GHSY; Secretary, Department of Social Services and (Social security second review)
[2025] ARTA 2196
•21 October 2025
GHSY; Secretary, Department of Social Services and (Social security second review) [2025] ARTA 2196 (21 October 2025)
Applicant:Secretary, Department of Social Services
Other Parties: GHSY
Tribunal Number: 2024/0837
Tribunal:Senior Member T Hamilton-Noy (second review)
Place:Melbourne
Date:21 October 2025
Decision:The Tribunal sets aside the decision under review and makes a decision in substitution that there is a newstart allowance debt totalling $7,382.16 for the period 25 March 2015 to 8 August 2017. The debt is recoverable by the Commonwealth.
Statement made on 21 October 2025 at 10:17am
Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 201(1A) – 201(1B) of the Social Security (Administration) Act 1999.
Catchwords
Newstart allowance debt – calculation of overpayment – under-declaration of income – no sole administrative error – no special circumstances – not appropriate to write off debt – debt is recoverable by the Commonwealth
Legislation
Administrative Review Tribunal Act 2024 (Cth)
Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (Cth)
Social Security Act 1991 (Cth)
Cases
Chaplin v Secretary, Department of Social Services [2025] FCAFC 89
Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114
Dranichnikov v Centrelink [2003] FCAFC 133
Groth and Secretary, Department of Social Security (1995) 40 ALD 541
Re Lumsden and Secretary, Department of Social Security (1986) 10 ALN N225
Re Stubbs and Secretary, Department of Family and Community Services (2003) AATA 03/0729
Secretary, Department of Social Security v Hales (1998) 82 FCR 154; [1998] FCA 219
Secretary, Department of Social Services and FTXB [2024] AATA 3021Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190; (2003) 132 FCR 126
Statement of Reasons
Background
This application relates to the raising and recovery of a newstart allowance debt from the Respondent on the basis of her earnings from employment.
The Respondent was in receipt of newstart allowance between March 2015 and May 2017 and, during this period, was in casual employment. On 18 April 2018, following a review of her circumstances, an employee of the Applicant (Services Australia – Centrelink) raised a debt in the amount of $8,783.91 for the period 11 March 2015 to 30 May 2017. The decision was internally reviewed by Centrelink and on 12 September 2018 was affirmed by an authorised review officer.
The Respondent then sought a review of the decision by the Administrative Appeals Tribunal (AAT). On 11 January 2024, the AAT at first review set aside the decision and sent the matter back to Centrelink for recalculation of the debt in accordance with the comments of the AAT in its decision.
The Applicant applied for a second review of the decision with the AAT on 12 February 2024.
From 14 October 2024, the AAT became the Administrative Review Tribunal (the Tribunal). Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (Cth) (the Transitional Act), applications for review to the AAT that were not finalised before 14 October 2024 are taken to be an application for review to the Tribunal. The Transitional Act gives the Tribunal the authority to continue and finalise any aspect of the review not already completed by the AAT. This decision and statement of reasons is made by the Tribunal.
Proceedings before the Administrative Review Tribunal
The hearing in this matter was conducted on 23 May 2025. A representative of the Applicant appeared by video. The Respondent and her representative also appeared by video and the Respondent gave evidence on affirmation.
Prior to the matter being heard by the Tribunal (and prior to the first review proceedings), the manner in which debts were being calculated for periods before December 2020 had come under scrutiny due to a Commonwealth Ombudsman report questioning the legality of the way overpayments had been calculated.[1] The scrutiny in question centred around the interpretation of “first earned, derived or received” in the youth allowance Rate Calculator and the manner in which this had been applied by Centrelink.
[1] Commonwealth Ombudsman, Lessons in Lawfulness: Own motion investigation into Service Australia’s and the Department of Social Services’ response to the question of the lawfulness of income apportionment before 7 December 2020, August 2023.
Also prior to the matter being heard, the AAT had issued a guidance decision as to the interpretation of “earned, derived or received” for the purposes of the income test (Secretary, Department of Social Services and FTXB [2024] AATA 3021). The AAT decision was appealed to the Full Federal Court and, on 15 July 2025, the Full Court of the Federal Court handed down its decision in Chaplin v Secretary, Department of Social Services [2025] FCAFC 89.
