JGRV and Secretary, Department of Social Services (Social security second review)

[2025] ARTA 1754

JGRV and Secretary, Department of Social Services (Social security second review) [2025] ARTA 1754 (10 September 2025)

Applicant/s: JGRV

Respondent:  Secretary, Department of Social Services

Tribunal Number:                2024/5748

Tribunal:Senior Member M Kennedy

Place:Adelaide

Date:10 September 2025

Decision:The decision under review is affirmed

Statement made on 10 September 2025 at 4:53pm

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

FAMILY ASSISTANCE – rate – reconciliation – change of circumstances during income year – maintenance action test - debt shell created but no debt raised – maintenance action test exemption applied retrospectively produced duplicated rate component paid as arrears –- unexplained adjustment to reconciliation appears in records – overall entitlement correct – anomaly in calculations explained

Legislation

A New Tax System Family Assistance Act 1999
A New Tax System (Family Assistance) (Administration Act) 1999

Statement of Reasons

1. Ms JGRV received family tax benefit (FTB) in respect of the 2022-23 income year.  During that income year, Ms JGRV separated from her partner, moved from parenting payment at the partnered rate to parenting payment at the single rate and obtained an exemption for taking maintenance action which was applied retrospectively.  All of these events impacted on her entitlement to FTB for that year.

2. On 6 July 2023, Ms JGRV’s entitlement to FTB was reconciled, and she was paid a top up of $1,289.72.  Ms JGRV was dissatisfied with that decision because she considered the top-up amount ought to have been higher.  The concern essentially was (and is) that the top up had been reduced by the payment of an amount the subject of a ‘debt shell’ of $666.68, created at a time when it was identified that Ms JGRV had not taken reasonable maintenance action within a grace period from separation, although those circumstances were completely overtaken by the subsequent grant of an exemption in respect of the maintenance action test.

3. On review, an authorised review officer found that Ms JGRV had been paid her correct entitlement to FTB, inclusive of supplements.  In relation to the amount of $666.68 in issue, the authorised review officer is documented to have said to Ms JGRV that ‘when the maintenance exemption was coded in October the system recognised that [she] was paid a reduced rate of FTB [Part A] due to no maintenance action and the back payment was paid’.  The substance of the authorised review officer’s review however focussed on an issue pertaining to the immunisation requirements, which I understand is not in fact in issue.

4. Ms JGRV applied to the Administrative Appeals Tribunal (AAT) for review on 6 April 2024.  On 10 July 2024, the AAT affirmed the decision.  The AAT identified that an arrears payment paid in October 2022 had included the difference between the amount Ms JGRV was entitled to receive on the basis that she had not taken reasonable maintenance action and the amount she was entitled to receive if she had, even though she had been paid the higher rate for that period in any event.  In this way, the AAT recognised that Centrelink had essentially duplicated a proportion of Ms JGRV’s entitlement through the payment of those arrears (in part), and when it came to reconciliation of the full FTB entitlement for the income year, that amount (which was the same as the amount in the ‘debt shell’) was deducted from the top up payment.

5. Ms JGRV applied to the AAT for second review on 6 August 2024.  On 14 October 2024, the AAT was abolished and the Administrative Review Tribunal commenced operations. Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (the Transitional Act), applications for review that were not finalised by the Administrative Appeals Tribunal before 14 October 2024 were taken to be applications for review to the Administrative Review Tribunal (hereafter the Tribunal). The Transitional Act gives the Tribunal the authority to continue and finalise any aspect of the review not already completed.

6. Ms JGRV was represented in these proceedings by Ms P, her mother.  Ms P has explained that she worked for Centrelink for 15 years in the area dealing with family payments.  Her concerns on behalf of Ms JGRV as to the correctness of the top up payment therefore stems from some knowledge about Centrelink’s systems, and a capacity to read and interpret Centrelink records.

7. Ms P’s concerns from what she had seen in the Tribunal papers are understandable.  The key record in this regard in T16, folio 311: the ‘FTB Calculation Result (FACRF)’ screen.  It shows in its penultimate line an ‘auto/ man[ual]/ special adjustment of -666.68’ to arrive at the top up amount of $1,289.72.  Ms P’s position is that the adjustment simply should not be there.  She says, correctly, that a debt shell that was earlier created in that amount as a result of the identification that Ms JGRV had not taken reasonable maintenance action was to have been investigated by a Centrelink officer who inevitably would have identified that the debt did not exist because the exemption to the maintenance action test had been subsequently applied.  Ms P is concerned that because that was not done, Centrelink has simply automatically recovered that amount as a debt, and did so in error, such that Ms JGRV has not received her correct entitlement.

