Decision: The Tribunal affirms the decisions under review.

SOCIAL SECURITY - carer payment - child with autism spectrum disorder - parenting payment partnered - cancellation and debt recovery - authorised review - caused solely by administrative error and received in good faith, and debt waived in part - income test - lump sum arrears payment of income protection entitlement, allocated to fortnights for 12-month period, and monthly income protection payments - debts properly calculated - special circumstances - loss of eligibility for family tax benefit - child's development delays and NDIS assistance - house repairs and improvements - financial hardship alone not sufficient to warrant further waiver - decisions 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. Mr Carson and Ms Leopardi are members of a couple and have three young children, [Child 1] aged 7 years, [Child 2] aged 3 years and [Child 3] aged 8 months. Mr Carson was in receipt of carer payment (CP), in respect of care he provides to [Child 1] (who has autism spectrum disorder (ASD)) from 26 May 2022 until it was cancelled on 8 January 2025 with effect from 31 July 2024. Ms Leopardi was in receipt of parenting payment partnered (PPP) from 26 August 2020 until it was cancelled on 8 January 2025 with effect from 31 July 2024.
2. On 12 December 2024, Centrelink raised and sought recovery from Mr Carson of a CP debt in the sum of $2,184.47 for the period 16 July 2024 to 26 November 2024. On 13 January 2025, Centrelink raised and sought recovery from Mr Carson of a CP debt in the sum of $7,345.81 for the period 31 July 2024 to 7 January 2025.
3. On 12 December 2024, Centrelink raised and sought recovery from Ms Leopardi of a PPP debt in the sum of $2,726.64 for the period 16 July 2024 to 26 November 2024. On 13 January 2025, Centrelink raised and sought recovery from Ms Leopardi of a PPP debt in the sum of $5,539.23 for the period 16 July 2024 to 7 January 2025.
4. These decisions were internally reviewed by a Centrelink authorised review officer (ARO) on 23 January 2025 (the decisions pertaining to Mr Carson) and 24 January 2025 (Ms Leopardi). The ARO affirmed the cancellations and debts but in each case decided that recovery of the larger debt should be waived, as it was caused solely by administrative error and was received in good faith. This meant that Mr Carson was required to repay a CP debt in the sum of $2,184.47 and Ms Leopardi was required to repay a PPP debt in the sum of $2,726.64.
5. On 30 January 2025, both Mr Carson and Ms Leopardi applied to this Tribunal for external review of the decisions to cancel their payments and seek recovery of a CP debt (in the case of Mr Carson) and a PPP debt (in the case of Ms Leopardi).