At the time the Tribunal has proceeded to make its decision, there is a special leave application pending before the High Court in relation to the Chaplin decision. There is also a proposed Bill which includes provisions retrospectively addressing the way in which Centrelink had calculated debts prior to December 2020.[2]
[2] Social Security and Other Legislation Amendment (Technical Changes No 2) Bill 2025.
The Respondent has urged the Tribunal to further delay making its decision in this matter to await the outcome of the above matters. The Respondent is seeking a delay of this matter until the special leave application, and any subsequent appeal, is resolved by the High Court. The Respondent submits that there would be a very real chance Chaplin would be overturned on appeal in the event that special leave is granted, the further delay does not cause prejudice to either party and there is a contextual difference between Chaplin and the Respondent’s circumstances that, in the Respondent’s view, would make it unclear how the Tribunal would apply the law as stated in Chaplin.
The Applicant responded to these submissions, opposing a delay due to the special leave application on the basis that Chaplin is binding on the Tribunal and it is speculative whether special leave will be granted. The Applicant neither consented to nor opposed a further delay due to the proposed Bill.
The Tribunal has considered the position of the parties and has decided to proceed at this time for several reasons. Firstly, the Tribunal considers that it has binding authority from Chaplin that allows it to proceed to consider and determine this matter and that the interpretation of “earned, derived or received” considered by the Court in Chaplin, within the context of a youth allowance debt, does allow the phrase to be also considered within the context of a newstart allowance debt. Should leave not be granted by the High Court, the authority in Chaplin remains binding on the Tribunal; should leave be granted, the Tribunal would not be minded to further delay for the significant period of time the matter takes to proceed before the Court, given its objectives in section 9 of the Administrative Review Tribunal Act 2024 (Cth). Secondly, there are no clear timeframes for the proposed Bill and the eventual changes to the legislation are unknown. And finally, the Tribunal is very mindful of the period of time this matter has already been with the Tribunal and considers that any further delay, for speculative reasons, would be inconsistent with the Tribunal’s objectives.
For the above reasons, the Tribunal has considered it is appropriate to proceed to determine this matter. At the time of making its decision, in addition to the submissions of the parties and evidence given by the Respondent at the hearing, the Tribunal had before it (which were also provided to the parties):
(i)The AAT decision dated 11 January 2024;
(ii)Bundles of “T” documents (T1 to T12, ST13 to ST16 and A1 to A6);
(iii)Applicant’s Statement of position dated 11 October 2024 with attached calculations;
(iv)Applicant’s Statement of Facts, Issues and Contentions dated 28 March 2025;
(v)Respondent’s statement dated 24 April 2025;
(vi)Respondent’s Statement of Facts, Issues and Contentions dated 24 April 2025;
(vii)Applicant’s Reply dated 14 May 2025, with calculations and annexures;
(viii)Applicant’s Supplementary Submissions dated 21 August 2025;
(ix)Respondent’s Supplementary Submissions dated 19 September 2025;
(x)Applicant’s statement of position (by email) dated 29 September 2025.
In proceeding to consider this matter, the Tribunal considered that the legal issues before it are whether there is a debt owed to the Commonwealth due to overpayment of newstart allowance and, if there is, whether there is any reason the debt should not be recovered by the Commonwealth.
Is there a debt due to the Commonwealth?
As of March 2015, section 643 of the Social Security Act 1991 (Cth) (the Social Security Act) provided that the rate of newstart allowance was calculated by the Rate Calculator at the end of section 1068 of the Social Security Act.
The overall rate calculation process was set out in section 1068-A1 of the Social Security Act and, at Step 5, required that the income test be applied using Module G to work out the income reduction. Section 1068-A1 also noted that the rate of newstart allowance was a daily rate, worked out by dividing the fortnightly rate calculated according to the rate calculator by 14.
The Method Statement in Module G set out an 11-step method for working out the rate of newstart allowance payable to a person and, at Step 1, required that a person’s ordinary income be worked out on a fortnightly basis. Section 1068-G7A provided that, subject to a number of other provisions,[3] ordinary income was to be taken into account in the fortnight in which it was “first earned, derived or received”.