8. Demonstrating that the manual adjustment was not the error Ms P identified has required the Secretary to produce additional computerised records as supplementary Tribunal papers, call evidence from two specialist officers, and explain particular features of Centrelink’s computer system that are responsible for the duplicated payment.  It was also conceded that the processing and implementation of the exemption to the maintenance action test was sub-optimal, and that a manual adjustment ought to have been applied at the time the arrears payment was made, but was not.

9. It is in this context therefore that I can be brief in setting out the complex legislative framework behind the calculation of Ms JGRV’s rate of FTB, and I can be succinct in identifying the relevant facts which are not in dispute. 

   ·A person’s entitlement to FTB is calculated in accordance with Schedule 1 and 2 of the A New Tax System Family Assistance Act 1999 (the FA Act). It is usually correct to view a person’s entitlement to FTB as an annual entitlement, reflecting the adjusted taxable income of the person, and their partner if relevant.

   ·Provisions exist for FTB to be paid by instalments throughout the financial year, typically on the basis of a reasonable estimate by the person as to their or their family’s anticipated income.  The A New Tax System (Family Assistance) (Administration Act) 1999 (the FA Administration Act)) contains a provision in section 105 relied upon by the Secretary to reconcile the amount of FTB paid in a year on the basis of an estimate with the correct amount payable once a person and their partner’s taxable incomes are known, usually through a data match with the Australian Taxation Office.

10. There are however a number of complications associated with calculating the correct rate of FTB for an individual depending on circumstances. Relevantly,

    ·FTB consists of FTB Part A, FTB Part B and supplements.  FTB Part A and Part B are means tested, but in different ways.  Where a person is a member of a couple, the combined adjusted taxable income of both members of the couple will be taken into account in identifying the entitlement to FTB Part A.  For members of a couple, FTB Part B will take into account the adjusted taxable income of the higher income earner by way of an ‘income cut out’ and the lower income earner by way of a reduction.  For example, in 2022/23, for a person who was a member of a couple, the higher income earner must have adjusted taxable income of less than $104,432pa for any entitlement to FTB part B, while the lower income earner must have adjusted taxable income of less than $6,059 in order for the maximum rate of FTB Part B, with the entitlement reducing by 20 cents in the dollar thereafter. The purpose of the two different approaches is to recognise that some parents and carers have different abilities to engage in the workforce.

    ·Where one member of a couple receives an income support payment, the maximum rate of FTB Part A will be paid, but entitlement to FTB Part B will be calculated in the usual way.

11. Where a person separates from their partner during a year of income, that person’s entitlement to FTB for the income year will take into account that change of circumstances from the date it occurred.

    ·Where a single person is in receipt of an income support payment, the person will receive the maximum rate of both FTB Part A and FTB Part B.

    ·In relation to FTB Part A however, this is subject to the maintenance action test. The maintenance action test is provided for at Schedule 1, item 10 and effectively operates to reduce a person’s entitlement to FTB Part A where the individual is entitled to claim or apply for maintenance for the child, the Secretary considers that it is reasonable for the individual to take action to obtain maintenance, and the individual does not take the action that the Secretary considers reasonable to obtain maintenance.

12. Finally, provision is made for supplementary payments to be paid at reconciliation after the end of the income year.  A person is eligible for the supplements if they meet various reconciliation conditions (such as lodging an income taxation return within prescribed timeframes).  The supplement amounts also serve as a buffer against overpayments in some circumstances.

13. These features of the FTB scheme, expressed in generality, form part of the more detailed background to the circumstances of this particular matter, which I will now set out:

14. Prior to the events relevant to this review, Ms JGRV was paid FTB as a partnered person.  She was paid the maximum rate of FTB Part A (as she was also receiving Parenting Payment at the partnered rate – an income support payment) but a reduced amount of FTB Part B based on her partner’s adjusted taxable income.

15. Ms JGRV separated from her partner on 31 January 2022.

16. Ms JGRV notified Centrelink of that change and claimed parenting payment at the single rate on 1 March 2022.  Centrelink did not action this information or process the claim at this time, and Ms JGRV’s instalments of FTB continued unchanged.

17. On 7 September 2022, Centrelink granted Ms JGRV’s application for parenting payment at the single rate and recorded that she was single from 31 January 2022.  As a result of these changes:

    ·Centrelink identified that Ms JGRV was entitled to an arrears payment of $706.16 for the period 31 January 2022 to 2 May 2022 representing her entitlement to the maximum rate of FTB Part B as a single person receiving income support.

    ·Centrelink applied a maintenance action test grace period of 13 weeks from the date of separation until 2 May 2022 (hence the period of the arrears identified above). 

    ·From 2 May 2022 however, Centrelink decided that Ms JGRV was not meeting the maintenance action test, and her entitlement to FTB Part A was to be reduced to the base rate.

18. This identified a potential overpayment accruing for the period 2 May 2022 to 31 August 2022 of $1,372.84, being the difference between the maximum rate of FTB Part A and the base rate of FTB Part A.

