Northbury and Secretary, Department of Social Services (Social security) - [2025] ARTA 1285

Northbury and Secretary, Department of Social Services (Social security) [2025] ARTA 1285 (12 February 2025)

Applicant/s: Mr Northbury

Respondent: Secretary, Department of Social Services

Tribunal Number: 2024/S191489
Tribunal: Member B Walters
Place:Sydney
Date:12 February 2025

Decision:The Tribunal sets aside the decision under review and remits the matter for reconsideration in accordance with the order that:

1. Mr Northbury’s entitlement to disability support pension for the period 4 March 2024 to 30 April 2024 is to be reassessed on the basis that the sum of $1,745.11 received by him on 20 March 2024 must be assessed pursuant to section 1072A of the Act; and,
2. any overpayment that is found to exist following this reassessment is a debt due to the Commonwealth, which must be recovered in full.

CATCHWORDS

SOCIAL SECURITY – recoverable disability support pension (DSP) debt – Commonwealth scholarship award – non-recovery of the debt – decision under review and remitted

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 Mr Northbury has a recoverable disability support pension (DSP) debt.
On 28 May 2024, Centrelink determined that Mr Northbury had been overpaid DSP. The following day a letter addressed to Mr Northbury raised a DSP debt of $1,627.04 for the period 4 March 2024 to 30 April 2024.[1] Centrelink said that a scholarship awarded to Mr Northbury was not taken into account when payments of DSP were made to him during the period of the debt.
[1] Page 140 of the hearing papers.
On 28 May 2024, Mr Northbury requested a review.[2] The decision was considered and affirmed by an authorised review officer (the ARO) on 7 June 2024.
[2] Page 113 of the hearing papers.
On 29 October 2024, Mr Northbury sought further review of the decision from the Administrative Review Tribunal (the Tribunal).
The application was heard on 29 January 2025. Mr Northbury and his mother, [Ms A], appeared at the hearing by video. They both gave affirmed evidence. The Tribunal had before it 143 pages of documents provided by Centrelink (the hearing papers). These were provided to Mr Northbury prior to the hearing.

ISSUES

The statutory provisions relevant to this review are set out in the Social Security Act 1991 (the Act) and the Social Security (Administration) Act 1999 (the Administration Act).
The issues which arise in this case are:
· Whether Mr Northbury owes a debt to the Commonwealth, and
· If so, whether there is a basis for non-recovery of the debt.

CONSIDERATION

Issue 1 – Whether Mr Northbury owes a debt to the Commonwealth

Pursuant to section 1223 of the Act, if a person is paid more DSP than they are entitled to receive, then the difference is a debt to the Commonwealth.
The rate of DSP payable to a person is calculated in accordance with the Rate Calculator set out at section 1064 of the Act. The DSP rate is calculated using the income test and the assets test and it is the lower of the two rates produced by each of these tests which is payable to the person. During the period of the debt, Mr Northbury was paid DSP under the income test.[3]
[3] Page 110 of the hearing papers.
Between 4 March 2024 and 30 April 2024 Mr Northbury was paid amounts of DSP totalling $4,602.26. The ARO determined that his entitlement during that period, having regard to the living allowance component of a scholarship awarded to Mr Northbury by [University 1], was $2,975.23.[4] Centrelink contends that the debt of $1,627.04 represents the difference between what Mr Northbury was paid and what Centrelink submits he was, in fact, entitled to receive.
[4] Pages 60 and 84 of the hearing papers.
In relation to whether Mr Northbury was overpaid DSP, two matters were raised by Mr Northbury and Ms Northbury. First, they say that the scholarship received by Mr Northbury is a Commonwealth scholarship and is therefore exempt from assessment under the income test. Second, they say that the debt period commences on 4 March 2024, however, Mr Northbury did not receive any scholarship funds until 20 March 2024. The Tribunal will address each of these matters in turn.

