HRMD and Secretary, Department of Social Services (Social security second review)
[2025] ARTA 1820
•16 September 2025
HRMD and Secretary, Department of Social Services (Social security second review) [2025] ARTA 1820 (16 September 2025)
Applicant: HRMD
Respondent: Secretary, Department of Social Services
Tribunal Number: 2021/4929
Tribunal:Senior Member T Hamilton-Noy (second review)
Place:Melbourne
Date:16 September 2025
Decision:The Tribunal sets aside the decision under review and substitutes its decision that:
(i)The Applicant owes a debt to the Commonwealth in the amount of $4,940.94 for overpayment of newstart allowance between 6 June 2015 and 20 May 2016;
(ii)The Applicant owes a debt to the Commonwealth in the amount of $15,243.36 for overpayment of parenting payment between 17 September 2016 and 14 February 2018; and
(iii)The debts are recoverable by the Commonwealth.
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.
[ SGD ]
………………………………….
Statement made on 16 September 2025 at 3:21pm
Catchwords
Newstart Allowance debt – parenting payment debt – wife’s earnings from employment – income apportionment – earned, derived or received – no grounds for waiver or write off
Legislation
Administrative Review Tribunal Act 2024 (Cth)
Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
Cases
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Chaplin v Secretary, Department of Social Services [2025] FCAFC 89
Groth v Secretary, Department of Social Security [1995] FCA 1708
Secretary, Department of Social Security v Coralie Hales [1998] FCA 219
Secretary, Department of Social Services and FTXB [2024] AATA 3021
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190
Statement of Reasons
Background
This application relates to debts raised by the Respondent (Services Australia – Centrelink) due to the Applicant’s wife’s earnings from employment.
The Applicant was in receipt of newstart allowance between 9 June 2015 and 16 September 2016 and was then paid parenting payment (at the partnered rate) between 17 September 2016 and 15 March 2022. The Applicant has been receiving jobseeker payment since 16 March 2022. While the Applicant was being paid newstart allowance and parenting payment, the Applicant’s wife was receiving income from employment.
Following a review of the Applicant’s combined income, on 29 May 2018 an employee of Centrelink made a decision to raise and recover a parenting payment debt of $18,684.26 for the period 17 September 2016 to 25 May 2018. This decision was made on the basis that the Applicant’s wife’s earnings had not been properly taken into account in determining the correct rate of payment payable to him.
Following a request for an internal review of this decision, on 31 July 2018 an authorised review officer of Centrelink found that there were newstart allowance and parenting payment debts for the period 9 June 2015 to 25 April 2018 and that the overpayments totalled $22,873.52.
The Applicant made an application to the Administrative Appeals Tribunal (AAT) on 4 May 2021 for an independent review of the decision. On 16 June 2021, the AAT at first review affirmed the decision under review.
Following the issuing of the AAT decision, the Secretary obtained payroll information for the Applicant’s wife’s employment and amended the debt amount to $20,184.30.
On 20 July 2021, the Applicant made an application to the AAT for a second review of the decision.
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.
The Tribunal held a hearing with the Applicant on 12 May 2025, on which date the Applicant participated in the hearing by telephone and gave evidence on affirmation. A representative for the Respondent also participated by telephone.
Delays in this proceeding
The Tribunal is mindful that this matter has been before the Tribunal for a significant period of time, in part arising due to scrutiny around the application of section 1073B of the Social Security Act 1991 (Cth) (the Social Security Act). This section had been identified in a Commonwealth Ombudsman report, which had questioned the legality of the way section 1073B had been applied in calculating overpayments for periods prior to December 2020.[1]
[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.
At the time the Tribunal conducted a hearing with the Applicant, there had been a decision issued by the AAT, which had provided an interpretation of the law relevant to the debt calculations for the Applicant’s matter (Secretary, Department of Social Services and FTXB [2024] AATA 3021). The Secretary was of the view that the decision was incorrect at law and had provided two sets of debt calculations to the Tribunal, one in which the FTXB method had been applied to the Applicant’s circumstances and once in which its preferred interpretation of the law had been applied to the Applicant’s circumstances. The FTXB method calculations had led to a higher debt amount being calculated for the Applicant.
At the time of the hearing, FTXB had been appealed to the Full Federal Court and arguments had been heard some two months prior to the Applicant’s hearing. The timing of the Applicant’s hearing with the Tribunal was discussed with the Applicant at the hearing and he expressed his preference to the Tribunal that the Tribunal await the outcome of the pending decision before finalising this matter.
