Molsworth and Secretary, Department of Social Services (Social security) - [2025] ARTA 1855

Molsworth and Secretary, Department of Social Services (Social security) [2025] ARTA 1855 (3 September 2025)

Applicant/s: Mrs Molsworth

Respondent: Secretary, Department of Social Services

Tribunal Number: 2025/S194595
Tribunal:General Member A Cichy
Place:Perth
Date:3 September 2025

Decision:The Tribunal sets aside the decisions under review and substitutes its decision that:
· There is a CCS debt of $2,060.14 for the period 31 July 2023 to 7 July 2024.
· A family tax benefit debt of $10,733.02 for the 2023/24 financial year.
· Both debts are written off under section 101 of the A New Tax System (Family Assistance) (Administration) Act 1999 from 16 September 2025 until 30 September 2026.

SOCIAL SECURITY – Child Care Subsidy – Family Tax Benefit – overpayments – recovery of debts to the Commonwealth – illness – sent children overseas to boarding schools or to live with relatives – resigned from full-time employment – special circumstances – debt written off during recovery – decision under review set aside

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been omitted from this decision and replaced with generic information pursuant to subsection 201(1A) of the Social Security (Administration) Act 1999.

Statement of Reasons

BACKGROUND

This review is about whether Mrs Molsworth owes recoverable debts to the Commonwealth in relation to child care subsidy (CCS) and family tax benefit (FTB) and, if so, whether there are any reasons why either or both debts should be written off or waived.
Mrs Molsworth was paid CCS and FTB during the 2023/24 financial year on the basis of combined adjusted taxable income estimates of $59,950 from 1 July 2023 and $94,950 from 6 August 2023. Her actual combined adjusted taxable income for the 2023/24 financial year was $135,299.47.
On 2 September 2024, having reconciled Mrs Molsworth’s actual combined adjusted taxable income with the estimates she provided, Centrelink raised and sought recovery of a CCS debt of $2,060.14 for the period 31 July 2023 to 7 July 2024 (debt [number]), on the basis that Mrs Molsworth had received more CCS than she was entitled to receive during the same period.
On 9 September 2024, Centrelink raised and sought recovery of an FTB debt of $10,733.02 for 2023/24 financial year (debt [number]), on the basis that Mrs Molsworth had received more FTB than she was entitled to receive during the same period.
On 19 December 2024, Mrs Molsworth requested reviews of both decisions through her husband and Centrelink nominee, Mr Molsworth, and the matters were referred to an authorised review officer.
On 20 December 2024, an authorised review officer of Centrelink reconsidered and decided to affirm both decisions.
On 13 May 2025, Mrs Molsworth applied to the Administrative Review Tribunal for an independent review of Centrelink’s decision.
On 28 August 2025, the Tribunal conducted a hearing at which Mrs Molsworth gave oral evidence by MS Teams video under affirmation. The Tribunal had before it documents provided by Centrelink from Mrs Molsworth’s Centrelink files (413 pages), which were copied to Mrs Molsworth before the hearing, and submissions from Mrs Molsworth (A1 to A64). By prior application and agreement of the Tribunal, Mrs Molsworth was represented at the hearing by Mr Molsworth, who also gave evidence under affirmation. The Tribunal was assisted at the hearing by an interpreter. Relevant aspects of the evidence and material before the Tribunal will be referred to in the Tribunal’s consideration of the issues to be determined.

LEGISLATION AND ISSUES

The statutory provisions relevant to this review are in the A New Tax System(Family Assistance) Act 1999 (the Act) and the A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act).
The issues for the Tribunal to determine in this review application are:
· Was Mrs Molsworth paid more CCS and FTB than she was entitled to receive in the relevant period and thereby incurred debts to the Commonwealth? And
· If so, are there any reasons why all or part of the debts should not be recovered?

Has Mrs Molsworth been paid more than her correct entitlement of CCS and thereby incurred a debt to the Commonwealth?

