everything is calculated into this and raised – and put as a – put into a debt. I think it’s not – it’s not fair.
He said that he was “absolutely willing” to pay back money to which they were not entitled but he begged the Tribunal to make the correct calculation. Moreover, he asked the Tribunal to consider the possibility of waiving any debt:
Any money coming in, yes, this is income, this is – so, please, I am requesting – it’s my humble request, please do the fair calculation. And when it says that it is not our fault for the first few years that Centrelink – we have been informing Centrelink accurate income, and if they are still paying us, again, it is not our fault. Again, I’m not saying that because Centrelink was paying us not the right amount it should be – it should be the – I’m requesting the honourable Member deem, we saw that this was not their mistake, Member should consider waiving that amount.
Again, how can we afford? No, we cannot. Believe me, my wife and the kids are increasing. We have limited income. I’m getting 400 – $470, which, again, is not on the basis of right calculation. We do not have enough income even to pay our – pay the mortgage, pay the money we borrowed from the bank to build this. We are not – we are – we are struggling. We are – we are, again, borrowing money that is house insurance. My house is not insured. If anything happen, I’ll be – I’ll be – I’ll be on the road. I cannot afford to pay $2,000 per year insurance.
In her oral evidence to the Tribunal, Mrs Ahmed also emphasised the unfairness of the decision.[63]
[63] Transcript, 1 September 2023, 38-39.
Mrs Ahmed did not dispute that she received income from the family day-care business.[64] Ms Egger asked her to explain an apparent discrepancy between the income reported to Centrelink and the Australian Taxation Office, to which she replied:
I am not sure, because I know that when I report to … Centrelink I’m removing all of my expenses or any of those expenditures. However, when we report to the taxation office, we have to give our full amount. I gave my full amount. However, I don’t completely understand this and I don’t think I can fully explain this situation or the discrepancy in any capacity. If you would allow, I can maybe ask my husband to clarify, because I do not understand and I cannot elaborate adequately.[65]
[64] Transcript, 1 September 2023, 41.
[65] Transcript, 1 September 2023, 40.
When she was receiving PPP, she was earning and reporting her income.[66] She said that she advised Centrelink what she would be receiving in her bank account. This did not include any expenses that she had from her business.[67] She elaborated as follows:
I would like to give some clarification on how the family tax – the family day-care business works. We would work directly with a scheme. Now, the hours of service we provide to the children, that payment would be paid directly to the scheme. The scheme would withhold some of the amount and their levy, and what was the remainder amount would be paid to us. We were also entitled to some additional payments directly from the parents. However, many times we mostly – that gap money, I did not receive that. We did not receive that. When it comes to the tax, the family tax with Centrelink, I didn’t get – so when it comes to reporting the tax for Centrelink, they have counted the full amount, even the money that I did not receive. They have counted all of that as my income. Also, there was the adjustment issue where, at the start of the year, I would provide an income estimate. However, at the end of the financial year, when the actual income was provided, tax was provided, there would sometimes be a gap. Sometimes my income was overestimated, sometimes it was underestimated. In both situations, either I would receive compensation or I would pay back any overpayments made.[68]
[66] Transcript, 1 September 2023, 44.
[67] Transcript, 1 September 2023, 42.
[68] Transcript, 1 September 2023, 43.
She said that when she was receiving Austudy payment, she was not working in any capacity.
She was also examined about the rental receipts for the granny flat. She agreed that she owned her home and received rent from renting the granny flat of $350 per week.[69] She was not specifically asked when she first received rent from the granny flat.[70]
[69] Transcript, 1 September 2023, 44.
[70] Transcript, 1 September 2023, 44.
She was examined on one set of deposits to her joint account (with her husband) in 2019.[71]
[71] Transcript, 1 September 2023, 45.
LEGISLATION
For convenience, I set out the relevant sections from the Act as it then stood.
1072 General meaning of ordinary income
A reference in this Act to a person’s ordinary income for a period is a reference to the person’s gross ordinary income from all sources for the period calculated without any reduction, other than a reduction under Division 1A.
Note 1: For ordinary income see subsection 8(1).
Note 2: For other provisions affecting the amount of a person’s ordinary income see section 1073AA (work bonus), sections 1074 and 1075 (business income), sections 1076 to 1084 (deemed income from financial assets) and sections 1095 to 1099DAA (income from income streams).
1073 Certain amounts taken to be received over 12 months
