1. We must determine whether the Applicants owe debts to the Commonwealth under the Act. This will require analysis of the effect of not only the purchase of the income stream product but also what, if any, effect there was on their entitlements resulting from the transfers of shares and cash.
2. It is necessary to first begin with the relevant statutory scheme.

1. The Act and the Administration Act form the foundation of the social security law, together with other legislative instruments expressly provided for: s 23(17) of the Act. The Secretary is responsible for the general administration of the social security law.
2. In a general sense, the Act deals with matters of qualification for, and payability of, various social security payments whereas the Administration Act is primarily concerned with matters dealing with the administration of the social security system and, at a granular level, its machinery.
3. Relevant to this application, s 1222A of the Act provides that if an amount has been paid by way of social security payment, the amount is a debt to the Commonwealth if a provision of the Act expressly provides that it is.
4. Section 1223 of the Act deals with debts arising from overpayments and requires the following two elements to be satisfied for there to be a debt due to the Commonwealth:

(a) a social security payment has been made; and > > (b) a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit.

5. Both disability support pension and carer payment are means-tested payments. The rates of both payments are worked out using the Pension Rate Calculator A (Rate Calculator) at the end of s 1064 of the Act: ss 117 and 210 of the Act.
6. Module A of the Rate Calculator establishes the overall method of calculating the rate: point 1064-A1. Both the ordinary income test and the assets test must be used. The test that results in the lower rate of pension or payment is the rate of payment that applies.
7. The rate of each payment is a daily rate, worked out by dividing the annual rate calculated under the Rate Calculator by 364. So far as is relevant here, the Rate Calculator includes three important steps:
   • Work out the person's maximum basic rate, add amounts of certain supplementary payments and rent assistance, if any, to arrive at the person's maximum payment rate;
   • Apply the ordinary income test in Module E to work out the income reduction which is deducted from the maximum payment rate to produce the income reduced rate; and
   • Apply the assets test in Module G to work out the reduction for assets which is deducted from the maximum payment rate to produce the assets reduced rate.
8. The lower of the income reduced rate and assets reduced rate is the person's provisional annual payment rate. After certain further adjustments, none of which apply here, the person's rate of pension results: step 12 in the method statement.
9. Point 1064-A2 states:

Members of a couple > > 1064-A2 Where 2 people are members of a couple, they will be treated as pooling their resources (income and assets) and sharing them on a 50/50 basis (see points 1064-E2 and 1064-G2 below). They will also be treated as sharing expenses (e.g. for rent) on a 50/50 basis (see section 1070V).

10. The operation of the assets test in calculating a person's rate of payment is contained in point 1064-G1. The first step is to work out the value of the person's assets. The term 'asset' is defined to mean 'property or money', both in and outside of Australia: s 11(1) of the Act.
11. Subsection 9A(1) of the Act sets out that certain income streams are exempt from the asset test.
12. Section 1118 of the Act contains a list of assets which are to be disregarded in calculating the value of a person's assets. Assets contained in s 1118 which are to be disregarded relevantly include:
    • the value of a person's principal residence, provided they have a right or interest which gives them reasonable security of tenure: s 1118(1)(a) and (b) of the Act;
    • the value of a person's investment in a superannuation fund until they reach pension age or start to receive a pension or annuity out of the fund: s 1118(1)(f) of the Act.
13. Point 1064-G1 sets out the steps involved in working out the assets reduced rate when the assets exceed the 'free area' thresholds. Point 1064-G2 provides:

Value of assets of members of couples > > 1064-G2 For the purposes of this Module: > > (a) the value of the assets of a member of a couple is to be taken to be 50% of > > the sum of: > > (i) the value of the person's assets; and > > (ii) the value of the person's partner's assets; and > > (b) the value of the assets of a particular kind of a member of a couple is to be > > taken to be 50% of the sum of: > > (i) the value of the person's assets of that kind; and > > (ii) the value of the person's partner's assets of that kind.

14. The Administration Act generally requires that a person who wants to be granted a social security payment must make a claim for the payment: s 11(1) of the Administration Act. The term 'social security payment' includes a 'social security pension'; both disability support pension and carer payment are social security pensions as defined: s 23(1) of the Act.
15. Where a person makes a claim for a social security payment, the Secretary is required to determine the claim, by either granting or rejecting it: s 36(1) of the Administration Act. Generally, the Secretary is required to grant a claim if satisfied the claimant is qualified for the social security payment and it is payable: s 37(1) of the Administration Act. The commencement of a person's social security payment requires a consideration of their start day: ss 41, 42 and Schedule 2 to the Administration Act.
16. Section 66A of the Administration Act imposes a general obligation on a person who has either claimed a social security payment, or is being paid such a payment, to notify Centrelink of any event or change of circumstances that might affect their payment within 14 days of the occurrence of the event or change of circumstances.
17. In addition, s 68(2) of the Administration Act provides that Secretary may give a person notice requiring them to inform Centrelink if there has been an event or change of circumstances that might affect their payment within 14 days of that event or change provided that it may affect their payment.
18. Section 100 of the Administration Act provides:

Automatic rate reduction -- recipient not complying with subsection 68(2) notice

(1) Subject to subsection (2), if:

(a) a person who is receiving a social security payment is given a notice under subsection 68(2); and

(b) the notice requires the person to inform the Department of the occurrence of an event or change of circumstances within a specified period (the notification period); and

(c) the event or change of circumstances occurs; and

(d) the person does not inform the Department of the occurrence of the event or change of circumstances within the notification period in accordance with the notice; and

(e) because of the occurrence of the event or change of circumstances, the rate of the social security payment is to be reduced;

the social security payment becomes payable to the person at the reduced rate on the day on which the event or change of circumstances occurs.