The assessment of Mr Northbury’s scholarship

[In] February 2024, [University 1] wrote to Mr Northbury and offered him an Australian Government Research Training Program (RTP) scholarship. The letter confirms that the scholarship is funded by the Australian Commonwealth government.
The ARO characterised Mr Northbury’s scholarship as a merit or equity-based scholarship, writing:[5]
The definition of a merit or equity-based scholarship is a scholarship that is awarded to a student to:
· recognise the student's achievement in studying or in undertaking research at an educational institution, or
· enable the student to study or undertake research at an educational institution.
A scholarship granted to a student for either of these purposes is treated as exempt income for social security purposes to the extent that the payment does not exceed the person's threshold in a calendar year ($9,724 in 2024). The threshold amount is indexed on 1 January every year.
[5] Page 61 of the hearing papers.
Mr Northbury and [Ms A] do not agree with the ARO’s characterisation of the scholarship funds. They referred to the following passages in the Australian government policy document, which may be followed by Centrelink, the Social Security Guide (the Guide) at 4.3.9.40 Income from scholarships:
Commonwealth scholarships are NOT treated as income for social security purposes.
Commonwealth scholarships include:
·     Commonwealth Education Costs Scholarship (CECS)
·     Commonwealth Accommodation Scholarship (CAS)
·     Indigenous Commonwealth Education Costs Scholarship
·     Indigenous Commonwealth Accommodation Scholarship
·     Indigenous Commonwealth Reward Scholarship.
CECS and CAS have been replaced by the student start-up scholarship, student start-up loan and relocation scholarship. However, all recipients of a CECS or CAS awarded prior to 1 January 2010 will continue to receive their scholarship until their scholarship entitlements has been consumed, provided they remain eligible for the scholarship.
Act reference: SSAct section 8(8)(zja) Excluded amounts—general
Social Security (Indigenous Student Assistance Scholarships - Excluded Amounts) Instrument 2016 section 5 Excluded Amounts
Most relevantly, Mr Northbury and [Ms A] submitted:
·Mr Northbury’s scholarship is a Commonwealth scholarship and as such it is exempt income.
·The RTP scholarship is funded by the Australian Commonwealth government and it is subject to Commonwealth government scholarship guidelines. The scholarship is therefore a Commonwealth scholarship.
·The Guide at 4.3.9.40 Income from scholarships states that Commonwealth scholarships are exempt from assessment as income.
·Though the list of Commonwealth scholarships set out in the Guide does not refer to the RTP scholarship, the Guide relevantly states, “Commonwealth scholarships include…”. Mr Northbury and [Ms A] submitted that the list set out in the Guide is of some but not all of the scholarships that fall within the category of Commonwealth scholarships.
·The Guide does not specifically state that the RTP scholarship is not a Commonwealth scholarship. However, the definition set out in the Guide at 1.1.M.136 Merit or equity-based scholarship specifically excludes Commonwealth scholarships, stating, “Merit or equity-based scholarships do not include Commonwealth scholarships or relocation scholarships, which are excluded amounts for social security purposes”.
The letter setting out Mr Northbury’s scholarship offer explains that the scholarship is made up of a living allowance of $35,411 per annum in 2024 paid in fortnightly instalments, and a fee offset component of $12,818 for 2024. Centrelink has assessed as income only the living allowance of $35,411.[6]
[6] Page 93 of the hearing papers.
It is relevant to state from the outset that the policy set out in the Guide is not law. The Tribunal may be guided by the policy unless it is inconsistent with the legislation.[7]
[7] See Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 and Hneidi and Others v Minister for Immigration and Citizenship [2010] FCAFC 20.
Section 8 of the Act sets out a definition of income for the purpose of social security law:
"income”, in relation to a person, means:
(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).