(1)Subject to points 1067G H5 to 1067G H20 (inclusive), 1067L D4 to 1067L D16 (inclusive), 1068 G7AA to 1068 G7AR (inclusive), 1068A E2 to 1068A E12 (inclusive) and 1068B D7 to 1068B D18 (inclusive), if a person receives, whether before or after the commencement of this section, an amount that:
(d)is not income within the meaning of Division 1B or 1C of this Part; and
(e)is not:
(i)income in the form of periodic payments; or
(ii)ordinary income from remunerative work undertaken by the person; or
(iii)an exempt lump sum.
the person is, for the purposes of this Act, taken to receive one fifty second of that amount as ordinary income of the person during each week in the 12 months commencing on the day on which the person becomes entitled to receive that amount.
(2)Subsection (1) applies to a person who has claimed one of the following allowances:
(a)newstart allowance;
(b)sickness allowance;
(c)youth allowance;
(d)widow allowance;
(e)partner allowance;
(f)mature age allowance under Part 2.12B;
even if the person:
(g)has to serve an ordinary waiting period or a liquid assets test waiting period in respect of the allowance claimed; or
(h)is subject to an income maintenance period in respect of the allowance claimed; or
(i)is subject to a seasonal work preclusion period;
during the period of 12 months referred to in subsection (1).
1075 Permissible reductions of business income
(1) Subject to subsection (2), if a person carries on a business, the person’s ordinary income from the business is to be reduced by:
(a)losses and outgoings that relate to the business and are allowable deductions for the purposes of section 8 1 of the Income Tax Assessment Act 1997; and
(b)amounts that relate to the business and can be deducted in respect of plant (within the meaning of the Income Tax Assessment Act 1997) under Division 40 of that Act; and
(c)amounts that relate to the business and are allowable deductions under section 290 60 of the Income Tax Assessment Act 1997.
(2) …
(3) If a person’s ordinary income for a period includes rental income from a property that is not business income, the person’s ordinary income from that property is to be reduced by losses and outgoings that relate to the property and are allowable deductions for the purposes of section 8 1 of the Income Tax Assessment Act 1997 for that period.
(4) If the amount of the allowable deductions relating to a property for a period under section 8 1 of the Income Tax Assessment Act 1997 exceeds the amount of the rental income from the property for that period, the amount of the ordinary income from the property for that period is taken to be nil.
CONSIDERATION
Mrs Ahmed
PPP and Austudy are subject to an income and asset test. There are three areas of contention, being the treatment of business income generated by the family day care business, rent generated by the granny flat, and multiple deposits in their joint bank accounts. The Respondent’s contention is that Mrs Ahmed received business and rental income which she failed to declare, and various deposits to her bank accounts which, in the absence of a satisfactory explanation, constitute income.
The PPP debt relates to the period 21 May 2013 to 8 June 2016. The Respondent’s SFIC contains spreadsheets relating to PPP, titled Entitlement Calculations,[72] and Debt Report.[73] The Entitlement Calculation runs from 21 May 2013 to 27 April 2016 on specific dates (not fortnightly). The Debt Report runs in fortnightly intervals from 21 May 2013 to 30 May 2016.
[72] RSFIC, 41-44.
[73] RSFIC, 45-52.
The Austudy debt relates to the period 13 July to 15 December 2016, but as noted above, it appears that Mrs Ahmed received Austudy from 9 August 2016, not 13 July 2016.
Rent
The AAT1 found that Mr and Mrs Ahmed received rental receipts of $59,670.50 during the period 12 October 2017 to 25 January 2021.[74] There is no evidence that rental receipts were received during the debt period ending on 15 December 2016. The joint account (#581) shows rental income received from 5 December 2017.[75]
[74] T2, 8.
[75] T11, 229.
Business income
The Respondent asserts that Mrs Ahmed failed to report her income from her family day care centre to Centrelink.
File notes show several communications between Mrs Ahmed and Centrelink about the day care business.
·On 16 October 2014, she spoke to a Centrelink officer about running the business under her ABN. She said she had made a profit of $12,484.00 from 31 March 2014 to 31 August 2014 but had not worked since 3 September 2014.[76]
·On 20 October 2014, she spoke to another officer about her reporting requirements. She was transferred through to another officer for further advice regarding participation requirements and perhaps taking her off reporting. She was advised to provide receipts showing business use for items such as car registration.[77]
·On 4 November 2014, she spoke to another officer who told her that because she had lodged her Profit and Loss Statement (P&L) regarding income from the business, she was no longer required to report those earnings each fortnight.[78]
·In February 2015, she visited the Liverpool Centrelink office in person to lodge her P&L. She was told to bring back all receipts and the P&L was not taken.[79]
·On 10 May 2016, she advised Centrelink that she was no longer operating her day care business.[80] She provided a P&L statement which was modified by the officer who reduced the claims made for business expenses.[81] There was some further discussion with Centrelink regarding the accuracy of the P&L information.[82]