1. Section 110 of the Administration Act relevantly provides:

(1) Subject to subsections (1A) to (11A) (inclusive), if a favourable determination is made following a person having informed the Department of the occurrence of an event or change of circumstances, the determination takes effect:

(a) on the day on which the person so informed the Department; or

(b) on the day on which the event or change occurred;

1. The term 'favourable determination' is defined by s 108 to mean a determination under ss 78, 85, 85AA or 85A of the Administration Act.
2. Section 78, which concerns rate increase determinations, provides:

If the Secretary is satisfied that the rate at which a social security payment is being, or has been, paid is less than the rate provided for by the social security law, the Secretary must:

(a) determine that the rate is to be increased to the rate provided for by the social security law; and

b) specify the last - mentioned rate in the determination.

1. Section 123 of the Administration Act relevantly provides:

123 Continuing effect of determinations > > (1) A determination that: > > (a) a person's claim for a social security payment is granted; or > > (b) a social security payment is payable to a person; > > continues in effect until: > > (ba) the payment is cancelled by section 38M of the 1991 Act, or subsection 42AM(4) or section 42AP of this Act; or > > (bb) immediately before the start of a payment suspension period for the person under section 42AL; or > > (c) a further determination in relation to the payment under section 80, 81 or 82, subsection 95C(1) or section 124H, 124M or 124NF takes effect; or > > (d) the payment ceases to be payable under section 90, 91, 93, 94 or 95; or > > (e) the end of the day immediately before the day on which the person dies. > > ... > > (3) A determination of the rate of a social security payment continues in effect until: > > (a) a further determination in relation to the payment under section 78, 79, 81A or 85A takes effect; or > > (b) the payment becomes payable at a lower rate under section 98, 99 or 100.

1. The husband worked as an aircraft engineer for many years. He suffered a serious illness which eventually rendered him quadriplegic. As his illness progressed and his physical capacities diminished, he required significant personal care and attention, much of which was provided by the wife. As already noted, they each lodged respective claims for disability support pension and carer payment in March 2019, which were subsequently granted with effect from the date of lodgement of their claims.
2. In their respective claim forms, both declared combined assessable assets of about $240,000 as well as the various shares they each held personally.
3. The wife's claim was granted first. A notice dated 2 May 2019 informed her of the decision to grant her claim. Arrears of carer payment of $657.30 for the period 15 March to 29 April 2019 were to be paid on 6 May 2019. She was notified her continuing rate of carer payment was $200.85 per fortnight. The notice included the following information:

Information used for calculating your regular payment

Total Combined Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $719,499.00

Combined Annual Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18,858.70

1. The husband's disability support pension claim was granted subsequently. A notice dated 28 June 2019 informed him of this decision. Arrears of disability support pension of $1,766.97 for the period 10 March to 28 June 2019 were to be paid on 2 July 2019. He was notified his continuing rate of disability support pension was $171.71 per fortnight. The notice also included the following information:

Information used for calculating your regular payment

Total Combined Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $760,181.00

Combined Annual Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,162.88

1. A notice dated 5 August 2019 informed the husband that his disability support pension payment was to increase to $551.85 from 21 August 2019. Arrears of $4,024.82 for the period 10 March to 5 August 2019 were to be paid on 7 August 2019. The notice also included the following information:

Information used for calculating your regular payment

Total Combined Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $492,133.00

Combined Annual Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,718.82

1. A notice dated 15 November 2019 informed the husband that his disability support pension payment was to increase to $688.50 from 27 November 2019. Arrears of $2,139.70 for the period 15 March to 11 November 2019 were to be paid on 19 November 2019. The notice also included the following information:

Information used for calculating your regular payment

Total Combined Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $404,733.00

Combined Annual Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $8,587.98

1. A notice also dated 15 November 2019 informed the wife that her carer payment was to increase to $688.50 from 27 November 2019. Arrears of $2,139.70 for the period 15 March to 11 November 2019 were to be paid on 19 November 2019. The notice also included the information that the same combined assets and annual income as was set out in the husband's notice dated 15 November 2019 was used in calculating her regular payment.
2. Each of the notices referred to above included the s 68(2) notice of the requirement for the husband and the wife to notify Centrelink of certain matters. The terms of the requirements set down in those notices here relevant were:

You must tell us within 14 days (28 days if residing outside Australia) if any of the changes listed below happen or are likely to happen to you and/or your partner (if you have one).

This request is an information notice given under social security law.

Income: Your or your partner's gross income changes. Changes mean your income starts, stops, recommences or amounts vary.