The broad effect of this provision is a starting presumption that any income amount earned, derived or received by a person is assessable income for the purposes of the social security law, unless the amount is specifically excluded by a provision of the Act. In relation to such exclusions, subsections 8(4) and (5) relate to home equity conversion agreements and have no bearing on the current application.
The passages in the Guide raised by Mr Northbury and [Ms A] refer to the Act at paragraph 8(8)(zja). Pursuant to this provision the following amounts are excluded from the definition of income for the purposes of the Act:
(zja) the amount or value of:
(ia) a scholarship provided for under Part 2-2A of the Higher Education Support Act 2003 (Indigenous student assistance grants) and specified by the Secretary under subsection (8AAA) of this section.
(i) a scholarship known as a Commonwealth Education Costs Scholarship; or
(ii) a scholarship known as a Commonwealth Accommodation Scholarship;
Paragraph 8(8)(zja) makes no reference to the RTP scholarship living allowance. Subsection 8(8) contains no other provision for exclusion of Commonwealth scholarships as a broader category.
Relevantly, paragraph 8(8)(zjd) provides for a partial exclusion from assessment as income of some scholarship funds up to a threshold amount:
(zjd) a payment of a scholarship to a person during a calendar year (other than an excluded payment):
(i) for the person to study, or to undertake research, at an educational institution; or
(ii) for the person's achievement in studying, or in undertaking research, at an educational institution;
to the extent that the payment does not exceed the person's threshold amount for that year;
The threshold amount was $9,724 from 1 January 2024.[8]
[8] See the A guide to Australian Government payments from 1 January 2024 and 20 March 2024.
The excluded payments referred to at paragraph 8(8)(zjd) are set out at subsection 8(8AA) of the Act, however the RTP scholarship living allowance is not provided for as an excluded payment.[9]
[9] The excluded payments at subsection 8(8AA) of the Act are the Commonwealth Trade Learning Scholarship, approved scholarships awarded outside Australia for which a Ministerial determination under section 24A is in force, those scholarships referred to at 8(8)(zja) (which are discussed above), a scholarship payment under the ABSTUDY Scheme, as well as start-up scholarships and relocation scholarships. These payments are excluded from income assessment pursuant to paragraphs 8(8)(viiaa), (viiab), (zia), (zj) and (zf).
The Tribunal is satisfied that the RTP scholarship living allowance is paid to Mr Northbury for him to study, or undertake research, at an educational institution. Accordingly, the Tribunal finds that the first $9,724 of the RTP scholarship living allowance received by Mr Northbury in the 2024 calendar year is excluded from assessment pursuant to paragraph 8(8)(zjd) of the Act.
No other provisions set out at subsection 8(8) of the Act are relevant to Mr Northbury’s application or otherwise provide for the RTP scholarship living allowance to be disregarded as income. For instance, paragraphs 8(8)(zjb) and (zjc) concern the reduction of amounts payable for enrolment or tuition in a course, or payments made to an educational institution or to the Commonwealth to reduce a person’s enrolment or tuition costs. These provisions are not relevant to the assessment of the RTP scholarship living allowance as this stipend is paid directly to Mr Northbury. Further, Centrelink has not assessed the fee offset component of the scholarship as income.
Mr Northbury further submitted that his scholarship should be excluded from assessment pursuant to paragraph 8(8)(zja) on the basis that it is a Commonwealth scholarship which assists him with the costs of education. The Tribunal is not persuaded by this submission, noting that subparagraph 8(8)(zja)(i) provides for exclusion of a scholarship known as a Commonwealth Education Costs Scholarship. The RTP scholarship is not known as a Commonwealth Education Costs Scholarship. It is known as a Research Training Program scholarship.
The Tribunal is satisfied that the balance of any RTP scholarship living allowance funds above the threshold of $9,724 paid to Mr Northbury in the 2024 calendar year must be included in the calculation of his DSP rate. This is the basis upon which Centrelink determined that Mr Northbury had been overpaid DSP. The Tribunal finds that this is correct.