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. The Tribunal sought further submissions from the Respondent on the impact of Chaplin on the calculation of any overpayment and these submissions were provided to the Tribunal on 22 August 2025. The submissions were provided to the Applicant and he was given time to respond.
On 7 September 2025, the Applicant provided a written response, in which he queried the accuracy of the calculations given the number of times the debt had been recalculated and restating evidence he had given at the hearing about his contacts with Centrelink at the time of claiming parenting payment. The Applicant also submitted that the circumstances outlined in Chaplin do not apply to him as he was not employed and that the overpayment is due to Centrelink employee error. The Applicant also raised in his written submissions his dissatisfaction with the way the Tribunal hearing had been run and the stress and the process had caused him.
The Tribunal notes that a special leave application to the High Court has been made in respect of the Chaplin judgment. More recently, a Bill has also been introduced which is intended to address the calculation of debts for periods prior to December 2020 and which is presently before the Parliament.[2]
[2] Social Security and Other Legislation Amendment (Technical Changes No. 2) Bill 2025.
The Applicant in two sets of written submissions to the Tribunal has noted the stress the Tribunal process has caused him. The Tribunal has had regard to the impact of a further delay on the Applicant, the length of time the matter has been listed with the Tribunal and the Tribunal’s obligations under section 9 of the Administrative Review Tribunal Act 2024 (Cth) in proceeding at the present time.
The Tribunal further notes that its findings about the quantum of an overpayment to the Applicant, as set out in further detail below, is the lowest quantum calculated through the various methods used (by the authorised review officer, by application of the FTXB method and by application of the Chaplin method) and is the most favourable outcome available to the Applicant in this matter.
Evidence before the Tribunal
At the time the Tribunal has proceeded to make its decision in this matter, in addition to the oral evidence of the Applicant and submissions of the Respondent given at the hearing, the Tribunal had before it in evidence:
(i)Main bundle of “T” documents (T1 to T7);
(ii)Supplementary “T” documents (ST1 to ST17);
(iii)Two emails prepared by the Applicant, containing written submissions and dated 30 August 2023;
(iv)Statements of Facts, Issues and Contentions prepared by the Respondent dated 23 February 2024 and 14 June 2024;
(v)Amended Statement of Facts, Issues and Contentions prepared by the Respondent dated 12 March 2025;
(vi)Submissions prepared by the Respondent dated 22 August 2025; and
(vii)Response prepared by the Applicant dated 7 September 2025.
All of the above documents were exchanged between the parties to the review and relevant parts of these documents are discussed further below.
Newstart allowance debt
At the time the claimed newstart allowance debt arose, 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 the following method for working out the income test:
Step 1. Work out the amount of the person’s ordinary income on a fortnightly basis.
Note: For the treatment of amounts received from friendly societies, see point 1068‑G4.
Step 2. If the person is a member of a couple, work out the partner income free area using point 1068‑G9.
Note: The partner income free area is the maximum amount of ordinary income the person’s partner may have without affecting the person’s benefit.
Step 3. Use paragraphs 1068‑G10(a), (b) and (c) to work out whether the person has a partner income excess.
Step 4. If the requirements of paragraphs 1068‑G10(a), (b) and (c) are not satisfied then the person’s partner income excess is nil.
Step 5. If the requirements of paragraphs 1068‑G10(a), (b) and (c) are satisfied, the person’s partner income excess is the partner’s ordinary income less the partner income free area.
Step 6. Use the person’s partner income excess to work out the person’s partner income reduction using point 1068‑G11.
Step 7. Work out whether the person’s ordinary income exceeds the person’s ordinary income free area under point 1068‑G12.
Note: A person’s ordinary income free area is the maximum amount of ordinary income the person may have without affecting the person’s benefit rate.
Step 8. If the person’s ordinary income does not exceed the person’s ordinary income free area, the person’s ordinary income excess is nil.
Step 9. If the person’s ordinary income exceeds the person’s ordinary income free area, the person’s ordinary income excess is the person’s ordinary income less the person’s ordinary income free area.
Step 10. Use the person’s ordinary income excess to work out the person’s ordinary income reduction using points 1068‑G14, 1068‑G15, 1068‑G16 and 1068‑G17.
Step 11. Add the person’s partner income reduction and ordinary income reduction: the result is the person’s income reduction referred to in Step 5 of point 1068‑A1.
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 is 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.