·In 2015, Mrs Ahmed inquired about an advance payment for family tax benefit.
[76] T18, 622.
[77] T18, 626.
[78] T18, 627.
[79] T18, 629.
[80] T18, 636.
[81] T18, 639.
[82] T18, 640.
According to a schedule provided by Centrelink, Mrs Ahmed received family day care income of $53,931, $58,935 and $74,509 on 1 July 2013, 2014 and 2015 respectively.[83] These amounts are derived as follows:
The following are the figures used to calculate Sadia’s FDC income:
From IQ:
Kids Link 31/03/2014 – 30/06/2014    $13446.00 – 91 days = $53931 per annum
Kids Link 01/07/2014 – 30/06/2015    $58935.30 – 365 days = $58935 per annum
Kids Link 01/07/2015 – 08/05/2016    $46944.00 – 344 days = $49946 per annum
Kids Link 21/11/2016 - 30/06/2017     $53358.00 – 222 days = $63105 per annum
[83] See RSFIC, Appendix C, 53. T26, 793; T9, 96-97.
Section 1072 provides the general meaning of “ordinary income” as being a reference to a person’s gross ordinary income from all sources for the relevant period without any reduction, other than a reduction under Division 1A. Division 1A relates to business income and section 1075 relates to permissible reductions of business income.
Section 1075 is relevant to the objection raised by Mr and Mrs Ahmed that their business expenses were not included in the assessment. Ms Egger did not refer to section 1075 in her submissions to the Tribunal and relied heavily on sections 1072 and 1073.[84] The RSFICs mention sections 1072 and 1073 and refer in passing to section 1075 but without elaboration. The Respondent’s SFIC states:
5.33 Section 1072 is in Part 3.10 of the Act headed “General provisions relating to the ordinary income test”. Section 1072 is a core provision whereby “income” for the purpose of the income test is gross income rather than net income.
…
5.35 Section 1073(1) of the Act is a deeming provision that applies to the calculation of Mr Ahmed's[85] debt for the debt period.
[84] Subsection 1073(1) applies to amounts received that are not income within the meaning of Division 1B or 1C; and not income in the form of periodic payments; or ordinary income from remunerative work undertaken by the person; or exempt lump sums. A person who receives such an amount is taken to taken to receive one fifty second of that amount as ordinary income during each week in the 12 months commencing on the day on which the person becomes entitled to receive that amount.
Subsection 1073(2) provides that subsection 1073(1) applies to certain allowances. The list contains none of the income support payments at issue in the present proceedings. However, several Tribunal decisions have proceeded on the basis that the specified list of allowances is not exhaustive. I assume for the moment that this is correct.
[85] Both SFICs refer at this point to the calculation of “Mr” Ahmed’s debt during the debt period.
It appears from the working notes provided by Centrelink that the business income attributed to Mrs Ahmed made no allowance for business deductions, as required by section 1075,[86] and that the annualised amounts were derived by a process of extrapolating the income earned during a period over the entire year.
[86] The Austudy debt relates to the period 13 July to 15 December 2016, the PPP debt to the period 21 May 2013 to 8 June 2016.
Mr and Mrs Ahmed questioned the validity of this approach. Mr Ahmed stated:
My wife… started working from 1 April 2014. She worked for three months on that quarter. The turnover, the gross income she received was $13,448, and strangely, this amount came up with $53,931 per annum. So her benefits were calculated on the basis of that, because suppose that my wife worked for the whole year and she earned this much money. And my entitlements were also calculated on the basis of this supposed income.
Mrs Ahmed stated:
One of the things that they’ve done is that some of my income – they have taken some of my income around the year of 2013 to 2014. I started during that time. I started my work in April and I finished for – after three months. I finished in June, so I only was employed for three months. However, they took that portion of only three months, they can work it out to a year’s salary, and on the basis of that, they then decided to ask me to pay back my Parenting Payment because I was usually working the whole year on that salary.
… because of this, my income, my yearly income to a turnover was inaccurately estimated. Because I’m working on an ABN and this is my own business, I was working as an own business, they considered that as a full income, which is incorrect. They failed to also accommodate my expenses, business expenses, other expenses that I would have incurred. They were counting it as a full income. However, I had always updated Centrelink on all of my earnings, whatever I was earning. At the same time, I always declared whatever money I was - I had earned yearly to providing my tax updates. And so because of these inaccurate calculations, they have now wanted me to return back my Family Tax Benefit, my Austudy and the Parenting Payment – Parenting Payments, they have asked me to return, but these are not (indistinct) pay.[87]
[87] Transcript, 1 September 2023, 38-39.