Entitlement to CCS is based on several factors, including the total amount of a person’s and their partner’s combined adjusted taxable income. A simplified outline of CCS and eligibility is set out in section 85AA of the Act and the eligibility criteria are set out in detail in section 85BA of the Act. It is not disputed, and the Tribunal accepts, that Mrs Molsworth met the eligibility requirements for CCS in the 2023/24 CCS year.
The rate at which CCS is payable is to be worked out in accordance with Part 1, Schedule 2 to the Act. Section 67DB of the Administration Act provides that a person’s rate of CCS may be calculated using their estimate, an indexed estimate or indexed actual income. At the end of the financial year, a person’s estimate of their (and their partner’s) income is compared with their actual income, as reported to Centrelink by the Australian Taxation Office (ATO). The purpose of this reconciliation process is to compare the amount of CCS the person was paid with the amount to which they were entitled. The reconciliation conditions are set out in section 103A of the Administration Act. If a person has received more CCS than their entitlement, they will owe a debt; if a person has experienced an underpayment of CCS, they may receive a top-up amount.
On the basis that Mrs Molsworth’s combined actual income was higher than the estimates she provided throughout the year, Centrelink determined that Mrs Molsworth had been overpaid CCS and thereby incurred a debt.
Having reviewed Centrelink’s calculation of the CCS debt for the 2023/24 CCS year, the Tribunal is satisfied that the calculation of the overpayment is accurate,[1] noting that the overpayment to Mrs Molsworth has been offset in part by the withholdings (a prescribed percentage of a recipient’s CCS) prescribed by section 67EB of the Administration Act.[2]
[1] Folio 90.
[2] Folio 83.
Subsection 71C(1) of the Administration Act provides that if a person has been paid more than their correct entitlement of CCS under the Act, then ‘the difference between the received amount and the correct amount is a debt due to the Commonwealth by the individual’. The Tribunal therefore finds that Mrs Molsworth has incurred a debt to the Commonwealth of $2,060.14 for the period 31 July 2023 to 7 July 2024.

Has Mrs Molsworth been paid more than her correct entitlement of FTB and thereby incurred a debt to the Commonwealth?

Section 20 of the Administration Act provides for Centrelink to make a determination of a person’s eligibility for FTB using a reasonable estimate of adjusted taxable income, which remains in force until another determination is made (sections 16 and 21 of the Administration Act). A person’s annual FTB rate is worked out under the rate calculator in Schedule 1 to the Act and depends (amongst other things) on the person’s adjusted taxable income (and, as applicable here, that of their partner).
Mrs Molsworth received fortnightly instalments of FTB based on the estimates that she provided of her adjusted taxable income to Centrelink.
Pursuant to section 105 of the Administration Act, Centrelink reviewed Mrs Molsworth’s entitlement to FTB. It did so by reconciling the income estimates that Mrs Molsworth had provided to Centrelink throughout the year with the actual income of Mrs Molsworth and her partner. The reconciliation conditions for FTB are located in Part 3, Division 1, Subdivision D of the Administration Act.
On the basis that Mrs Molsworth’s combined actual income was higher than the estimates she provided throughout the year (see paragraph 2 above), Centrelink determined that Mrs Molsworth had been overpaid FTB and thereby incurred a debt.
Since Ms Molsworth was paid FTB on the basis of income estimates that were lower than her actual income during the same period, it follows that she was paid FTB at a rate that was greater than her entitlement.
The Tribunal has reviewed the calculation of the FTB overpayment to Mrs Molsworth by Centrelink for the 2023/24 financial year[3] and did not identify any errors.
[3] Folios 34 to 39.
Section 71 of the Administration Act provides that if a person receives an overpayment of FTB, the overpayment is a debt to the Commonwealth. Therefore, Mrs Molsworth owes an FTB debt of $10,733.02 for the 2023/24 financial year.

Are there any reasons why all or part of the debts should not be recovered?

In Secretary, Department of Social Security v Hales [1998] FCA 219, French J indicated that ordinarily, where a person is paid money that they are not entitled to receive (in that case, in the context of any overpayment under the Social Security Act 1991 but equally applicable to payments made under family assistance legislation), the taxpayer is entitled to expect the recovery of the overpayment. Nonetheless, for the avoidance of outcomes that are harsh or unjust in particular circumstances, there are provisions in the Administration Act for writing off or waiving of debts owed by individuals to the Commonwealth. These are contained in sections 95, 97 and 101 respectively. The Tribunal will consider each provision in turn below in relation to both the CCS and FTB debts under review.

