Thorpe and Secretary, Department of Social Services (Social services second review)
[2024] AATA 446
•14 March 2024
Thorpe and Secretary, Department of Social Services (Social services second review) [2024] AATA 446 (14 March 2024)
Division:GENERAL DIVISION
File Number(s): 2021/3840
Re:Mr Dennis Raymond Thorpe
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
Date:14 March 2024
Place:Brisbane
DECISION
Pursuant to section 43(1)(c)(i) of the Administrative Appeals Tribunal Act 1975 (Cth), the Tribunal sets aside the decision under review, and in substitution determines that:
(i)the applicant has a legally recoverable debt arising from the overpayment of his age pension during the period of 9 August 2014 to 12 October 2018; and
(ii) the matter is further remitted to the respondent to recalculate the applicant’s debt in accordance with this decision.
...............................[SGD].........................................
Senior Member B. Pola
CATCHWORDS
SOCIAL SECURITY – where applicant was recipient of age pension entitlements – where applicant had sources of income including employment and wife’s self-employment income – whether the applicant was overpaid the age pension – respondent calculation for parts of income not completed with use of payslips as best available information – applicant had under-reported income and was overpaid age pension – where overpayments constitute a debt to the Commonwealth – whether debt recoverable in part or in full – where there are no special circumstances or sole administrative error in the present case – decision set aside and remitted to respondent
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth)
Family and Community Services Legislation Amendment (Australians Working Together and other 2001 Budget Measures) Act 2003 (Cth)
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
CASES
Beadle and Director-General of Social Security [1984] 6 AATA 176
Callaghan and Secretary, Department of Social Security [1996] 45 ALD 435
Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114
Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Feneley and Secretary Department of Family and Community Services [2003] AATA 496
Janseen and Secretary, Department of Social Services [2023] AATA 1030
Jazazievska v Secretary Department of Family & Community Services [2000] FCA 1484
Judd and Secretary, Department of Social Services (Social services second review) [2022] AATA 727 (11 April 2022)
Lyall and Secretary, Department of Social Services (Social services second review) [2023] AATA 3356 (17 October 2023)
Panacci and Secretary, Department of Employment and Workplace Relations [2008] AATA 30
Read v Commonwealth [1988] HCA 26; (1988) 167 CLR 57 (2 June 1988)
Secretary, Department of Education, Employment, Training and Youth Affairs v Prince [1997] 152 ALR 127
Secretary, Department of Social Security v Hales (1998) FCA 219
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190
SECONDARY MATERIALS
Social Security Guide
REASONS FOR DECISION
Senior Member B. Pola
14 March 2024
BACKGROUND
The applicant, Mr Dennis Thorpe, has been a recipient of the age pension since 12 October 2011[1]. The applicant also earns income through employment and has at times had periods where his age pension payments have ceased because of this additional income. The applicant is married, and his wife owns a business and from this receives self-employment income, in addition to family tax benefit payments, which ceased in 2019.
[1] Exhibit TR1, T42, page 393.
On 3 June 2019, Centrelink raised an age pension debt of $13,534.72 against the applicant on the basis of his wife’s self-employment income from her business not having been taken into account when age pension payments were made to the applicant during the period of 29 August 2014 to 12 October 2018[2].
[2] Exhibit TR1, T33, pages 203 to 205.
The applicant sought review of this decision and on 25 January 2021 an Authorised Review Officer (herein referred to as an “ARO”) varied the original decision and determined the applicant had an age pension debt of $12,497.00 for the period of 9 August 2014 to 12 October 2018 (herein also referred to as the “relevant debt period”) on the basis that the applicant did not correctly report his employment income during this period, in addition to not including his wife’s self-employment income from her business. Further, the ARO determined the applicant’s debt could not be waived due to sole administrative error or special circumstances[3].
[3] Exhibit TR1, T37, pages 275 to 281.
On 18 February 2021, the applicant applied to the Social Services and Child Support Division (herein referred to as the “SSCSD”) of the Administrative Appeals Tribunal (herein referred to as the “Tribunal”) for a first tier review of the ARO decision[4].
[4] Exhibit TR1, T38, pages 282 and 283.
On 1 April 2021, the SSCSD of the Tribunal determined that the decision under review should be set aside and remitted the matter to the Chief Executive Centrelink for reconsideration in accordance with a direction that the applicant’s age pension debt was to be recalculated having regard (in particular) to paragraph 20 of the reasons. Further, it was determined that the Applicant’s debt could not be written off or waived for special circumstances[5].
[5] Exhibit TR1, T2, pages 13 to 19.
On 11 June 2021, the applicant applied to the Tribunal for a second tier review of the SSCSD decision of 1 April 2021[6].
[6] Exhibit TR1, T1, pages 1 to 12.
It is noted that on 30 September 2021, Centrelink recalculated the age pension debt of the applicant and determined the age pension debt had decreased to $11,768.10 for the relevant debt period[7].
[7] Exhibit TR1, T27, pages 152 to 187; and T36, pages 208 to 274.
On 3 June 2022, the respondent recalculated the applicant’s age pension debt from verified earnings from the applicant’s employers and the self-employment business income which was reported in the applicant’s individual income tax returns of the applicant’s wife during the relevant debt period. These revised calculations are before the Tribunal for consideration in supplementary materials filed by the respondent with the Tribunal on 18 July 2022[8].
[8] Exhibit TR2.
JURISDICTION
This is an application to review a decision of the SSCSD of the Tribunal, dated 1 April 2021, which set aside and remitted earlier decisions made by an ARO on 25 January 2021.
Section 179(1) of the Social Security (Administration) Act 1999 (Cth) (herein referred to as the ‘Administration Act’), states:
“…179 Application for AAT second review
(1) Application may be made to the AAT for review (AAT second review) of a decision of the AAT on AAT first review made under subsection 43(1) of the AAT Act.
(2) For the purposes of subsection (1), the decision of the AAT on AAT first review is taken to be:
(a) if an AAT first review affirms a decision—that decision as affirmed; or
(b) if an AAT first review varies a decision—that decision as varied; or
(c) if an AAT first review sets a decision aside and substitutes a new decision—the new decision; or
(d) if an AAT first review sets a decision aside and sends the matter back to the Secretary for reconsideration in accordance with any directions or recommendations of the AAT—the directions or recommendations of the AAT…”
In accordance with section 179(1) of the Administration Act, the Tribunal has jurisdiction to hear the applicant’s application of 11 June 2021.
ISSUES
The issues before the Tribunal for determination are:
(a)Was the applicant overpaid age pension payments in excess of his entitlement for the relevant debt period?
(b)Whether any overpayment of age pension identified constitutes a debt to the Commonwealth; and
(c)Whether any debt owed to the Commonwealth is recoverable in part or in full?
RELEVANT LEGISLATIVE FRAMEWORK
Rate of Age Pension and Disability Support Pension Payments
The relevant legislation with respect to these provisions is the Social Security Act 1991 (Cth) (herein referred to as the ‘Act’). The age pension is a means tested payment.
The rate of the age pension is determined in accordance with section 1064 of the Act. Relevantly, Module A of this section provides an overall rate calculation process – an ordinary income test and an assets test, which affects the rate of the relevant pension payment.