“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 in the Social Security Act 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:
(a) an income amount earned, derived or received by the person for the person's own use or benefit; or
(b) a periodical payment by way of gift or allowance; or
(c) a periodical benefit by way of gift or allowance;
but does not include an amount that is excluded under subsection (4), (5) or (8).[4]
[4] Excluded amounts under subsections 8(4), (5) and (8) do not include the Applicant’s wife’s income from employment.
“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).
As noted above, on 28 August 2024, the AAT issued its decision in FTXB, in which it provided a guidance decision as to the interpretation of “earned, derived or received” for the purposes of the income test. The AAT held (at [138]-[139]):
Our conclusion that income is ‘earned’ for the purposes of point H23 when a person becomes legally entitled to it means that ‘earned’ cannot be equated with ‘accrued’. A benefit may be accruing on a daily basis without giving rise to a legal entitlement to be paid that benefit at the end of each day. For example, if a worker is entitled to be paid wages for each day of a working week at the end of Friday, the worker may be accruing a right to be paid for each day worked at the end of each work day but the entitlement to be paid does not arise until the end of Friday.
In the context of employment income, the time at which an employee becomes legally entitled to wages will depend upon the legal arrangements that apply to the employment relationship. Those legal arrangements may arise from a contract of employment (whether oral or in writing, express or implied or inferred from a course of conduct) or may be governed by a legal instrument such as a statute or an industrial award.
The AAT set out the relevant considerations to be the following (at [150]):
On this basis, the question posed by point H23 is: in what instalment period was a particular income amount first earned, derived or received, so that it can be taken into account in that instalment period in order to determine a person’s income reduction for the purposes of step 12 of the method statement in point 1067G-A1 for working out the benefit amount payable to the person in that instalment period? Applying the meanings we have assigned to the words in point H23, the analysis required by point H23 in respect of each income amount of a person may be framed as follows:
In which of the person’s instalment periods did they first:
(a) become legally entitled to the income amount, where the income amount is of a kind that can be described as being earned; or
(b) become legally entitled to the income amount, where the income amount is not of a kind that can be described as being earned but can be described as being derived; or
(c) receive the income amount?
On review, the majority of the Full Federal Court in Chaplin held that the AAT had erred in concluding that all of Mr Chaplin’s income was earned on Sundays, based on the AAT’s views that a legal entitlement to the week’s income arose on that day (at [172]). The Court stated, in respect of the concept of “earned” (at [178] – [181]) that:
Both parties before us accepted that the Tribunal was correct in concluding that ordinary income is earned by a person for the purpose of Point H23 when that person becomes entitled to that income (T[133]) but erred in its application of that principle by conflating the concept of legal entitlement to be paid with the time at which an enforceable right to compel immediate payment arises or with the point in time at which wages are calculated. The error manifests at T[158].
There is nothing in the word “earned” in the context in which that word is used in the Act including in the general definition of the phrase “earned, derived or received” in s 8(1), or in the phrase “first earned, derived or received” in Point H23, which suggests that it was intended to refer to income in respect of which a legally enforceable right to require payment has arisen.
It is the service that “earns” the remuneration: Automatic Fire Sprinklers Pty Ltd v Watson [1946] HCA 25; 72 CLR 435 at 465 (Dixon J). This is consistent with the definition of employment income in s 8(1A) in so far as that definition refers to income “from remunerative work undertaken by the person as an employee”. A casual employee earns income as the employee provides services under the contract. The services are the consideration for the entitlement to be paid and typically that income is earned on an hourly, daily or per shift basis.
The phrase “pay period” may refer to the period over which a person is required to provide services in order to discharge the obligation in respect of which the person is to be paid. The phrase may also refer to the period which an employer uses as an administrative basis to calculate and pay employees. The former is directly relevant to determining the time at which wages were earned or derived. The latter is not.
The majority went on to find as follows, where there is insufficient evidence of when amounts were earned or derived (at [193]-[194] and [197]-[198]):
In circumstances such as the present, if a decision-maker cannot work out (either through a consideration of direct evidence or through appropriate inference and having afforded procedural fairness) the fortnight in which income was “earned” or “derived”, but can work out the fortnight in which it was “received” (a few says after that income was “earned”), is the decision-maker disabled from making a decision about entitlement (with potentially unfortunate consequences for a social security claimant) or does the statutory scheme permit the taking into account of the income when it is received?
The legislature should not be taken to have intended that Point H23 was to operate such that income known to have been earned shortly before it was received should be entirely excluded from the relevant calculations because it cannot be determined whether it was earned in that part of the relevant week which fell within the Youth Allowance fortnight in which it was received or the Youth Allowance fortnight immediately before. That would result in the determination of an entitlement known to be wrong and is contrary to the statutory scheme.
