Tiswell and Secretary, Department of Social Services (Social security) - [2025] ARTA 2048

Tiswell and Secretary, Department of Social Services (Social security) [2025] ARTA 2048 (28 April 2025)

Applicant/s: Mr Tiswell

Respondent: Secretary, Department of Social Services

Tribunal Number: 2024/B192563

Tribunal: General Member A Shelley

Place: Canberra

Date: 28 April 2025

Decision:The Tribunal sets aside the decision under review and in substitution decides that:
-Mr Tiswell has a family tax benefit debt of $1,506.80 as raised, for the 2022-23 financial year; and
-Recovery of the full amount of the debt is waived under section 97 of the A New Tax System (Family Assistance) (Administration) Act 1999.

CATCHWORDS

SOCIAL SECURITY – family tax benefit – duplicate payment of rent assistance in error –change of residence and increased rent – delay in notifying Centrelink and personal circumstances at the time – debt correctly raised – no circumstances for write-off apply – waiver – payment received in good faith – applicant’s contribution to debt needs to be more than just providing information and making claim – no correspondence from Centrelink about payment – decision under review substituted

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 161(1B) of the A New Tax System (Family Assistance) (Administration) Act 1999..

Statement of Reasons

BACKGROUND

This is an application by Mr Tiswell for the review of a decision made by Services Australia (Centrelink) to raise and recover a family tax benefit (FTB) debt for the 2022‑23 financial year.
On 27 September 2024 Centrelink wrote to Mr Tiswell advising of a debt of $1,506.80 arising from the 2022–23 financial year.
On 30 September 2024 Mr Tiswell contacted Centrelink seeking review of the debt.
On 12 October 2024 a Centrelink authorised review officer (ARO) affirmed the decision raising the debt, finding that the debt was correctly raised and that circumstances justifying waiver of the debt did not exist. The debt was said to arise because of a duplicate payment of rent assistance.
Mr Tiswell sought review by the Tribunal, and the matter proceeded to a hearing on 11 April 2025. I had before me the hearing papers numbered 1 to 200 and a statement of financial circumstances completed by Mr Tiswell on 2 April 2025.
Following the hearing, I sought from Centrelink and was provided with copies of letters dated 9 August 2023, 31 August 2023 and 5 September 2023.

ISSUES

The issues in the application are:
· whether Mr Tiswell has a debt in the amount raised by Centrelink and, if so
· is there any reason the debt should not be recovered (in whole or in part)?

CONSIDERATION

Does Mr Tiswell have a debt in the amount raised by Centrelink?

Section 21 of the A New Tax System (Family Assistance) Act 1999 (the Act) provides the eligibility criteria for FTB. A person with at least 35% care of an ‘FTB child’ may qualify for some part of an FTB payment. FTB rates are worked out under the rate calculator in Schedule 1 to the Act and include an income test. Entitlement depends on annual income. FTB payments can be made through the year based on an estimate, then retrospectively reconciled once tax returns have been filed confirming a person’s actual adjusted taxable income for the year (which may reveal an underpayment or overpayment).
As supplementary support, parents caring for a child (and with at least 14% care of an FTB child) may also be eligible to receive rent assistance, if renting in the private rental market. Rent assistance may be payable where the person’s fortnightly rental liability is over a particular threshold, and is calculated at 75 cents for each dollar above the threshold, up to the maximum rate (when a person’s rent reaches the rent ceiling).
Under subsection 71(2) of the A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act), an amount paid to a person that is more than they were entitled to receive is a debt due to the Commonwealth.
Mr Tiswell, who has 50% shared care of 2 children (since, he told me, from about May 2022), claimed FTB for 2022-23 on 7 September 2022. His claim was granted on 31 October 2022, resulting in both an arrears payment for the period from 1 July 2022, and the commencement of ongoing fortnightly payments, based on an income estimate of $60,000.
On or about 5 January 2023 Mr Tiswell moved house, but did not advise Centrelink until 8 June 2023. His weekly rent increased from $480 per week to $525 per week. At both rates, the weekly rent was over the rent ceiling, so the maximum amount of rent assistance was payable.
Mr Tiswell attributed the delay in advising Centrelink of his new address and increased rent being overwhelmed by the changes in his life at that time, including his still-recent separation and related court proceedings. He had also considered that because his rent had increased there could only be an underpayment, not an overpayment.
On 17 July 2023 – just after the financial year, and presumably in response to Mr Tiswell’s declaration of changed accommodation and rental liability – Centrelink paid Mr Tiswell the sum of $1,722.15 by way of arrears for the period 5 January 2023 to 17 May 2023, including $1,649.74 in rent assistance. That was in error, as Mr Tiswell had already been paid rent assistance on a fortnightly basis through that period.
Mr Tiswell failed to file a tax return in relation to 2022-23 before 30 June 2024. As a result, on 30 August 2024, Centrelink raised a debt for the entire amount of FTB paid to him in 2022-23.
Mr Tiswell promptly filed a tax return, causing Centrelink to recalculate Mr Tiswell’s entitlement. Mr Tiswell’s adjusted taxable income was $58,921, slightly lower than the estimate of income on which the rate of payments had been based.
On 27 September 2024, Centrelink recalculated Mr Tiswell’s FTB entitlement and raised a debt for $1,506.80. That was, it appears, the amount of the erroneous payment of rent assistance in July 2023, less a small amount because of an underpayment resulting from the difference between estimated and actual income.
Having regard to what was paid to Mr Tiswell (which includes the erroneous rent assistance payment) and what should have been paid, I am satisfied that because of the operation of subsection 71(2) of the Administration Act Mr Tiswell has a debt in the amount of $1,506.80.

