XWMP; Secretary, Chief Executive Centrelink and (Social security second review)
[2025] ARTA 1789
•12 September 2025
XWMP; Secretary, Chief Executive Centrelink and (Social security second review) [2025] ARTA 1789 (12 September 2025)
Applicant:Secretary, Chief Executive Centrelink
Respondent: XWMP
Tribunal Number: 2024/1106
Tribunal:Senior Member T Hamilton-Noy (second review)
Place:Melbourne
Date:12 September 2025
Decision:The Tribunal sets aside the decision under review and substitutes its decision that:
(i)The Respondent owes a debt to the Commonwealth in the amount of $1,823.02 for the period 21 December 2016 to 20 June 2017;
(ii)The debt is recoverable from the Respondent; and
(iii)Interest charges are to be imposed for periods from 28 September 2018 to 10 October 2018, 3 July 2019 to 31 July 2019, 15 August 2019 to 19 November 2019 and 24 May 2023 to 14 June 2023.
Statement made on 12 September 2025 at 8:50am
Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 201(1A)–201(1B) of the Social Security (Administration) Act 1999
Catchwords
Youth allowance debt – earnings from casual employment – income apportionment – earned, derived or received – no grounds for waiver or write off – interest charges
Legislation
Administrative Review Tribunal Act 2024 (Cth)
Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (Cth)
A New Tax System (Family Assistance) (Administration) Act 1999 (Cth)
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)Cases
Chaplin v Secretary, Department of Social Services [2025] FCAFC 89
Dranichnikov v Centrelink [2003] FCAFC 133
Secretary, Department of Social Security v Hales (1998) 82 FCR 154; [1998] FCA 219
Secretary, Department of Social Services and FTXB [2024] AATA 3021Ward and Secretary, Department of Family and Community Services [2000] AATA 2112
Statement of Reasons
Background
This application relates to the raising and recovery of a youth allowance debt from the Respondent due to his earnings from employment.
The Respondent was granted youth allowance from 14 September 2016. At the time of grant, he was enrolled as a full-time student and was also in casual employment.
On 29 August 2018, an employee of the Applicant (Services Australia – Centrelink) decided to raise and recover a youth allowance debt of $1,575.80 for the period 14 September 2016 to 6 June 2017, on the basis that the Respondent’s correct earnings from employment had not been taken into account in calculating his rate of payment.
Following a request for an internal review, on 22 June 2021, an authorised review officer of Centrelink decided that there was a debt of youth allowance for the period 7 December 2016 to 6 June 2017, that the correct amount of the debt was $2,304.92 and that the debt was recoverable by Centrelink.
The Respondent applied to the Administrative Appeals Tribunal (the AAT) on 27 June 2023 for an independent review of the Centrelink decision and on 18 January 2024, the AAT at first review set aside the decision and sent the matter back for recalculation in accordance with the findings of the Tribunal at paragraphs 64 to 68 of the AAT’s Statement of Reasons. The findings of the AAT related to the requirement for Centrelink to obtain further evidence about the Respondent’s earnings. A copy of the AAT’s decision was sent to the parties on 23 January 2024.
The Applicant applied to the AAT for second review of the matter on 20 February 2024.
From 14 October 2024, the AAT became the Administrative Review Tribunal (the Tribunal). Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (Cth) (the Transitional Act), applications for review to the AAT that were not finalised before 14 October 2024 are taken to be an application for review to the Tribunal. The Transitional Act gives the Tribunal the authority to continue and finalise any aspect of the review not already completed by the AAT. This decision and statement of reasons is made by the Tribunal.
The Tribunal hearing in this matter was conducted on 6 June 2025. A representative of the Applicant participated in the hearing by video and the Respondent also participated in the hearing by video and gave evidence on affirmation.
Legal issues relating to the calculation of any overpayment
The legislation relevant to this matter is contained in the Social Security Act 1991 (Cth) (the Social Security Act) and the Social Security (Administration) Act 1999 (Cth) (the Social Security Administration Act).
The legal issues for the Tribunal in this matter are whether there is a debt due to the Commonwealth owed by the Respondent, the quantum of any debt and whether any debt is recoverable by Centrelink. The Applicant has also imposed, subsequent to the AAT first review decision, interest charges and the Tribunal accepts that it also has jurisdiction to review the raising of interest charges in this matter.
At the time the claimed debt arose, section 556 of the Social Security Act stated that a person’s rate of youth allowance was to be worked out in accordance with the Youth Allowance Rate Calculator in section 1067G. The rate calculator in section 1067G of the Social Security Act noted that the rate of allowance was a daily rate and is worked out by dividing the fortnightly rate calculated according to the rate calculator by 14.
Section 1067G-A1 of the Social Security Act provided a method statement for calculating the rate of youth allowance payable and, at Step 12, required that the income test be applied, using Module H to work out a person’s income reduction.
The method statement at section 1067G-H1 provided how to work out the effect of a person’s ordinary income on a fortnightly basis, as follows:
Method statement
Step 1. Work out the amount of the person’s ordinary income on a fortnightly basis (where appropriate, taking into account the matters provided for in points 1067G‑H2 to 1067G‑H25).
