Tribunal: Member Dr I Alexander
The applicant, MZNK, was receiving a parenting payment from 2007 to 2008 and an Austudy payment from 2008 to 2013 from Centrelink. While the applicant was receiving these Centrelink payments, her husband was receiving compensation payments for a workplace injury. In 2013, Centrelink advised the applicant that she had a debt of $2,360.77 for the parenting payments and $29,693.76 for the Austudy payments because an incorrect amount for her husband’s compensation payments was used when her payments were calculated. The applicant asked for a review of this decision, which resulted in the debt being increased. The applicant asked for a review of this decision by the former Social Security Appeals Tribunal, who affirmed the increase.
The applicant and her husband separated in 2014, and then divorced in June 2016. In 2017, the applicant applied to the AAT for another review of the decision.
It was agreed that the correct amount of the compensation was not taken into account. The applicant requested that the debt be ‘written off’ or ‘waived’ because she was suffering from severe financial hardship following the divorce with her husband, with whom she had a very difficult relationship.
A debt can be written off if the applicant has no capacity to repay the debt[1] and it can be waived if it was due to the sole administrative error of Centrelink[2].
The Department claimed that the applicant did have the capacity to repay the debt as she was doing so at a rate of $20 per fortnight, withheld from her family assistance payments. The applicant claimed that she was in ‘severe financial hardship’ and therefore the debt should be written off. The Tribunal accepted that the applicant’s circumstances were difficult and that she suffered financial hardship, but there was a requirement that the recovery of the debt directly caused the severe financial hardship. Therefore, the AAT was satisfied that there were no grounds for the debt to be written off.
The Department also argued that law is very strict regarding whether something can be considered the sole administrative error of Centrelink[3]. They argued that even minor actions by the debtor that contributes to the error, such as leaving part of a form blank, may prevent the debt from being found ‘solely’ due to Centrelink’s administrative error. The AAT found that Centrelink was regularly informed of changes in the applicant’s ex-husband’s income, but it was unclear from Centrelink documents how the information was received and there was no evidence that the documents were viewed or considered. Centrelink also regularly failed to recognise the difference between taxable income and after-tax income, which was an administrative error that was due solely to Centrelink.
After being notified by the ATO, it took Centrelink 15 months to finalise the matter without a clear reason, during which time the applicant continued to receive payments unaware of an increasing debt. The AAT was satisfied that a portion of the applicant’s debt could be attributed solely to administrative error by Centrelink,
The decision under review was set aside and the matter was remitted to the Department for reconsideration.
Read the full written decision on AustLII.