YDSJ and Secretary, Department of Social Services (Social security second review) - [2025] ARTA 1913

YDSJ and Secretary, Department of Social Services (Social security second review) [2025] ARTA 1913 (26 September 2025)
Applicant/s:  YDSJ
Respondent:  Secretary, Department of Social Services
Tribunal Number:                2024/7867

Tribunal:Senior Member M Kennedy
Place:Adelaide
Date:26 September 2025
Decision:The decision under review is affirmed.

Statement made on 26 September 2025 at 3:26pm
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
SOCIAL SECURITY – carer payment – rejection – compensation preclusion period – period correctly calculated – funds expended recklessly – evidence of capacity to earn income – no special circumstances to disregard whole or part of compensation – decision affirmed.
Legislation
Social Security Act 1991
Statement of Reasons

Ms YDSJ settled a common law medical negligence claim for $1.17 million on 23 May 2023. As a consequence, Ms YDSJ’s carer payment was cancelled as a compensation preclusion period had commenced.
On 25 June 2024, Ms YDSJ lodged a new claim for carer payment, and on 2 July 2024 she lodged a claim for jobseeker payment. Ms YDSJ’s claim for jobseeker payment was rejected on 15 July 2024 because she was subject to the compensation preclusion period from 21 August 2018 to 17 April 2028. Ms YDSJ’s claim for carer payment was rejected for other reasons.
Ms YDSJ requested review of both decisions. On 19 July 2024, Centrelink affirmed the decision to reject Ms YDSJ’s claim for jobseeker payment, and on 30 July 2024 Centrelink affirmed the decision to reject her claim for carer payment, now relying on the compensation preclusion period. In respect of the 30 July 2024 decision, the authorised review officer made certain findings essentially reducing the compensation preclusion period by amounts corresponding with identified transactions in the context of claimed family violence and financial abuse, and also funeral expenses, but not so as to reduce the compensation preclusion period to the point where the claim lodged on 25 June 2024 could be granted.
Ms YDSJ applied to the Administrative Appeals Tribunal (AAT) for review of the decision dated 30 July 2024 (the rejection of carer payment) on 16 August 2024. On 5 September 2024, the AAT affirmed the decision under review.
In doing so, the AAT found the compensation preclusion period had been correctly identified and calculated by Centrelink. The AAT declined to disregard any further part of her compensation lump sum in special circumstances, noting that Ms YDSJ had been informed of the compensation preclusion period and then expended the entirety of her compensation payment in little more than a year in a manner that could only be described as reckless and irresponsible.
Ms YDSJ applied for second review of the AAT’s decision. On 14 October 2024, the AAT was abolished and the Administrative Review Tribunal commenced operations. Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (the Transitional Act), applications for review that were not finalised by the Administrative Appeals Tribunal before 14 October 2024 were taken to be applications for review to the Administrative Review Tribunal (hereafter the Tribunal). The Transitional Act gives the Tribunal the authority to continue and finalise any aspect of the review not already completed.
The documentary evidence before the Tribunal consists of an indexed hearing bundle consisting of the Tribunal papers at first review, material lodged on behalf of Ms YDSJ, including a Statement of Facts issues and Contentions prepared by Legal Aid NSW who assisted Ms YDSJ to lodge her application for second review but did not represent her at the hearing, and supplementary tribunal documents.
CONSIDERATION
Does Ms YDSJ have a compensation preclusion period?
Carer payment is a ‘compensation affected payment’: paragraph 17(1)(f) of the Social Security Act 1991 (the Act). A compensation affected payment is not payable to a person in relation to any day in a compensation preclusion period: section 1169 of the Act.
The calculation of a compensation preclusion period is regulated by provisions in Division 3 of Part 3.14 of the Act.
Ms YDSJ did not advance any specific arguments in relation to Centrelink’s identification or calculation of the compensation preclusion period.