……
When Step 1 of the Method statement in Point H1 and Point H23 are read together, in the context of the Act as a whole, including Module A, the better view is that income which was known to be earned before being received, but which is incapable of being allocated between the two weeks in which it was known to be earned, can be taken into account when it was received in undertaking the task required by Point H1 and in determining the extent of a recipient’s entitlement to Youth Allowance.
The word “first” in Point H23 is intended to ensure that income is taken into account only once and directs that income is to be allocated to the earliest fortnight in which the income can be identified as being “first earned, derived or received” on the available material. Point H23 does not confer a discretion as to which fortnight the amount is to be allocated, but it cannot be understood as authorising the formation of a state of satisfaction as to the extent of a recipient’s entitlement which is premised on income known to be earned, derived or received being ignored for the purposes of Step 1 in the Method Statement in Point H1 because it is not possible to identify when the first of these occurred. The fact that there might not be one event which occurred “first” (because, for example, the events occurred simultaneously), or that the material does not allow more than a speculative conclusion as to which occurred first, should not be understood as authorising the non-inclusion of income when working out fortnightly income under Point H1. Nor does the fact that it is known that the income was first earned before it was received, but it is not known in which of the two weeks before receipt it was earned. Rather, one must revert to Point H1 because, although it is “appropriate” to take Point H23 into account, it is not possible to apply it.
Turning to the evidence available to the Tribunal regarding the Applicant’s wife’s income, the Tribunal notes that it had been provided a pay summary in relation to the Applicant’s wife covering the period from June 2015 to May 2016, in addition to daily employment arrangements. The rates paid to the Applicant’s wife include ordinary hours, public holiday, public holiday 1.5, penalty loadings and leave loadings. The Applicant’s wife’s gross income was consistent across a number of fortnights, but varied in other fortnights in this period.
The Online Document Recording Archive records provided by the Respondent, and contained in the papers before the Tribunal, indicate that the Applicant was reporting his wife’s fortnightly earnings between June 2015 and December 2015. In this period, he consistently reported his wife had earned $1,047.52 for a fortnight (for 9 fortnightly reports), amounts of $1,268 and $1,279 in other fortnights, and no income for four of the fortnights in question.
The Applicant’s wife’s gross income, as summarised in her summary of payments, was notably higher than the amounts reported by the Applicant indicated in the Centrelink records. The Respondent provided the following submissions, to demonstrate the pattern of under-reporting while the Applicant was in receipt of newstart allowance:
Fortnightly instalment period
Amount earned by partner
Amount declared by Applicant
1/8/2015 – 14/8/2015
$1,404.12
Nil
15/8/2015 – 28/8/2015
$1,443.24
$1,407.52
29/8/2015 – 11/9/2015
$1,443.24
Nil
12/9/2015 – 25/9/2015
$1,443.24
Nil
26/9/2015 – 9/10/2015
$1,443.24
$1,279.80
The Applicant did not dispute, in his evidence to the Tribunal, that he had under-estimated his wife’s income during the period he was receiving newstart allowance. He referred in his evidence to having been forced to “guesstimate” the earnings but did not otherwise submit that there had been no overpayment or that any calculations undertaken by the Respondent were incorrect. As noted above he has, however, questioned the accuracy of any overpayment given the varying calculations undertaken by the Respondent.
The Tribunal was satisfied from the evidence before it that the Applicant consistently under-declared his wife’s earnings from employment between 6 June 2015 and 20 May 2016. The Tribunal finds that the best evidence before it as to the amount of any overpayment is contained in the calculations provided by the Respondent that are in line with the majority judgment in Chaplin. This approach uses the amount of income earned by the Applicant’s partner in the fortnight in which it was earned. The Tribunal finds that, in the period 6 June 2015 to 20 May 2016, the Applicant was overpaid newstart allowance totalling $4,940.94.
Subsection 1223(1) of the Social Security Act provides that where a social security payment is made and the person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit, the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment. The Tribunal finds that the Applicant owes a debt to the Commonwealth in the amount of $4,940.94 under subsection 1223(1) of the Social Security Act.
Parenting payment debt
At the time the claimed parenting payment arose, the rate of parenting payment for a person who was partnered was calculated by section 1068B of the Social Security Act. Section 1068B-A1 noted that the rate of parenting payment is a daily rate, worked out by dividing the fortnightly rate by 14.
The income test in Module D provided the following method to apply the income test:
Step 1. Work out the amount of the person’s ordinary income on a fortnightly basis.