As the applicant in this matter is partnered, section 1064(4) of the Act requires the income and assets of the partner to be taken into account when calculating the relevant ordinary income and asset tests, which also affect the rate of the relevant pension payment.
Section 1072 of the Act provides a general meaning for the term ‘ordinary income’:
“…1072 General meaning of ordinary income
A reference in this Act to a person’s ordinary income for a period is 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.
Note 1: For ordinary income see subsection 8(1)…”
Ordinary income is further defined in section 8(1) of the Act, which provides:
“…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).
Note 1: See also sections 1074 and 1075 (business income), Division 1B of Part 3.10 (income from financial assets (including income streams (short term) and certain income streams (long term)), Division 1C of Part 3.10 (income from income streams not covered by Division 1B of Part 3.10), section 1099F (exempt bond amount does not count as income) and section 1099K (refunded amount does not count as income).
Note 2: Where a person or a person’s partner has disposed of income, the person’s income may be taken to include the amount which has been disposed of—see sections 1106-1112.
Note 3: Income is equivalent to ordinary income plus maintenance income…”
The Tribunal observes that the Courts have taken a wide view with respect to the definition of the term ‘income’, as it is used within the Act. The Tribunal refers to their Honour Brennan J in the High Court decision of Read v Commonwealth[9]:
“… The definition is exhaustive: the term "income" means what it is defined to mean; it does not mean what "income" would be understood to mean if the definition were not in the Act. The definition is couched in the widest terms, presumably to ensure that public expenditure is directed to those who stand in actual need of the periodic support which income-related pensions provide. The definition is wide enough to embrace receipts of a capital nature as well as receipts of income, for "income" is defined to mean, inter alia, any moneys, valuable consideration or profits irrespective of the means by which or the source from which those moneys, etc. are received…”
[Tribunal underline for emphasis]
[9] [1988] HCA 26; (1988) 167 CLR 57 (2 June 1988) at [3].
Employment income is defined in section 8(1A)(a) of the Act, which defines employment income as a reference to ordinary income of the person, “… that is for remunerative work of the person as an employee in an employer/employee relationship”.
Sections 1073B and 1073C of the Act were inserted by the Family and Community Services Legislation Amendment (Australians Working Together and other 2001 Budget Measures) Act 2003 (Cth), in force from 20 September 2003, relevantly section 1073B(1) of the Act (in force during the relevant debt period) provided:
“…
(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.…”
The operative effect of section 1073B(1)(d) of the Act was to deem the person to have earned, derived or received an amount of employment income on each day in that instalment period, worked out by dividing the total amount of employment income by the number of days in the instalment period.
Instalment period as defined in section 23 of the Act, is, “… means a period that is determined by the Secretary under section 43 of the Social Security (Administration) Act 1999 to be an instalment period of the person…”.
Subsection 43(1) of the Administration Act provides that a social security periodic payment is to be paid in arrears and by instalments relating to such periods (not exceeding 14 days) as the Secretary determines. Subsection 43(3) provides that:
“… …the amount that is to be paid to a person as an instalment of a social security periodic payment in relation to a period is the total of the amounts of the social security periodic payment (calculated by reference to the daily rate of payment applicable to each day) payable to the person for days in that period on which the social security periodic payment was payable to the person…”
The gross employment income of the applicant is assessed under the ordinary income test in Module E of section 1064 of the Act in order to determine the appropriate rate of age pension to which the applicant is entitled.
The importance of determining when a person has earned, derived or received an amount of employment income was considered in detail in a decision by Senior Member K Millar in Lyall and Secretary, Department of Social Services (Social services second review)[10] (herein referred to as “Lyall”). In this decision, the importance of the calculation of a person’s debt with reference to the instalment period where income has been determined to be earned derived or received is explained[11]:
“… Income is earned when the person completes a unit of work for which payment is due, and for casual workers this may be the hours or days worked. It is derived when the person has a present legal entitlement to the income. Income is received when it is actually received or capable of being accessed by the person.
Where a person has casual income from employment and earns more in one instalment period and less in another, this can result in different rates of payment in different instalment periods. Of considerable importance is identifying when the income was earned, derived or received as this will determine the instalment period to which income is attributed.
If income has been correctly attributed to a single instalment period, as it has in the recalculations in his case, the question then arises of whether it has been correctly attributed according to when it was earned, derived or received.
A different rate of payment can result if the day or days on which income is actually earned is used to calculate the rate. This is because if income is earned, for example, for three days in one week and four days the next week and these weeks fall in different Centrelink instalment periods, it potentially results in a higher rate in both instalment periods than if it is attributed in a single instalment period when the income was received…”
[10] [2023] AATA 3356 (17 October 2023).
[11] Ibid at [19] to [28]; and [31] to [33]; see also Judd and Secretary, Department of Social Services (Social servicesSection 1073C as it was in force during the relevant debt period provided:
“… 1073C Fortnightly or yearly expression of attributed employment income
If, in accordance with the operation of section … 1073B … a person is taken to earn, derive or receive a particular amount of employment income on each day in an instalment period:
(a) the rate of the person’s employment income on a fortnightly basis for that day may be worked out by multiplying that amount by 14; and
(b) the rate of the person’s employment income on a yearly basis for that day may be worked out by multiplying that amount by 364…”
Self-employment income
The Tribunal refers to the Social Security Guide (herein referred to as the “Guide”). Whilst the Tribunal is not bound to strictly apply the Guide, the Tribunal will take into account the established practices set out in the relevant sections of the Guide, as consistent application of the relevant policies is desirable unless cogent reasons exist not to[12].
[12] Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at [645].
The Guide at 4.7.1.20 provides the following guidance with respect to the assessment of business income from a sole trader or partnership business[13]:
“… Income from a sole trader or partnership business is the net amount:
AFTER allowable expenses for the cost of running the business, AND
BEFORE income tax and other personal deductions.For assessment purposes the current annual rate of income is used, generally based on the most recent income tax return. To calculate the effect of income on fortnightly payments, the annual rate should be divided into 26 equal instalments and then treated as ordinary income in each fortnight…”[13] 4.7.1.20 Assessment of income for sole traders & partnerships | Social Security Guide (dss.gov.au)
Section 1075(1) of the Act provides:
“…1075 Permissible reductions of business income
(1) Subject to subsection (2), if a person carries on a business, the person’s ordinary income from the business is to be reduced by:
(a)losses and outgoings that relate to the business and are allowable deductions for the purposes of section 8‑1 of the Income Tax Assessment Act 1997; and
(b)amounts that relate to the business and can be deducted in respect of plant (within the meaning of the Income Tax Assessment Act 1997) under Division 40 of that Act; and
(c)amounts that relate to the business and are allowable deductions under section 290‑60 of the Income Tax Assessment Act 1997…”
Debts
The following paragraphs outline relevant legislative provisions which apply to debts incurred resulting from a lack of qualification for a payment, or an overpayment. A debt, pursuant to subsection 1223(1) of the Act, is incurred when:
“…1223 Debts arising from lack of qualification, overpayment etc.