1. The statutory provisions relevant to this review are contained in the Social Security Act 1991 (the Act).
2. Both CP and PPP are subject to an income test.
3. Definitions relevant to income are set out in section 8 of the Act. In general, income means amounts of money that are earned, derived or received by any means or from any source, unless excluded pursuant to subsection 8(8) of the Act. Income can be deemed from financial assets. The deeming thresholds and rates for members of pensioner and non-pensioner couples are set out in sections 1077 and 1078 of the Act.
4. Definitions relevant to compensation are also relevant to this matter as income protection payments in relation to lost earnings arising from an injury may be regarded as a form of compensation. Pursuant to subsection 17(2) of the Act and policy set out in the Security Guide at 4.3.9.30, income protection payments that are paid in accordance with insurance arrangements within a superannuation fund must be treated as income.
5. Pursuant to section 1072A of the Act, when arrears of periodic income protection payments are paid as a lump sum, they can be apportioned over a period of up to 12 months from the date of receipt.
6. Pursuant to section 210 of the Act the rate of CP payable to a person is worked out using the pension Rate Calculator in section 1064 of the Act. This includes an income test which is applied in accordance with Module E of section 1064. If a person is a member of a couple, the income of both members is combined and then divided by two to yield the income of the claimant. The income test has an income-free area, which is the amount of income a person can earn without any impact on the maximum rate of CP. Any income in excess of this amount reduces the rate of CP for a member of a couple by 50 cents for each dollar of excess income. During the debt period, the income free area for a couple was a combined income of $372 per fortnight.
7. Pursuant to section 503 of the Act, the rate of PPP payable to a person is worked out using the benefit Rate Calculator in section 1068B of the Act. The method for applying the income test is set out in Module D of section 1068B. When a person is a member of a couple the income test has regard to partner income. There is an income free area that applies to the personal income of the PPP recipient and a different income free area that applies to the partner's income. During the debt period the personal income free area was income up to $150 per fortnight. Every dollar of income between $150 and $256 per fortnight reduced PPP by 50 cents. Every dollar of income above $256 reduced PPP by 60 cents. During the debt period the partner income free area was income up to and including $1,345 per fortnight. Each dollar of income above the income free area reduced PPP by 60 cents.
8. Under section 1223 of the Act, when a person is paid any amount of a social security payment that they were not entitled to receive (whether because of lack of qualification or lack of payability), this amount is a debt due to the Commonwealth.
9. Under section 1236 of the Act, a debt can be written off if it is not recoverable in law or not recoverable for other reasons, or where the debtor has no capacity to pay. Under section 1237A of the Act, Centrelink may waive its right to recover a debt if the debt arose solely as a result of administrative error and was received in good faith. Waiver under section 1237A is not available if the debt is raised within six weeks of the first payment giving rise to the debt. Under section 1237AAD of the Act, Centrelink may waive its right to recover a debt in special circumstances, but only if the debt did not arise wholly or partly from a person knowingly making a false statement or representation or failing to comply with a reporting requirement. Under section 1237AAD, financial hardship alone is not a special circumstance.
10. The issues which arise in this case are:
    • Whether Mr Carson's CP and/or Ms Leopardi's PPP were properly and lawfully cancelled;
    • Whether Mr Carson has a CP debt (and, if so, in what sum) and/or whether Ms Leopardi has a PPP debt (and, if so, in what sum); and
    • Whether any debt incurred by Mr Carson and/or Ms Leopardi must be recovered in full.

1. The evidence before me in this matter consists of:

(i) The documents provided by Centrelink as representing the evidence it relied upon at the time of the original decisions and at the time of the internal reviews (the hearing pap.

(ii) Sworn evidence and oral submissions provided by Mr Carson and Ms Leopardi, during a hearing by telephone on 19 May 2025.

(iii) Additional evidence in the form of a Statement of Financial Circumstances, provided by Mr Carson and Ms Leopardi.

1. Centrelink's position is set out in the decision statement of the ARO. The ARO found that on or around 16 July 2024, Mr Carson received a lump sum arrears payment of an income protection entitlement for the period 10 April 2020 to 9 July 2024 in the sum of $135,343.95 and that thereafter he received monthly income protection payments. The ARO found that the lump sum payment had to be treated as income for the year in which it was received and allocated to fortnights for purposes of the income test. The amount of income precluded payment of CP to Mr Carson or PPP to Ms Leopardi. Once these payments ceased to be payable, they were subject to cancellation and any amounts paid from the date of cancellation were debts. The ARO waived recovery of that part of Mr Carson's CP debt and that part of Ms Leopardi's PPP debt that were found to be caused solely by administrative error and received in good faith.
2. During the hearing, Mr Carson and Ms Leopardi submitted that it was unreasonable to apply the arrears payment in a way that made them ineligible to receive payments. They told me that not only had the treatment of the income protection arrears payment as income left them with CP and PPP debts, but they had also lost access to family tax benefit. As a result, they were struggling to meet their living costs and on occasion had to be helped out by friends or relatives. They submitted that, even if the debts had been properly raised, they were affected by special circumstances that made it unreasonable for Centrelink to recover such part of the debts for which recovery had not already been waived.

Does Mr Carson have a CP debt and Ms Leopardi have a PPP debt, and if so, in what sums?