Note: The amount of the person’s ordinary income is affected by points 1068B‑D2 to 1068B‑D21.
Step 2. Work out the partner income free area using point 1068B‑D22.
Note: The partner income free area is the maximum amount of ordinary income the person’s partner can have without affecting the person’s rate.
Step 3. Use point 1068B‑D23 to work out the person’s partner income excess.
Step 4. Use the person’s partner income excess to work out the person’s partner income reduction using point 1068B‑D24.
Step 5. Work out whether the person’s ordinary income exceeds the person’s ordinary income free area (see point 1068B‑D27).
Note: A person’s ordinary income free area is the maximum amount of ordinary income the person can have without affecting the person’s rate.
Step 6. If the person’s ordinary income does not exceed the person’s ordinary income free area, the person’s ordinary income excess is nil.
Step 7. If the person’s ordinary income exceeds the person’s ordinary income free area, the person’s ordinary income excess is the person’s ordinary income less the person’s ordinary income free area.
Step 8. Use the person’s ordinary income excess to work out the person’s ordinary income reduction using points 1068B‑D29 to 1068B‑D31.
Step 9. Add the person’s ordinary income reduction and partner income reduction: the result is the person’s income reduction referred to in step 5 of the method statement in point 1068B‑A2.
Point 1068B-D19 stated that, subject to points 1068B-D8 to 1068B-D18, a person’s ordinary income was to be taken into account over such period, not exceeding 52 weeks, as the Secretary determined. The note to this section stated that this point, in conjunction with point 1068B-D20, enabled the Secretary to determine the person’s fortnightly income that best represents the person’s income situation.
Point 1068B-D20 then stated that, for the purposes of the module, the person’s ordinary income for such a period was to be reduced to a fortnightly rate rounded to the nearest cent (rounding 0.5 cents downwards).
The person’s ordinary income, referred to in the income test in Module D, is defined (as set out above) to be income that is not maintenance income or an exempt lump sum. “Income”, also as set out above, refers to amounts earned, derived or received by a person.
For the period the Applicant was receiving parenting payment, the Applicant does not dispute that he was not reporting his wife’s income to Centrelink. His evidence was that any overpayment is due to Centrelink error, on the basis that he hadn’t been advised of his reporting requirements while receiving parenting payment and had given hard copies of his wife’s payslips at the time of claim.
The Tribunal found, from the undisputed evidence before it, that the Applicant was paid parenting payment between 17 September 2016 and 14 February 2018 without his wife’s income having been taken into account in determining his rate of payment. The Applicant’s wife’s earnings information for this period demonstrates ongoing fortnightly income throughout the period, of varying fortnightly amounts. As none of this income was taken into account in determining the Applicant’s rate of parenting payment, the Tribunal accepted that the Applicant was overpaid parenting payment between 17 September 2016 and 14 February 2018.
The calculation of fortnightly rate of parenting payment does not specifically require consideration of when an income amount is “first” earned, derived or received. In submissions provided to the Tribunal, the Respondent has noted that the Applicant’s wife’s income is taken into account over such period, not exceeding 52 weeks, as the Secretary determines and that this provision provides “significant flexibility” to a decision maker to assess income in the way best represented by that person’s situation.[5]
[5] Respondent’s Statement of Facts Issues and Contentions at paragraph 73.
The Respondent submits that the Applicant’s wife’s income is most appropriately assessed consistently with how her income was assessed in relation to the newstart allowance debt, that is, based on amounts earned in each instalment period. The Tribunal notes that this approach is not only consistent with the approach to the newstart allowance overpayment, but is also consistent with the majority decision in Chaplin. Based on the calculations undertaken by the Respondent when using this approach, the Tribunal accepted that the Applicant was overpaid parenting payment totalling $15,243.36 in the period 17 September 2016 to 14 February 2018.
The Tribunal finds that the Applicant owes a debt to the Commonwealth in the amount of $15,243.36 under subsection 1223(1) of the Social Security Act.
Whether there is any reason the debts should not be recovered
Part 5.4 of the Social Security Act provides mandatory and discretionary provisions relating to non-recovery of social security debts. In considering these provisions, the Tribunal was mindful of the comments of the Federal Court in Secretary, Department of Social Security v Coralie Hales [1998] FCA 219, where the Court stated that:[6]
The taxpayer is entitled to expect that in the ordinary course money paid to people which they are not entitled to receive will be recovered, albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the persons concerned. However, the confining of a recovery regime by rigid rules, particularly in this area of the law, is likely to be productive of unfair or harsh outcomes in some of the great variety of fact situations that can arise. There are provisions in the Act which recognise that reality. They relate to the writing off and the waiver of debts otherwise due to the Commonwealth.