Pensions and annuities: An income stream from an allocated, lifetime or term pensions and annuities, defined benefit pensions or income streams or pensions from other countries.

Financial Investments: Financial investments attract deemed income. Tell us if there is a change of $2,000 or more to the value of your and/or your partner's combined financial investments. Including but not limited to buying and selling shares or managed investments, receiving any bonus shares, changes to bank account balances, changes to details of loans made or you open any new accounts.

Assets: If the value of your and/or your partner's combined assessable assets change by $1,000 or more. Changes include buying, receiving, selling or giving away assets. Assets include, but are not limited to, the value of goods, cars, boats, furniture, money, investments, real estate (including real estate in other countries), personal property, any interest in any property, trust or company, home equity conversion loans, money/loans owed and any other right or interest in any other asset (including assets in other countries).

Gifting assets: When you give away any assets (including cash or investment) or sell any assets for less than market value.

1. Sometime after their claims were granted, the husband and wife consulted Mr Kwa. The advice given included:

(i) To generate additional income for the couple, the husband would withdraw funds from his superannuation account to purchase an income stream product. For Centrelink purposes the purchase of the income stream product resulted in moving funds from a non-assessable environment to an assessable environment and so the income stream asset would be included in the calculation of the couple's assets under the assets test. > > (ii) Shareholdings of the husband and wife, as well as cash held by the wife, would be transferred into the wife's superannuation account. For Centrelink purposes the transfer of those assets resulted in assessable assets being transferred to a non-assessable environment and so the value of those transfers would no longer be included in the calculation of the couple's assets under the assets test.

2. The following cash transfers from the wife's bank account into the wife's superannuation account occurred:

1. On 18 November 2019 the husband purchased an income stream product from his superannuation fund; the purchase price was $250,614.62 and income of $2,000 per month was to be paid from December 2019.
2. Based on a Portfolio Snapshot statement of the wife's superannuation account for the period 1 June 2019 to 1 November 2020, the following listed share transfers into her superannuation account occurred:[3]

1. We were informed there was no transfer of the husband's shares to the wife, requiring her to then transfer the shares into her superannuation account. Instead, the shares were directly transferred from the husband into the wife's superannuation account. We accept this was so.
2. It was common ground that neither the husband nor the wife advised Centrelink of the purchase of the income stream or the transfer of the assets into the wife's superannuation account within a 14-day period of these events. It was submitted that the husband looked after financial matters for the couple. Mr Kwa states that he told the husband he would have to report the purchase of the income stream product in November 2019 to Centrelink and the husband did not do so. He was apparently under the incorrect impression that Centrelink would automatically be advised of such transactions.
3. Centrelink became aware of the husband's income stream in May 2022. By letter dated 23 May 2022 a formal request was made of the husband to provide historical information about the product. Following receipt of this information, as well as disclosures regarding the share and cash transfers, Centrelink then undertook a review of the couple's entitlements.
4. By letters dated 29 July 2022 the Applicants were notified that Centrelink had decided they had each been overpaid $24,667.80 during the relevant period. They were each required to pay their debt or set up an arrangement by 26 August 2022.
5. The debts were raised on the basis that their disability support pension and carer payment were paid at incorrect rates because the value of the income stream product was not taken into consideration. The debt calculations did not take into account the diminution of the value of their total assets by virtue of the cash and share transfers into the wife's superannuation account.
6. It is common ground in these circumstances that the debt decisions here involve the application of the assets test rather than the income test.

Do the Applicants owe debts to the Commonwealth?

1. Mr Kwa authored submissions dated 3 August 2022 which summarised the Applicants' position in respect of the transactions:[4]

1. Transferred $300,000 of cash and shares to [the wife's] super. These shares and cash assets were previously owned personally. Sheltered for Centrelink assets test as she is not age pension age (67).
2. Commenced a $250,000 account based pension for [the husband] to provide additional income for living expenses to complement Centrelink benefits. Aware that this pension is an assessable asset.
3. Retained approximately $700,000 in [the husband's] accumulation super (non-pension) as this would be sheltered from Centrelink's assets test until he is age pension age (66.5).

1. Recent correspondence from Centrelink suggested that their assessable assets are over $601,000. We strongly disagree with this. Based on the value of his account based pension ($207,000 as per attached Centrelink income stream schedule and pension summary), combined cash at bank ($61,000), cars ($27,000) and contents ($10,000), their total assets should be closer to $305,000. They do not hold any personally owned shares.
2. We have intentionally and legally sheltered assets in [the wife's] and [the husband's] accumulation super accounts over the past 3 years to avoid being treated as assessable assets.