In her tax returns, Mrs Ahmed reported a net income for the 2016/17 financial year of $19,091, or $8,046 on an individualised basis, compared to the $8,650 she is said to have reported to Centrelink.
Other employment income
Mrs Ahmed completed a schedule in March 2021 relating to her employment in the period 31 March 2014 to 19 March 2021.[88] It is not clear what activities contained in this questionnaire relate to the period applicable to Mrs Ahmed’s debts. She was not cross-examined on her answers in relation to this questionnaire.
[88] T11, 135.
Unexplained deposits
I turn to the question of unexplained deposits. The Respondent’s SFIC relating to Mrs Ahmed states:
5.61 In the absence of a satisfactory explanation or sufficient corroborating evidence, the Secretary contends that the bank deposits should be treated as ‘income’ for the purposes of subsection 8(1) of the Act, on the basis that they are an ‘income amount’, being monies received by Mrs Ahmed for her own use or benefit. Further, the amounts should have been taken into account in assessing her rate of Austudy and PPP during the debt periods. As they were not taken into account, Mrs Ahmed received Austudy and PPP which she was not entitled to receive during the debt periods.
Ms Egger contends that unexplained deposits form part of a person’s income for the purposes of social security law.[89] She relies upon the broad definition of income in section 8 of the Act, together with subsection 1073(1) of the Act.
[89] Transcript, 1 September 2023, 22-23.
Reference has been made above to the notices sent by Centrelink to Mr Ahmed on 9 March 2021.[90] The schedule attached to the letter listed some 35 bank deposits to a joint account held with his wife (#636) made between 2013 and 2019.
[90] This schedule does not appear to have been sent to Mrs Ahmed. The schedules included in her T docs relate to Mr Ahmed.
Mr Ahmed completed the schedule by writing explanations on it by hand. The Respondent produced a print-out from a screen generated by a software program known as OINS (“Other Income Screen”) which purports to show deemed income on a particular account (#636).[91]
[91] T13, 580.
This schedule contains 23 items relating to the relevant debt period for Mrs Ahmed. Ms Egger did not ask Mrs Ahmed about any of the items covered by this schedule.[92]
[92] Transcript, 1 September 2023, 44-45.
A second schedule relating to another joint account (#581) covered 102 entries for the period 2017 to 2020. Ms Egger asked Mrs Ahmed about a $500 transaction on 3 July 2019 and three $1,000 transactions arising on 8 and 9 July 2019. Mrs Ahmed explained that the first amount (for $500) related to savings for a Hajj trip. As to the other transactions she was unable to offer any detailed explanation.[93] The explanation written on the schedule was “Money received from sharing groups created to pay off loan” and “Money contributed by family earlier.”[94] In any event, these deposits all occurred well outside her debt period.
[93] Transcript, 1 September 2023, 45.
[94] T11, 179.
FINDINGS - MRS AHMED
There is no evidence to show that any rent was received for the granny flat until 2017, and probably December 2017,[95] well outside the relevant debt period.
[95] T11, 177.
I am not satisfied that the Centrelink calculation relating to business income includes legitimate business losses, as provided for by section 1075. There is nothing to suggest that the ATO questioned her tax returns, and no direct challenge was made before the Tribunal to the calculation of the losses identified in those returns. I am satisfied that Mrs Ahmed reported her business income appropriately during the relevant debt period.
As to the unexplained amounts deemed by Centrelink to be income, Ms Egger did not question Mrs Ahmed about any amounts received within the relevant debt periods even though she had the opportunity to do so.[96] Under these circumstances, the Tribunal is reluctant to proceed on the footing that Mrs Ahmed carries a burden of proving that these deposits, which occurred many years past, are not income.
[96] Transcript, 1 September 2023, 44-45.
I am not persuaded that the debts raised against Mrs Ahmed for PPP and Austudy are valid.
MR AHMED
I turn to consider Mr Ahmed’s position, arising from the payment of DSP over the period 21 May 2013 to 5 July 2021. As with Mrs Ahmed, Centrelink alleges that Mr Ahmed failed to disclose business income, rents and various other income amounts in the form of unexplained deposits.
Rental income
As noted above, the joint account (#581) was credited with rental receipts from December 2017.[97]
[97] T12, 132; T11, 177.
Mrs Ahmed filed annual income tax returns up until 2020.[98] Unfortunately, none of these returns show rental income.[99]
[98] See RSFIC, para 5.45.
[99] The return for 2020-2021 is not included in the materials.
Mr Ahmed stated his belief that gross rental receipts were not reportable to Centrelink because any rent received was fully absorbed in paying the interest on the investment loan. In their joint statement, Mr and Mrs Ahmed state:
We have submitted explanation and with evidence of our income through Tax assessment notices and explanations of rental returns and interest paid on loan amount taken to build a granny flat. … We are residing in the house that is purchased on loan and receiving small rent less than interest amount to pay interest and not claiming any rent assistance but that amount to pay interest in taken as income by department. The rental income and loss is declared in Sadia Ahmed’s income tax returns from year 2019 and it like double dipping when department also considering this amount as individual income when calculating Saleem Ahmed’s DSP payments.
In oral evidence Mr Ahmed said:
I’m paying $13,000 interest only whereas secretary is taking the whole amount of rent (indistinct) as my income. It is not an income.
Section 1075 of the Act provides:
(3)If a person’s ordinary income for a period includes rental income from a property that is not business income, the person’s ordinary income from that property is to be reduced by losses and outgoings that relate to the property and are allowable deductions for the purposes of section 8-1 of the Income Tax Assessment Act 1997 for that period.
(4)If the amount of the allowable deductions relating to a property for a period under section 8-1 of the Income Tax Assessment Act 1997 exceeds the amount of the rental income from the property for that period, the amount of the ordinary income from the property for that period is taken to be nil.
I refer to the Social Security Guide (the Guide).[100] The Guide is a policy of the Australian government. An administrative decision-maker is entitled to have regard to and apply government policy unless it is unlawful or tends to produce an unjust decision.[101]
[100] 4.3.8.30 Income from real estate | Social Security Guide (dss.gov.au)
[101] Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 642, 645; Ferreira and Secretary of Social Services (Social services second review) [2018] AATA 1290 at [47].
Under the Guide, rental income for social security purposes is the same as that assessed for taxation purposes with some exceptions.[102] If a loan was obtained to purchase a rental property, then the interest can be an allowable deduction for social security purposes even if the mortgage is secured against the principal residence. Construction costs (as opposed to interest paid on a loan to fund such costs) are not allowed for social security purposes, although they may be an allowable tax deduction.[103]
[102] Social Security Guide, 4.3.8.30.
[103] Social Security Guide, 4.3.8.30.
In cases where no tax return is available, an estimate of deduction amounts is necessary. The Guide prescribes the following method:
1. Deduct one third from the gross amount of rent received (this takes into account land tax, rates, insurance, repairs, etc).
2. Deduct any mortgage interest payments from this amount.
In the adjusted calculations upon which the DSP debt is based, Centrelink used information sourced from the verification schedules. In the absence of tax returns including information about rent and deductions for rental income, the rental receipts were assessed using the 1/3 rule for allowable deductions.
[Mr Ahmed] completed the unexplained bank verification schedule for the joint account which was mostly rent received by various tenants beginning on 12 October 2017 (sic).[104] This has been assessed using the 1/3 rule and entered onto the REBS screen with no asset as the granny flat is attached to his principal home.
Gross amounts of rent received sourced from bank accounts:
2017/2018      $12900 – $4300 (1/3 allowable deds) = $8600
2018/2019      $19350 – $6450 (1/3 allowable deds) = $12900
2019/2020      $17260 – $5753 (1/3 allowable deds) = $11507[105]
[104] The first rental receipts appears to have been on 5 December 2017: T11, 177.
[105] T26, 793; T9, 96-97.
The use of the 1/3 rule was permissible given that the rental receipts were not disclosed by Mrs Ahmed in her tax returns. However, I note that no deduction was made, as required by the Guide, for mortgage interest payments.
Business income
I turn to consider business income.
I have previously noted that the stated income amounts were derived by a process of averaging the income earned during a specific period over the entire year, giving rise to a finding, for example, that Mrs Ahmed earned $87,943 from the family day care business in the 2018-2019 financial year.[106]
[106] T26, 792-793. T9, 96-97.
This method of calculation is relevant to Mr Ahmed’s debt calculation over the period 21 May 2013 to 5 July 2021.
I note the AAT1 decision on this point.
18. The tribunal carefully considered Mr and Mrs Ahmed’s testimony and written submissions (at A85 to A86) regarding the calculation of Mrs Ahmed’s net family day care income during the relevant periods and concludes that Centrelink correctly calculated the gross and net income of the family day care business, consistent with Mrs Ahmed’s income tax returns prepared by her accountant during the same period. In the tribunal’s view this is the best available evidence and there is no apparent error in Centrelink relying on this evidence.
Mrs Ahmed filed regular returns with the Australian Tax Office (ATO).