(1) Subject to this section, if:
(a) a social security payment is made; and
(b) a 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…”
Writing off a debt
Section 1236 of the Act provides that the Secretary may write off debt:
“…1236 Secretary may write off debt
(1) Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.
(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.
(1B) 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.
(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.
(2) A decision made under subsection (1) takes effect:
(a) if no day is specified in the decision—on the day on which the decision is made; or
(b) if a day is specified in the decision—on the day so specified (whether that day is before, after or on the day on which the decision is made).
(3) Nothing in this section prevents anything being done at any time to recover a debt that has been written off under this section…”
Administrative error
Section 1237A of the Act provides that:
“…(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)…”
Special circumstances
Section 1237AAD of the Act provides that:
“…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…”
Relevant notice
Section 68(2) of the Administration Act, provides the following:
“…(2)The Secretary may give a person to whom this subsection applies a notice that requires the person to do any or all of the following:
(a)inform the Department if:
(i)a specified event or change of circumstances occurs; or
(ii)the person becomes aware that a specified event or change of circumstances is likely to occur;
(b)give the Department one or more statements about a matter that might affect the payment to the person of the social security payment; …”
Section 100(1) of the Administration Act provides that:
“…100 Automatic rate reduction—recipient not complying with subsection
68(2) notice(1) Subject to subsection (2), if:
(a)a person who is receiving a social security payment is given a notice under subsection 68(2); and
(b) the notice requires the person to inform the Department of the occurrence of an event or change of circumstances within a specified period (the notification period); and
(c) the event or change of circumstances occurs; and
(d) the person does not inform the Department of the occurrence of the event or change of circumstances within the notification period in accordance with the notice; and
(e) because of the occurrence of the event or change of circumstances, the rate of the social security payment is to be reduced;
the social security payment becomes payable to the person at the reduced rate on the day on which the event or change of circumstances occurs…”
Therefore, in circumstances where a person is in receipt of a social security payment and is given notice under section 68(2) of the Administration Act by the Agency, and there is a change in the person’s circumstances and the person does not inform the Agency, the social security payment becomes payable to that person at the reduced rate on the day the change of circumstance occurs.
CONSIDERATION
The application was heard in Brisbane on 5 December 2023 with the applicant (self-represented), and the respondent, represented by Mr Ben Dube of Sparke Helmore. Parties appeared by telephone, as permitted by section 33A of the Administrative Appeals Tribunal Act 1975 (Cth). The Tribunal considered oral submissions made by the applicant and respondent, in addition to submitted written evidence, as outlined in the Exhibit Register (marked as Annexure 1 at the end of these reasons).
At the conclusion of the hearing, the Tribunal was of the view that it was appropriate for closing submissions of the parties to be provided in written form, following questioning by the Tribunal to the respondent with respect to available evidence regarding the applicant’s employment income in determining when it was earned derived or received, as it applies to relevant instalment periods in the revised debt calculations of 3 June 2022 (this is more fulsomely discussed in the later part of this decision). Closing submissions from the respondent were received on 11 January 2024, while the applicant elected not to provide written closing submissions on 29 January 2024.
Was the applicant overpaid age pension payments in excess of his entitlement for the relevant debt period?
The first issue for the Tribunal to determine with respect to this application is whether the applicant was overpaid age pension payments for the period of 9 August 2014 to 12 October 2018.
The applicant is 77 years of age and had become a recipient of the age pension when he turned 65, in October 2011.
During the relevant debt period, evidence before the Tribunal confirms the applicant had received income from the following sources:
(a)Self-employment income from his wife’s business;
(b)Employment income in the form of wages from:
(i)Brown Brothers Waste Contractors Pty Ltd (herein referred to as ‘Brown Brothers’);
(ii)Greyhound Australia;
(iii)Whitsunday Transit; and
(iv)Faletti Brothers.
Applicant’s evidence at the hearing
With respect to the applicant’s wife’s business income, the applicant told the Tribunal he was told not to report this income on a fortnightly basis by Centrelink and that this would be something that Centrelink would calculate. Under further questioning, the applicant stated that he had assumed that this was something that Centrelink would sort out with the Australian Taxation Office.
In opening submissions to the Tribunal the applicant accepted that he was responsible for a portion of the debt he had incurred with respect to the under reporting of his earnings from Brown Brothers. Under questioning during cross-examination, the applicant also told the Tribunal that he had made attempts to correctly report his earnings from Brown Brothers but he experienced delays of up to “1.5 hours” on the phone with Centrelink, something which he said he did not have time for when he was driving trucks and working.
The applicant’s evidence to the Tribunal under cross-examination was that he had accurately reported his wages from Greyhound Australia, Whitsunday Transit, and Faletti Brothers.
At the hearing the applicant was taken to correspondence from Centrelink which clearly set out the applicant’s reporting obligations with respect to any income he received, including any income from a business where he or his partner worked. A letter dated 10 February 2014 clearly set out reporting periods and dates upon which the applicant was expected to report his income[14].
[14] Exhibit TR1, T4, pages 85 to 90.
The Tribunal is satisfied the applicant was appropriately notified of his reporting obligations with respect to his income, and the impact this would have on his entitlement to the age pension, with respect to the application of section 68(2) of the Administration Act.
The applicant gave evidence to the Tribunal that he agreed with the general proposition that he received letters from Centrelink and would have likely read them, but when taken to specific examples such as that above, his evidence was that he should have received such a letter but was unable to confirm if he read it. This was the tenor of the applicant’s evidence when taken to specific examples throughout the hearing. On reflection of the applicant’s evidence, the Tribunal has formed the view that it is unable to rely on the applicant’s oral submissions, given the applicant’s inability to recall information accurately.
The Tribunal will now review evidence with respect to the applicant’s sources of income during the relevant debt period in order to determine whether any overpayment arises with respect to the applicant’s entitlement to the age pension.
Self-employment income of applicant’s wife
With respect to self-employment income from the beauty business run by the applicant’s wife, the Tribunal has before it copies of individual income tax returns for the 2013-14 financial year through to the 2018-19 financial year. The Tribunal notes that the individual tax returns were completed by the applicant’s accountant and provided to the respondent by the applicant on 15 December 2020[15]. Relevantly, the Tribunal summarises the omitted net business income by the applicant to the respondent, as follows:
[15] Exhibit TR1, T36, page 208.
Period applicable
Net business income of Mrs Thorpe
1 July 2014 to 30 June 2015
$13,007[16]
1 July 2015 to 30 June 2016
$12,511[17]
1 July 2016 to 30 June 2017
$15,617[18]
1 July 2017 to 30 June 2018
$19,964[19]
1 July 2018 to 30 June 2019
$11,644[20]
[16] Exhibit TR1, T36, pages 222 and 223.
[17] Exhibit TR1, T36, pages 232 and 233.
[18] Exhibit TR1, T36, pages 243 and 244.
[19] Exhibit TR1, T36, pages 255 and 256.
[20] Exhibit TR1, T36, pages 267 and 268.