1. Having regard to ss 23(5A) and (5D) of the Act respectively, we find that the husband's age pension age was 66.5 years of age (occurring on 29 October 2022) and the wife's age pension age is 67 years of age (occurring on 6 October 2030).
2. On the facts here, each of the transfers of cash or shares into the wife's superannuation account in 2019 and 2020 involved an event or change of circumstances which affected the Applicants' rates of payment at the time. As the wife was below pension age, the effect of the transfers under the assets test was to move the funds and shares from an assessable assets environment into a non-assessable environment. In turn, these transfers reduced the value of the couple's combined assessable assets under the assets test. Had prompt notifications been made, they would have been entitled to an increase to their rate of payments.
3. The husband's purchase of the income stream product on 18 November 2019 occasioned an increase to the couple's income and the value of their combined assessable assets. It was common ground that the income stream product was market-linked and not an asset-test exempt income stream. Having regard to ss 9A, 9B, 9BA and 9BB of the Act, we accept this to be the case and so find that the income stream was not an exempt asset.
4. The income stream product was purchased from funds held inside the husband's superannuation account. The result was an effective transfer of funds from a non-assessable assets environment to an assessable environment. The value of this product therefore increased the value of the Applicants' combined assets.
5. We are satisfied that both the husband and wife were required, by operation of their ss 66A and 68(2) notice obligations, to notify Centrelink of the purchase of the product within 14 days. Their notice obligations were also triggered by the change to their gross income when the income stream product was purchased, since income (as that term is commonly understood) of $2,000 per month was expected to start in December 2019.
6. In these circumstances, we are satisfied that the provisions of s 100(1) of the Administration Act were satisfied and both disability support pension and carer payment became payable at reduced rates from 18 November 2019 when the income stream product was purchased. It follows we accept the essence of the Secretary's position with respect to the purchase of the income stream product and s 100 of the Administration Act.
7. We next turned to consider the effect of the share and cash transfers to the wife's superannuation account.
8. The Secretary maintains that he was not obliged to reduce the quantum of couple's assessable assets by virtue of the transfer of shares and cash into the wife's superannuation account when calculating their entitlement to the pension and payment during the relevant period. That is, the Secretary's position is that the decrease in value of the Applicants' combined assets due to the transfers of cash and shares into the wife's superannuation account can only take effect from the time of notification of these transfers on 4 August 2022, being after the relevant period. Relying on s 110(1) of the Administration Act, the Secretary asserts it follows that the Applicants' entitlements prior to notification, in respect of any possible reduction to their assets and consequent increase to their rates of payment, were fixed by the rate determinations previously made.
9. The Secretary's contends that ss 66A and 68 of the Administration Act cast a "broad net" and compliance is required when there "may" be a change in the assessment of quantum of a person's assets. The Full Court's decision in Chaplin requires that the Act be read in conjunction with the Administration Act as they are an "integrated regime". Thus, a rate of payment is determined not just by reference to the Rate Calculator but also the Administration Act and these provisions are "self-executing".
10. The Secretary submits that s 123(3)(b) of the Administration Act supports this conclusion because it states that a determination regarding the rate of a social security payment continues in effect until the payment becomes payable at a lower rate under ss 98, 99 or 100.
11. We disagree with the Secretary's construction of these determination provisions. In our view, the interpretation adopted by the Secretary conflates the determination provisions with the calculation of entitlement. The determination regime in the Administration Act (including ss 78, 79, 80 and 82) do not determine payability nor do they set down the correct rate payable.
12. Instead, the better view is that the determination regime simply regulates and authorises payments of social security payments. Such payments may well be incorrect, however the determinations are not concerned with qualification or payability. Furthermore, the date of effect provision set down in s 110 of the Administration Act does not regulate payability or qualification. That is, there is a distinction between being paid a social security payment, a social security payment being payable and when arrears are payable.
13. As established in Chaplin,[5] the rate of payment a person is entitled to must first be ascertained. Once their entitlement is established, a comparison with what was paid to them can be made to assess the extent of any overpayment.
14. In this case, this requires an assessment of the value of the Applicants' actual assets during the relevant period. Section 78 is framed to include the past tense: the Secretary is required to make a rate increase determination if satisfied a social security payment has been paid at a rate less than provided for by the social security law. In the common context of changes to a person's income or assets, for the Secretary to be satisfied a rate being paid was less than the law provides, necessarily requires that regard be had to the relevant means test provisions in the Act during the same period.
15. It follows that 'the rate provided by the social security law' in s 78 should be understood to refer to the rate applicable under the relevant means test provisions, here the Rate Calculator in s 1064 of the Act. On this view, the Secretary was required to make rate increase determinations once the reductions in the value of the Applicants' combined assets in 2019 and 2020 became known in 2022. Counsel for the Secretary did not take issue with this view during the course of submissions. However, the Secretary's submission remained that, ss 78 and 110 read together, did not assist the Applicants since any rate increase determination could only take effect after the debt period.
16. Section 1223 of the Act deals with debts arising from overpayments_._ First, a social security payment must have been made: s 1223(1)(a). Secondly, it must be established that the person who obtained the benefit was not entitled for any reason to obtain that benefit: s 1223(1)(b). If those two elements are made out, then the debt is taken to arise when the person obtains the benefit of the payment to which they were not entitled.