I have examined the evidence regarding Ms YDSJ’s receipt of compensation. I find that Ms YDSJ received $1.17 million in settlement of a claim for medical negligence pertaining to injuries she sustained on or about 21 August 2018.[1] The claim and settlement incorporated an amount for lost earnings and lost capacity to earn.
[1] Hearing Bundle, section R1 pages 20-28, incorporating Compensation Advice of Lump Sum Payment form and Deed of Release
An amount is ‘compensation’ if it is a payment in settlement of a claim for damages that is made wholly or partly in respect of lost earnings or lost capacity to earn: paragraph 17(2)(c) of the Act. I am satisfied that the amount received by Ms YDSJ is therefore ‘compensation’ for the purposes of the Act.
The calculation of the compensation preclusion period turns on the identification of the ‘compensation part of a lump sum compensation payment’. Where, as here, a claim has been settled by consent judgment, 50% of the payment will be the compensation part of the lump sum: paragraph 17(3)(ab) of the Act.
I find therefore that the compensation part of the lump sum is $585,000.
The duration of the compensation preclusion period is calculated by dividing the compensation part of the lump sum by the ‘income cut out amount’, which is an amount also worked out using a formula at subsection 17(8) of the Act. It is essentially reflective of the amount of income above which no pension would be payable under the ordinary income test. In Ms YDSJ’s case, I am satisfied the income cut out amount is $1159.00.
As Ms YDSJ did not receive periodic compensation in respect of her injuries, subsection 1170(3) of the Act provides that the compensation preclusion period begins on the day the loss of earnings or loss of capacity to earn began. I find this day to be the date recorded as the date of injury: 21 August 2018.
The duration of the compensation preclusion period is calculated by applying the formula in subsection 1170(4) of the Act by dividing the compensation part of the lump sum by the income cut out amount to produce a figure representing the number of weeks in the preclusion period. In Ms YDSJ’s case, the figure produced is 504 weeks (rounded down). The preclusion period therefore is for the period commencing 21 August 2018 and ending 504 weeks later on 17 April 2028.
I note that Centrelink has notified Ms YDSJ that in implementing the decision of the authorised review officer of 30 July 2024, its records now reflect that the compensation preclusion period will end on 28 June 2027.
Subject to the considerations below, no compensation affected payment is payable to Ms YDSJ in respect of the claim she lodged on 25 June 2024, and the decision to reject her claim for carer payment would be correct.
Should any part of the compensation payment be treated as not having been made?
Section 1184K of the Act provides that I may treat the whole or part of a compensation payment as not having been made if it is appropriate to do so in the special circumstances of the case. Where that discretion is exercised, it will reduce the compensation preclusion period accordingly.
The written Statement of Facts Issues and Contentions lodged on behalf of Ms YDSJ contend that Ms YDSJ faced unexpected and unforeseen circumstances and expenses, encountered family and domestic violence and is experiencing homelessness. It is submitted that a decision should be made so as to end the compensation preclusion period from 12 December 2024 which would provide for a significant period of the compensation preclusion period to have been served while permitting Ms YDSJ access to income support to alleviate current hardship.
At the hearing, Ms YDSJ emphasised that the authorised review officer who had decided to reduce the compensation preclusion period had not accounted for all of the funds she believed are attributable to family violence and financial coercion. Ms YDSJ emphasised her current homelessness and distress.
I have had regard to Ms YDSJ’s written statement of 5 March 2025. In her statement, Ms YDSJ describes a difficult childhood in which she was sexually and physically abused. She describes moving from Sydney to Western Australia at the age of 14 to live with relatives, and dropping out of high school in year 10. Ms YDSJ describes undertaking some work in supermarkets as a teenager, before becoming pregnant. She assisted her then partner in his concreting business, before commencing and completing a nursing diploma in 2024.
Ms YDSJ did not wish to elaborate on the circumstances of her injury, but mentioned the doctor who injured her is still in the news and she still has updates from health regulators who are investigating him.
Ms YDSJ describes her relationship with a Mr C, who is the perpetrator of domestic violence on her. She describes being subjected to coercion and being abused by him in public. The worst incident was a strangulation attempt on 31 December 2023. Ms YDSJ took out an apprehended violence order against Mr C on 18 June 2024.