[3] Points 1068‑G7B, 1068‑G7C, 1068‑G8 and 1068‑G8A and section 1073 of the Social Security Act. These provisions are not relevant to the circumstances of this matter.
Section 1068-G7B then provided that:
If a person whose claim for an allowance has been granted receives a lump sum amount after the claim was made that:
(a) is paid to him or her in relation to remunerative work; and
(b) is not a payment to which point 1068‑G8 applies; and
(c) is not an exempt lump sum;
the person is, for the purposes of this Module, 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.
“Ordinary income” was defined at subsection 8(1) of the Social Security Act to be income that is not maintenance income or an exempt lump sum. Section 1072 of the Social Security Act further noted that a reference to a person’s ordinary income was 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.
“Income” was also defined at subsection 8(1) of the Social Security Act to be, in relation to a person, an income amount earned, derived or received by a person for the person’s own use or benefit, a periodical payment by way of gift or allowance, or a periodical benefit by way of gift or allowance. Specified matters in subsections 8(4), (5) and (8) were excluded as income, but do not relate to the circumstances of the Respondent.
“Employment income” was defined in subsection 8(1A) of the Social Security Act as follows:
(1A) A reference in this Act to employment income,in relation to a person, is a reference to ordinary income of the person:
(a) that is earned, derived or received, or that is taken to have been earned, derived or received, by the person from remunerative work undertaken by the person as an employee in an employer/employee relationship; and
(b) that includes, but is not limited to:
(i) salary, wages, commissions and employment‑related fringe benefits that are so earned, derived or received or taken to have been so earned, derived or received; and
(ii) if the person is engaged on a continuing basis in that employer/employee relationship—a leave payment to the person;
but does not include:
(c) a superannuation payment to the person; or
(d) a payment of compensation, or a payment to the person under an insurance scheme, in relation to the person’s inability to earn, derive or receive income from that remunerative work; or
(e) if the person is not engaged on a continuing basis in that employer/employee relationship—a leave payment to the person; or
(f) a payment to the person by a former employer of the person in relation to the termination of the person’s employment; or
(g) a comparable foreign payment.
Division 1AA of Part 3.10 set out the employment income attribution rules and, at section 1073B provided as follows:
1073B Daily attribution of employment income
(1) If:
(a) a person is receiving a social security pension or a social security benefit; and
(b) the person’s rate of payment of the pension or benefit is worked out with regard to the income test module of a rate calculator in this Chapter; and
(d) the person earns, derives or receives, or is taken, either by virtue of the operation of section 1073A or any other provision of this Act, to earn, derive or receive, employment income during the whole or a part of a particular instalment period of the person;
the person is taken to earn, derive or receive, on each day in that instalment period, an amount of employment income worked out by dividing the total amount of the employment income referred to in paragraph (d) by the number of days in the period.
(2) If a person has reached pension age and is receiving a social security benefit, subsection (1) does not apply to the person, to the extent that it relates to that benefit.
Note 1: Subsection (1) applies to a person who has not reached pension age and is receiving a social security benefit.
Note 2: For pension age see subsections 23(5A), (5B), (5C) and (5D).
The Tribunal accepted that the Respondent was granted newstart allowance from 11 February 2025. The rate of newstart allowance payable to her was determined by the Rate Calculator in section 1068 of the Social Security Act and any income she earned was relevant to determining that rate, as set out above.
The Respondent was sent correspondence by Centrelink on 11 March 2015, confirming that a decision had been made that she would be paid newstart allowance from 11 February 2015 and setting out an immediate payment to be made to her and her ongoing fortnightly rate. Under the heading “Information used for calculating your payment”, total fortnightly income of $0.18 was recorded. The letter further noted, under “Important information”, that:
Your Reporting Statement is enclosed. If you are using self service (online or phone), you do not need to return this form. You must report your earnings and other information on the due date. You may be able to report by:
- going to my.gov.au and signing in to your account and selecting Centrelink services
- using the Express Plus Job Seeker app available on your smart device
- going to humanservices.gov.au and logging on to Centrelink services online, or
- calling our reporting line on 133 276 (13 ‘EARN’)
The second page of the letter provided a range of further information to the Respondent, including the following:
What is Income
Income has a very broad meaning for social security purposes. Some examples of income are earnings from employment (including fringe benefits), business income (including farms), income from rental properties, deemed income from financial investments, income from superannuation pensions and other income streams, income paid from overseas including pensions, most compensation payments. If you have a partner, that person’s income may affect your payment.