Is there any reason the debt should not be recovered?

Despite my conclusion that the debt is properly raised, it is necessary to consider whether there can be any write off (deferral) or waiver (cancellation) of the debt, or part of the debt.

Write off

There are limited circumstances, which are set out in section 95 of the Administration Act, in which it may be possible to write off (that is, defer) a debt. None of those circumstances arise in Mr Tiswell’s case.

Waiver

Family assistance law also recognises that in some circumstances, recovery of a debt must be waived, or can as a matter of discretion be waived.
Section 97 of the Administration Act requires waiver of the right to recover the proportion of a debt that is solely attributable to an administrative error of the Commonwealth, if:
· the person received in good faith the payment or payments that gave rise to the administrative error proportion of the debt, and
· the debt was raised after the next income year in which the period of eligibility occurred.[1]
[1] Alternatively, the person would be in severe financial hardship if the debt was not waived. That does not arise in this case.
In relation to the question of good faith receipt of payments, the Federal Court held in Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186 that regard must be had to the state of mind of a person regarding their receipt of the relevant payment. Where a person knows or has reason to know that they are not entitled to a payment they have received, the payment is not received in good faith.
In Secretary, Department of Family and Community Services and Trio [2002] AATA 865, the Tribunal set out the following propositions derived from relevant Court authorities:[2]
·      Good faith must be determined by reference to the state of mind of the recipient of the payment.
·      Where the recipient knows that they are not entitled to the payment, the payment is not received in good faith.
·      Where the recipient suspects that he or she is not entitled to the payment and has an objective basis for that suspicion, they cannot have received it in good faith.
·      Where payments are not made directly to the recipient but to a third person, such as a bank, on behalf of the recipient, the time at which the recipient’s good faith is to be considered is the time they were aware that the payment had been made and at which they commenced to exercise control over the payment by retaining it.
[2] Particularly, Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186.
Here, Mr Tiswell received $1,722.15 in his bank account in July 2023. He did not think he had received any accompanying letter from Centrelink (and none has been produced by Centrelink).[3] He assumed that the money resulted from Centrelink factoring in his increased rental liability and/or some sort of correction due to a new financial year having commenced. As he was open to the possibility that he would get some sort of arrears payment, having provided updated information, it did not occur to him that the payment could be an error and he did not take any steps to investigate its calculation. He pointed out that none of the letters he had received indicate that he was already being paid rent assistance at the maximum rate.
[3] To ensure this was correct, I sought from Centrelink letters dated 9 August 2023, 31 August 2023 and 5 September 2023, which were identified in a schedule of correspondence but not contained in the hearing papers. Because the additional letters do not contain material adverse to Mr Tiswell, he was not invited to provide a response.
The ARO found, in the decision under review, that the debt resulted from error but not solely from error, because it was contributed to by Mr Tiswell’s delayed declaration about having moved house.
I do not think that is the correct characterisation.
To find a non-Commonwealth contribution to a debt, there must be a closer connection between a person’s actions and the overpayment than the person having merely triggered Centrelink making a determination. Otherwise, section 97 would have no application. Any person who receives a payment would not have received that payment, and therefore could not have received an overpayment, but for making a claim. Finding an external contribution to the debt on that basis alone cannot be the correct construction of section 97.
The declaration of having moved house did not give rise to any increased entitlement. As I have noted, Mr Tiswell was already receiving rent assistance at the maximum rate. His delay did not increase the amount of rent assistance that would be payable for the past period.
From that perspective, the overpayment did not result from Mr Tiswell’s actions any more than if he had made the declaration promptly. His contribution to the error is no higher than the person making a claim for a payment. The duplicate payment of rent assistance was simply, and solely, a result of Centrelink’s error.
The next question is whether Mr Tiswell received the payment in good faith. There is obvious difficulty in determining, with any precision, Mr Tiswell’s state of mind at the time he received a payment nearly 2 years ago. Nonetheless, I am satisfied – for the reasons he provided – that he did not suspect that the payment was in error. He was open to the idea that he was entitled to an arrears payment and was not sent any sort of correspondence that might have given him a clue to the contrary.
It follows that he did not know, or have reason to know, that the payment was made in error, and so received it in good faith.
The debt was raised after 30 June 2024. That is, it was raised after the end of the income year in which the entitlement arose.
Accordingly, section 97 requires the waiver of the proportion of the debt that resulted from the error. In this case, the entire debt resulted from the error (in fact, the debt is less than the amount that was paid in error but a proportion of a debt cannot be higher than the amount of the debt).
Section 101 of the Administration Act provides for the discretionary waiver of a debt if, amongst other things, the debt did not result in any part from a person knowingly making a false statement or a false representation, and there are special circumstances (other than financial hardship alone) that make it desirable to waive the debt. It is unnecessary to consider whether that may also apply to any part of the debt.

DECISION
The Tribunal sets aside the decision under review and in substitution decides that:
· Mr Tiswell has a family tax benefit debt of $1,506.80 as raised, for the 2022-23 financial year; and
· Recovery of the full amount of the debt is waived under section 97 of the A New Tax System (Family Assistance) (Administration) Act 1999.

Date(s) of hearing:

Friday, 11 April 2025