Year

Total Income from FDC ($)

Net Income from FDC ($)

2014/2015

59,943

21,047[107]

2016/2017

37,938

19,091[108]

2017/2018

56,755

31,769[109]

2018/2019

43,848

26,736[110]

2019/2020

53,098

28,440[111]

[107] T7, 54.
[108] T11, 133
[109] T11, 128
[110] T11, 120.
[111] T11, 115.

Ms Egger cross-examined Mrs Ahmed about an apparent discrepancy between her tax returns for FDC and the information reported to Centrelink. She took her to information contained in paragraph 5.45 of the SFIC (referencing Annexure E) and asked her to explain these “discrepancies” with her filed tax returns.
Year   Reported Income from FDC ($)
2016/2017                 8,650
2017/2018                 17,050
2018/2019                 16,550
2019/2020                 1,300
94.The Tribunal has had some difficulty in identifying, from the many sources provided to it, the amounts reported to Centrelink by Mrs Ahmed. Based on the information provided in Appendix D of the RSFIC, it is not clear that her family day care expenses have been properly included, as required by section 1075. I have referred to the Centrelink file notes, and the oral evidence given by Mr and Mrs Ahmed.
With respect to the AAT1, the Tribunal is not satisfied that Centrelink correctly calculated Mrs Ahmed’s net family day care income. It does not appear from the Centrelink working notes that any allowance was made for business expenses associated with the family day care business.
Unexplained bank deposits
I turn to consider unexplained bank deposits.
As noted above, on 9 March 2021, Centrelink issued a notice to Mr Ahmed requiring the completion of a Mod R form, applicable in cases in which a home property is used for business purposes.[112]
[112] T12, 123; T11, 168.
The same day, Centrelink also issued two further notices to Mr Ahmed relating to unexplained bank deposits.[113] These notices required the completion of schedules headed “Unexplained Bank Deposits – Verification Schedule”. The first listed 35 bank deposits to a joint account held with his wife (#636) made between 2013 and 2019.[114]
[113] Pursuant to section 63 of the Social Security (Administration) Act 1999 (the Administration Act).
[114] T12, 90 – 93; T11, 136-138.
The second listed 102 deposits to a separate joint account (#581) for the period 2017 to 2020.[115]
[115] T12, 132 - 138; T11, 177-183.
Ms Egger cross-examined Mr Ahmed about some of these entries.
Amount of $1,200 deposited to #636 on 16 January 2015
Mr Ahmed stated that this amount was withdrawn from the account closed in 2017 when he took out the investment residential loan. He stated that he was unable to provide a financial statement to support this. He agreed he did not have any evidence.
Deposit of $700 on 9 February 2015
Mr Ahmed said that he had made several withdrawals from his home loan account before it was closed and redeposited the same or similar amounts to the joint bank account:
All these statements from – secretary obtained from the bank, but no (indistinct) statements where the amount was withdrawn, because those statements are not available. That account is closed. When I switched to investment loan, the actual - that account, where I was withdrawing all of the cash from my home loan, which is a liability, loan account is not part of this – it’s not part of this bundle. So that’s why I cannot – as on top of my head, I can remember, yes, these were the withdrawals from my own account and these amounts, like five, six amounts, were deposited cash at the branch. Again, if you are asking me a particular transaction seven years ago, no statements available… I cannot provide specific explanation for those accounts. $1,200, $700. But again, as I say, it is drawn from my home loan account which all these statements are not there.[116]
[116] Transcript, 1 September 2023, 21-22.
Amount of $500 deposited on 5 March 2015
Mr Ahmed was also cross-examined on various deposits of $500:
MS EGGER: Thank you. So, Mr Ahmed … I note that you have said throughout this questioning that you are unable to take me to a bank statement which shows such an amount has been withdrawn. Is that the same case for this amount of $500 or are you able to show me a withdrawal amount in $500?
MR AHMED: Yes. During – I refer to the bank statements which are very self-explanatory. There are many, many cash withdrawals from – it is reflected from the bank statements, there are many cash withdrawals. So this $500 again is a deposit from those withdrawals. Again, if you want to go back to these matters again and again, I believe if you refer to page 14 of T2, the document you are referring to, it was part of the – the investigator went through each and every deposit made into my account for the last seven years and taken as ‘these are the suspicious deposits’. And when I explain all these deposits, it has come to this sheet, T2, which is on page 14, that these are, I believe secretary and the tribunal, previous tribunal, were satisfied with my explanation and it comes to only these transactions which were in