The Tribunal accepted from the evidence before it that the Respondent had had three casual employers in the period under review.
There was one main employer during this period (“Employer 1”). The Tribunal was provided payslips for this employer and noted that the Respondent earned income for periods from March 2015 to August 2017, with the exception of one fortnight in February/March 2017. The payslips indicated a fortnightly pay period, with the pay date being on the last day of the pay period. The Respondent was paid differing hourly rates, which included “normal”, “retail PHOL”, “Retail Sat” and “Retail Sun”. No information in the payslips identified specific days worked or hours paid per day of work. The Respondent’s representative submitted, and the representative for the Applicant acknowledged, that the income earned by the Respondent from Employer 1 did not neatly align with the Centrelink fortnightly reporting periods.
The Respondent was employed by a second employer (“Employer 2”) and the payslip received from this employer indicates that she was employed for one day only, on 24 February 2016, and earned $193.45 gross for work performed on that date. The Tribunal accepted that, when a laundry allowance of $3.13 was deducted from this amount, the Respondent’s earnings from Employer 2 were $190.32.
The Respondent was employed by a third employer (“Employer 3”). No payslips were available to the Tribunal from this employer and the Applicant has submitted that it is unable to seek these due to Employer 3 having been deregistered by ASIC in January 2022. The Respondent’s bank statements indicate that the Respondent was paid income by Employer 3 on 29 October 2015 and 12 November 2015.
The Applicant submitted, in its Statement of Facts, Issues and Contentions, that the Respondent only reported earnings for the period from March 2017 to May 2017.[4] However, the Tribunal was provided details of the Respondent’s “Earnings from Employment (EAN)” screens,[5] and noted from these that the “NVE” earnings (indicating unverified earnings reported by a Centrelink customer) covered the period from 24 March 2015 through to May 2017. The Tribunal was satisfied from this evidence that the Respondent declared earnings throughout the claimed debt period.
[4] Applicant’s Statement of Facts, Issues and Contentions at paragraph 6.6.
[5] Annexure C to Applicant’s Reply dated 14 May 2025.
The Tribunal observed two things from a comparison of the declared earnings with the gross earnings of the Respondent in the period under review. The first of these was that, despite earning variable amounts that were never a round figure, earnings declared by the Respondent were largely round figures, for example, $1,000 or $1,200.
Secondly, the overall pattern was one of under-declaration of income, rather than some periods of under-declaration and others of over-declaration, which the Tribunal would generally observe when there had been difficulties in estimating income but a genuine attempt to amend any errors in declaration from the previous fortnight.
When asked at hearing about how she had reported her income, the Respondent stated she didn’t remember but had probably called or reported online. She stated she had probably read the letter enclosing her reporting statement, but noted it related to some time ago and also noted that she has a bad memory. She agreed in her evidence that she knew the times she had started and finished work and knew her hourly rate. In response to the observation that she must have known there was some inaccuracy in her reporting in providing round numbers to Centrelink, she responded by stating she did not know, perhaps that was her OCD and ADD, or maybe it was just how she did stuff. When the same observation was made a second time, she responded that this was to the best of her knowledge.
The Tribunal was satisfied from the evidence before it that the Respondent did not correctly declare her income from the time she commenced receiving newstart allowance in March 2015 and that any income declared was less than the Respondent earned.
As to the quantum of any overpayment, the Tribunal notes that extensive oral submissions were made by the representatives for both the Applicant and the Respondent at the hearing, in addition to the written submissions both parties had provided to the Tribunal. This was within the context of the decision in FTXB having been issued, but Chaplin not having been determined. Arguments and submissions made based on FTXB, while considered by the Tribunal, were, in the Tribunal’s view, subsumed by the Chaplin decision, which took a different view of the relevant law.