Step 2. If the person is a member of a couple, work out the partner income free area using point 1067G‑H26.
Note: The partner income free area is the maximum amount of ordinary income the person’s partner can have without affecting the person’s benefit.
Step 3. Use point 1067G‑H27 to work out the person’s partner income excess. (If there is no partner income excess under that point, the person’s partner income excess is taken to be nil.)
Step 4. Use the person’s partner income excess to work out the person’s partner income reduction using point 1067G‑H28.
Step 5. Use point 1067G‑H30 to work out the person’s ordinary income excess. (If there is no ordinary income excess under that point, the person’s ordinary income excess is taken to be nil.)
Step 6. Use the person’s ordinary income excess to work out the person’s ordinary income reduction using points 1067G‑H31, 1067G‑H32 and 1067G‑H33.
Step 7. Add the person’s partner income reduction and ordinary income reduction: the result is the person’s income reduction referred to in Step 12 of the Method statement in point 1067G‑A1.
Subsection 8(1) of the Social Security Act defined “ordinary income” to be income that is not maintenance income or an exempt lump sum.
“Income” was also defined at subsection 8(1) to be, in relation to a person:
(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).
“Employment income” was defined at subsection 8(1A) of the Social Security Act to be
(1A) A reference in this Act to employment income,in relation to a person, is a reference to ordinary income of the person:
(a) that is earned, derived or received, or that is taken to have been earned, derived or received, by the person from remunerative work undertaken by the person as an employee in an employer/employee relationship; and
(b) that includes, but is not limited to:
(i) salary, wages, commissions and employment‑related fringe benefits that are so earned, derived or received or taken to have been so earned, derived or received; and
(ii) if the person is engaged on a continuing basis in that employer/employee relationship—a leave payment to the person;
but does not include:
(c) a superannuation payment to the person; or
(d) a payment of compensation, or a payment to the person under an insurance scheme, in relation to the person’s inability to earn, derive or receive income from that remunerative work; or
(e) if the person is not engaged on a continuing basis in that employer/employee relationship—a leave payment to the person; or
(f) a payment to the person by a former employer of the person in relation to the termination of the person’s employment; or
(g) a comparable foreign payment; or
(h) an instalment of parental leave pay; or
(i) dad and partner pay.
Also as of December 2016, section 1067G-H23 of the Social Security Act stated that, subject to points 1067G‑H23A, 1067‑H23B, 1067G‑H24 and 1067G‑H25 and section 1073, ordinary income was to be taken into account in the fortnight in which it is first earned, derived or received. “Ordinary income” was defined at section 1072 to be a reference to a person’s gross ordinary income from all sources for the period calculated without any reduction, other than a reduction under Division 1A.
Div 1AA of Part 3.10 set out the employment income attribution rules and, at section 1073B provided as follows:
1073B Daily attribution of employment income
(1) If:
(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.
(2) If a person has reached pension age and is receiving a social security benefit, subsection (1) does not apply to the person, to the extent that it relates to that benefit.
Note 1: Subsection (1) applies to a person who has not reached pension age and is receiving a social security benefit.
Note 2: For pension age see subsections 23(5A), (5B), (5C) and (5D).
The Tribunal notes that this matter has a long history before the Tribunal, in part because of scrutiny around the application of section 1073B of the Social Security Act, arising from a Commonwealth Ombudsman report questioning the legality of the way section 1073B had been applied in calculating overpayments.[1]
[1] Commonwealth Ombudsman, Lessons in Lawfulness: Own motion investigation into Service Australia’s and the Department of Social Services’ response to the question of the lawfulness of income apportionment before 7 December 2020, August 2023.
On 28 August 2024, the AAT issued its decision in Secretary, Department of Social Services and FTXB [2024] AATA 3021, in which it provided a guidance decision as to the interpretation of “earned, derived or received” for the purposes of the income test (also, in that particular case, within the context of a youth allowance overpayment having been calculated where the applicant had also had casual earnings from employment). The AAT held (at [138]-[139]):
Our conclusion that income is ‘earned’ for the purposes of point H23 when a person becomes legally entitled to it means that ‘earned’ cannot be equated with ‘accrued’. A benefit may be accruing on a daily basis without giving rise to a legal entitlement to be paid that benefit at the end of each day. For example, if a worker is entitled to be paid wages for each day of a working week at the end of Friday, the worker may be accruing a right to be paid for each day worked at the end of each work day but the entitlement to be paid does not arise until the end of Friday.
In the context of employment income, the time at which an employee becomes legally entitled to wages will depend upon the legal arrangements that apply to the employment relationship. Those legal arrangements may arise from a contract of employment (whether oral or in writing, express or implied or inferred from a course of conduct) or may be governed by a legal instrument such as a statute or an industrial award.