1. I am satisfied that on or around 16 July 2024, Mr Carson received a lump sum arrears payment of an income protection entitlement for the period 10 April 2020 to 9 July 2024 in the sum of $135,343.95 and that he also received periodic income protection payments after 9 July 2024.
2. As set out above, both the lump sum arrears of income protection and any periodic income protection payments paid to Mr Carson are income, pursuant to sections 8 and 17 of the Act (and in accordance with Centrelink policy as set out in the Social Security Guide). Pursuant to section 1072A of the Act, Centrelink properly apportioned the lump sum to fortnightly amounts for a 12-month period.
3. This income had to be used in the income test applicable to Mr Carson's CP and the income test applicable to Ms Leopardi's PP. The relevant income tests are outlined above.
4. The debt periods that apply to Mr Carson and to Ms Leopardi are periods when their rate of payment was calculated without regard to Mr Carson's income protection payments. Their entitlements had to be recalculated as a result of the income protection payments and the debts arose because of the discrepancy between the amounts they were paid and the amounts they were entitled to receive under the relevant income test. These discrepancies are overpayments and debts pursuant to section 1223 of the Act.
5. The debt calculations are set out in detail in the hearing papers. While these calculations are somewhat opaque, they were not disputed by either Mr Carson or Ms Leopardi. Their submissions went to debt recovery, which I will consider separately.
6. I am satisfied that the debts have been properly calculated, which means that I must affirm the debts as determined by Centrelink.

Must Mr Carson's CP debt and Ms Leopardi's PPP debt be recovered in full?

1. I note that recovery of a substantial part of each debt has already been waived by Centrelink on the grounds that these parts were caused solely by administrative error and were received in good faith. The error arose because Centrelink failed to apportion Mr Carson's arrears payment in accordance with policy. I note that neither Mr Carson nor Ms Leopardi disputed the decision to waive part of their debts. Their submissions were to the effect that recovery of the balance of the debts should also be waived in their special circumstances.
2. I am satisfied that Centrelink has appropriately waived recovery of those parts of Mr Carson's CP debt and Ms Leopardi's PPP debt that were attributable solely to administrative error, pursuant to section 1237A of the Act. This means that the remaining issue is whether part or all of the balances of these debts can be waived, pursuant to section 1237AAD of the Act.
3. During the hearing, Mr Carson and Ms Leopardi identified several circumstances that made their situation unusually difficult and warranted debt relief. They told me that, as a result of his ASD, [Child 1] has significant language delays and is not age appropriate in his toileting. While [Child 1] has been getting NDIS support, his care needs and the age of the younger children has limited Ms Leopardi's work options and Mr Carson is limited by his knee injuries and has been experiencing bleeding from the bowel, which is under investigation.
4. Mr Carson and Ms Leopardi told me that their finances are precarious, especially because the arrears payment meant that they ceased eligibility for family tax benefit. They no longer have funds left from the income protection arrears payment, which was approximately $90,000 after tax. Their house, which they purchased in 2022, required restumping, which cost $72,000 - and consumed most of the arrears payment. They also owe $33,000 for solar panels and batteries and are awaiting a significant invoice for necessary plumbing work.
5. While I accept the evidence provided by Mr Carson and Ms Leopardi and appreciate that they are in a difficult position, I am not satisfied that their circumstances are such as to warrant waiver of part or all of the balance of their debts, pursuant to section 1237AAD of the Act.
6. Their financial difficulties are largely attributable to investments they have made in their home. While these investments appear to be appropriate and reasonable, I am not satisfied that they are substantially different than those that other people find necessary. It would also seem to me that, notwithstanding the age of their children Mr Carson and/or Ms Leopardi probably have capacity to supplement their income with part-time work. Their difficulties are also short term because Mr Carson's arrears income will cease to have effect from mid-July. Their investment in re-stumping and solar power can be expected to add value to their property (which is unencumbered) in the longer term as well as substantially reduce their utility costs.
7. The evidence indicates that [Child 1] probably has a moderately severe form of ASD. However, Mr Carson and Ms Leopardi are receiving public assistance through NDIS in respect of [Child 1's] ASD.
8. While their CP and PPP debts are a significant burden, they may be able to enter into a repayment arrangement with Centrelink that allows recovery by instalment by withholdings from their payments when they again become entitled to receive them.
9. It follows that I must also affirm recovery in full of such debts as remain. The commencement and rate of recovery should give proper consideration to Mr Carson's and Ms Leopardi's circumstances.

Mr Carson and Ms Leopardi were self-represented