Ms YDSJ said that Mr C enjoyed gambling, but before she met him it had never interested her. Ms YDSJ said that when she gambled, it was always with Mr C. She said that she continued to gamble with Mr C until she didn’t have any money left.
Ms YDSJ described her children in her statement, both of whom have disabilities. She described being their primary carer, but from December 2024 the children no longer live with her.
In her statement, Ms YDSJ said she only received $560,000 in hand as a result of her settlement. She says she received the funds in May 2023 but it was all gone by July 2024. Ms YDSJ believes she transferred $180,000 to Mr C herself, but also believes Mr C accessed her bank account and made international transactions amounting to $72,767.42. Ms YDSJ acknowledges that the bank did not accept the transactions were fraudulent. Ms YDSJ concludes that she believes she has spent approximately $360,000 on gambling for herself and Mr C.
Ms YDSJ also described providing money to her nana for illnesses and medication and to help with her rent, identifying such transfers of $17,360. Ms YDSJ also described spending $24,679 on her father’s funeral and clearing his debts, and supporting an uncle with schizophrenia. Ms YDSJ acknowledges that she does not have receipts or invoices for a lot of her expenses, explaining she had been evicted from her accommodation.
Ms YDSJ concludes her statement by describing the support she has received from counsellors and charities. She says she has sold most of her property, and has no income. She does not know how she will survive to 2027. She says she has commenced working three hours per week to survive, but this is against medical advice. She wishes to get better, and resume a normal life with her children. During the hearing, Ms YDSJ emphasised her qualifications in nursing, and explained she wishes to work again as a nurse.
Under cross examination, it was established by reference to bank account statements that Ms YDSJ received a very substantially higher amount in hand as a result of her settlement than she had mentioned in her statement. Indeed, Ms YDSJ had said she received $560,000 in her statement but the bank statements now produced by the Secretary demonstrate the amount was in fact $899,785.29.
Ms YDSJ was also taken through records prepared by the Secretary based on bank statements demonstrating that in 11 months, she had spent $859,000, of which $437,000 was withdrawn at hotels and bank branches. Ms YDSJ denied it was always her who withdrew these sums, explaining that Mr C would take her card. Ms YDSJ also denied that she would gamble the funds, but rather Mr C would.
In relation to domestic violence and coercive control, Ms YDSJ was invited to comment on the conclusions of the Commonwealth Bank which had investigated Ms YDSJ’s allegations in relation to unauthorised transactions. Essentially, the bank had established that many of the transactions Ms YDSJ had disputed had in fact been funded through the transfer of funds from linked accounts which were not disputed, and that authorised Apple Pay transactions had occurred before and after the disputed transactions. From this, the bank had essentially concluded that the transactions were authorised and intentional, and Ms YDSJ’s device had been with her when disputed transactions occurred. The bank had also noted that all PIN transactions had been authorised on the first attempt, suggesting the PIN had either been entered by Ms YDSJ or someone to whom she had provided the PIN.
Also, Ms YDSJ was taken to employment records obtained by the Secretary demonstrating that she had worked substantially longer hours than she had deposed to in her statement, averaging 46 hours per fortnight.
Finally, as to the cessation of her employment with the identified employer, and after Ms YDSJ was informed of her right not to answer any questions if the answers may tend to incriminate her, Ms YDSJ was invited to comment on records from the employer stating that her employment had been terminated because the employer alleged she had stolen property from another staff member, and had financially exploited an NDIS participant in her care by obtaining access to the person’s debit card and PIN, a matter which had been reported to Police.
Ms YDSJ denied the allegations contained in the correspondence from her former employer. Ms YDSJ denied she had been charged with an offence, but gave evidence of appearing in court consistent with her having been charged with an offence. For completeness, I record that the evidence available to me about the circumstances in which Ms YDSJ’s employment ceased is limited to correspondence provided by the employer in response to the Secretary’s exercise of information gathering powers, and Ms YDSJ’s response to that information at the hearing when invited to comment.