The Respondent has submitted that there is a textual difference between the income test applicable to youth allowance and the income test applicable to newstart allowance recipients. The youth allowance calculator at section 1067G-H1 states to “work out the amount of the person’s ordinary income on a fortnightly basis (where appropriate, taking into account the matters provided for in points 1067G-H2 to 1067G-H25)”; while the newstart allowance calculator at section 1068-G1 states to “work out the amount of the person’s ordinary income on a fortnightly basis”. The Respondent submits that the majority’s reasoning in Chaplin focused on the “where appropriate” language at several points in its judgment and that “it is unclear whether the majority would have found that Mr Chaplin’s ordinary income could be taken into account in the fortnight in which it was received if Step 1 of Point H1 did not contain the “where appropriate” language”.[6]
[6] Respondent’s Supplementary Submissions , paragraph 10.
The Applicant’s position was that it had submitted to the Court in Chaplin that Step 1 of Module H contained a “critical command” for the purposes of application of that module and the newstart allowance rate calculator followed a similar structure to the youth allowance rate calculator. Both calculators yield a daily rate that is worked out by dividing the fortnightly rate calculated according to [the] Rate Calculator by 14 and the income test provisions are in similar terms. The Applicant submits that while the majority in Chaplin referred to the phrase “where appropriate”, the two income tests “could not be construed differently”: Point G7A is effectively identical to Point H23; Step 1 of each Method statement requires the working out of ordinary income on a fortnightly basis; and construing the provisions such that a debt could not be raised, despite knowing there was an overpayment, would be inconsistent with the legislative intention. The Applicant submits that point 1068-G1 should be the “primary command” requiring the Tribunal to work out ordinary income on a fortnightly basis and, where the evidence does not establish when income was earned or derived, but does identify when it was received, the need for point G7A to dictate which of two possible fortnights in which income is assessed does not arise; the income must be assessed in the fortnight received.
The Tribunal, after consideration of both parties’ positions, has ultimately accepted that, given the similarity of structure of both rate calculators and the requirement in each to determine ordinary income on a fortnightly basis, and the requirement to assess when income was “first earned, derived or received”, has concluded that it is bound by the findings of the majority in Chaplin in consideration of the quantum of any overpayment to the Respondent. The majority held that ordinary income is earned when that person becomes entitled to that income (at [178]) and that, when a decision-maker cannot work out the fortnight in which income was earned or derived, but can work out the fortnight in which it was received, the decision-maker is not precluded from finding that there is a debt (at [193]-[194]). In such circumstances, the amount earned can be taken into account in the fortnight in which it was received (at [197]).
The Tribunal was satisfied that there was evidence of an overpayment to the Respondent in the period from March 2015 to August 2017, having regard to the income reported by the Respondent, the various payslips available to the Tribunal and the bank statements of the Respondent. In line with Chaplin, the income of the Respondent when applied to the rate calculator is applied in the following way:
(i)For Employer 1: While there are payslips available to the Tribunal, these do not identify the days the Respondent worked in any of the Centrelink fortnights under review. The payslips provide evidence of when income was “received” and are to be applied in the Centrelink fortnight in which they were received. There are three exceptions to this approach, being three public holidays during the period under review, on which it can be inferred specific amounts identified in the payslips were “earned”. There were also amounts paid to the Respondent by way of incentive payments that have been assessed under section 1068-G7B of the Social Security Act and spread over 52 weeks in accordance with that provision.
(ii)For Employer 2: The payslip demonstrates the date on which the income was earned and when it was received (the Applicant noted that both dates fell within the same Centrelink fortnight).
(iii)For Employer 3: As there are only bank statements available to the Tribunal in respect of this income, the only information available to the Tribunal establishes when the amounts were “received”.
The Tribunal accepted, from written submissions provided by the Applicant, that following the above approach as required by the findings in Chaplin, the Respondent was overpaid newstart allowance totalling $7,382.16 between 25 March 2015 and 8 August 2017.
Subsection 1223(1) of the Social Security Act provides that where a social security payment is made and a person obtains the benefit of the payment who was not entitled to obtain that benefit, the amount of the payment is a debt due to the Commonwealth by the person and is taken to arise when the person obtains the benefit. The Tribunal finds that the Respondent owes a debt to the Commonwealth in the amount of $7,382.16 for the period from 25 March 2015 to 8 August 2017.
