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

This matter concerned an appeal to the Administrative Appeals Tribunal regarding the recovery of overpayments of family tax benefit and schoolkids bonus. The applicant, Ms Hockey, sought to have these debts waived. The primary dispute revolved around whether the debts were irrecoverable at law or whether Ms Hockey had the capacity to repay them, considering the potential for severe financial hardship.

The Tribunal was required to determine two key legal issues. Firstly, whether any of the circumstances outlined in section 95(3) of the *Administration Act 1999* (Cth) applied, rendering the debt irrecoverable at law. Secondly, if the debt was recoverable through deductions from social security payments, income tax refunds, or family assistance payments, whether Ms Hockey had the capacity to repay the debt, which would be presumed unless recovery would result in severe financial hardship, as per section 95(4) of the *Administration Act*.

The Tribunal found that none of the circumstances in section 95(3) were met. In relation to section 95(4), the Tribunal considered Ms Hockey's financial position, noting her fortnightly income, Centrelink benefits, expenses, and her repayment of the debt by way of $15 fortnightly deductions. The Tribunal referred to established case law and the Guide to Social Security Law, which defines severe financial hardship as occurring when net fortnightly income after reasonable expenses is less than the minimum amount allowed for flexible repayment arrangements for family assistance debts. Applying this definition and considering Ms Hockey's stated income and expenses, the Tribunal concluded that she was suffering from severe financial hardship.

Consequently, the Tribunal set aside the decision under review and substituted it with a decision that the family tax benefit and schoolkids bonus debts should be written off pursuant to section 97 of the *Administration Act*.