The period of the debt

A question remains concerning the date from which Mr Northbury’s RTP scholarship living allowance funds should be assessed.
Mr Northbury’s debt was raised on the basis that RTP scholarship living allowance funds impacted his rate of DSP from 4 March 2024.[10]
[10] Page 59 of the hearing papers.
The ARO did not discuss in their reasons the basis upon which the scholarship was taken to have affected Mr Northbury’s rate of DSP from 4 March 2024. However, notes recorded on Mr Northbury’s Centrelink file suggest that on 10 April 2024 he made an online declaration to Centrelink that he had received a scholarship in the amount of $35,411.[11] The date of 4 March 2024 was provided as part of this declaration.
[11] Page 108 of the hearing papers.
The letter dated [in] February 2024 offering the RTP scholarship to Mr Northbury advised that the scholarship was to commence between 1 January 2024 and 31 March 2024.[12] This letter also confirms that Mr Northbury’s scholarship is paid to him in fortnightly instalments.
[12] Page 70 of the hearing papers.
Mr Northbury provided the Tribunal with an email sent on 8 March 2024 from [University 1] confirming that his scholarship payments were active with effect from 4 March 2024 and would end on 4 March 2026, subject to any period of leave taken. Mr Northbury was told to expect an initial payment of $1,745.10 by 21 March 2024 and then fortnightly payments of $1,357.30. Mr Northbury also provided the Tribunal with his bank account statement, which shows he received a payment of $1,745.11 on 20 March 2024.
Pursuant to section 1072A of the Act, where a person receives an amount of income in the form of a lump sum payment which represents arrears of non-remunerative periodic payments, Centrelink may determine that the person is taken to have received the lump sum payment over a period, determined by Centrelink, which does not exceed 52 weeks.[13] For each day in the period, the person is taken to have received an amount of ordinary income worked out by dividing the amount of the lump sum by the number of days in the period.[14] Subsection 1072A(3) provides that the period determined by Centrelink must begin on the day on which the person received the lump sum payment.
[13] The provision lists specified exemptions which are not relevant here, for instance, the provision does not apply to exempt lump sums or compensation.
[14] Subsection 1072A(4) of the Act.
By requiring the assessment of the lump sum from when it is received, 1072A differs from section 1073 which concerns the assessment of non-remunerative lump sum income amounts that do not reflect an entitlement to a periodic payment. Section 1073 provides that such payments are assessed across a period of 12 months commencing on the day on which the person becomes entitled to receive the amount.
The Tribunal finds that the payment of $1,745.11 received by Mr Northbury on 20 March 2024 represented a non-remunerative lump sum payment of arrears of his ordinary fortnightly scholarship instalment from 4 March 2024, and is assessable under section 1072A of the Act.
On the background of the available evidence, the Tribunal is not satisfied that Mr Northbury has been overpaid amounts of DSP totalling $1,627.04 as calculated by Centrelink.
The Tribunal will set aside the decision under review and remit the matter for reconsideration by Centrelink in accordance with an order that Mr Northbury’s entitlement to disability support pension for the period 4 March 2024 to 30 April 2024 is to be reassessed on the basis that the sum of $1,745.11 received by him on 20 March 2024 must be assessed pursuant to section 1072A of the Act.
Should an overpayment of DSP be found to exist following this reassessment, the Tribunal is satisfied that Mr Northbury will have a debt due to the Commonwealth under subsection 1223(1) of the Act.

Issue 2 – Whether there is a basis for non-recovery of the debt

The Tribunal will consider whether recovery of any debt which might be found to exist after recalculation by Centrelink may be written off or waived pursuant to provisions in the Administration Act.

Write off

When a debt is written off, recovery action in relation to the debt is suspended for a specified period or otherwise. However, Centrelink may recommence recovery of the debt at a later point.
Section 1236 of the Act provides for write off of debts, but only in specified circumstances. For instance, paragraph 1236(1A)(b) provides that a debt may be written off where a debtor has no capacity to repay.
Mr Northbury did not provide the Tribunal with a Statement of Financial Circumstances. However, the Tribunal notes that he is in receipt of a part payment of DSP in addition to his fortnightly scholarship payments of $1,357.30. Mr Northbury was also awarded another $10,000 scholarship in 2024.
The Tribunal is not satisfied on the available evidence that Mr Northbury has no capacity to repay his debt. His circumstances do not meet the requirements in relation to any other provision for write off pursuant to section 1236 of the Act.
The Tribunal finds that the debt cannot be written off.

Waiver for administrative error

Centrelink must waive whatever proportion of a debt is attributable solely to an administrative error made by the Commonwealth, pursuant to section 1237A of the Act. However, the amounts proposed to be waived must have been received by the debtor in good faith. The debt must also have been raised more than 6 weeks after the first payment that caused the debt.
At hearing, Mr Northbury and [Ms A] both presented as sincere and frank. The Tribunal considers them to be witnesses of credit and accepts their evidence.
Mr Northbury told the Tribunal that he had attempted to declare his scholarship on 15 March 2024 via Centrelink’s online services. This is consistent with a record in the hearing papers dated 15 March 2024 which states that Mr Northbury made an online update to his income and assets on 15 March 2024 and was asked to return, “the latest statement/certificate for each scholarship, bursary or educational assistance payments” by 12 April 2024.[15]
[15] Page 107 of the hearing papers.
Mr Northbury said that he assumed, on this information, that a bank statement was required so he waited until the first scholarship payment was made to him. However, the amount of the first scholarship payment made to Mr Northbury was greater than the usual fortnightly instalment he would receive for the rest of the scholarship period. He decided to wait until he had received his next instalment before he provided a bank statement to Centrelink.