The AAT set out the relevant considerations to be the following (at [150]):
On this basis, the question posed by point H23 is: in what instalment period was a particular income amount first earned, derived or received, so that it can be taken into account in that instalment period in order to determine a person’s income reduction for the purposes of step 12 of the method statement in point 1067G-A1 for working out the benefit amount payable to the person in that instalment period? Applying the meanings we have assigned to the words in point H23, the analysis required by point H23 in respect of each income amount of a person may be framed as follows:
In which of the person’s instalment periods did they first:
(a) become legally entitled to the income amount, where the income amount is of a kind that can be described as being earned; or
(b) become legally entitled to the income amount, where the income amount is not of a kind that can be described as being earned but can be described as being derived; or
(c) receive the income amount?
On 28 February 2025, the Applicant provided the Tribunal a Statement of Issues, Facts and Contentions, with annexures containing calculations of the debt in this matter calculated in accordance with the approach in FTXB (Attachment A) and in accordance with the Applicant’s views (Attachment B).
At the time the present matter was heard by the Tribunal, FTXB had been appealed to the Full Federal Court and the Tribunal was mindful that neither the Secretary nor the applicant in that matter were in agreement with the construction of the law set down in FTXB. The pending appeal in FTXB was discussed with the parties at the hearing. The Applicant sought that the Tribunal await the outcome of the appeal before proceeding in the present matter and the Respondent did not object to this approach. The Tribunal decided to await the outcome of the appeal, given its relevance to the matters to be considered in this decision. In deciding to wait, the Tribunal was also mindful that the calculation of an overpayment was higher when the FTXB approach was used, than when the Applicant’s preferred position was adopted.
On 15 July 2025, the Full Court of the Federal Court handed down its decision in Chaplin v Secretary, Department of Social Services [2025] FCAFC 89. The majority held that the AAT had erred in concluding that all of Mr Chaplin’s income was earned on Sundays, based on the AAT’s views that a legal entitlement to the week’s income arose (at [172]). The Court stated, in respect of the concept of “earned” (at [178] – [181]) that:
Both parties before us accepted that the Tribunal was correct in concluding that ordinary income is earned by a person for the purpose of Point H23 when that person becomes entitled to that income (T[133]) but erred in its application of that principle by conflating the concept of legal entitlement to be paid with the time at which an enforceable right to compel immediate payment arises or with the point in time at which wages are calculated. The error manifests at T[158].
There is nothing in the word “earned” in the context in which that word is used in the Act including in the general definition of the phrase “earned, derived or received” in s 8(1), or in the phrase “first earned, derived or received” in Point H23, which suggests that it was intended to refer to income in respect of which a legally enforceable right to require payment has arisen.
It is the service that “earns” the remuneration: Automatic Fire Sprinklers Pty Ltd v Watson [1946] HCA 25; 72 CLR 435 at 465 (Dixon J). This is consistent with the definition of employment income in s 8(1A) in so far as that definition refers to income “from remunerative work undertaken by the person as an employee”. A casual employee earns income as the employee provides services under the contract. The services are the consideration for the entitlement to be paid and typically that income is earned on an hourly, daily or per shift basis.
The phrase “pay period” may refer to the period over which a person is required to provide services in order to discharge the obligation in respect of which the person is to be paid. The phrase may also refer to the period which an employer uses as an administrative basis to calculate and pay employees. The former is directly relevant to determining the time at which wages were earned or derived. The latter is not.
The majority went on to find as follows, where there is insufficient evidence of when amounts were earned or derived (at [193]-[194] and [197]-[198]):
In circumstances such as the present, if a decision-maker cannot work out (either through a consideration of direct evidence or through appropriate inference and having afforded procedural fairness) the fortnight in which income was “earned” or “derived”, but can work out the fortnight in which it was “received” (a few days after that income was “earned”), is the decision-maker disabled from making a decision about entitlement (with potentially unfortunate consequences for a social security claimant) or does the statutory scheme permit the taking into account of the income when it is received?
The legislature should not be taken to have intended that Point H23 was to operate such that income known to have been earned shortly before it was received should be entirely excluded from the relevant calculations because it cannot be determined whether it was earned in that part of the relevant week which fell within the Youth Allowance fortnight in which it was received or the Youth Allowance fortnight immediately before. That would result in the determination of an entitlement known to be wrong and is contrary to the statutory scheme.
……
When Step 1 of the Method statement in Point H1 and Point H23 are read together, in the context of the Act as a whole, including Module A, the better view is that income which was known to be earned before being received, but which is incapable of being allocated between the two weeks in which it was known to be earned, can be taken into account when it was received in undertaking the task required by Point H1 and in determining the extent of a recipient’s entitlement to Youth Allowance.