Is the debt recoverable by the Commonwealth?
Write off
The Tribunal first considered whether the debt is able to be written off for a period of time. Subsection 1236(1A) of the Social Security Act provides a discretion to write off a debt where:
(a) the debt is irrecoverable at law; or
(b) the debtor has no capacity to repay the debt; or
(c) the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d) It is not cost effective for the Commonwealth to take action to recover the debt.
It was not submitted that paragraphs 1236(1A)(a), (c) and (d) apply in the circumstances of this particular matter and the Tribunal found accordingly.
In respect of paragraph 1236(1A)(b), subsection 1236(1C) states as follows:
(1C) For the purposes of paragraph (1A)(b), if a debt is recoverable by means of:
(a) deductions from the debtor's social security payment; or
(b) deductions under section 84 of the A New Tax System (Family Assistance) (Administration) Act 1999; or
(c) setting off under section 84A of that Act;
the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe financial hardship.
Guidance provided in previous Tribunal decisions indicates that, for a finding of severe financial hardship to be made, a person’s entire financial position would need to be materially less than the current rate of pension (Re Lumsden and Secretary, Department of Social Security (1986) 10 ALN N225) and, “while not implying destitution, goes beyond straitened financial circumstances and imports a need for the particular case of a person to include financial suffering of a severe or extreme nature” (Re Stubbs and Secretary, Department of Family and Community Services (2003) AATA 03/0729).
The Respondent had provided the AAT at first review a Statement of Financial Circumstances, which set out the following position about her financial situation as of June 2023:
·She was not employed as she was a carer;
·She received a Centrelink payment of $1,366 per fortnight and had no other sources of income;
·Household expenses included rent of $300 per week, telephone $45 per month, groceries $125 (period unspecified), chemist $80 per week, clothing and shoes $180 per fortnight, car registration $500 per year, petrol $70 per week and car repairs $800 per year;
·No amounts were specified as money owed, for example, credit card or hire purchases, or for debts;
·The Respondent did not declare any real estate, property, savings or other assets such as shares;
·The Respondent commented in the document that after all necessary expenses she was left with $36 per fortnight, “if that at all”.
The Respondent gave evidence at the hearing that she is a full-time carer for her mother and is unable to work and is unable to repay the debt. She is currently receiving jobseeker and carer allowance and agreed she had previously been making repayments towards the debt in the amount of $20 per fortnight.
The Respondent’s representative submitted that the Respondent has no partner, no real estate and no savings. She is reliant on social security payments. The information she completed in the Statement of Financial Circumstances was a “line item” and she has no capacity to repay the debt and would have to go into credit card debt. The Respondent’s representative noted that the Respondent had provided a statement, dated 24 April 2025, in which she had indicated that she had the same expenses as in her Statement of Financial Circumstances, but “everything gone up. Everything costs more”.
The Tribunal noted that the Respondent had provided other information about her current financial circumstances in the statement made on 24 April 2025, which stated as follows (paragraph numbering deleted):
I am on a carer payment for my mum who has heart attack, hip and knee replacements, she’s not well. I get $1361 pension and $159.30 rent assistance. There’s nothing else for income.
I pay $300 pw/k rent to Dad. I help out with everything for paying for things, it’s my family. When have money I help with electricity, water, whatever, I pay dad because he’s doing it tough too. Both he and mum are pensioners, but their pension is less than mine.
My phone has gone up it $52per month. I buy the groceries sometimes, I pay for my parents, sometimes its $125 sometimes $200 for dad and mum. I pay $80 plus per week chemists, for my antibiotics, I have lot of allergy conditions, I am celiac, lactose intolerant, and I have IBS. I had car accidents several years ago and I need lots of stuff for the pain, like voltaren, deep heat, medication. My car insurance and greenslip is at least $2000-2500 per year. I spend about $70per week on petrol. It costs around $800 per year for repairs. I have a service coming up, I will put that in the credit card.
I have just enough at the end of the day, sometimes not. I am lucky I have my credit card. I wouldn’t be able to survive without my card. I have had the same one for years. They won’t put up the limit because I am carer and I don’t work but that card has saved my life more than a million times. Everything has gone up. I am left with nothing, I’m left with 5 cents.