[6] Cited in Respondent’s Statement of Facts Issues and Contentions at paragraph 8.2.
The Tribunal considered the following non-recovery provisions, relevant to the circumstances before it.
Write off
Subsection 1236(1A) of the Social Security Act allows for write off of a debt for a period of time where the following requirements are met:
(1A) The Secretary may decide to write off a debt under subsection (1) if, and only if:
(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.
Subsection 1236(1B) of the Social Security Act then provides that, for the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:
(b) there is no proof of the debt capable of sustaining legal proceedings for its recovery; or
(c) the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or
(d) the debtor has died leaving no estate or insufficient funds in the debtor's estate to repay the debt.
Subsection 1236(1C) of the Social Security Act provides the circumstances in which a debtor is taken to have capacity to repay a debt and states that:
(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.
The Tribunal is satisfied that the debts are recoverable at law, the Applicant’s whereabouts are known and that it is cost effective for the Commonwealth to take action to recover the debts. The preconditions for write off under paragraphs 1236(1A)(a), (c) and (d) are not met.
As to whether the Applicant has the capacity to repay the debts, the Tribunal had regard to a summary of the family’s budget, provided in an email prepared by the Applicant’s wife on 30 August 2023. The budget states that the family’s total annual expenses are $62,681.30, the Applicant’s wife’s annual income is $54,615.60 and the family receive family tax benefit totalling $7,680, leaving the family with an annual deficit of $1,385.70. The Tribunal noted some minor discretionary expenses in the budget, such as firearms, fishing and boating licences.
At the Tribunal hearing, the Applicant gave evidence that he had commenced work in 2024 and continues to be employed by the same employer. In response to observations that he had, during 2024, been earning $390 to $737 per week, he stated “could be”. When asked about what his current income is, he did not respond directly but rather stated that it varies on the hours he does. When asked whether his income continued to be between $390 and $737 per week, he replied by stating it is “nothing to do with you”.
The Tribunal notes that the household budget prepared by the Applicant’s wife in August 2023 was not accurate at the time the Tribunal has made its decision in this matter, on the basis that the Applicant’s employment circumstances have changed since that time. The Applicant was unwilling to provide any information to the Tribunal about his current income and, in these circumstances, the Tribunal did not accept that a repayment arrangement of the debts, at a reasonable fortnightly rate of repayment, would cause the Applicant severe financial hardship. The precondition for write off under paragraph 1236(1A)(b) is not met.
The Tribunal finds that the debts are unable to be written off for a period of time under section 1236 of the Social Security Act.
Administrative error waiver
Section 1237A of the Social Security Act states that a debt must be waived in the following circumstances:
(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, the Full Court of the Federal Court made the following observations about the requirement for sole administrative error (at [35]-[37]):[7]
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…
This is the meaning of the phrase which the primary judge purported to adopt and apply. He drew attention to the fact that the decision to issue the notice was a discretionary decision. This necessarily means that there was more involved in that decision than merely identifying that the pre-conditions for making it had been met. Although there was no evidence before either the Tribunal or the primary judge identifying the reasons for that discretionary decision, nevertheless the primary judge was correct to conclude that ‘the giving of the notice was not itself an administrative error’, or at least there was no evidence that it was. Implicit within this conclusion is an acceptance by the primary judge not only that the legal pre-conditions for the issue of the notice were present, but also that there was no administrative error in respect of the policy considerations involved in that discretionary decision…
Further, it is inappropriate to use a ‘but for’ test to determine a sole cause. A ‘but for’ test is a test to determine a case – it is not a test for determining the sole cause: see the comparison drawn by Callinan J between the ‘but for’ test and ‘solely caused’ in I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 192 ALR 1 at 51-52 [210]. Indeed, even as a test to determine a cause, it is too broad for some purposes such as to establish causation in tort: see Gummow and Kirby JJ in Tame v New South Wales [2002] HCA 35; (2002) 191 ALR 449 at 501 [211].
[7] Cited in Respondent’s Statement of Facts Issues and Contentions at paragraph 93.
The Applicant agreed in his evidence at the hearing that he had received a number of Centrelink notices over the years. He gave evidence that he had been careful to read the notices sent to him and had understood the notices sent to him. He was taken during the hearing to a letter that had been sent to him, dated 11 May 2015, which was headed “Your Newstart Allowance”. The letter set out the Applicant’s rate of payment of newstart allowance and noted that information used for calculating his regular payment was $0.21.