The word “first” in Point H23 is intended to ensure that income is taken into account only once and directs that income is to be allocated to the earliest fortnight in which the income can be identified as being “first earned, derived or received” on the available material. Point H23 does not confer a discretion as to which fortnight the amount is to be allocated, but it cannot be understood as authorising the formation of a state of satisfaction as to the extent of a recipient’s entitlement which is premised on income known to be earned, derived or received being ignored for the purposes of Step 1 in the Method Statement in Point H1 because it is not possible to identify when the first of these occurred. The fact that there might not be one event which occurred “first” (because, for example, the events occurred simultaneously), or that the material does not allow more than a speculative conclusion as to which occurred first, should not be understood as authorising the non-inclusion of income when working out fortnightly income under Point H1. Nor does the fact that it is known that the income was first earned before it was received, but it is not known in which of the two weeks before receipt it was earned. Rather, one must revert to Point H1 because, although it is “appropriate” to take Point H23 into account, it is not possible to apply it.
Relevant to the current decision, the majority addressed circumstances in which evidence may not be able to establish in which specific Centrelink fortnight an amount of income was earned (at [163] and [166]):
Given the attention given by Kennett J to what might happen should recovery action later be taken, we make the following observations. To succeed in recovering a debt in a court, the Secretary would need to prove by admissible evidence that the person had received more Youth Allowance than that to which the person was entitled. On the facts of this case, we are not satisfied that the Secretary would not be able to prove on the balance of probabilities that Mr Chaplin had received Youth Allowance to which he was not entitled in Youth Allowance instalment fortnights over the period he had received the relevant payments. He had reported his net earnings and not his gross earnings for that whole period. No doubt the ideal scenario would be proof of the exact amount of the entitlement in each fortnight. However, if that were not possible, it would be for a court to reach a view on the balance of probabilities as to the level of debt on the admissible evidence before the court. We disagree with Kennett J that an action in debt would necessarily fail if the Secretary could not positively establish in which of two consecutive fortnights the income was earned.
…..
The legislature should not be taken to have intended (Certain Lloyd’s Underwriters v Cross [2012] HCA 56; 248 CLR 378 and [25]) that a decision-maker could not “raise a debt” on the basis that the decision-maker, although knowing that there had been an overpayment, could not tie the overpayment to a particular fortnight because of a lack of information. The statutory scheme ought not to be construed as operating in a manner that would result in a person, who had knowingly misreported earnings in order to obtain a benefit to which that person was not entitled, being able successfully to challenge any decision to demand recovery of the debt by withholding information necessary to determine the precise fortnight in which the income was earned. It is unlikely that it was intended that social security recipients who fail properly to report their income would receive “windfall gains”. A construction of the legislative scheme that requires the decision-maker to be satisfied of the existence of any entitlement before being satisfied that a debt does not exist is consistent with the legislative intention.
The Tribunal issued directions to the Applicant on 22 July 2025, providing time for any further submissions it sought to rely on in light of the effect of the decision in Chaplin.
On 30 July 2025, the Applicant wrote to the Tribunal, submitting that its former submissions as to its interpretation of the legislation had been correct. The Tribunal noted that these submissions had been, in relevant part, that the Respondent owed a debt in the amount of $1,823.02, based on his income being assessed in the following way:
(a)Where evidence was available to allow a finding as to the instalment period in which it was earned (being when the income producing activities had been performed), it had been assessed in that instalment period; and
(b)Where evidence was not available to permit a finding as to the instalment period in which income was earned, it had been assessed in the instalment period in which it was received.
The Respondent was given an opportunity to provide a response to the Applicant’s submissions and indicated to the Tribunal that he was not seeking to provide any further comments.
The Tribunal notes that, at the time it has proceeded to make its decision in this matter, a special leave application to the High Court has been made in the matter of Chaplin and a Bill has been proposed in parliament to address historical income apportionment.[2] In making a decision to proceed at this time, the Tribunal has weighed up the length of time this matter has been pending before this Tribunal, the Tribunal’s obligations under section 9 of the Administrative Review Tribunal Act 2024 (Cth) and the likely length of time any further proceedings, or the passing of any legislation, may take.
[2] Social Security and Other Legislation Amendment (Technical Changes No. 2) Bill 2025.
Evidence and findings
At the time the Tribunal proceeded to make its decision in this matter, in addition to the oral submissions of the Applicant and the oral evidence and submissions of the Respondent that had been given at the hearing, the Tribunal had in evidence before it:
(i)Main bundle of documents provided by the Applicant (“T documents”)
(ii)Supplementary bundle of documents provided by the Applicant (supplementary T documents);
(iii)Statement of Position provided by the Applicant, dated 23 October 2024;
(iv)Statement of Facts, Issues and Contentions provided by the Applicant, dated 28 February 2025, with two Appendices relating to debt calculations;
(v)Written submissions relating to interest charges provided by the Applicant, dated 20 June 2025; and
(vi)Further submissions provided by the Applicant dated 30 July 2025.
The Applicant submits that there is an overpayment in this matter due to the Respondent consistently under-declaring his casual earnings between December 2016 and June 2017.
The Tribunal heard evidence from the Respondent at the hearing about his employment arrangements during 2016 and 2017. The Respondent agreed in his evidence at the hearing that he had been employed on a casual basis in the period under review.[3] He did not dispute that his earnings had been incorrectly declared, but submitted that when he had applied for youth allowance, customer service staff had directed him on how to report his earnings and had advised him to report his after-tax amount.