19. The difference between the arrears and the identified overpayment was $666.68.  Administratively, this result created a record known as a ‘debt shell’ in a different part of Centrelink’s computer system, but no debt was raised at that time.

20. On 25 October 2022, Centrelink decided that it was not reasonable for Ms JGRV to take maintenance action, and an ‘exemption’ to the maintenance action test was processed to retrospectively apply to the date the maintenance action test grace period expired: 2 May 2022. 

21. The application of this exemption triggered a recalculation of Ms JGRV’s entitlements, given she was now retrospectively made (again) entitled to the maximum rate of FTB Part A (as the maintenance action test no longer operated to restrict her entitlement to the base rate of FTB Part A).  An arrears payment of $2,534.40 was paid.  Further analysis of this amount is set out below.

22. On 6 July 2023, Ms JGRV’s overall entitlement to FTB Part A, FTB Part B and the supplements was reconciled, taking into account the instalments she had received throughout the year, the changes to her personal circumstances in her separation and her exemption from the maintenance action test.  The product of this calculation, according to Centrelink, was $1,404.00.  As mentioned above, the record of this calculation includes the negative adjustment of $666.68 in issue.

23. It is convenient to consider the situation against the ‘big picture’ and the ‘little picture’, reflecting the approach set out in the Secretary’s submissions.  The notion of a ‘big picture’ is appropriate because entitlement to FTB is ultimately identified on an annual basis and is the subject of the reconciliation process.  It follows that if that reconciliation result ultimately reflects Ms JGRV’s correct entitlement after her changes to circumstances are taken into account, then that will effectively be an answer to the matter.

24. However, in circumstances where, as mentioned above, Ms P points to the detail of Centrelink’s records showing the negative adjustment of $666.68 as a legitimate concern, it is helpful to descend to the explanatory details as to why such an adjustment was necessary.  That analysis is the little picture.

25. The Secretary contends, in respect of the big picture, that Ms JGRV’s correct entitlement to FTB, inclusive of FTB Part A, FTB Part B and the supplements for 2022/23 is $16,281.92 taking into account the changes to her circumstances on 31 January 2021, her exemption from the maintenance action test, and the failure of one of her children to meet the immunisation requirements prior to 23 May 2023 (which was not in issue).

26. Ms P did not contend that this calculation was incorrect, nor point to any alternative calculation.  The calculation is complex, computerised and undertaken essentially by reference to each day across the income year.   I am satisfied the calculation is correct, particularly because none of the various complications relevant to the rate calculation are in issue, and nor has it been put in doubt that those matters have not been appropriately recorded and implemented in Centrelink’s systems.  It is the final negative adjustment that was put in issue.

27. With that entitlement in mind, the big picture then looks to identify what has in fact been paid to Ms JGRV in respect of the 2022/23 income year.   It appears that producing a single record of outgoing payments in that regard is not as simple as one might expect.  The Secretary has manually prepared a spreadsheet in that regard, drawing from other records, at S8, folio 21. 

28. Ms P had not checked the details of that record setting out the instalments against Ms JGRV’s bank accounts.  The spreadsheet identifies that some instalments incorporate amounts for the previous and subsequent financial years, but identifies that the sum of instalments (in the sense of ‘routine fortnightly instalments’) of FTB paid to Ms JGRV in respect of the 2022/23 financial year was $13,627.37.

29. The spreadsheet identifies two arrears payments in addition to the instalments.  The first, for the period 2 May 2022 to 27 October 2022 is recorded as $1404.  By way of further explanation, noting that the lump sum actually paid on 27 October 2022 was $723.96 and has elsewhere been described as an arrears payment of $2534.40, the Secretary contends that only $1404 of that payment related to the 2022/23 income year to date, with $1,130.40 relating to arrears from the previous financial year (see footnote 6 of the Secretary’s statement of facts and contentions).  In addition, from that amount, an amount of $1,810.44 was applied to an existing debt (see footnote 12 of the Secretary’s statement of facts and contentions), resulting in the arrears payment of $2534.40 ultimately being a net payment of $723.90.  A further arrears payment of $2.19 was also paid, apparently in or about May 2023, presumably as an adjustment relating to Ms JGRV’s son complying with the immunisation requirements from 23 May 2023.

30. In this way, the Secretary contends that $13,627.37 was in fact paid to Ms JGRV by way of instalments in respect of the 2022/23 income year, and a further $1,406.19 in arrears payments.  The reconciliation payment therefore was $1,248.36, although (inevitably it would seem) that is not in fact what Ms JGRV was actually paid, but rather she was paid $41.36 more than required to meet the entitlement of $16,281.92.  This is explained by the Secretary as pertaining to a small arrears payment for the previous 2021/22 income year.

31. Ultimately however, the Secretary contends that when the reconciliation payment was made it correctly brought the amounts paid in aggregate to Ms JGRV to equal the amount of her correct entitlement.

