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

The Secretary, Department of Social Services, sought review of a decision by the Administrative Appeals Tribunal (AAT) concerning family tax benefit (FTB) debts owed by Mr Smith. The AAT had previously set aside a debt of $13,469.23 for the 2018-2019 financial year, finding it was entirely due to the sole administrative error of Services Australia, and affirmed debts of $6,317.16 for 2019-2020 and $3,376.31 for 2020-2021. The dispute centred on whether the AAT correctly applied section 97 of the *A New Tax System (Family Assistance) (Administration) Act 1999* (Cth) in waiving the largest debt.

The primary legal issue before the court was whether the AAT erred in finding that the entire $13,469.23 FTB debt was attributable solely to administrative error by the Agency, thereby allowing for its waiver under section 97(3) of the Administration Act. This involved considering the Respondent's role in underestimating his income and the Agency's delay in raising the debt. The court also had to determine the recoverability of the other two debts, which the AAT had affirmed.

The court reasoned that while the Respondent had underestimated his income, this was not indicative of deceit but rather a reflection of the inherent difficulty in predicting earnings from a newly established business. The AAT had found no false or misleading information provided by the Respondent and that payments were received in good faith. However, the court found that the AAT had misapplied section 97(3) by attributing the entire debt to administrative error, despite the Respondent's contribution to the overpayment through his income estimates. The court noted that section 97A of the Act provided for the recovery of FTB debts even where there was administrative error, provided the debt was raised within the prescribed timeframe.

The Tribunal set aside the AAT's decision regarding the $13,469.23 debt for the 2018-2019 financial year and substituted a decision that the whole amount was recoverable from the Respondent under section 71A of the Administration Act. The Tribunal affirmed the AAT's decision regarding the other two debts, which were found to be recoverable.