[3] A second employer was indicated in the papers before the Tribunal, where the Respondent had worked prior to December 2016. Given the findings of the Tribunal about the debt period when calculated in accordance with Chaplin, the Tribunal has not addressed the Respondent’s pre-December earnings.
The Respondent agreed, and the Tribunal accepted, that the Respondent had been sent correspondence by Centrelink about his reporting obligations. He was taken to one such letter during the Tribunal hearing. The letter was dated 11 October 2016 and notified the Respondent that a decision had been made that he would be paid youth allowance from 14 September 2016. Under “Important Information”, the letter noted that the Respondent was required to notify Centrelink within 14 days about events or changes in circumstances affecting his payment.
The Respondent stated he believed he would have received the letter but couldn’t recall as it was so long ago. The letter had been accompanied by a second letter, enclosing a Reporting Statement, also dated 11 October 2016. The Reporting Statement noted that the Respondent had to report every two weeks and set out a number of reporting periods and the date he was required to report for each period. The Respondent, when taken to this correspondence during the hearing, agreed he was aware he had to report each fortnight to Centrelink.
The Reporting Statement noted the following, in relevant part:
What you must report for each Centrelink Reporting Period
• If any circumstances have changed (see the list on the back of this page for details)
• If you were employed:
• The business where you worked.
• The amount you earned for work done in the Centrelink Reporting Period that relates to the
day you need to report. The amount reported must be the amount earned before tax and
other deductions such as salary sacrifice. You must report even if you have not received
some or all of the pay yet.
The Respondent was asked about the indication in the letter that he was required to report his before-tax income, in contrast to his earlier evidence that he had been advised to report his after-tax income. He stated that he didn’t remember seeing that, that he had attended a Centrelink office and that he had not claimed government help before that. He went with all of his information and was told that by a worker there. He agreed that he was aware his youth allowance amount could change depending on his income. He gave evidence that, between September 2016 and June 2017, he had believed he was reporting correctly.
The Applicant has submitted, in its Statement of Facts Issues and Contentions, that the Respondent had consistently under-reported his income, as demonstrated by the below amounts:[4]
[4] Applicant’s SFIC at paragraph 6.6.
Fortnightly instalment period
Amount earned by Respondent (on the Applicant’s construction)
Amount declared by Respondent
21 December 2016 – 3 January 2017
$1,797.83
$944.40
4 January 2017 – 17 January 2017
$1,403.19
$689.88
18 January 2017 – 31 January 2017
$863.21
$780
1 February 2017 – 14 February 2017
$824.37
$740
When examples of under-declaration were put to the Respondent at the hearing, he stated that it was so long ago, but “yes”. In response to an observation by the Applicant that the differences could not be explained by the difference between gross and net income, the Respondent stated in response that when he reported was different to when he was paid; from memory, a bit of calculating had been required.
The Tribunal had been provided information from the Respondent’s employer in the form of a summary of “Taxable Allowances” paid to the Respondent and payslips for fortnightly pay periods. The taxable allowances information indicated the Respondent was paid at different rates of hourly pay, described in the document as ordinary hours, casual loading 25%, time & half, Sunday penalty 100% and “PH penalty (wrked and cntrcted)”. The individual payslips also reflected payments at the above different rates, but did not indicate specific days the Respondent had worked in each pay period.
The “Casual Earnings Apportionment” information provided by the Applicant in its annexure to its Statement of Facts, Issues and Contentions indicates that the amount earned by the Respondent was consistently in excess of the amount declared to Centrelink and that the amounts declared did not correlate to net earnings of the Respondent. The Tribunal was satisfied from this information that there had been an overpayment to the Respondent between 21 December 2016 and 29 June 2017. Even in the absence of clear evidence as to which specific days had been worked in the overpayment period, the Tribunal was satisfied on the balance of probabilities that the Respondent had received more youth allowance than he was entitled to, such that it was appropriate for a debt to have been raised, as described by the majority in Chaplin.
The Tribunal has had regard to the submissions of the Applicant and to the interpretation of “earned, derived or received” as set out by the majority in Chaplin. The Tribunal accepts that the calculations provided by the Applicant are in line with the comments of the majority in Chaplin, in that amounts to which the Respondent became legally entitled were allocated to a particular Centrelink fortnight where it could be established in which Centrelink fortnight they had been earned, and that where this was not possible on the evidence available, amounts were allocated to the Centrelink fortnight in which they had been received. The Tribunal accepts that, based on this approach, the Respondent was overpaid youth allowance totalling $1,823.02 in the period 21 December 2016 to 20 June 2017.
Subsection 1223(1) of the Social Security Act provides that where a social security payment is made and the 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. The Tribunal finds that the Respondent owes a debt to the Commonwealth in the amount of $1,823.02 under section 1223 of the Social Security Act.
Waiver – Administrative error
Section 1237A of the Social Security Act requires that a debt be waived if the following circumstances are met:
(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).