For each tax return, net business income calculations have been derived by deducting purchases, cost of sales, and other related expenses from the business income in that financial year, in accordance with section 1075 of the Act, as transposed in earlier reasons. It is appropriate that the net business income for each applicable period is apportioned into 26 equal instalments and then treated as ordinary income in each fortnight in accordance with the approach detailed in the Guide[21].
[21] 4.7.1.20 Assessment of income for sole traders & partnerships | Social Security Guide (dss.gov.au)
The Tribunal has reviewed the revised debt calculations which the respondent undertook on 3 June 2022.
On 30 January 2024, following receipt of final written closing submissions from the respondent, the Tribunal contacted the respondent to provide a further breakdown of the summary information with respect to income totals provided in the MultiCal calculations of 3 June 2022, in order for the Tribunal to confirm that the various sources of the applicant’s income had been correctly captured in the debt calculations[22].
[22] With reference to the sources of income (including each amount) which make up the summary total provided in the
row "EARNINGS", and a further breakdown of the amount and calculation for each total in the row "OTHER INCOME"
in the calculations at Exhibit TR2, ST3, pages 40 to 51, and pages 76 to 79.
On 14 February 2024 the respondent advised the Tribunal that it would take four weeks to provide that information. As it transpires, the Tribunal will not be relying on the respondent’s 3 June 2022 calculations for the conclusions arrived at in the latter reasons of this decision, as the Tribunal will be remitting this application to the respondent for recalculation in accordance with the latter reasons of this decision.
For the avoidance of doubt, the Tribunal is satisfied the omission of the applicant’s wife’s net business income from the applicant’s reported income to the respondent during the relevant debt period as detailed in paragraph 49 of these reasons, has resulted in an overpayment of the age pension to the applicant[23]. The recalculation of the applicant’s debt is to include the net business income of Mrs Thorpe for each applicable period as detailed by the Tribunal.
[23] With reference to reported earnings during the relevant debt period at Exhibit TR1, T42, pages 400 and 401.
Wages from Brown Brothers
Supplementary evidence obtained by the respondent with respect to the applicant’s employment with Brown Brothers, clearly shows the applicant received income in the form of wages from this employer in excess of what he declared to the respondent during the relevant debt period[24]. Records before the Tribunal confirm the applicant declared earnings of $50,856.81 during the relevant debt period[25]. Payslip information before the Tribunal from this employer confirms the applicant was paid gross wages of $85,305.66 during the relevant debt period[26]. During the relevant debt period the applicant’s income was under-declared by $34,448.85.
[24] Exhibit TR2, ST1, pages 1 to 23; and with reference to reported earnings during the relevant debt period at Exhibit
TR1, T42, pages 400 and 401.
[25] Exhibit TR1, T42, pages 400 and 401.
[26] Exhibit TR2, ST1, pages 4 to 23.
With respect to calculating the applicant’s correct entitlement to the age pension, in earlier reasons the Tribunal detailed the importance of determining when employment income was earned, derived, or received by an individual, and the flow on impact this can have with respect to an individual’s entitlement to a rate of payment.
In the evidence before the Tribunal regarding the applicant’s earnings from Brown Brothers, the pay slip information provided does not confirm the dates within each pay period the applicant worked, instead it only records the applicant’s total hours and the rate at which he was paid within each pay period[27]. Information in these payslips confirm the date on which the applicant was paid, and also classified the applicant’s employment as a “casual driver”, with the applicant working varied hours week to week during the period of employment.
[27] Exhibit TR2, ST1, pages 4 to 23.
During the course of the hearing the Tribunal questioned the respondent as to the method used to determine when the applicant’s employment income was earned, derived or received with respect to the pay slip information obtained from Brown Brothers, which was used in the debt calculations of 3 June 2022.
The respondent has submitted in closing submissions that there was insufficient detail in the payslip information provided to determine what employment income the applicant earned each day within each pay period, which is why the respondent has applied the “payment date” listed in each payslip in their instalment period calculations, as this most accurately identified when the employment income was received by the applicant in each particular instalment period[28].
[28] Exhibit R2, pages 15 and 16, paragraph 4.39.
On close reflection of the available evidence the Tribunal agrees with the approach of the respondent. The pay slip information lacks sufficient detail to determine when the applicant’s employment income was earned within each pay period, and therefore there is insufficient information to reasonably determine when the applicant’s income was earned or derived with respect to the relevant instalment periods. The only factor that can be determined with certainty is the payment date, that is, when the applicant received his income. Therefore, the Tribunal determines that it is reasonable to apply the payment date for each of the payslips with respect to the relevant instalment periods when calculating the applicant’s entitlement to the age pension.
As detailed in earlier reasons, the Tribunal will not be relying on the respondent’s 3 June 2022 calculations for the conclusions arrived at in the latter reasons of this decision, given the Tribunal’s decision to remit this application to the respondent for recalculation in accordance with the latter reasons of this decision.
For the avoidance of doubt, the Tribunal is satisfied the applicant under-reported his income from Brown Brothers to the respondent during the relevant debt period as detailed by the Tribunal, and this has resulted in an overpayment of the age pension to the applicant. The Tribunal is satisfied the respondent correctly captured the applicant’s income from Brown Brothers and apportioned this in the applicable instalment periods in the debt calculations[29].
[29] At Exhibit TR2, ST3, pages 69 and 70.
Wages from Greyhound Australia
Supplementary evidence obtained by the respondent with respect to the applicant’s employment at Greyhound Australia clearly indicates the applicant received income from this employer in the form of wages, in excess of what had been declared to the respondent during the relevant debt period[30].
[30] Exhibit TR2, ST2, pages 24 to 38; and with reference to reported earnings during the relevant debt period at Exhibit
TR1, T42, pages 400 and 401.
Records before the Tribunal confirm the applicant declared earnings of $21,368.00 during the relevant debt period[31]. A pay history report supported by partial payslip information before the Tribunal from this employer confirms the applicant was paid gross wages of $26,888.32 during the relevant debt period[32]. During the relevant debt period the applicant’s income was under-declared by $5,520.32.
[31] Exhibit TR1, T42, pages 400 and 401.
[32] Exhibit TR2, ST1, pages 4 to 23.
With respect to the applicant’s earnings from Greyhound Australia, the Tribunal is of the view the respondent went to reasonable efforts to obtain accurate payroll information relating to the applicant, with evidence before the Tribunal confirming the respondent used powers pursuant to sections 192 and 196 of the Administration Act to obtain relevant information from the applicant’s employer, Greyhound Australia[33].
[33] Exhibit TR2, ST2, pages 24 to 26.