I have no other debts. I am so embarrassed I have this one, I cried in the Tribunal last time because I don’t know why this happened.
The Applicant submitted that write off is not available to the Respondent, on the basis that there was an element of discretion in the claimed expenditure that could be reduced and there is no evidence of an extreme shortfall in finances.
The evidence before the Tribunal suggests that the Respondent has, and in the past has had, an ability to maintain a level of discretionary expenditure. At the time of completing the Statement of Financial Circumstances, the Respondent indicated she was spending $180 per fortnight on clothing and shoes. While her representative has noted it was a “line item” completed by her, there was no evidence before the Tribunal to suggest that the amount estimated was incorrect or what the correct amount disclosed should have been. The Respondent’s more recent statement, prepared in April 2025, also indicates a level of discretion in that she is able to assist her parents with expenses other than rent and food.
The Tribunal was not persuaded on the evidence presented by the Respondent that it is appropriate to write off the debt for a period of time, on the basis that the debt could be recovered from the Respondent’s social security payment and the Tribunal was not persuaded that recovery by such means – at a reasonable rate of repayment – would result in the Respondent being placed in severe financial hardship. The Tribunal makes these findings on the basis of its observations about the Respondent’s past and more recent level of discretionary expenditure.
Waiver – Administrative error
Subsections 1237A(1) and (1A) of the Social Security Act provide that a debt must be waived where:
(1) Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.
Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).
(1A) Subsection (1) only applies if:
(a) the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or
(b) if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;
whichever is the later.
In Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190; (2003) 132 FCR 126, the Full Federal Court, per Selway J, observed (at [35]) that:
The ordinary or usual interpretation of the phrase “attributable solely to” is that it refers to the single or sole cause of the relevant act or event. The word “attributable” means “capable of being attributed”. It involves an objective assessment of causation. The words “a debt attributable solely to an administrative error” can be paraphrased as meaning that the only cause that objectively can be ascribed to the relevant debt is an administrative error.
The Tribunal has observed, above, that the income declared by the Respondent in the relevant period was round figures that did not correlate with the variable gross amounts she had earned. There was, further, a pattern of under-declaration of income across the debt period. The Tribunal found that the debt was caused by the incorrect declaration of income by the Respondent. It was not caused by (or contributed to by) Commonwealth administrative error and, because of this, is unable to be waived under section 1237A of the Social Security Act.
Waiver – Special circumstances
Section 1237AAD of the Social Security Act provides that the Secretary may waive the right to recover all or part of a debt if satisfied that:
(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false statement or a false representation; or
(ii) failing or omitting to comply with a provision of this Act, the Administration Act or the 1947 Act; and
(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c) it is more appropriate to waive than to write off the debt or part of the debt.
As all of the above requirements are cumulative, and given the matters raised by and on behalf of the Respondent at the hearing, the Tribunal first considered whether there are special circumstances in this case that make it desirable to waive the debt, or part of the debt.
In Secretary, Department of Social Security v Hales (1998) 82 FCR 154; [1998] FCA 219, the Federal Court noted that:
The concept of special circumstances is broad. A constellation of factors, including financial circumstances, may fall within it. The express exclusion of financial hardship alone as a special circumstance is an indicator that it would otherwise be included. This gives some measure of the range of circumstances which will qualify as special….
The evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words…But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose.
Elsewhere, the term special circumstances has been held to relate to circumstances that are distinguishable from those of other applicants (Groth and Secretary, Department of Social Security (1995) 40 ALD 541), that are distinguishable from the usual case (Dranichnikov v Centrelink [2003] FCAFC 133) and that require the Tribunal to consider not only an applicant’s circumstances, but to consider whether there are circumstances that make it desirable for the section to apply, having regard also to the general administration of the social security system (Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114).
The Tribunal has set out in some detail, above, the financial circumstances of the Respondent at the time of the AAT first review hearing and her more recent circumstances as of April 2025. The Respondent gave evidence at the hearing that she is a full-time carer for her mother who is unwell and who depends on her. She is unable to work and believes she can’t repay the debt. She gave evidence that she has previously made repayments towards the debt of $20 per fortnight from her jobseeker and carer allowance payments.