Ms YDSJ denied that her employment ended in the way relayed by the employer, and said she was only learning of those allegations in these proceedings. Ms YDSJ said that she was unable to sustain employment due to her mental health impairment, and had been working against medical advice in any event.
Finally, the Secretary invited Ms YDSJ to explain the circumstances in which substantial deposits were made into her bank account by various people, including approximately $12,000 in December 2024. Ms YDSJ denied she was running a business, but said that various people had helped her by lending money for food, and some of the funds represented the proceeds of sale of property she had in storage. Ms YDSJ also described allowing her bank account to be used by other people who had maxed out their own debit card, so funds would be transferred in and then immediately withdrawn and handed to that person. Ms YDSJ confirmed that this was her explanation for the approximately $42,000 in deposits into her account in the six months to May 2025.
The Secretary’s contentions as a result of this evidence are that I should conclude that Ms YDSJ was capable of employment, and would likely be working now had her employment not been terminated due to the misconduct described and alleged by the employer. The Secretary further contends that Ms YDSJ’s explanation for the substantial deposits into her bank account should not be accepted, and therefore the evidence demonstrated that Ms YDSJ was not in fact in the straightened financial circumstances she claimed.
The Secretary contends that Ms YDSJ’s expenditure of almost $860,000 in the period August 2023 to June 2024 was reckless and excessive, and grossly irresponsible. There was no corroborative evidence of exactly how so much money was expended, and it was reasonable to infer that most had been gambled away. The Secretary notes, accurately, that the medical evidence does not establish a diagnosis of pathological gambling addiction.
The Secretary has also produced evidence demonstrating the applicant undertook travel to Indonesia and the United States, acknowledging that the applicant has said she travelled to the United States to consult a surgeon.
I have considered carefully the evidence available concerning Ms YDSJ’s receipt of compensation funds and her expenditure of those funds. I do not consider there are any special circumstances arising out of the proportion of the settlement funds Ms YDSJ received in hand, and in this regard prefer the evidence of the bank statements to Ms YDSJ’s evidence of the amount she received in hand. I note that the amount Ms YDSJ received in hand is well in excess of the compensation part of the lump sum she received. She has not been disadvantaged by the ‘50% rule’, as the effect of paragraph 17(3)(b) of the Act is sometime colloquially known. In my view, there is no aspect of the evidence or circumstances pertaining to Ms YDSJ’s receipt of compensation or the application of the compensation provisions of the Act to calculate a compensation preclusion period that have produced an unexpected, unjust or unintended result. In my view there is no special circumstances arising out of the receipt or application of the compensation preclusion provisions that would make it appropriate to treat the whole or part of the compensation as if it had not been received.
Turning to the expenditure of the funds Ms YDSJ received, Ms YDSJ herself explained that in hindsight she felt sick at how quickly and completely she expended the funds. It cannot be denied that the majority of the funds were spent recklessly, and indeed substantially more money is unaccounted for after identifying the large discrepancy between the evidence in Ms YDSJ’s statement and the bank statements obtained by the Secretary. It is also the case that not much of the expenditure can be accounted for by reference to receipts or invoices, other than the direct transfers of cash to third parties.
I have noted Ms YDSJ’s evidence suggesting that most of the funds withdrawn at hotels and at bank branches were spent on gambling by Mr C. While I accept that Ms YDSJ is a victim of family and domestic violence, and I have noted her evidence of the circumstance of coercive financial control in this regard, I have reservations in accepting Ms YDSJ’s evidence at the hearing as to the extent of expenditure attributable to this circumstance. I have noted that her evidence regarding receipt and expenditure of funds has been inconsistent, the observations recorded by the Commonwealth Bank investigation regarding how funds were accessed is wholly consistent with those identified transactions being authorised by her, and have also had regard to the narrations to some transfers identified by the AAT at paragraphs 40 to 41 of its reasons, that are not consistent with coercive transfers in the course of the perpetration of family violence.