With respect to the evidence which has been obtained, there are incomplete records breaking down the applicant’s earnings during the relevant debt period. Evidence before the Tribunal from Greyhound Australia includes a pay history report disclosing gross wages paid to the applicant for the period of 17 June 2015 to 22 January 2016. Supplementing this information, are an incomplete record of payslips for the applicant, with payslip information only provided for the following dates[34]:
(i)14 October 2015, for the pay period 5 October 2015 to 11 October 2015;
(ii)25 November 2015, for the pay period 16 November 2015 to 22 November 2015;
(iii)2 December 2015, for the pay period 23 November 2015 to 29 November 2015;
(iv)9 December 2015, for the pay period 30 November 2015 to 6 December 2015;
(v)16 December 2015, for the pay period 7 December 2015 to 13 December 2015;
(vi)18 December 2015, for the pay period 7 December 2015 to 13 December 2015 (with a note stating extra pay period 13 December 2015 to 13 December 2015, on this payslip it confirms the applicant was paid a sum for “Term ANN”, which the Tribunal reasonably infers is annual leave as the applicant was classified as a part-time employee and displays an annual leave balance which is reduced from 90.91 hours in this payslip to 1.15 hours in the payslip referred to below; further the applicant was paid an amount referred to as “Term Sum C”); and
(vii)22 January 2016, for the pay period 18 January 2016 to 24 January 2016 (with a note stating extra pay period 14 December 2015 to 14 December 2015, again the Tribunal reasonably infers the applicant was paid a sum for annual leave in this pay slip for the reasons outlined above).
[34] Exhibit TR2, ST2, pages 27 to 38.
The payslip information that is available from Greyhound Australia does not confirm the dates within each pay period the applicant worked, instead it only records the applicant’s total hours and the rate at which he was paid within each pay period. However, these payslips do confirm the date on which the applicant was paid. The Tribunal notes that the applicant’s hours worked in the payslip information varied greatly from week to week, which is also reflected in the totals provided in the pay history report.
Similar to earlier findings made by the Tribunal with respect to the treatment of the applicant’s earnings from Brown Brothers, the Tribunal is satisfied the respondent’s approach of applying the “payment date” found in the pay history report and the payslip information when determining the applicant’s entitlement to the age pension in the instalment period calculations is reasonable as this is the only factor that can be determined with certainty, that is when the applicant received his income.
The incomplete record of payslips for the applicant’s wages indicates the applicant was regularly paid allowances for “Uniform” and “Tool Allow”. With respect to the treatment of allowances received by the Applicant, the Guide at 4.3.2.10 states that with respect to payments received for reimbursement of expenses, some amounts are not considered to be income if they are paid to a person to reimburse them for the cost of specific expenses (e.g. work related expenses) which they have incurred[35].
[35] 4.3.2.10 Income received to cover specific expenses | Social Security Guide (dss.gov.au)
The Tribunal is of the view that a reasonable approach would be to deduct these amounts from the applicant’s gross payment before tax and treat them as allowances in accordance with the practice set out in the Guide, where these amounts are able to be confirmed through the payslip information which is available.
The Tribunal was able to summarise the applicant’s wages from Greyhound Australia during the relevant debt period with regard to the approaches outlined above, in the following table:
| Source of information for Gross Wages | Pay Period (from Pay Slip information) | Allowances Before Tax | Gross Payment | Gross Payment less Allowances Before Tax | ||
| Pay History Report Date of Payment | Pay Slip Information Date of Payment | From | To | |||
| 22/01/2016 | 18/01/2016 | 24/01/2016 | $ 1,666.27 | $ 1,666.27[36] | ||
| 18/12/2015 | 7/12/2015 | 13/12/2015 | $ 1,515.42 | $ 1,515.42[37] | ||
| 16/12/2015 | 7/12/2015 | 13/12/2015 | $ 7.00 | $ 1,311.30 | $ 1,304.30[38] | |
| 9/12/2015 | 30/11/2015 | 6/12/2015 | $ 4.24 | $ 606.54 | $ 602.30[39] | |
| 2/12/2015 | 23/11/2015 | 29/11/2015 | $ 3.50 | $ 557.30 | $ 553.80[40] | |
| 25/11/2015 | 16/11/2015 | 22/11/2015 | $ 7.01 | $ 1,215.71 | $ 1,208.70[41] | |
| 18/11/2015 | n/a | n/a | n/a | $ 1,287.30 | $ 1,287.30[42] | |
| 11/11/2015 | n/a | n/a | n/a | $ 1,516.20 | $ 1,516.20[43] | |
| 4/11/2015 | n/a | n/a | n/a | 1,299.30 | $ 1,299.30[44] | |
| 28/10/2015 | n/a | n/a | n/a | $ 1,087.89 | $ 1,087.89[45] | |
| 21/10/2015 | n/a | n/a | n/a | $ 1,111.00 | 1,111.00[46] | |
| 14/10/2015 | 5/10/2015 | 11/10/2015 | $ 7.00 | $ 1,363.00 | $ 1,356.00[47] | |
| 30/09/2015 | n/a | n/a | n/a | $ 725.25 | $ 725.25[48] | |
| 23/09/2015 | n/a | n/a | n/a | $ 1,167.30 | $ 1,167.30[49] | |
| 16/09/2015 | n/a | n/a | n/a | $ 829.20 | $ 829.20[50] | |
| 9/09/2015 | n/a | n/a | n/a | $ 1,495.00 | $ 1,495.00[51] | |
| 2/09/2015 | n/a | n/a | n/a | $ 338.45 | $ 338.45[52] | |
| 26/08/2015 | n/a | n/a | n/a | $ 906.56 | $ 906.56[53] | |
| 19/08/2015 | n/a | n/a | n/a | $ 1,369.00 | $ 1,369.00[54] | |
| 12/08/2015 | n/a | n/a | n/a | $ 1,023.30 | $ 1,023.30[55] | |
| 5/08/2015 | n/a | n/a | n/a | $ 918.65 | $ 918.65[56] | |
| 29/07/2015 | n/a | n/a | n/a | $ 543.94 | $ 543.94[57] | |
| 22/07/2015 | n/a | n/a | n/a | $ 1,243.00 | $ 1,243.00[58] | |
| 15/07/2015 | n/a | n/a | n/a | $ 157.13 | $ 157.13[59] | |
| 24/06/2015 | n/a | n/a | n/a | $ 181.31 | $ 181.31[60] | |
| 17/06/2015 | n/a | n/a | n/a | $ 1,453.00 | $ 1,453.00[61] | |
| Total | $ 28.75 | $ 26,888.32 | $ 26,859.57 | |||
[36] Exhibit TR2, ST2, page 38.
[37] Exhibit TR2, ST2, page 37.
[38] Exhibit TR2, ST2, pages 27 and 36.
[39] Exhibit TR2, ST2, pages 27 and 35.
[40] Exhibit TR2, ST2, pages 27 and 34.
[41] Exhibit TR2, ST2, pages 27 and 33.
[42] Exhibit TR2, ST2, page 27.
[43] Exhibit TR2, ST2, page 27.
[44] Exhibit TR2, ST2, page 27.
[45] Exhibit TR2, ST2, page 27.
[46] Exhibit TR2, ST2, page 28.
[47] Exhibit TR2, ST2, pages 28 and 32.
[48] Exhibit TR2, ST2, page 28.
[49] Exhibit TR2, ST2, page 28.
[50] Exhibit TR2, ST2, page 28.
[51] Exhibit TR2, ST2, page 28.
[52] Exhibit TR2, ST2, page 28.
[53] Exhibit TR2, ST2, page 28.
[54] Exhibit TR2, ST2, page 28.
[55] Exhibit TR2, ST2, page 28.
[56] Exhibit TR2, ST2, page 28.