Centrelink’s records show that on 10 April 2024 Mr Northbury provided an income and assets update with verification documents.[16] Centrelink’s record shows that Mr Northbury declared that he had been granted a scholarship in the amount of $35,411 from 4 March 2024. The record also states, “The update could not complete as an unexpected error occurred”. Ultimately, Centrelink required Mr Northbury’s scholarship documents and these were provided on 1 May 2024.[17]
[16] Page 108 of the hearing papers.
[17] Page 69 of the hearing papers.
Mr Northbury told the Tribunal that he did not finish the declaration he started on 15 March 2024 because the wording of the instructions given to him was vague. He said if he had been asked to provide his scholarship offer documents he would have provided them to Centrelink the same day. However, he was asked for a statement and he assumed this meant a bank statement so he waited until he had one which showed receipt of his usual scholarship funds.
Mr Northbury was overpaid DSP because his rate was calculated without reference to income from his scholarship. The question is whether this occurred solely as a result of Commonwealth administrative error. Importantly, subsection 1237A(1) of the Act 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).
Centrelink did not act on Mr Northbury’s advice about the receipt of his scholarship funds until after he provided documents confirming the nature of his scholarship to Centrelink on 1 May 2024. This information was required by Centrelink to ensure a correct decision was made concerning the assessment of Mr Northbury’s scholarship funds. Had Mr Northbury provided Centrelink with these documents earlier, then the debt may not have accrued.
It is unfortunate that Mr Northbury understood Centrelink’s request for the latest statement or certificate for his scholarship as a request for a bank statement showing his receipt of scholarship funds. Mr Northbury raised that Centrelink’s instructions to him concerning what information he was required to provide were vague. However, the Tribunal does not accept that this would amount to administrative error on the part of the Commonwealth, or that this was the sole cause of the debt.
The Tribunal accepts that Mr Northbury was genuine in his actions and did not intend to receive amounts he was not entitled to be paid. However, the raising of the debt under review is not a fine or a punishment.

Waiver for special circumstances

Section 1237AAD provides for waiver of all or part of a debt in special circumstances:
Waiver in special circumstances
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 this Act, the Administration Act or the 1947 Act; and
(b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c)it is more appropriate to waive than to write off the debt or part of the debt.
Having regard to the evidence, in particular Mr Northbury’s multiple contacts with Centrelink to advise of the receipt of his scholarship, the Tribunal is satisfied that the debt did not arise because Mr Northbury, or another person, knowingly made a false statement or knowingly failed to comply with a provision of the social security law.
The next question is whether there are special circumstances which make it desirable to waive all or part of Mr Northbury’s debt. The phrase special circumstances is not defined in the legislation. For the Tribunal to contemplate waiver there must be something unusual or out of the ordinary about the circumstances that would mean that application of the usual rules would be unfair or unjust.[18] There must be something about the circumstances of the case that distinguishes it from the usual run of cases.[19] However, the circumstances do not need to be exceptional.[20]
[18] Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones [2012] FCA 639 at [51].
[19] Dranichnikov v Centrelink [2003] FCAFC 133 at [66].
[20] Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 at [33].
Mr Northbury shared with the Tribunal details concerning the conditions for which he was granted DSP, as well as others he lives with that also affect his function. The Tribunal is satisfied that these conditions have had an impact on Mr Northbury’s ability to interpret and act on Centrelink’s requests for information in relation to his scholarship.
Mr Northbury also told the Tribunal that he had capacity to repay the debt. However, he raised that it is difficult for him to work, and to interact with others. At the time the debt arose he was trying to deal with Centrelink as well as engage with the postgraduate study that led to the grant of his scholarship.
Having regard to all of Mr Northbury’s circumstances, the Tribunal is not satisfied they are sufficiently special as to warrant waiver of any part of his debt pursuant to section 1237AAD.

DECISION

The Tribunal sets aside the decision under review and remits the matter for reconsideration in accordance with the order that:

Mr Northbury’s entitlement to disability support pension for the period 4 March 2024 to 30 April 2024 is to be reassessed on the basis that the sum of $1,745.11 received by him on 20 March 2024 must be assessed pursuant to section 1072A of the Act; and,
any overpayment that is found to exist following this reassessment is a debt due to the Commonwealth, which must be recovered in full.

Date(s) of hearing:

Wednesday, 29 January 2025