I recognise that the transfer of funds may be ‘authorised’ and in that sense voluntary, and yet still nonetheless be examples of funds being lost due to coercive control and Ms YDSJ being the victim of family and domestic violence. As mentioned above however, I am not confident to accept the scale of the loss attributable to that cause now contended for by Ms YDSJ.
While I accept Ms YDSJ has lost some of her funds due to being subject to coercive financial control and family and domestic violence, I consider the primary characterisation of her expenditure of the funds should remain as found by the AAT and contended for by the Secretary. Ms YDSJ has expended her compensation moneys recklessly and irresponsibly.

Reflecting on that self-evident characterisation more deeply however, the expenditure of funds in this way is entirely consistent with the observations of Ms YDSJ’s psychiatrist in his report of 21 February 2025. The psychiatrist observed Ms YDSJ to be impulsive, unable to understand the consequences of financial decisions, prone to financial exploitation due to her psychiatric conditions, and also a person who had difficulties accurately recalling and describing past events and expenditure. I accept that all these features pose risk to Ms YDSJ manifested in the predicament she finds herself in at present, and render her vulnerable. While on the one hand I consider the expenditure of funds to be reckless and irresponsible, it is in the context of these particular vulnerabilities identified in the medical evidence.
As to Ms YDSJ’s current circumstances, I accept that Ms YDSJ is currently highly vulnerable and homeless. I accept her evidence that she is largely estranged from her family, with the exception of her nana. It was clear throughout preparation for the hearing and in the course of the hearing that Ms YDSJ is homeless.
Ms YDSJ’s particular vulnerabilities could potentially amount to special circumstances that would make it nonetheless appropriate to disregard the whole or part of the compensation, notwithstanding the characterisation I have placed on the manner of her expenditure. However, the evidence produced by the Secretary in my view establishes that Ms YDSJ has capacity for employment. In this way, the favourable exercise of the discretion in section 1184K despite the manner of the expenditure of the compensation funds is not an appropriate solution to Ms YDSJ’s challenges and current difficulties.
I do not accept Ms YDSJ’s evidence that her employment was minimal, as this is contradicted by the employment records obtained by the Secretary. Likewise, I do not accept that the employment ceased for reasons associated with her medical limitations, because this is also contradicted by the employment records obtained by the Secretary. The Secretary has demonstrated that while employed, Ms YDSJ earned sufficient income to meet reasonable living expenses, and I accept the submission that but for the circumstances in which Ms YDSJ’s employment was terminated, she would still be employed today.
Furthermore, in relation to the substantial and unexplained deposits into Ms YDSJ’s account, I do not accept that Ms YDSJ’s explanation for these deposits is complete or accurate. I accept the Secretary’s contentions that the deposits tend to demonstrate that Ms YDSJ should not be viewed as being in financial hardship given the amount of funds she has recently had access to, where the circumstances in which those funds were received have not been adequately unexplained.
Ultimately, while I accept that Ms YDSJ’s personal characteristics and vulnerabilities might explain the inappropriate expenditure of her compensation funds, the evidence regarding her demonstrated capacity for employment and the unexplained receipt of funds leads me to conclude that it is not appropriate to disregard the whole or part of the compensation funds to recognise those circumstances.
I am not satisfied it is appropriate to treat the whole or part of the compensation payment as not having been made in the special circumstances of the case, so as to reduce the compensation preclusion period to render carer payment payable on the date of claim, at any material time up to the present, or at any identified date in the near future. I do not purport to disturb Centrelink’s indication that it now considers that the compensation preclusion period will end on 28 June 2027.
DECISION
The decision under review is affirmed.

I certify that the preceding fifty three (53) paragraphs are a true copy of the reasons for the decision herein of Senior Member M Kennedy.

.............................[SGND]...................................
Associate

Date of hearing:  12 September 2025
Applicant:  Self-represented
Solicitor for the Respondent:  T Balakisnan
(Services Australia)