Can the debts be written off?

Section 95 of the Administration Act provides for the writing off of debts. The relevant subsections are cited in full below:
95(2)  The Secretary may decide to write off a debt under subsection (1) 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.

Having considered these provisions in relation to the circumstances of this case, the Tribunal is satisfied that the provisions of paragraphs 95(2)(a), 95(2)(c) and 95(2)(d) are inapplicable.
In relation to determining whether a person has no capacity to repay a debt for the purposes of paragraph 95(2)(b), the Tribunal must also have regard to the requirements of subsection 95(4) of the Administration Act: a person is taken to have a capacity to repay the debt if they are in receipt of payments made under family assistance or social security legislation from which deductions can be made (paragraph 95(4)(a)) or by application of an income tax refund (paragraph 95(4)(c)).
Mr Molsworth told the Tribunal that Mrs Molsworth is currently unemployed as a consequence of her current medical conditions and he is the sole provider for the household, meeting her expenses as well as his own. He told the Tribunal that their weekly expenses amount to between $800 and $900 and their weekly income is $1,250. They currently have savings of $1,900. Mrs Molsworth is also currently in receipt of jobseeker payment. On this evidence, the Tribunal is not satisfied that Mrs Molsworth does not have the capacity to repay the debt because the household income exceeds expenses and she is in receipt of an income support payment against which deductions can be made. A write off of the debt pursuant to paragraph 95(2)(b) is therefore not possible.

Can the debts be waived due to sole administrative error?

Section 97 of the Administration Act provides for waiving recovery of all or part of a debt when (subject to particular conditions) the debt has occurred solely as a consequence of administrative error by the Commonwealth.
Neither of the debts in this case arose through sole administrative error. Rather, they arose when Centrelink reconciled the estimates of Mrs Molsworth’s combined adjusted taxable income with her actual adjusted taxable income for the same period. This means the debts cannot be waived pursuant to section 97 of the Administration Act.

Can the debt be waived due to special circumstances?