question, I believe. And now you’re going to that part of investigation where I have explained, and I believe it was - my explanation was accepted, and those calculation were – I was not told that these – my explanation was never considered as satisfactory. I believe only this page which was provided to me, T2, page 14, that these transactions are in question after all this explanation. So if I’m really – and I have provided evidence. All my work, my evidence, I – I spent time to answer these transactions. So if you are going to – I leave it to the honourable tribunal Member to decide whether it is 500, 700, particular five, six transactions should be deemed as income as – there is no evidence if you claim these are the incomes, these transactions are income if you want to deem that as income it is – I leave it to the tribunal to consider. But I believe – again, I’m referring to T2, page 14, I believe these are the transactions which are in question after all my explanation.
MS EGGER: My question to you was, though, that $500 that was re-deposited on 5 March, are you able to show me in the bank statements where that specific amount was withdrawn?
MR AHMED: I don’t have access to those bank statements where I withdraw the amount.[117]
…
MS EGGER: Mr Ahmed, I’ll take you to another transaction, if you wouldn’t mind. In July 2019, there was a deposit of $500 into your account, which is explained as ‘mosque fund payment’. Are you able to provide any clarification on what that deposit is?[118]
…
Okay. Are you able to show or point to anywhere in the bank statements where you were initially paid that amount and that it was a repayment, so where the withdrawal initially was?
MR AHMED: It was paid to, again, a group of people who were – who were contributing this money to. It was paid cash, and they returned this money into my account. So there is no payment receipt. I cannot – because of withdrawals, it’s referenced to all the withdrawals, all from my bank, I cannot say on top of my head whether my wife gave me this money, $500, who were contributing. Yes, yes, this $500, one particular amount, I remember – as far as I remember, it was part of our saving, ah, pattern to fund our trip.
MS EGGER: Just to clarify, there’s not anywhere you’re able to point in the documentation. You’re not able to point to anywhere in the bundle of material which shows the withdrawal of the $500?
MR AHMED: There are heap – heaps of withdrawals from there.[119]
[117] Transcript, 1 September 2023, 24.
[118] Transcript, 1 September 2023, 30.
[119] Transcript, 1 September 2023, 30-31.
FINDINGS - MR AHMED
With regard to rental income, I am satisfied that the 1/3 rule was an appropriate means of assessment, however, no deduction was made for allowable deductions, such as interest on the investment loan. I am satisfied that the granny flat was constructed with borrowed funds, and that the interest actually paid on the borrowed funds was an allowable deduction for social security purposes.
As noted above, an amount of $124,037.08 was paid into their joint account (#581) on 8 July 2016. I accept that these funds were borrowed for the construction of the granny flat. The Tribunal did not have any information relating to the actual construction costs, nor the amount of interest actually paid on the component of the loan used for the construction. The Applicants should have an opportunity to provide such information to the Respondent as will enable a determination to be made as to the interest payments over the debt period.
In terms of the impact of business income associated with the operation of the family day care business, I am not satisfied that business expenses have been properly assessed by Centrelink, as required by section 1075 of the Act. I note that this information is readily available from the comprehensive information provided by Mrs Ahmed in her income tax returns.
In terms of the identification of additional income amounts arising from so-called unexplained deposits, I note that the AAT1 did not accept the explanation given for many of these transactions.[120] Some of the transactions identified by the AAT1 as problematic have been the subject of further evidence. This applies to the monies given by the Applicants to Mr Zulkaif Ahmed (Mr Ahmed’s father) for his parents’ visas, as well as various transactions between the Applicants and Mr Ameen Ahmed, to which the latter addressed a statutory declaration.[121] In these proceedings, some smaller amounts of $500 were identified which Mr Ahmed said were withdrawn from his now defunct housing loan account and used to service other debt. I do not regard this as inherently improbable. Nor do I regard it as inherently improbable that his parents had paid the visa money back in dribs and drabs, as claimed by Mr Ahmed’s father. The impression formed by the Tribunal about the veracity and integrity of witnesses who appear before it is a critical part of the merits review process.
[120] AAT1, paras [19], [26}-[28].
[121] See Applicant’s Supporting Documents.