The Respondent’s representative submitted that the Tribunal should waive any debt under section 1237AAD of the Social Security Act and that administrative error is one of the factors being relied on by the Respondent in this matter. The Respondent’s written submissions on this point were that there are three matters which, when considered together, establish special circumstances:[7]
The first matter is financial hardship. It is true that s 1237AAD(b) refers to special circumstances “other than financial hardship alone”, but that does not mean that the existence of financial hardship, or its severity in a particular case, is an irrelevant consideration for the purposes of waiver…. [The Respondent] is experiencing financial hardship of a severe or extreme nature.
The second matter is that administrative errors by Centrelink have contributed to any debt amount. To illustrate, [the Respondent] reported $170 and $1000 of income for her first two newstart allowance periods respectively. Yet, Centrelink calculated [the Respondent’s] newstart allowance payments for those instalment periods on the basis that her fortnightly income amounts were $0.18 and $0.16 respectively. It is not possible to know how widespread such administrative errors were throughout the Relevant Period, as the Secretary has not produced records of [the Respondent’s] reported income in each instalment period, nor correspondence confirming the income amount that her payments were based on in each instalment period. But there is sufficient material before the Tribunal to infer that the error occurred on several occasions.
The third matter is delay. The Relevant Period commenced on 11 March 2015 and ended on 20 May 2017. Centrelink did not make any subsequent enquiries as to [the Respondent’s] earnings until February 2018, and did not first raise the debt until April 2018. The ARO’s decision to confirm the debt was not made until September 2018. As such, the debt was not conclusively imposed on [the Respondent] for three and a half years after the Relevant Period commenced. Moreover, the Secretary is still seeking to defend the debt decision in these proceedings, which will be heard in May 2025, more than a decade after the Relevant Period commenced. The protracted nature of this case...is not only likely to have caused [the Respondent] significant distress and uncertainty, but to have undermined her ability to clearly recall facts and circumstances from the Relevant Period which are now in issue.
[7] Respondent’s SFIC at paragraphs 64-66; references to location in T documents omitted.
At the Tribunal hearing, the Respondent’s representative reiterated their submissions that the above factors establish special circumstances. In addition, the Respondent’s representative submitted that the Respondent is a full-time carer and is unable to return to work and that all of the factors before the Tribunal, in combination, are out of the ordinary and amount to special circumstances.
In contrast, the Applicant submitted that the discretion in section 1237AAD of the Social Security Act should not be exercised as the Respondent’s circumstances are not distinguishable from other social security recipients such that they could be considered to be special circumstances, and there are no matters that would make it desirable to waive recovery of the debt.
The Tribunal has found, for the reasons set out above, that it is not persuaded the Respondent is in severe financial hardship or would face severe financial hardship if required to make reasonable repayments towards the debt. The payment summary screens provided to the Tribunal indicate variations to the Respondent’s fortnightly rate of newstart allowance, which suggests that the Respondent was being paid a rate based on the fortnightly income she was reporting to Centrelink, and not based on incorrectly recorded income of $0.18 or $0.16 as asserted by her representative. Further, in circumstances where an overpayment has been identified by Centrelink through the provision of ATO lodgement information, a delay in calculating and raising a debt is an inevitable result of the debt having been identified in that manner.
The Tribunal accepted the Respondent is a full-time carer for her mother and is unable to work due to her caring responsibilities. However, while accepting this, and while noting the evidence presented by and on behalf of the Respondent about her circumstances, the Tribunal was not persuaded that there are circumstances in this case that take the case out of the ordinary when compared with other social security recipients and which make it appropriate to exercise the discretion in section 1237AAD of the Social Security Act.
Other provisions in Part 5.4 of the Social Security Act are not applicable to the circumstances of this matter. The Tribunal therefore finds that the newstart allowance debt is recoverable by the Commonwealth.
DECISION
The Tribunal sets aside the decision under review and makes a decision in substitution that there is a newstart allowance debt totalling $7,382.16 for the period 25 March 2015 to 8 August 2017. The debt is recoverable by the Commonwealth.
Date of hearing: 23 May 2025 Solicitors for the Applicant: Mr M Sherman of counsel Solicitors for the Respondent: Mr L Chircop of counsel
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