32. I accept that to be the case, having regard to the breakdown of the payments and the amount of the entitlement calculation.  An analysis of the big picture in that regard is sufficient to conclude that the decision under review should be affirmed.

33. However, as suggested above, to simply leave the matter there would be inadequate in all the circumstances of this matter, as Ms P’s concern about the negative adjustment appearing on the relevant screen that summarises the calculation of the reconciliation payment must be explained. I turn therefore to the little picture to understand what the negative adjustment was in fact achieving.

34. In that regard, the Secretary produced two witnesses to assist the Tribunal, Ms I and Ms W.  Both are Assistant Directors in Services Australia who I am satisfied have relevant responsibilities and experience in relation to Services Australia’s systems and procedures to give evidence about the calculations of concern and to provide further analysis of the calculations and context about the way the computer systems operate.

35. The Secretary’s case is that the reason the negative adjustment appears in the records identifying the reconciliation amount (T16, folio 311) is because it was necessary to account for an earlier duplication of entitlement.  More specifically, the Secretary contends that when the decision to exempt Ms JGRV from the maintenance action test was implemented and arrears generated, the system appears to have assumed that the overpayment identified as part of the ‘debt shell’ had been recovered or will be recovered.

36. Ms I and Ms W’s explanation of the design and operation of Centrelink’s systems in this regard was informative and supported by other computerised records.  Essentially, the system that records and progresses Service’s Australia’s obligations to identify and recover overpayments is a separate system to that which administers family payments, calculates rates and undertakes the reconciliations.

37. I understood from Ms I that given the design of the systems there is a potential at least for duplicated payments to be made in circumstances where an exemption to the maintenance action test is retrospectively applied, and that Services Australia’s expectations of its staff in that regard would therefore be that the systems are checked and manual adjustments are made prior to the arrears payments being made to avoid that outcome.  It would appear that this manual step was not done correctly or at all in Ms JGRV’s case at the time the arrears payment of 27 October 2022 was made.

1. An analysis of supplementary documents S5 and S6 are central to understanding what has gone wrong.  Each document contains a reference number (‘AMR’) that records an activity, or series of activities that reflect changes to Ms JGRV’s record and the undertaking of calculations.

2. Exhibit S5 shows AMR 3057.  This is the series of activities that reflect the reduction in Mr JGRV’s rate of FTB Part A to the base rate as a consequence of the maintenance action test grace period expiring.  It can be seen from these records that an ‘old rate’ of FTB was replaced by a lesser ‘new rate’ on a daily basis.  For example, for the 22-day period between 12 May 2022 and 2 June 2022, the old daily rate of $31.80 was replaced with a new daily rate of $20.79.

3. As mentioned above, the sum of those changes calculated an overpayment of FTB Part A in the amount of $1372.84, which when combined with the increase to the FTB Part B payment of $706.16 produced a net overpayment of $666.68.  This information was transferred to Services Australia’s system administering overpayments and debts as a ‘debt shell’ at that time.

4. What is key however, is that the system administering payments now recorded a series of new daily rates of FTB which no longer reflected the reality of what had in fact been paid.  It is in this sense that the notion of the system ‘assuming the debt has been or will be repaid’ is to be understood.

5. Exhibit S6 shows what the next relevant activity, AMR 3295, did.  That activity shows the implementation of the decision to exempt Ms JGRV from the maintenance activity test, and shows a series of increases from the old rate of FTB Part A to a new rate of FTB Part A.  The example of the 22-day period between 12 May 2022 and 2 June 2022 is instructive of the problem.  It shows the ‘old rate’ of $20.79 being replaced by a ‘new rate’ of $39.63.  Of course, the ‘old rate’ in activity 3295 is the new rate in the earlier activity 3057, and so is not reflective of what was actually paid to Ms JGRV at all.  It is reflective of what the old rate would be if the debt shell had been raised as a debt and recovered, which it was not.

6. In this way, when the arrears payment made on 27 October 2022 was made, the electronic assumption as to the rate that had been paid was incorrect, and the arrears payment generated can be said to have duplicated a proportion of FTB which Ms JGRV had already received.  The ultimate reconciliation correctly identified this by comparing what the correct entitlement was against the sum of what had in fact been paid, and corrected it by the negative adjustment that had not unreasonably been perceived to be the recovery of the debt shell in respect of a debt that did not exist.

7. I am satisfied in light of this analysis that the negative adjustment was a correction to the duplication of payments forming part of the arrears payment of 27 October 2022, and is not reflective of an automated recovery of a debt attributable to Ms JGRV failing the maintenance action test, from which she is exempt.

8. I am satisfied that Ms JGRV was paid her correct entitlement to FTB for the 2022/23 income year, and will affirm the decision under review.

   DECISION

   The decision under review is affirmed.