17. In practical terms, an assessment of the Applicants' entitlements in the relevant period flowing from the reductions to the values of their combined assets due to the cash and share transfers turns on the correct approach to the application of s 110 of the Administration Act.
18. In this respect, it is useful to note that s 100 of the Administration Act, once engaged, provides for automatic rate reductions. The reduced rates of disability support pension and carer payment flowing from the purchase of the income stream product on 18 November 2019 became payable from that date by force of the provision. No decision was necessary although, in practice, a record to recognise the effect of the rate reductions in Centrelink's computer systems was required.
19. The Administration Act does not provide for automatic rate increase determinations. However, on the Secretary being satisfied that the Applicants had been paid less than provided for under the relevant assets test provisions in the Rate Calculator, rate increase determinations were mandatory under s 78 of the Administration Act. Such rate increase determinations are favourable determinations as defined. Here, by virtue of s 110(1) of the Administration Act, the mandatory rate increase determinations could only take effect from the time of notification, since this was later than the times of the relevant transfers.
20. In this case, we consider that the mandatory s 78 rate increase determinations represent the Applicants' entitlements during the relevant period, notwithstanding their failure to provide timely notifications of the various transfers means that increased payments cannot be made for the relevant period.
21. We do not accept, as the Secretary contends, that the Applicants' entitlements were governed by rate determinations made during the relevant period. The difficulty with the Secretary's approach is that it suggests that rate determinations govern entitlement. Applying the Secretary's methodology, an incorrect rate determination governs a person's entitlement despite the rate being different to that provided for under the income and assets tests.
22. Once a claim for a social security payment is granted, a determination as to the rate to be paid must be made. Such a determination will authorise the making of the payment. Social security payments are generally made fortnightly. Given the large number of payments Centrelink makes, it is unrealistic to require separate determinations authorising each subsequent fortnightly payment for every recipient. Section 123 of the Administration Act can be seen as the mechanism to authorise continuing payments and avoid the need for individual fortnightly authorising determinations.
23. We do not consider anything in s 123 requires a conclusion that an incorrect rate determination governs a person's entitlement. It does not follow from such a determination having continuing effect under s 123 that it therefore is the person's entitlement.
24. In summary, in the context of changes to income or assets, when considering whether a person owes a debt to the Commonwealth under s 1223(1) of the Act, we consider that it is necessary to go to the qualification and payability provisions in the Act and the automatic cancellation and variation provisions in the Administration Act to assess a person's entitlements.
25. In this case, regard to the assets test provisions in the Act was required. Once the Applicants' entitlements are established by reference to s 100 of the Administration Act (in relation to the income stream product purchase) and point 1064-G1 of the Act (in relation to the transfers of cash and shares), a comparison with what they were paid can be made to establish whether there have been overpayments.
26. The Secretary provided debt calculations performed on 24 June 2025 on the assumption that s 110 of the Administration Act does not apply.[6] Those calculations provide that for the period starting 12 November 2019 and until 20 June 2022, the husband was entitled to be paid $48,851.53. He was in fact paid $48,694.85, $156.68 less than the amount he was entitled to.[7] The quantum in respect of entitlement and underpayment was identical for the wife.[8]
27. On that basis, on proper consideration of the rates of payment of the Applicants' entitlements during the relevant period and based on the actual value of their assets, the Applicants did not owe debts.
28. Regarding the application of s 110 of the Administration Act, we accept that it provides that if a favourable determination is made following a person having informed the Department of the occurrence of an event or change of circumstances, the determination takes effect on the later of the date of notification or the day on which the change occurred. In essence, s 110 involves consideration of a determination about whether a person has been paid less than their correct entitlement, a determination regarding their entitlement to a higher rate and, if relevant, a determination regarding the date from which the increased rate is payable.[9] It is evident that the purpose of the provision is to limit the payment of any arrears that may result from a rate increase in circumstances where the person has not informed the Secretary of a change in a timely manner.
29. Contrary to the Secretary's position, we do not consider s 110(1) of the Administration Act fixes the Applicants' entitlements flowing from the reduction in their assets due to the transfers of cash and shares. We prefer the view that s 110(1) operates to fix the time from which payment can be made in respect of the mandatory s 78 rate increase determinations.
30. By way of illustration, if the Applicants were seeking payment of the $156.68 they were entitled to during the period 12 November 2019 until 20 June 2022, they would be prevented from succeeding by virtue of s 110(1) of the Administration Act. That is because the provision limits the date of effect of a favourable determination, for the payment of arrears, arising because of a favourable determination made under s 78.
31. On that basis, we conclude that the Applicants did not owe a debt to the Commonwealth during the relevant period by application of s 78 of the Act and ss 110 and 123 of the Administration Act.
32. However, the proceedings also raise an issue in relation to the whether any transfers of cash and shares into the wife's superannuation account would amount to a disposal of assets pursuant to s 1123 of the Act.
33. For the reasons that follow, we have come to different conclusions as to the proper interpretation of the law in respect of the transfer of the husband's shares to the wife's superannuation account. Therefore, separate reasons in respect of this aspect of the matter are set out below. Given the position of the majority on the issue, it does not affect the overall outcome that the Applicants did not owe debts to the Commonwealth during the relevant period.