(1A) Subsection (1) only applies if:
(a) the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or
(b) if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;
whichever is the later.
In Ward and Secretary, Department of Family and Community Services [2000] AATA 2112, the Tribunal stated (at [47]) that:[5]
This means that the Secretary’s duty to waive does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth’s administrative error. It makes no difference that those other errors or factors are minor. If those other errors or factors follow as a result of the Commonwealth’s administrative error (i.e. they are incidental to the Commonwealth’s error), then it may be that the debt is attributable solely to the Commonwealth’s administrative error.
[5] Cited in Applicant’s SFIC at paragraph 6.18.
The Tribunal has noted, above, that the Respondent was sent correspondence by Centrelink notifying him of the requirement to advise of his gross earnings from employment. The Respondent incorrectly declared his income in the period 21 December 2016 to 29 June 2017. The debt has therefore not been caused by sole administrative error on the part of the Commonwealth and cannot be waived under section 1237A of the Social Security Act.
Waiver – Special circumstances
Section 1237AAD of the Social Security Act provides that a debt may be waived where:
(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.
All three of the above requirements are cumulative; that is, all must be met for waiver to be considered under this provision. The Respondent did not provide any documents to the Tribunal for the purposes of the hearing. He told the Tribunal at the hearing that, after the debt had been raised, he had been contacted by Dunn and Bradstreet about recovery of the debt on a constant basis, and the phone calls had been quite threatening. The Respondent gave evidence of having contacted Centrelink and having been advised by one area of Centrelink that he had no debt and then subsequently having been told he did have a debt. He had also received a letter indicating his debt may be due to the Robodebt issue. It has been tough on his mental health, knowing he has money owing. When asked about the time frames around contacts from the debt collection agency, he stated that it had occurred in 2018 and 2019 and had stopped prior to the COVID-19 pandemic.
The Respondent gave evidence that had had graduated from university in 2019. The month prior to the hearing he had left his employment as a project officer with a state government department due to health issues. He had been in the project officer role for some 12 months, but had been in two other roles within the government department and had worked for the department in total for a bit over two years. His first two roles were on a contract basis and his most recent role was on a full-time salary of $95,000 per annum plus superannuation. He is now struggling to buy essentials, pay bills and has put in a claim for jobseeker payment. At the time of the hearing he was up to date with his rent, but had bills outstanding which he had made arrangements to repay and had a credit card debt of $4,500. He was hopeful of gaining further employment and had been applying for positions, including temporary work.
The Respondent was asked about his mental health and gave evidence of having attended counselling over past years and having ceased recently because of the cost of the sessions. He stated he has been prescribed medication through his GP.
The term “special circumstances” is not defined in the legislation. In Dranichnikov v Centrelink [2003] FCAFC 133, the Court noted that other cases which have considered analogous words have concluded that what was required are circumstances which distinguish the current case from the usual case, or those which are out of the ordinary (at [66]). In Secretary, Department of Social Security v Hales (1998) 82 FCR 154; [1998] FCA 219, the Court stated (at paragraphs 162C-G) that:[6]
The concept of special circumstances is broad. A constellation of factors, including financial circumstances, may fall within it. The express exclusion of financial hardship alone as a special circumstance is an indicator that it would otherwise be included. This gives some measure of the range of circumstances which will qualify as special…
The evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words. But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose.
[6] Cited in Applicant’s SFIC at paragraph 6.36.
While the Tribunal accepts the matters raised by the Respondent at the hearing about his circumstances, it was not persuaded that the circumstances outlined by the Respondent are sufficiently out of the ordinary as to constitute special circumstances. On the evidence before it, the Tribunal finds that it is not appropriate to exercise the discretion in section 1237AAD of the Social Security Act.
Write off
Subsection 1236(1A) of the Social Security Act provides for write off where:
(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.
Subsection 1236(1B) states that 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.
Subsection 1236(1C) then states that a debtor is taken to have a capacity to repay the debt by way of deductions from a social security payment, deductions under section 84 of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (the Family Assistance Administration Act) or setting off under section 84A of the Family Assistance Administration Act, unless recovery by those means would result in the debtor being in severe financial hardship.
The debt in this matter is recoverable at law, the Respondent’s whereabouts are known and it is cost effective for the Commonwealth to take action to recover the debt, given the quantum of the debt. The Respondent provided a level of detail about his financial circumstances in his oral evidence to the Tribunal at the hearing, but did not provide any documentary evidence of the other debts he states he owed or his outstanding credit card balance. While he was in the process of claiming jobseeker payment at the time of the hearing, he had only recently made a decision to leave a position of employment and was hopeful of seeking further employment. Taking into account these matters, and the Respondent’s ability to negotiate a reasonable repayment arrangement with Centrelink, the Tribunal found that the Respondent has the capacity to repay the debt in this matter. The debt is unable to be written off for a period of time under section 1236 of the Social Security Act.
No other provisions in Part 5.4 of the Social Security Act are relevant to the Respondent’s circumstances. The debt is recoverable by the Commonwealth.