[57] Exhibit TR2, ST2, page 28.
[58] Exhibit TR2, ST2, page 28.
[59] Exhibit TR2, ST2, page 29.
[60] Exhibit TR2, ST2, page 29.
[61] Exhibit TR2, ST2, page 29.
For the reasons outlined in this decision, the Tribunal is of the view that where payslip information for the applicant is available, this information should be used, as it is the best available evidence. Therefore, it is appropriate that the respondent recalculate the applicant’s debt to accurately capture information with respect to the applicant’s earnings and adjust the calculations to deduct the allowances paid to the applicant from the applicant’s gross income before tax, in accordance with the practice set out in the Guide.
The Tribunal is satisfied the applicant under-reported his income from Greyhound Australia to the respondent during the relevant debt period as detailed by the Tribunal, and this has resulted in an overpayment of the age pension to the applicant. The Tribunal remits this matter to the respondent to recalculate the applicant’s debt in accordance with the reasons of this decision.
Wages from Whitsunday Transit
On 23 October 2014 the respondent requested the applicant provide information regarding his income and assets, and on 11 November 2014, the applicant lodged a partial record of his payslips from his employment with Whitsunday Transit. The Tribunal has summarised the applicant’s earnings from the available payslip information during the relevant debt period in the following table[62]:
[62] Exhibit TR1, T10, pages 111 to 127.
Pay Period
Payment Date
Gross Payment
From
To
8/09/2014
14/09/2014
17/09/2014
$1,070.58
15/09/2014
21/09/2014
24/09/2014
$1,019.60
22/09/2014
28/09/2014
1/10/2014
$790.19
29/09/2014
5/10/2014
8/10/2014
$860.29
6/10/2014
12/10/2014
15/10/2014
$1,070.58
13/10/2014
19/10/2014
22/10/2014
$1,019.60
20/10/2014
26/10/2014
29/10/2014
$925.29
27/10/2014
2/11/2014
5/11/2014
$815.68
Total
$7,571.81
Records before the Tribunal confirm the applicant declared earnings of $22,883.50 during the relevant debt period[63]:
[63] Exhibit TR1, T42, pages 400 and 401.
Event Date
Amount declared by Applicant
22/08/2014
$1,287.50
5/09/2014
$1,975.00
19/09/2014
$1,850.00
3/10/2014
$1,175.00
17/10/2014
$2,360.00
31/10/2014
$1,950.00
14/11/2014
$1,825.00
28/11/2014
$1,874.00
12/12/2014
$1,500.00
6/02/2015
$900.00
20/02/2015
$1,000.00
6/03/2015
$1,000.00
20/03/2015
$1,425.00
3/04/2015
$1,375.00
17/04/2015
$1,387.00
Total
$22,883.50
With respect to determining the applicant’s earnings during the debt period and calculating the applicant’s entitlement to the age pension, the respondent has taken the approach of using the applicant’s declared employment income on the basis that the applicant’s earnings declarations were made by him contemporaneously and in accordance with the applicant’s obligation to inform the respondent of his employment income for the purposes of determining his rate of age pension[64].
[64] Exhibit R1, pages 14 and 15, paragraph 4.37.
In submissions before the Tribunal the respondent has stated the Secretary was unable to obtain additional evidence with respect to the applicant’s declared employment income from Whitsunday Transit (as well as Faletti Brothers, further discussed in the following paragraphs of this decision)[65]. The Tribunal is of the view the respondent made reasonable attempts to obtain further information with respect to the applicant’s employment income with Whitsunday Transit.
[65] Exhibit R1, page 14, paragraph 4.37; Exhibit R2, page 16, paragraph 4.41.
In submissions before the Tribunal, the respondent stated, “… there is no available evidence to displace the Applicant’s declared income from these employers…”[66]. Respectfully, the Tribunal is of the view that there is evidence available which partially displaces the earnings declared by the applicant, and that is in the form of the limited payslip information the applicant provided the respondent on 11 November 2014, outlined in the summarised table by the Tribunal in paragraph 74 of these reasons.
[66] Exhibit R1, page 15, paragraph 4.37; Exhibit R2, page 16, paragraph 4.41.
The Tribunal is of the view that the most reasonable approach would be to use the applicant’s payslip information where it is available, and to then defer to the applicant’s declared earnings for the remaining periods where there are no verifiable records to confirm the applicant’s declared earnings.
The payslip information that is available from Whitsunday Transit does not confirm the dates within each pay period the applicant worked, instead it only records the applicant’s total hours and the rate at which he was paid within each pay period. The payslips do confirm the date on which the applicant was paid, and the hours the applicant worked in the payslip information varied greatly from week to week.
As was found with the applicant’s payslip information from both Brown Brothers and Greyhound Australia, the Tribunal is satisfied the best approach in relying on the limited payslip information when calculating the applicant’s entitlement to the age pension in the instalment period calculations is to apply the “payment date” found on the submitted payslips, as this is the only factor that can be determined with certainty, that is when the applicant received his income.
In light of the approach outlined above, the Tribunal has merged the available information from the applicant’s payslips which were provided to the respondent in November 2014, with the applicant’s declared earnings made contemporaneously to the respondent (where payslip information was not available), in order to summarise the applicant’s earnings from Whitsunday Transit. The Tribunal refers to the following table:
Pay Period
*Event Date / Payment Date
*Amount declared by Applicant / Gross Payment
From
To
n/a
n/a
*22/08/2014
*$1,287.50
8/09/2014
14/09/2014
17/09/2014
$1,070.58
15/09/2014
21/09/2014
24/09/2014
$1,019.60
22/09/2014
28/09/2014
1/10/2014
$790.19
29/09/2014
5/10/2014
8/10/2014
$860.29
6/10/2014
12/10/2014
15/10/2014
$1,070.58
13/10/2014
19/10/2014
22/10/2014
$1,019.60
20/10/2014
26/10/2014
29/10/2014
$925.29
27/10/2014
2/11/2014
5/11/2014
$815.68
n/a
n/a
*14/11/2014
*$1,825.00
n/a
n/a
*28/11/2014
*$1,874.00
n/a
n/a
*12/12/2014
*$1,500.00
n/a
n/a
*6/02/2015
*$900.00
n/a
n/a
*20/02/2015
*$1,000.00
n/a
n/a
*6/03/2015
*$1,000.00
n/a
n/a
*20/03/2015
*$1,425.00
n/a
n/a
*3/04/2015
*$1,375.00
n/a
n/a
*17/04/2015
*$1,387.00
Total
$21,145.31
Notes:
(a) (*) Event Date refers to the date on which the applicant declared his earnings to the respondent, the amount declared is also denoted (*); and
(b) Payment Date refers to the day on which the applicant was paid with reference to payslip information provided to the respondent on 11 November 2014, the amount declared is the applicant’s gross payment received.