DEPUTY PRESIDENT DORDEVIC AND SENIOR MEMBER SIMON

1. As noted above, after the hearing written submissions were sought regarding whether any transfers of cash and shares made by the Applicants into the wife's superannuation account would amount to a disposal of assets pursuant to s 1123 of the Act.
2. Both parties submit that none of the transfers amount to a disposal of the assets as provided for by s 1223 of the Act.
3. Section 1123, found in Division 2 of Part 3.12 of the Act, provides:

(1) For the purposes of this Act, a person disposes of assets of the person if:

(a) the person engages in a course of conduct that directly or indirectly:

(i) destroys all or some of the person's assets; or

(ii) disposes of all or some of the person's assets; or

(iii) diminishes the value of all or some of the person's assets; and

(b) one of the following subparagraphs is satisfied:

(i) the person receives no consideration in money or money's worth for the destruction, disposal or diminution;

(ii) the person receives inadequate consideration in money or money's worth for the destruction, disposal or diminution;

(iii) the Secretary is satisfied that the person's purpose, or the dominant purpose, in engaging in that course of conduct was to obtain a social security advantage.

Note: Under Division 4 of Part 3.18A, certain transfers of assets to special disability trusts can be taken not to be disposals of the assets (but this can be subject to a limit on the aggregate value of the transfers).

(2) For the purposes of subsection (1), a person has a purpose of obtaining a social security advantage if the person has a purpose of:

(a) obtaining a social security pension, a social security benefit, a parenting allowance, a service pension, income support supplement or a veteran payment or enabling the person's partner or someone else of whom the person is a family member to obtain such a pension, benefit, allowance, supplement or payment, or a youth training allowance; or

(b) obtaining a social security pension, a social security benefit, a parenting allowance, a service pension, income support supplement or a veteran payment, or enabling the person's partner to obtain such a pension, benefit, allowance, supplement or payment, or a youth training allowance, at a higher rate than would have otherwise been payable; or

(c) ensuring that the person or the person's partner would be qualified for fringe benefits for the purposes of this Act or the Veterans' Entitlements Act.

1. The Applicants concede that in this case the transfers were part of a wider 'sheltering' strategy; the email dated 3 August 2022 states as much:[10]

We have intentionally and legally sheltered assets [the wife] and [the husband]'s accumulation super accounts over the past 3 years to avoid being treated as assessable assets.

2. Given these concessions we are satisfied that the dominant purpose of the sheltering strategy was for the couple to obtain a social security advantage, so satisfying s 1123 (1)(b)(iii) of the Act.
3. However, for the section to be engaged, it must first be established that the person engaged in a course of conduct that directly or indirectly destroyed, disposed or diminished the value of all or some of their assets.
4. As noted above, s 11 of the Act provides that an asset means property or money. We are satisfied that the cash and shares are assets for the purposes of the Act.
5. The terms 'destroys', 'disposes' and 'diminishes' are not separately defined in the Act. Previous Tribunal matters that have dealt with these provisions are generally not analogous to the circumstances of the transfers. There is little consideration as to the meaning of the words in the authorities. We have proceeded to consider the cash and share transfers and whether they were a disposal of assets pursuant to s 1123 of the Act.

1. In our view, the transfer of cash and shares that were held by the wife into her own superannuation fund was not a disposal of an asset.
2. Section 1118 of the Act provides that certain assets are to be disregarded in calculating the value of a person's assets. Relevantly it provides that the value of the person's investment in a superannuation fund is exempt until the person reaches pension age or starts to receive a pension or annuity out of the fund.
3. We find that the transfers from the wife's own bank account and share portfolio into her superannuation account were not disposals of property. In effect, these transfers were merely the rearrangement of the wife's assets. Whilst the assets moved into a non-assessable environment for Centrelink purposes, there was no destruction, disposal or diminution of these assets.

Transfer of husband's shares into the wife's superannuation account

1. It is not in dispute that the husband and wife were members of a couple as defined in s 42(2) of the Act.
2. As already noted, point 1064-G2 provides that for the purpose of the Module, the value of the assets of a member of a couple (including assets of a particular kind) are to be taken to be 50% of the sum of the value of the person's assets and the value of the person's partner's assets. Thus, the net effect of the transfer led to no change to the quantum of the couple's combined assets, notwithstanding the fact that there was a change to their assessable assets for Centrelink purposes.
3. In circumstances in which assets are assessed in that way, the transfer of the husband's shares to his wife's superannuation account does not result in a direct or indirect 'destruction', 'disposal' or 'diminution' of all or some of his assets for the purposes of s 1123(1). There was merely an adjustment of assets between the parties as a consequence of the transfers. That these assets were moved into a non-assessable environment is of no relevance to the application of s 1123 of the Act.
4. We reached this conclusion with greater certainty given s 1126E of the Act, which modifies Division 2 of Part 3.12 of the Act. Sections 1126AC and 1126AD are concerned with the disposal of assets to a third party in an income year or in a five-year period (respectively) for members of a couple. Section 1126E(1)(b)(ii) states that, in the case of ss 1126AC and 11226AD, if the person who disposed of the asset, or that person's partner, again acquires the asset or receives consideration for that asset, the Secretary may determine that ss 1126AC and 1126AD no longer apply. We understand this to indicate that the holding of an asset by a partner is equivalent to it being held by the person.