On the second page of the letter, under the heading “What you must tell us”, the following information was set out:
You must tell us within 14 days about events or changes in circumstances affecting your payment. A list of the events you need to report is shown below. If you get a Reporting Statement, report your earnings or changes in circumstances on your due date. If you do not get a Reporting Statement, you can tell us about any changes via self service (online or phone), in writing (fax or post), or by attending any of our service centres.
This is an information notice given under the social security law.
The second page of the letter also required the Applicant to advise Centrelink if any of the following changes happened or were likely to happen:
-you or your partner start paid work or any form of profession, trade, business or self employment
…..
-you or your partner start to receive or stop receiving income, your or your partner’s income changes from the rate last notified or the income shown above is incorrect
The Applicant was sent further correspondence by Centrelink during the newstart allowance debt period. This included an Income Statement sent to him on 7 July 2015, which did not reflect his wife’s income, and letters dated 1 March 2016, 11 March 2016, 17 March 2016 and 5 April 2016, all of which reflected that the information being used for calculating his regular payment was total fortnightly income of $0.21.
The letter dated 11 May 2015 was discussed in some detail with the Applicant at the hearing. The Applicant gave evidence that he had “probably flicked over it” when asked if he had read it. As to whether he had understood he needed to notify Centrelink of changes in circumstances, the Applicant stated, “when applicable”. When asked where the notice indicated this, the Applicant stated it was common sense. When asked if he knew he needed to advise of changes to his partner’s income within 14 days, the Applicant responded that they had payslips given to them, so yes. As to the “information used for calculating the payment” being $0.21, the Applicant responded by stating that he and his wife had told Centrelink about her income.
As to the other notices sent to the Applicant during the newstart allowance debt period, the Applicant’s evidence about these was that he had asked Centrelink employees about this, and his wife had, and they had been advised there was a glitch in the system. The Applicant did not accept there was no record of him having been advised that in the Centrelink papers.
The Tribunal finds that the newstart allowance debt was caused by consistent under-declaration by the Applicant of his wife’s earnings. It was therefore not due to sole administrative error by the Commonwealth and cannot be waived under section 1237A of the Social Security Act.
The Applicant was sent correspondence on 3 October 2016, notifying him that his newstart allowance would be cancelled because he would be paid another Centrelink payment. He was sent a second piece of correspondence on the same date, headed “Your Parenting Payment”. The letter noted his rate of payment from 17 September 2016, stated that “Your payment is worked out suing both your and your partner’s incomes”, and stated that information used for calculating his regular payment was as follows:
Assets $21,670.00
Your partner’s annual other income $5.72
Your partner’s fortnightly earned income $0.00
Your annual other income $5.72
Your fortnightly earned income $0.00
The letter went on to note that the Applicant was required to tell Centrelink within 14 days of specified changes, which included:
-you or your partner start work or go back to work, change jobs, or start any form of business or self-employment
…
-your total personal income goes over $104.00 a fortnight
-your partner’s total personal income goes over $938.00 a fortnight
The Applicant was sent further notices by Centrelink during the parenting payment debt period. These included Income Statements dated 6 October 2016, 6 April 2017 and 10 October 2017, none of which reflected the Applicant’s wife’s income as part of the income and assets recorded by Centrelink. He was also sent letters on 6 October 2016, 14 October 2016, 28 October 2016, 8 November 2016, 11 November 2016, 12 November 2016 and 5 March 2017, which set out the Applicant’s rate of parenting payment and noted that the information being used for calculating his rate of payment included his wife’s annual income of $5.72 and fortnightly income of $0.00.
The Applicant was taken to the letter dated 3 October 2016 during the hearing and gave evidence that he had not advised of any changes because Centrelink had the payslips and already knew what was going on with his wife’s pay. As to the requirement to advise if his income went over $104 per fortnight and his partner’s over $938 per fortnight, the Applicant stated that he probably would not have read the whole of the letter. The Applicant also gave evidence of having gone into Centrelink and being advised the payment was correct, he believed four to five times in addition to the “initial times”.
The Applicant submitted at hearing that the parenting payment debt is all due to Centrelink error, on the basis that he provided Centrelink a copy of his wife’s payslips at the time of claim and Centrelink was aware of what the Applicant’s combined income was at the time of claim. It was unclear when these may have been provided to Centrelink: the claim appears to have been made online,[8] and while there is evidence of the Applicant providing a birth certificate shortly after the claim was made,[9] there is no information in the documents suggesting the Applicant provided copies of his wife’s payslips or that he was requested to do so.