It is evident from the tables above prepared by the Tribunal, that the limited payslip information provided by the applicant to the respondent on 11 November 2014, does not correspond to the earnings the applicant declared to the respondent. The payslip information provided covers pay periods from 8 September 2014 to 2 November 2014, and gross earnings during this period totalled $7,571.81. To avoid duplication by including the applicant’s declared earnings during this period, the Tribunal omitted declared earnings of the applicant for 5 September 2014, 19 September 2014, 3 October 2014, 17 October 2014 and 31 October 2014, noting declared income of the applicant for these dates totalled $9,310.00. This change by the Tribunal will see the applicant’s gross earnings from Whitsunday Transit during the relevant debt period reduce by $1,738.19.
For the reasons outlined in this decision, the Tribunal is of the view that where payslip information for the applicant is available, this information should be used, as it is the best available evidence which reflects when the applicant received his income during the relevant instalment periods when calculating the applicant’s entitlement to the age pension. Therefore, it is appropriate that the respondent recalculate the applicant’s debt in accordance with this decision.
Wages from Faletti Brothers
In the evidence before the Tribunal the applicant declared earnings to the respondent from employment with Faletti Brothers in June and July 2016. There is no further supporting documentation with respect to the applicant’s earnings, and the Tribunal is of the view the respondent has made a reasonable attempt to source such information. The respondent has taken the approach of only including the applicant’s declared earnings as the Secretary was unable to obtain additional evidence with respect to the applicant’s declared employment income[67].
[67] Exhibit R1, pages 14 and 15, paragraph 4.37.
In view of the finding the Tribunal has made with respect to the applicant’s evidence at the hearing, the lack of verifiable information from the applicant’s former employer (and acknowledging the brief period the applicant had worked for this employer); the Tribunal is of the view the best available evidence with respect to the applicant’s earnings for this employer are those which he declared to the respondent contemporaneously. The Tribunal has summarised the applicant’s declared earnings from Faletti Brothers in the following table[68]:
[68] Exhibit TR1, T42, pages 400 and 401.
Event Date
Amount declared by Applicant
24/06/2016
$156.00
8/07/2016
$1,456.00
22/07/2016
$364.00
Total
$1,976.00
Summary of overpayments
The Tribunal has found the applicant was overpaid age pension payments in excess of his entitlement during the relevant debt period detailed in these reasons, with refence to the applicant:
(i)not declaring self-employment income of his wife; and
(ii)under declaring his income from his employment from both Brown Brothers and Greyhound Australia.
The Tribunal has found that it is appropriate that the respondent recalculate the applicant’s entitlement to the age pension, due to adjustments which should be made to the applicant’s:
(i)gross income from Greyhound Australia, by deducting amounts paid to the applicant in the form of allowances for his employment duties, thereby reducing the applicant’s gross income before tax; and
(ii)gross income from Whitsunday Transit, as the Tribunal has found the preferred approach would be to use the gross income detailed in available pay slip information the applicant provided the respondent on 11 November 2014, which lowers the applicant’s gross income from this employer during the relevant debt period.
The Tribunal finds the applicant was overpaid his age pension entitlements during the relevant debt period of 9 August 2014 to 12 October 2018 and directs the respondent to recalculate the amount of overpayment in this period, in accordance with the findings of the Tribunal.
Whether any overpayment of age pension identified constitutes a debt to the Commonwealth?
Section 1223(1) of the Act states that for debts arising from overpayment (where a social security payment has been made to a person who obtains the benefit of a payment they were not entitled to), the amount of that payment is a debt due to the Commonwealth (arising from when the person obtains the benefit of the payment).
The Tribunal has found the applicant was in receipt of age pension payments during the relevant debt period in excess of his entitlement due to the under reporting of his income from various sources. The Tribunal finds the subsequent overpayment of age pension entitlements received by the applicant to be a legally recoverable debt due to the Commonwealth pursuant to section 1223(1) of the Act.
Whether any debt owed to the Commonwealth is recoverable in part or in full?
In establishing whether the overpayment of age pension is recoverable in part or in full, the Tribunal refers to His Honour French J (as his Honour then was), in Secretary, Department of Social Security v Hales[69], where he stated:
“…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…”
[69] (1998) FCA 219 at [1].
There are circumstances where the recovery of outstanding debts to the Commonwealth can be either written off or waived. Relevant to the applicant’s legally recoverable debt, it may be written off or waived if the requirements set out in sections 1236, 1237A or 1237AAD of the Act were met.
Debt write off (section 1236 of the Act)?
Section 1236 of the Act gives the Secretary the power to write off a debt for a stated period, or otherwise if one or more criteria are met pursuant to section 1236(1A) of the Act (set out in earlier reasons of this Decision).
At the hearing, the applicant confirmed to the Tribunal that he had been repaying his age pension debt by way of $50 per fortnight age pension reductions and had been managing his financial affairs to accommodate this repayment. The Tribunal is satisfied the applicant would not suffer severe financial hardship in repaying his debt to the Commonwealth[70].
[70] Exhibit TR1, T10, pages 111 to 127; and refer to Feneley and Secretary Department of Family and Community ServicesThe Tribunal is satisfied that the debt is recoverable at law, that the applicant has the capacity to repay the debts, that the whereabouts of the applicant is known, and that there is no evidence to suggest it is not cost effective for the Commonwealth to take action to recover the debt.
The Tribunal finds that the applicant’s debt to the Commonwealth cannot be written off pursuant to section 1236 of the Act.
Waiver of debt arising from sole administrative error (section 1237A of the Act)?
Section 1237A of the Act provides that the Commonwealth 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.
The Tribunal refers to Sekhon v Secretary, Department of Family and Community Services[71], where the Full Federal Court observed:
“…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…”
[71] [2003] FCAFC 190 at [35].
In order to satisfy section 1237A of the Act, the applicant must also have received, in good faith, the payments which gave rise to the debt (being his age pension payments during the relevant period).
Good Faith
In considering whether the applicant received age pension payments in good faith, the Tribunal refers to their Honour Finn J, in Secretary, Department of Education, Employment, Training and Youth Affairs v Prince[72]:
“…the burden of the formula…is with the state of mind of a person concerning his or her receipt of the payment: if that person knows or has reason to know that he or she is not entitled to a payment received – ie is not entitled to use the moneys received as his or her own – that person does not receive the payment in good faith. Absent such knowledge or reason to know, the receipt would be in good faith.”
[72] [1997] 152 ALR 127 at [130].
Additionally, the Federal Court has found that a person does not act in good faith where they turn a blind eye to the circumstances which raise doubt as to the entitlement to receive a payment, with reference to their Honour Cooper J, found in Jazazievska v Secretary Department of Family & Community Services[73].
[73] [2000] FCA 1484 at [40] and [44].
Further to this, the Tribunal refers to the decision of Panacci and Secretary, Department of Employment and Workplace Relations[74], where Senior Member Handley stated:
“… An absence of good faith does not amount to fraudulent conduct on the part of the recipient of a benefit but it does mean that the recipient acts without an honestly held belief of entitlement to receive and retain the payment. The state of mind of the recipient must be examined and the test of good faith is entirely subjective…”
[74] [2008] AATA 30 at [25].
The Tribunal has found the applicant was appropriately notified of his reporting obligations to the respondent and that changes in his circumstances including the receipt of income through employment or business income would impact his entitlement to the amount of age pension he could receive (with reference to section 68(2) of the Administration Act).
