SOCIAL SECURITY - childcare subsidy - adjusted taxable income - income estimates changed during debt period and made in good faith - debt calculations correct - recovery would not cause severe financial hardship - claim of free child care under scheme funded by state government during COVID pandemic - no evidence of scheme found - decision under review affirmed

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 201(1A) of the Social Security (Administration) Act 1999.

1. Mrs Bozowski was in receipt of child care subsidy (CCS) between 12 July 2021 and 24 October 2021 (the debt period). Payments were made periodically to her child care provider on her behalf.
2. On 13 October 2022, after receiving advice from the Australian Taxation Office (the ATO) about the taxable income assessments for Mrs Bozowski and her partner that had been made by the ATO, Centrelink decided that Mrs Bozowski had received overpayments of CCS during the debt period in the sum of $539.38. Centrelink raised a debt in this sum and sought recovery of the debt in full. When Mrs Bozowski failed to enter into a repayment arrangement, Centrelink added an interest charge.
3. The CCS debt and its recovery in full was affirmed by a Centrelink authorised review officer (ARO) following internal review on 20 May 2025. The ARO set aside the interest charge on the grounds that Mrs Bozowski had sought review of the debt decision.
4. On 31 July 2025, Mrs Bozowski applied to this Tribunal for external review of Centrelink's decision to recover in full her CCS debt.

1. The statutory provisions relevant to this review are contained in the A New Tax System (Family Assistance) Act 1999 (the FA Act) and the A New Tax System (Family Assistance) (Administration) Act 1999 (the FA Admin Act).
2. CCS is subject to an income test, the details of which are set out in Schedule 2 to the FA Act. The combined income of a couple determines the percentage of the child care fee (up to the hourly rate cap) that is subsidised. Once the combined income reaches a specified threshold, which, for the debt period, was $354,304, the percentage applicable is 0%, which means that no CCS is payable. Below the threshold, the percentage varies according to income using what amounts to a sliding scale but with some income bands that have a fixed percentage of care fees. For example, during the debt period, if the combined income was more than $175,014 but less than $254,306, 50% of the fee charged (up to the fee cap) was subsidised. Every $3,000 of income in excess of $254,305 resulted in a 1% decrease in the percentage of fee subsidised. When income reached $344,305, 20% of the fee charged (up to the cap) was subsidised. However, when combined adjusted taxable income exceeded $354,304 no CCS was payable.
3. Adjusted taxable income is explained in Schedule 3 to the FA Act. It includes taxable income, as assessed by the ATO, and additional specified payments.
4. While CCS is an annual payment, recipients can elect to receive it in fortnightly instalments, in which case the rate of payment is based on income estimates for the relevant tax year that are provided by the recipient. After receiving advice from the ATO about the actual taxable income of both members of a couple, Centrelink conducts what is termed a reconciliation. This compares the amount of CCS paid in fortnightly instalments and the amount the person was entitled to receive under the income test.
5. Following the reconciliation, Centrelink either provides a top-up payment if the person received less than their entitlement in the form of fortnightly instalments or seeks recovery of any amount the person received that exceeded their entitlement.
6. Under section 71C of the FA Admin Act any overpayment of CCS is a debt. Section 97 of the FA Admin Act allows for non-recovery of part or all of a debt that arose solely because of administrative error (and recovery would cause severe financial hardship) and section 101 of the FA Admin Act allows for non-recovery of part or all of a debt if there are special circumstances that make waiver of recovery desirable.
7. The issues which arise in this case are:
   • Does Mrs Bozowski have a CCS debt; and, if so, in what sum?
   • Should any CCS debt owed by Mrs Bozowski be recovered in full?

(i) documents submitted by Centrelink (the hearing papers) as being relevant to the original decision and the internal review of that decision; and,

(ii) sworn evidence provided by Mrs Bozowski during a telephone hearing on 5 November 2025.

1. Centrelink's position is set out in the ARO's decision statement. The ARO found that Mrs Bozowski's CCS percentage of 37.28% was determined on the basis of combined income estimates she provided for the 2021-22 financial year of $292,453 and $323,534. However, the ATO income assessments yielded an actual combined taxable income of $339,840. This meant that the CCS percentage that Mrs Bozowski was entitled to was lower than the CCS percentage used to determine CCS payments, with the result that Mrs Bozowski was paid $539.38 in CCS in excess of her entitlement. This sum was a debt, pursuant to section 71C of the FA Admin Act. The ARO found that there was no basis for waiving recovery of any part of the debt as there was no administrative error and Mrs Bozowski was not affected by special circumstances.
2. During the hearing, Mrs Bozowski told me that she did not dispute the income data used in the debt calculation but submitted that the debt should not be recovered from her because the Victorian government had made child care services free and not means tested during the debt period as a response to the COVID-19 pandemic and associated lockdowns. She submitted that it was unreasonable to recover CCS from her when other people received free child care, regardless of income. Mrs Bozowski told me that she did not in fact use child care services during the debt period but maintained CCS so that she could access subsidised child care if she needed it.

1. I am satisfied that Centrelink paid CCS to Mrs Bozowski's child care provider on the basis of her income estimates. I am also satisfied that her actual combined adjusted taxable income was higher than her estimates, which meant that the CCS percentage she was entitled to was lower than the CCS percentage upon which the payments made to her were based. As a result, the amount of CCS paid exceeded her entitlement.
2. That debt calculation is set out in some detail in the hearing papers. The calculation is moderately complex because the income estimates changed during the debt period which affected the amount of CCS paid periodically. However, the debt calculations appear to be correct and were not disputed by Mrs Bozowski.
3. I am therefore satisfied that Mrs Bozowski was paid a total of $539.38 in CCS in excess of her entitlement during the debt period. This sum is a debt, pursuant to section 71C of the FA Admin Act.
4. I must therefore affirm that Mrs Bozowski has a CCS debt in the sum of $539.38 and the remaining issue is whether this sum must be recovered in full.

Must Mrs Bozowski's CCS debt be recovered in full?

1. I am satisfied that the debt is recoverable, which means that it cannot be written off.
2. The debt arose because CCS was paid on the basis of income estimates and not because of administrative error. In any case, recovery of the debt would not cause Mrs Bozowski to experience severe financial hardship.
3. I accept that Mrs Bozowski made her income estimates in good faith, which means there is no barrier to consideration of her special circumstances in respect of waiver pursuant to section 101 of the FA Admin Act.
4. Mrs Bozowski submitted that her special circumstance is that other people in her position were able to receive free child care under a scheme funded by the Victorian government. Because of this scheme, there was no need for Centrelink to provide CCS and it was unreasonable for them to recover any debt caused by an overpayment in such circumstances.
5. An internet search did not yield evidence of any such scheme. A Commonwealth scheme provided free child care during part of 2020. The Victorian government-funded scheme provided free kindergarten during the debt period. However, kindergarten and child care are different services. CCS is applicable to child care only.
6. It seems likely to me that Mrs Bozowski understandably but wrongly believed that the State government scheme extended beyond kindergarten to child care. I am satisfied that child care services were not free during the debt period and CCS was provided in accordance with the requirements of the income test. It follows that there is nothing special about the expectation that Mrs Bozowski repay any amount of CCS that exceeded her entitlement under the income test.
7. As there is no evidence that Mrs Bozowski has been treated unfairly or been affected by other special circumstances, I have no basis for applying section 101 of the FA Admin Act to waive recovery of any part of her CCS debt. It follows that the debt must be recovered in full.