Interest charges
Subsection 1229A(1) of the Social Security Act provides for interest charges to be imposed in the following circumstances:
(1) If:
(a) a notice is given to a person under subsection 1229(1) in relation to a debt; and
(b) an amount (the unpaid amount) of the debt remains unpaid at the end of the day (the due day) on which the debt is due to be paid; and
(c) at the end of the due day, there is no arrangement in effect under section 1234 in relation to the debt;
Then the person is liable to pay, by way of penalty, interest charge, worked out under subsection (3), for each day in the period described in subsection (2).
In submissions provided to the Tribunal, the Applicant submitted that interest charges are recoverable for the following periods:
(i)28 September 2018 to 10 October 2018;
(ii)3 July 2019 to 31 July 2019;
(iii)15 August 2019 to 19 November 2019; and
(iv)23 May 2023 to 14 June 2023.
The Applicant has made the following written submissions about the above periods:
The respondent entered into a voluntary repayment arrangement during the period of 6 March 2020 to 14 April 2020. For the other parts of the debt period which did not fall within the periods identified above, the respondent was exempted from the accrual of interest charges.
The Secretary submits that the Tribunal should not accept that the respondent had a reasonable excuse for not entering into a repayment arrangement during the periods identified above. The respondent was sent multiple letters during those periods advising him that he owed a debt, that he was not in a repayment arrangement and putting him on notice that if he did not enter into one, interest would accrue (T12/243; 246; 248; 251; 257; 260; 263; 279). The contention made by the respondent at the hearing on 6 June 2025 that he did not enter into a repayment arrangement due to his thinking that he did not owe the debt because it was a “Robodebt” should not be accepted as being a reasonable excuse in light of the letters sent to him.
The Respondent was sent correspondence by Centrelink dated 11 September 2018, headed “An interest charge has been applied to your debt”. The letter noted that the Respondent owed a debt to Centrelink and that, if the debt had not been paid in full, an interest charge had been applied to the debt. The letter further noted that, to avoid further interest charges being applied to the debt, the Respondent was required to either: pay the outstanding debt amount and any interest charge in full; make the agreed payments under a current payment arrangement; or enter into a payment arrangement and make the agreed payments.
On 21 September 2018, Centrelink wrote to the Respondent again about the debt, stating that it may ask the ATO to recover outstanding amounts from tax refunds or payments due to him. The letter further noted that:
An interest charge may also be applied to your debt if you do not repay the amount in full or make an acceptable payment arrangement. Interest is compounded daily until a payment is made. You must keep making the agreed repayments until the outstanding debt is paid.
On 28 September 2018, Centrelink wrote to the Respondent stating that an interest charge had been applied to his debt. The letter again noted that, to avoid further interest charges being applied to the debt, the Respondent was required to either: pay the outstanding debt amount and any interest charge in full; make the agreed payments under a current payment arrangement; or enter into a payment arrangement and make the agreed payments.
The Applicant has submitted that the first period to which an interest charge relates begins on 28 September 2018 and ends on 10 October 2018 because: “Exclusion – Mercantile agent”. The Tribunal is prepared to accept that, as of 10 October 2018, a mercantile agent was involved in assisting to recover the debt from the Respondent.
On 3 July 2019, the Respondent was sent a letter by Centrelink stating that if the Respondent had not repaid the debt owing, an interest charge had been applied. Under the heading “What you need to do”, the correspondence noted that the Respondent was required to pay the debt in full or make payments under an acceptable payment arrangement.
On 11 July 2019, the Respondent was sent a letter by Centrelink stating that he had a debt and Centrelink had requested the ATO recover amounts from his tax refund or other amounts owing to him. The letter noted that:
We may charge interest on money you owe us. We charge compound interest daily. To avoid this you must:
· pay your debt in full or
· make payments under an acceptable payment arrangement.
On 15 July 2019, the Respondent was sent a letter by Centrelink stating that an interest charge had been applied to his debt and that he was required to pay the debt in full or make payments under an acceptable payment arrangement.
The Applicant submits that the second period to which an interest charge relates ends on 31 July 2019, due to a “grace period”. The Tribunal is prepared to accept the Applicant’s discretion to impose a grace period from 31 July 2019 and does not intend to disrupt this approach by Centrelink.
On 1 August 2019, the Respondent was sent a letter by Centrelink stating that it was writing to him because he did not have a current payment arrangement in place for the money he owed. The letter provided the following information:
We may charge interest on the money you owe us. We charge compound interest daily. To avoid
this you must do one of the following within 14 days of the date of this letter:
• pay your debt in full or
• make payments under an acceptable payment arrangement.
What you need to know if you do not pay
To recover money you owe, we can:
• use your tax refund
• reduce payments you receive from us
• use your Family Tax Benefit arrears, lump sum, top up and supplement payments
• refer your debt to an external collection agency
• use your wages, other assets and income (including money you may have in a bank account)
• refer your case to our solicitors for legal action
• issue a Departure Prohibition Order, which will stop you from travelling overseas.