1. We conclude that s 1123 is not engaged in this matter.
2. It follows that the decisions made on 28 July 2022 to raise and recover each of the disability support pension and carer payments debts in the amount of $24,667.80 for the period 18 November 2019 to 20 June 2022 are set aside and, in substitution, it is decided that there were no disability support pension and carer payment debts in the relevant period.

1. I have had the advantage of reading draft reasons of the majority in this matter. The essential facts as set out in these reasons are uncontroversial. I generally agree with the conclusions reached on critical issues, save for the approach taken in respect of the husband's transfers of his shares to the wife's superannuation account.
2. The majority has accepted the thrust of the Secretary's position in this respect. The Secretary's submission is that s 1123 is not engaged here because there was no relevant disposal, destruction or diminution of value involved. Reliance was placed on point 1064-G2 of the Act which provides that, for the purposes of the assets test, the value of the assets of a member of a couple is taken to be 50% of the value of each partner's assets. It was submitted it followed there could be no direct or indirect disposal, destruction or diminution for the purposes of s 1123 when one partner transferred assets to the other. The same conclusion applied in relation to a transfer of assets by a person to their partner's superannuation account. The submission continued that to recognise such a transaction as a disposal of assets would be inconsistent with the command in s 1118(1)(f) of the Act that the value of a person's interest in a superannuation fund is to be disregarded in calculating the value of their assets under the Act. Subsection 9(9) of the Act provides that a person has an investment in a superannuation fund if they have benefits in the fund; this was clearly the case in relation to the wife's interest in her superannuation fund.
3. I have difficulty accepting the Secretary's submissions in this respect. There is nothing in the text of s 1123 of the Act which limits its scope as contended. The Secretary's submissions rely on the pooling of assets of members of a couple and, it seems to me, an implicit assumption that the assets of one partner are taken to be the couple's assets. In my view, there is no indication of any presumption that assets owned by a member of a couple are to be considered to be jointly owned in this context. I do not consider anything in s 1126E supports this view. In general terms, if s 1123(1) which deals with whether there has been a disposal of assets by the person for the purposes of the Act is satisfied, the disposal provisions apply in this way. Where no consideration for a disposal is received, the value of the disposal is the value of the assets disposed of: s 1124(a)(ii) of the Act. For members of a couple, where the amount of the disposal/s exceed $10,000 in an income year, 50% of the value of the disposal/s above $10,000 is to be included in the value of each partner's assets for five years: s 1126AC(2) of the Act. In the circumstances here, after the husband's death on 8 July 2024, no amount referable to the disposal/s is to be included in the value of the wife's assets: s 1126AC(4) of the Act.
4. It would have been a simple matter for Parliament to have included a provision to make clear that these provisions have no application to disposals as between members of a couple if this was intended. There is no such provision. I also consider the Secretary's submission based on s 1118(1)(f) of the Act misses the key point that it is the amount of the value of any asset disposed of without adequate consideration which is to be included for the purposes of the assets test. The disposal provisions are not concerned with the ultimate destination of any particular asset disposed of, whether that be as an investment in a superannuation fund or otherwise.
5. In the result, I do not accept the Secretary's submissions on the disposal issue. I take the view that s 1123 of the Act is simply to be applied according to its terms. I now proceed to consider the transfer of the husband's personally held shares into the wife's superannuation account.
6. The husband was the owner of his shares and the associated rights. His transfer of his shares to the wife's superannuation fund resulted in the superannuation fund's trustee holding title to the shares and associated rights on transfer. After these transfers, the husband no longer held any interest in these shares. Each transfer constituted a disposal: s 1123(1)(a)(ii) is satisfied. The value of the shares transferred was reflected in the wife's superannuation account statements; she obtained a beneficial interest in the shares. This is not consideration recognised in law in the context of voluntary transfers. The husband received no consideration himself for the disposal of his shares: s 1123(1)(b)(i) is satisfied. It follows the husband disposed of his shares within s 1123 in the context of these transfers.
7. The evidence shows that there were separate transfers involved for the husband's APA, TLS and QAN shares. The transfers can be considered to have been completed once their value was reflected in the wife's superannuation account: 2 October 2019 for APA and TLS and 30 October 2019 for QAN.
8. Based on a Portfolio Snapshot of the wife's superannuation account for the period 1 June 2019 to 1 November 2020, the value of the husband's APA and TLS shares transferred on 2 October 2019 was $58,424.48 and the value of the QAN share transfer on 30 October 2019 was $2,954.42.[11] The amount of the disposals was the value of the shares transferred in the circumstances: s 1124 of the Act. The total value of his APA, TLS and QAN shares transferred into the wife's superannuation account was $61,378.90.
9. Under s 1126AC of the Act, $58,424.48, less a disposal limit of $10,000, was to be maintained in the assessment of the couple's combined assets for a period of five years from 2 October 2019 when the transfer of the APA and TLS shares was completed. The mechanism used in this section is to include 50% of $48,424.48 in the value of each of the couple's assets for the five-year period. In addition, 50% of $2,954.42 was also to be included in the value of each partner's assets for five years from 30 October 2019 in relation to the transfer of the QAN shares. I note that no amount relating to these disposals should be included in the value of the wife's assets after the husband's death on 8 July 2024.