[8] T documents at T6/196.
[9] T documents at T6/197.
Even were the Tribunal to accept the Applicant provided details of his wife’s payslips at the time of claiming parenting payment, it does not follow that sole administrative error has caused the parenting payment debt. The Applicant was sent numerous notices by Centrelink during the period the parenting payment overpayment arose, some of which noted incorrectly his wife’s income and one of which notified him of the requirement to advise if his partner’s income increased above $938 per fortnight. There is no evidence before the Tribunal that the Applicant responded to any of the notices and he did not assert at the Tribunal hearing that he had done so.
In circumstances where the Applicant did not respond to the notified requirement to advise Centrelink that his wife’s income was above $938 per fortnight, or otherwise advise of changes to his wife’s fortnightly income, sole administrative error by the Commonwealth cannot be said to have caused the parenting payment debt. This debt is also unable to be waived under section 1237A of the Social Security Act.
Special circumstances waiver
Section 1237AAD of the Social Security Act allows that a debt may be waived where there are special circumstances (other than financial hardship alone) that make it desirable to waive a debt. In addition, the Tribunal must be satisfied that the debt has not arisen from the debtor or another person knowingly making a false statement or a false representation or failing or omitting to comply with a provision of the relevant legislation, and that it is more appropriate to waive than to write off the debt or part of the debt.
The term “special circumstances” is not defined in the legislation. The Federal Court in Groth v Secretary, Department of Social Security [1995] FCA 1708 noted that (at [12]):[10]
The phrase “special circumstances”, it has been said, although imprecise is sufficiently understood not to require judicial gloss…it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.
[10] Cited in Respondent’s Statement of Facts Issues and Contentions at paragraph 115.
In Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25, the Federal Court stated (at [33]) that:[11]
There is less overstatement if the words “unusual” or “uncommon” are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case…
[11] Cited in Respondent’s Statement of Facts Issues and Contentions at paragraph 116.
The Applicant was invited at the hearing to make submissions about any special circumstances in his case and responded by talking about the letters that had been set to him by Centrelink and that Centrelink had kept telling him the payment was fine. He queried how Centrelink had been able to produce information from 10 to 15 years earlier but had been unable to find one phone call, which he had been advised was being recorded. The Applicant stated that the debt has caused him stress and he has been diagnosed with stress-related diabetes. His teeth have been falling out due to stress.
The Applicant’s wife provided written submissions on behalf of the Applicant, which stated the following:
I am writing on behalf of my husband, [the Applicant], to give you an idea of what’s been happening.
His ute currently has a blown motor, which we have no money to fix. Because of this, he has been unable to attend legal appointments to try and get help with this case.
On top of this, we have had more deaths in the family, as well as our hot water cylinder packing it in, so having to take cold showers.
None of this takes into account the stress that I have been under at work, which has meant I haven’t been able to be the support he needs me to be at times.
I have attached below a copy of the family budget, which I had to work on for school fees.
It clearly shows the position we are in, which allows zero movement for non-essentials.
The family’s budgetwas attached to the email prepared by the Applicant’s wife. As noted above, the Applicant gave evidence of being employed from 2024 up to the date of the hearing and was unwilling to engage with questions put to him at the hearing about his current level of income.
Having considered the matters raised by, and on behalf of, the Applicant about his circumstances, the Tribunal was not persuaded that the Applicant’s circumstances are sufficiently unusual or out of the ordinary as to constitute special circumstances. The Tribunal finds that the discretion in section 1237AAD of the Social Security Act is not enlivened in this case in respect of either of the debts.
There are no other non-recovery provisions in Part 5.4 of the Social Security Act that apply in the circumstances of this case. The Tribunal therefore finds that the Applicant owes debts to the Commonwealth that are recoverable by Centrelink.
DECISION
The Tribunal sets aside the decision under review and substitutes its decision that:
The Applicant owes a debt to the Commonwealth in the amount of $4,940.94 for overpayment of newstart allowance between 6 June 2015 and 20 May 2016;
The Applicant owes a debt to the Commonwealth in the amount of $15,243.36 for overpayment of parenting payment between 17 September 2016 and 14 February 2018; and
The debts are recoverable by Centrelink.
| Date of hearing: Date last submissions received: | 12 May 2025 7 September 2025 |
| Solicitors for the Applicant: | Self-represented |
| Solicitors for the Respondent: | Mr Sherman of counsel |
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