On 23 September 2019, the Respondent was sent a letter by Centrelink stating that he had a debt he needed to pay back and that Centrelink may ask the ATO to recover money he was owed from tax refunds or available credits that may be due to him. The letter again noted that Centrelink may charge interest on the money owed, that compound interest was charged daily, and that to avoid this, the Respondent had to pay his debt in full or make payments under an acceptable payment arrangement.
The Tribunal accepted that the Respondent did not contact Centrelink following the issuing of the letter dated 1 August 2019, within the 14 days indicated in the letter, to arrange to pay the debt or to enter a payment arrangement. The Applicant submits that the third period to which an interest charge relates ends on 19 November 2019 due to the debt being written off for a period of time. The Tribunal does not intend to disrupt this approach by Centrelink from 20 November 2019 onwards.
On 24 May 2023, the Respondent was sent a letter by Centrelink stating that the Respondent owed an amount to Centrelink and had not entered and kept to a payment arrangement. The letter noted that Centrelink would now charge interest daily, that the Respondent could stop interest being applied by paying his debt or keeping to a payment arrangement and that, if he delayed paying, his debt may increase.
The Applicant submits that the fourth period to which an interest charge relates ends on 14 June 2023, on the basis that the debt was then written off for a period of time. The Tribunal does not intend to disrupt this approach by Centrelink from 15 June 2023 onwards. The Tribunal does note, however, that the date of the correspondence sent to the Respondent indicates that the fourth period to which an interest charge relates should commence on 24 May 2023, not 23 May 2023 as submitted by the Applicant.
Section 1229E of the Social Security Act sets out circumstances in which a person is not liable to pay an interest charge. At subsection 1229E(1), the circumstances are that:
(a) the person is receiving a social security payment; or
(b) the person is receiving a payment of pension, veteran payment or allowance under the Veterans' Entitlements Act; or
(c) the person is receiving instalments of family tax benefit; or
(d) the person is receiving instalments under the ABSTUDY scheme (also known as the Aboriginal Study Assistance Scheme) that includes an amount identified as living allowance; or
(e) the person is receiving instalments under the Assistance for Isolated Children Scheme; or
(f) the circumstances determined in an instrument under subsection (2) apply in relation to the person.
The Tribunal accepted from the “Allowance / Benefit History (ABH)” screen contained in the papers that the Respondent was not receiving a social security payment between 28 September 2018 and 10 October 2018, 3 July 2019 and 31 July 2019, 15 August 2019 and 19 November 2019 or 24 May 2023 to 14 June 2023. The Applicant submits, and the Tribunal accepts, that none of the other circumstances set out in section 1229E apply to the Respondent’s circumstances. In so finding, the Tribunal understands that no relevant instrument has been made under paragraph 1229E(1)(f) and that the Applicant was not otherwise in receipt of a payment described in paragraphs 12239E(1)(b) to (e).
Section 1229F of the Social Security Act provides that a determination that an interest charge is not payable by a person may be made, in circumstances where the person has a reasonable excuse for failing to enter into an arrangement to pay the outstanding amount of the debt or, having entered into an arrangement, failing to make a payment in accordance with that arrangement.
The Respondent was asked at hearing about the numerous letters sent to him about the debt amount he owed. He stated that he thinks he remembers receiving one, maybe. When asked why he had not responded to the letters, he stated that he thought it was a Robodebt and that Centrelink had taken an amount from his income tax return. When asked when he had been contacted about it being a Robodebt, he stated he wasn’t specifically contacted, but that Centrelink had identified that he could be caught up in the Robodebt issue. He had been sent a letter by Centrelink and then a law firm sent him a letter to register.
The Tribunal noted that, despite being sent a number of letters over a prolonged period of time, the Respondent had not responded to the letters. He had not queried why the letters continued to be sent, which would have been reasonable if he believed the debt was raised through the Robodebt scheme. The letters clearly set out consequences for the Respondent if he failed to enter a payment arrangement in respect of the debt. Taking into account all of the above, the Tribunal did not consider that the Respondent established that he had a reasonable excuse for failing to enter into payment arrangements in the periods 28 September 2018 to 10 October 2018, 3 July 2019 to 31 July 2019, 15 August 2019 to 19 November 2019 and 24 May 2023 to 14 June 2023. Interest charges are to be recalculated for these periods and are to be imposed and recovered by Centrelink.
DECISION
The Tribunal sets aside the decision under review and substitutes its decision that:
The Respondent owes a debt to the Commonwealth in the amount of $1,823.02 for the period 21 December 2016 to 20 June 2017;
The debt is recoverable from the Respondent; and
Interest charges are to be imposed for periods from 28 September 2018 to 10 October 2018, 3 July 2019 to 31 July 2019, 15 August 2019 to 19 November 2019 and 24 May 2023 to 14 June 2023.
Date of hearing: 6 June 2025 Solicitors for the Applicant: Mr M Sheedy, Sparke Helmore
Solicitors for the Respondent: Self-represented
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