Based on the evidence before the Tribunal, I am not satisfied that Mr Ahmed knowingly gave false information or made any false representation about his claim for DSP.
On the balance of probabilities, I accept the explanation provided by Mr and Mrs Ahmed for these various transactions.
Although he showed some lack of understanding of social security law, he would not be alone in having such misconceptions, and should not be stigmatised as dishonest for that reason alone. Centrelink itself has had some difficulty in applying some provisions of the Act, as revealed by a recent report by the Commonwealth Ombudsman, which will do little to bolster the confidence of Centrelink clients. The Ombudsman wrote:[122]
[122] Lessons in lawfulness: Own motion investigation into Services Australia’s and the Department of Social Services’ response to the question of the lawfulness of income apportionment before 7 December 2020, Commonwealth Ombudsman (2023) Commonwealth-Ombudsman-public-statement-regarding-OMI-Income-Apportionment-Lawfulness.pdf
·In February 2023, Services Australia and the Department of Social Services (DSS) told our Office there was an issue with how Services Australia had been apportioning income to calculate social security payment rates before 7 December 2020, when the law changed.
·‘Income apportionment’ is different to ‘income averaging’ that was at the heart of Robodebt.
·The Administrative Appeals Tribunal (AAT) sent some debts back to Services Australia to be recalculated. This raised concerns about whether income had been lawfully calculated.
·Services Australia advised it paused approximately 13,000 debt reviews while the agencies sought legal advice. Another 87,000 files which may become debts were also potentially affected by unlawful or incorrect income apportionment calculations.
·Given the scale, significance and potential impact, the Ombudsman decided to conduct two investigations into income apportionment:
oInvestigation 1 – lawfulness of the agencies’ approach to income apportionment.
oInvestigation 2 – examining the agencies’ administration of income apportionment decisions, communication with customers, and handling of complaints, internal reviews and AAT or Federal Court appeals.
·This statement relates to Investigation 1. Investigation 2 is ongoing.
I am not satisfied that Mr Ahmed failed to comply with his reporting requirements regarding business income from his wife’s family day care business. As to whether there are special circumstances, I note the approach taken by the Tribunal in the 2017 matter involving Mr Ahmed. As set out above, the Tribunal described the circumstances of Mr Ahmed’s as “special”. This led to a 50% reduction of the debt.
I note that in contrast, in the present proceedings, the AAT1 found no basis for applying section 1237AAD. The learned Tribunal member stated:
38. Mr and Mrs Ahmed provided the following testimony regarding their circumstances. Mr Ahmed suffered a spinal injury at work in 2003. He kept working until 2012, against all advice from his treating doctors. He suffers from cervical and lumbar disc pain as well as arthritis and a shoulder disorder. It was on this basis that he was granted disability support pension and continues to receive the pension and income protection payments. Mrs Ahmed suffers from high cholesterol and struggles under the weight of her caring responsibilities.
39. Mr and Mrs Ahmed have four children, aged 21, 20, 16 and 11 years. The two younger children attend private school. The two older children are still financially dependent. All the children are in good health. They live in an unencumbered home. In addition to the debts under review, Mrs Ahmed is liable to repay an overpayment in family tax benefit of about $11,000. In order to make repayments on the debts they would need to cut down on their expenses and their children will suffer. They continue to rent out the granny flat at $300 per week. They had to reduce rent as there is a glut of rental accommodation in their local area.
40. After carefully considering all the evidence before it, the tribunal was not persuaded that Mr and Mrs Ahmed’s circumstances are sufficiently special or out of the ordinary when compared to that of other social security recipients. The tribunal is not persuaded that repayment of the debts would be unjust or unreasonable, notwithstanding the fact that the debts are significant, particularly in light of Mr and Mrs Ahmed’s declared incomes. Nevertheless, the tribunal considers the fact that the debts can be repaid in instalments will not cause undue hardship and should allow for recovery in a reasonable period. Therefore, Mr Ahmed’s debt (as recalculated) and Mrs Ahmed’s debts must be recouped.
With respect, having listened carefully to Mr and Mrs Ahmed during the hearing, I do not share this somewhat sanguine assessment. There is no evidence that might lead to a conclusion that Mr Ahmed’s health has improved since the 2017 Tribunal finding, and the family remains under financial pressure. The issue of private school fees was not canvassed at the hearing, but I note that many private schools have very modest fees. Over everything else, the cost of servicing the residential investment mortgage has increased dramatically with recent interest rate rises. I note Mr Ahmed’s oral evidence that they were unable to afford their existing mortgage or pay for home insurance.
I accept that Mr Ahmed has a limited capacity to increase his income and that the family is under serious financial strain, and that recent cost of living pressures are affecting this family along with many others in the community. It is understandable that Mr and Mrs Ahmed do not wish to sell their family home and suffer the vagaries of the rental market.
On the other hand, the family home has increased in nominal value over their period of ownership. They have a relatively small mortgage and significant equity in the home. Those with assets to sell are generally expected to do so to clear Commonwealth debts.[123] In this context, I note Mr Ahmed’s honourable statement that he did not seek to avoid paying what was rightly owed. He simply wanted to have the debts properly calculated.
[123] See, for example, Taleb and Secretary, Department of Social Services (Social services second review) [2021] AATA 4078, at [54]-[69] in the context of preclusion periods.
The Tribunal is reluctant to consider applying any of the palliative provisions of the Act (such as waiving the debt under 1237AAD or writing off the debt under section 1236) in the abstract and without a clear understanding of the amount, if any, of the residual debt.
DECISION
In matters 2022/7545 and 2022/7546 (Mrs Ahmed), the decisions under review are set aside and substituted with a decision that there is no recoverable debt for overpayment of Austudy or Parenting Payment Partnered.
In matter 2022/4109 (Mr Ahmed), the decision under review is set aside and remitted to the Respondent for reconsideration with the following directions:
(a)Income relating to rent from the granny flat be recalculated to take account of interest on that part of the residential investment loan used to construct the flat;
(b)Income relating to the family day care business be recalculated to take account of appropriate business deductions; and
(c)Should Mr Ahmed wish to provide information to the Respondent relevant to (a) and (b) above, he must do so within 30 days of the date of this decision.

I certify that the preceding 118 (one hundred and eighteen) paragraphs are a true copy of the reasons for the decision herein of Emeritus Professor P A Fairall, Senior Member

........[SGD]................................................................
Associate
Dated: 28 November 2023

Date of hearing: 1 September 2023

Applicants: In person

Solicitors for the Respondent: Ms J. Egger, Hunt & Hunt Lawyers

[2023] AATA 3923

28 November 2023

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Procedural Fairness

Statutory Construction

Appeal

Natural Justice

Remedies

Year	Total Income from FDC ($)	Net Income from FDC ($)
2014/2015	59,943	21,047[107]
2016/2017	37,938	19,091[108]
2017/2018	56,755	31,769[109]
2018/2019	43,848	26,736[110]
2019/2020	53,098	28,440[111]

Date of hearing:	1 September 2023
Applicants:	In person
Solicitors for the Respondent:	Ms J. Egger, Hunt & Hunt Lawyers