10. The result of my consideration of the Applicants' entitlements is that, apart from the value of the husband's share transfers which engaged the disposal provisions, the actual value of their combined assets from time to time, assessable under the assets test provisions, is to be used in assessing their entitlements in the debt period. This would require that the value of the wife's cash and share transfers, which reduced the value of the couple's combined assessable assets, be taken into account.
11. The changes in the capital value of the husband's income stream product during the debt period should also be taken into account. The recalculations required would also have to take account of the disposal provisions in the Act being applied to the husband's transfers of his shares to the wife's superannuation account. Given these findings, I would have considered it appropriate to remit the decisions under review to the Secretary for recalculation of any, likely smaller, debts arising.
12. Since it is possible, if not likely, that the recalculations required by my findings will give rise to debts under s 1223 of the Act, it is appropriate to consider issues of recovery.
13. The general expectation is that debts arising under the Act are to be repaid. However, in certain circumstances, a departure from this position may be appropriate. The Act provides for write off (the temporary cessation of recovery action) and waiver (non-recovery) in ss 1236 and 1237 (and the provisions specified therein) respectively.
14. None of the pre-conditions detailed in s 1236(1A) of the Act before it is open to consider write-off is met in this case. It follows that write-off is not available.
15. Section 1237AAD of the Act provides for a discretion to waive recovery where, amongst other criteria, there are special circumstances (other than financial hardship alone) which make waiver of the whole or part of a debt desirable. In this context, the consideration of special circumstances will involve an assessment as to whether the circumstances, viewed as a whole, are unusual or uncommon so as to justify a departure from the general position that overpaid public monies are to be repaid.
16. The husband and wife migrated to Australia in the 1980s. They arrived with nothing and everything they achieved was through determination and hard work. They have two adult sons. The husband worked as an aeronautical engineer but developed a rare autoimmune disease that cut short his working life. The wife cared for her husband for over 10 years until his death in July 2024. Her sleep was constantly disrupted as she was required to attend to him overnight.
17. The wife suffers from depression and a wrist impairment which prevent her from engaging in paid work. She said her financial circumstances prevent her from engaging with psychological supports. She described the impact of the debt decisions as "mental torture".
18. The wife is the sole beneficiary of the husband's estate. She lives in an unencumbered home and has access to superannuation of about $1,100,000. She draws about $66,000 per annum from her superannuation to live on. She will reach age pension age in October 2030. She has no debts apart from the debts under review. She drives a 2018 motor vehicle and has cash savings of about $51,000. She is not in receipt of any Centrelink payments. Her fixed monthly costs are about $5,500.
19. It was submitted that the Applicants have always tried to do what is best for their family and they respect the law. At all times they sought and relied on financial advice from Mr Kwa. As at August 2019, the couple had most of their assets in superannuation and had insufficient income to meet their living expenses. Upon receipt of financial advice, the income stream was purchased and the cash and share transfers were made. The financial advice was that this sheltering strategy was perfectly legal and the cash and shares were not assessable assets once transferred into the wife's superannuation.
20. The husband was under the mistaken belief that Centrelink would be notified of the changes to his assets and the purchase of the income stream. There was never any intention to deceive or receive more than they were entitled to. As a matter of fact, given the recalculations provided by the Secretary, it was submitted the husband and wife received marginally less than they were legally entitled to; debt calculations based on the actual value of their assets (ignoring any s 1123 impact) show the couple were each underpaid about $156 over the debt period.
21. I accept the wife's evidence regarding her circumstances generally and the submissions made on her behalf. I take into account the Applicants' reliance on the financial advice given to them. However, considering their access to financial resources then and now (for the wife), I am not persuaded that the Applicants' current and historical circumstances are sufficiently out of the ordinary so as to constitute special circumstances. I take the view that waiver under s 1237AAD of the Act is not appropriate in this case. It follows I would decide any resulting debts should be repaid.
22. For these reasons, I would set aside the decisions under review and remit the matters to the Respondent with an order that any debts be recalculated on the basis set out in paragraphs 120 and 121 above. Any resulting debts are to be repaid.

1. While we have come to differing views regarding the disposal of assets, the majority have concluded that there has been no relevant disposal of assets during the debt period.
2. Having come to that conclusion, we have agreed how the value of the assets should be calculated for the purposes of determining entitlement. We agree that the rates of payment of the Applicants' entitlements during the relevant period should have been based on the actual value of their assets.
3. On that basis, and given that the majority have found that there has been no disposal of assets, the Applicants did not owe debts to the Commonwealth during the relevant period. Accordingly, the decisions under review must be set aside.

1. The decisions made on 28 July 2022 to raise and recover each of the disability support pension and carer payments debts in the amount of $24,667.80 for the period 18 November 2019 to 20 June 2022 are set aside and, in substitution, it is decided that there were no debts in the relevant period.

Mr Matthew Sherman, Sixth Floor Selborne Wentworth Chambers

[1] [2025] FCAFC 89, [107].

[2] Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (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.

[9] MGDT & Secretary, Department of Social Services (unpublished), Joint Tender Bundle, folios 1345 to 1367.