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

Case [2023] AATA 3923

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

  1. 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).

  2. 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…

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Details
AGLC
Ahmed and Secretary, Department of Social Services (Social services second review) [2023] AATA 3923
Case
[2023] AATA 3923
Decision Date

CaseChat Overview and Summary

This matter concerned appeals by Mr and Mrs Ahmed against decisions by the Department of Social Services (the Department) to raise debts for alleged overpayments of Parenting Payment Partnered, Austudy, and Disability Support Pension. The core of the dispute involved whether certain bank deposits, business income, and rental income should be considered as assessable income for the purposes of calculating social security entitlements, and consequently, whether the raised debts were recoverable. The appeals were heard by Emeritus Professor P A Fairall, Senior Member.

The legal issues before the Tribunal were whether the debts raised against the applicants were recoverable, specifically concerning the treatment of unexplained bank deposits as income, the calculation of business expenditures, and the inclusion of rental income. The Tribunal was required to determine whether the Department had correctly assessed the applicants' income and liabilities in calculating the debts, and whether any debt could be waived.

The Tribunal considered the evidence presented, including the applicants' explanations for various bank deposits and business expenses. It noted that the applicants had failed to fully declare their partner's business income and rental income, and that numerous undisclosed bank deposits had been made into their accounts. The Tribunal found that while some deposits might not constitute income, the overall failure to declare income and the presence of unexplained deposits meant that the applicants had received more in social security payments than they were entitled to. The Tribunal also considered the applicants' arguments regarding business expenses and the financing of a granny flat, but concluded that these did not negate the fact that undeclared income had been received.

The Tribunal set aside the previous decision and substituted its own. It found that Mrs Ahmed had been overpaid $828.69 in Austudy and $12,764.75 in Parenting Payment Partnered, and that Mr Ahmed had been overpaid $69,758.90 in Disability Support Pension. The Tribunal determined that these debts were recoverable and that there was no basis for waiving them.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

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.

Evidence

Evidence Before The Court

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.

Decision

Reasons for decision

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.

Ratio Decidendi

Legal Principle Established

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.