The Tribunal also considered whether the debt should be waived on the grounds of special circumstances. Section 101 of the Administration Act provides as follows:
The Secretary may waive the right to recover all or part of a debt if the Secretary is 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 the family assistance law; 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.
Before considering whether there are special circumstances in this case, the Tribunal must first be satisfied that the debt did not result from false representations or failures in compliance with legislation made knowingly by Mrs Molsworth or Mr Molsworth (as her Centrelink nominee).
The Tribunal notes in the application to the Tribunal made by Mr Molsworth his assertion that during the relevant period, Mrs Molsworth was experiencing [Health condition 1] and started ‘overworking’ at this time and ultimately sustained an injury that prevented her from working.[4] Documentary evidence submitted with the application included several letters from a consultant psychiatrist (dated 11 May 2024 and 13 July 2024), indicating that on both occasions, Mrs Molsworth had presented as ‘[Health condition 1 details]’.[5] The Tribunal is satisfied, on this evidence, that during the relevant period, Mrs Molsworth’s state of mind was such that she did not make a knowingly false statement or otherwise knowingly fail to comply with a legislative requirement. Per Re Nisha and Secretary, Department of Family and Community Services [2000] AATA 315, Mrs Molsworth’s circumstances were such that her capacity and ability to comprehend her obligations and responsibilities was reduced.
[4] Folio 8.
[5] Folios 21 to 24.
The Tribunal also notes in the submissions made by Mr Molsworth in his application to the Tribunal on Mrs Molsworth’s behalf that his wife’s illness meant that he was ‘barely able to breath[e]’ as he helped with the care of their children.[6] In such circumstances, the Tribunal can accept that any failures by him, as Mrs Molsworth’s Centrelink nominee, to comply with legislative provisions or otherwise provide information to Centrelink were not made knowingly or as a deliberate choice, but were rather a consequence of being preoccupied with the circumstances within which he, Mrs Molsworth and their family found themselves. The Tribunal is therefore satisfied that the debt did not arise from omissions, false representations or failures to comply with relevant legislation made by either Mrs Molsworth or Mr Molsworth.
[6] Folio 8.
Although the term ‘special circumstances’ is not defined in the Administration Act, the Federal Court and the Tribunal have considered both the term and its application on numerous occasions. In every case, the particular circumstances of the case have been examined to determine whether they were such that it would be unjust, unreasonable or inappropriate for the debt to be recovered. In Beadle and Director-General of Social Security [1984] AATA at [12] (Beadle), the Tribunal held that for circumstances to be ‘special’, they needed to be ‘unusual, uncommon or exceptional’. The Federal Court in Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 refined the test in Beadle, noting that the exercise of the discretion was not to be confined to ‘exceptional’ cases – rather that there should be something that distinguishes a particular case from one that is ordinary or usual.
Mr Molsworth’s pre-hearing submissions were to the effect that his wife was unwell during the period in which the debts were incurred, he was in no position at the time to update Centrelink on her circumstances and she was in no position to do so either because of her ill health.[7] The medical evidence canvassed in paragraph 32 attests to Mrs Molsworth’s symptoms from 11 May 2024 onwards, noting a relapse [details deleted].
[7] Folio 8.
At the hearing, Mr Molsworth told the Tribunal that Mrs Molsworth is currently [a medical] patient as a consequence of her conditions (although she had been granted leave for the purpose of attending the hearing) and that a discharge date has not yet been set. He explained that the Centrelink debts have created significant pressure for Mrs Molsworth. In view of her illness, they have sent their children overseas to boarding schools or to live with relatives. He said that he has resigned from his full-time employment (a role that he has held for about 18 years) effective 3 October 2025. It is anticipated that Mrs Molsworth will return overseas on 16 September 2025 and he will join her there. They expect to be overseas for at least 12 months, emphasising that at this time their priority is supporting Mrs Molsworth’s recovery from her health conditions. After Mrs Molsworth’s recovery, he said that both he and Mrs Molsworth wish to return to Australia with their family and both wish to undertake paid employment again. He submitted that they do not currently have the capacity to repay the debt in the short term. He currently supports both himself and his wife through his own employment.
Mr Molsworth explained that the pressure of the Centrelink debts is compounded by the pressure of repaying additional debts that she incurred overseas previously. He estimates that these currently amount to $6,500 and told the Tribunal that although Mrs Molsworth is not permitted to work at the moment in view of her illnesses, she nonetheless continues to seek job interviews because of her anxiety to repay the debts as soon as possible. Her attempts to have part of her superannuation released to assist with repaying the debts have not been successful to date but they are continuing to attempt to have the funds released.
Mrs Molsworth requested a favourable decision from the Tribunal, saying that her health has been affected by the stress of the debts.
Having considered the pre-hearing submissions along with Mr and Mrs Molsworth’s oral evidence and weighed these alongside the relevant legislative provisions and decided cases, the Tribunal is satisfied that the circumstances of this case are out of the usual run of cases and sufficiently out of the ordinary for the circumstances to be considered special circumstances.
In considering (pursuant to paragraph 101(c) of the Administration Act), whether it is more appropriate to waive or write off the debt, the Tribunal notes that Mrs Molsworth is expected to be overseas for 12 months to recover from her conditions and, when she and Mr Molsworth return to Australia, both expect to return to paid employment. The situation as Mr Molsworth described it to the Tribunal is of a temporary nature which, after a period of recovery for Mrs Molsworth, should mean that their circumstances will be significantly different in the future. Such circumstances make it more appropriate that the Tribunal write off the debt than to waive it, and will give Mrs Molsworth time to recover from her conditions and return to employment. Noting that Mrs Molsworth is to be overseas for approximately 12 months from 16 September 2025, the Tribunal will therefore exercise the discretion in section 101 of the Administration Act to write off the debt from 16 September 2025 until 30 September 2026.

DECISION
The Tribunal sets aside the decisions under review and substitutes its decision that:
· There is a CCS debt of $2,060.14 for the period 31 July 2023 to 7 July 2024.
· A family tax benefit debt of $10,733.02 for the 2023/24 financial year.
· Both debts are written off under section 101 of the A New Tax System (Family Assistance) (Administration) Act 1999 from 16 September 2025 until 30 September 2026.

Date of hearing:

Thursday 28 August 2025