With respect to the applicant’s state of mind regarding his actions, the Tribunal refers to the number of claims made by the applicant at the hearing with respect to his debt, that:
(a)he was told by Centrelink not to report the self-employment income of his wife’s business on a fortnightly basis by Centrelink and that this would be something that Centrelink would calculate and assumed that this would be sorted out with the Australian Taxation Office (despite there being no evidence to support such claims);
(b)he conceded that he did not accurately report his income from Brown Brothers; and
(c)he insisted that he had accurately reported his wages from Greyhound Australia, Whitsunday Transit, and Faletti Brothers.
The Tribunal is of the view that such claims by the applicant do not amount to sole administrative error[75].
[75] Refer to Janseen and Secretary, Department of Social Services [2023] AATA 1030 at [93].
The Tribunal is satisfied that the debts raised were not solely due to an administrative error on the basis that the applicant was informed of his obligation to provide updated information to the Agency (including changes to his income) in notices sent to the applicant pursuant to s 68(2) of the Administration Act[76].
[76] Exhibit TR1, T4, pages 85 to 89; T24, pages 146 to 149; T28, pages 188 to 191.
In circumstances where the applicant has conceded he did not appropriately report his earnings to the respondent, the Tribunal is of the view the applicant did not receive the overpayment of his age pension income during the relevant debt period in good faith.
As the Tribunal has found that the debts were not due solely to administrative error and the age pension payment received by the applicant during the relevant debt period was not done so in good faith, the associated debt is therefore unable to be waived pursuant to s1237A of the Act.
Waiver in special circumstances (section 1237AAD of the Act)?
As outlined in earlier paragraphs of these reasons, section 1237AAD of the Act sets out provisions relating to circumstances where the Secretary may waive the right to recover all or part of a debt where they are satisfied certain provisions are met.
Section 1237AAD(a) of the Act requires the Secretary to waive the right to recover all or part of a debt if the Secretary is satisfied that the debt did not result wholly or partly from the person knowingly making a false statement or representation, or knowingly failed to omit or comply with a provision of the Act or the Administration Act.
Regarding the application of section 1237AAD(a) of the Act, and the term “knowingly” in the circumstances of this application, the Tribunal refers to Callaghan and Secretary, Department of Social Security[77]:
“… There is nothing in section 1237AAD which suggests that the word "knowingly" should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation or that he or she is failing or omitting to comply with a provision of the Act. That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act or omission…”
[77] [1996] 45 ALD 435 at [48].
In the present application, the applicant has conceded he did under declare his income with respect to his earnings from Brown Brothers. The Tribunal is of the view the applicant knowingly conceded that he failed to report his income from Brown Brothers. The Tribunal is of the view this equally applies to the applicant’s failure to declare his wife’s self-employment income in circumstances where the applicant would have had actual knowledge of her earnings, when the applicant submitted evidence of her tax returns during the debt period to the respondent on 5 October 2018[78].
[78] Exhibit TR1, T27, page 152.
Further, the applicant has made unsubstantiated claims with respect to his attempts to report income from the other identified sources that he had received during the relevant debt period. The Tribunal has found the applicant was appropriately notified of his obligation to properly declare his income. The Tribunal is of the view that the applicant knowingly failed to comply with his reporting obligations in the Administration Act.
The Tribunal refers to authority in Beadle and Director-General of Social Security which sets out what amounts to special circumstances[79]:
“… An expression such as "special circumstances" is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special…”
[79] [1984] 6 AATA 176 at [12].
The Tribunal also refers to Davy and Secretary Department of Employment and Workplace Relations[80]:
“…“special circumstances” are not merely directed to the person’s own circumstances. Rather, they are directed to those that are “special circumstances ... that make it desirable to waive”. That necessarily requires a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system. Waiver of the debt would mean that Mr Davy would have had the benefit of part of his DSP in circumstances in which he was not entitled to it. Certainly, he did not know that his father was giving him his own money but the fact that he was deceived by his father does not mean that it is desirable to waive the debt. He has had the benefit of the money and there is no injustice in requiring him to repay the money of which he has had the benefit but not the entitlement. His not knowing that his father had continued to receive the money does not take him outside the expectation that all social security recipients should repay money when they receive money but are not entitled to it. The system of administration of the SS Act does not visit any injustice for many if not all social security recipients but it did not lead to any injustice or unfairness on Mr Davy that is not visited, or potentially visited, upon all other recipients of social security payments under the Act. Therefore, I am not satisfied that there are special circumstances that make it desirable to waive the debt under s 1237AAD of the Act…”
[80] [2007] AATA 1114 at [80].
Despite the applicant’s stated issues in dealing with Centrelink, the applicant’s age pension debt arose because the applicant failed to properly declare his earnings. With respect to the applicant’s claims regarding Centrelink’s failure to recalculate his debt, the Tribunal makes a general point, the genesis of the applicant’s debts is due to the fact that he did not accurately declare his income to the respondent, despite being appropriately notified of the requirement to do so. Ultimately, there will be changes to the value of the applicant’s debt as additional information becomes available, as is the case in this application.
On reflection of the evidence before it, the Tribunal is of the view that the facts of this application do not give rise to special circumstances.
Based on the evidence before it, the Tribunal does not consider the applicant’s circumstances are sufficiently special or unusual as to warrant the exercise of the discretion in section 1237AAD of the Act to waive the applicant’s debt. Therefore, the applicant’s debt cannot be waived pursuant to section 1237AAD of the Act.
Summary
The Tribunal concludes that the applicant’s recalculated debt to the Commonwealth must be recovered. Write-off on the basis of severe financial hardship and waiver on the basis of administrative error, or special circumstances is not warranted.
DECISION
Pursuant to section 43(1)(c)(i) of the Administrative Appeals Tribunal Act 1975 (Cth), the Tribunal sets aside the decision under review, and in substitution determines that:
(i)the applicant has a legally recoverable debt arising from the overpayment of his age pension during the period of 9 August 2014 to 12 October 2018; and
(ii) the matter is further remitted to the respondent to recalculate the applicant’s debt in accordance with this decision.
I certify that the preceding 121 (one hundred and twenty-one) paragraphs are a true copy of the reasons for the decision herein of Senior Member B. Pola
……………[SGD]……………………
Associate
14 March 2024
Date of Hearing: 5 December 2023
Applicant: Mr Dennis Thorpe (self-represented)
Respondent Representative: Mr Ben Dube (Sparke Helmore)
Annexure 1
EXHIBIT
DESCRIPTION OF EVIDENCE
PARTY
DATE OF DOCUMENT
DATE RECEIVED
R1.
Respondent Statement of Facts, Issues and Contentions (25 pages)
R
01.08.2023
Tr1.
Section 37 T-Documents (T1-T43; pp 477)
-
-
04.03.2022
Tr2.
Supplementary Section 37 T-Documents (S1-S3; pp 1-80)
-
-
18.07.2022
R2.
Respondent’s written closing submissions
R
11.01.2024
11.01.2024
second review) [2022] AATA 727 (11 April 2022).
[2003] AATA 496 at [36].
0
6
0