The Tribunal sets aside the decision under review and remits the matter for reconsideration in accordance with the order that Mr Costlow has incurred a family tax benefit debt of $2,502.66 for 2023/24 but recovery of the debt is to be waived in the special circumstances of the case.

SOCIAL SECURITY - family tax benefit - debt recovery - Centrelink applied automated adjustments of estimated income - administrative error - most recent income estimates not applied - payments not in good faith - 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 subsections 161(1B) of the A New Tax System (Family Assistance) (Administration) Act 1999.

1. In 2022/23, Mr Costlow was paid family tax benefit (FTB) on the basis of an estimate of combined adjusted taxable income for himself and his partner, [Partner A], as follows:
   • From 1/7/22, $47,135
   • From 18/8/22, $62,249
   • From 18/5/23, $144,000. FTB was cancelled due to the estimated income being too high for payment of FTB.
2. The actual combined adjusted taxable income, as assessed by the Australian Taxation Office (ATO), was $149,168 for 2022/23. On 10 August 2023, Services Australia (Centrelink) recalculated Mr Costlow's entitlement to FTB for 2022/23 and decided to raise and recover from Mr Costlow an FTB debt of $13,807.18 for the period 1 July 2022 to 30 June 2023.
3. In 2023/24, Mr Costlow was paid FTB on the basis of an estimate of combined adjusted taxable income for himself and his partner, [Partner A], as follows:
   • From 1/7/23, $64,553
   • From 23/8/23, $154,688. FTB was cancelled due to estimated income being too high for payment of FTB.
4. The actual combined adjusted taxable income, as assessed by the ATO, was $154,367 for 2023/24. On 13 August 2024, Centrelink recalculated Mr Costlow's entitlement to FTB for 2023/24 and decided to raise and recover from Mr Costlow an FTB debt of $2,502.66 for the period 1 July 2023 to 30 June 2024.
5. Mr Costlow sought a review of these decisions. The matters were considered by an authorised review officer on 20 May 2025, who affirmed the decisions to raise and recover the debts but decided that interest charges were to be removed. Mr Costlow then lodged an application for review with this Tribunal on 18 August 2025 seeking an independent review of the decisions to raise and recover the debts of $13,807.18 and $2,502.66.
6. The application was heard on 11 November 2025. Mr Costlow spoke to the Tribunal by MS Teams audio and gave evidence on affirmation. The Tribunal had before it papers from Mr Costlow's Centrelink file numbered 1 to 233. A copy of these documents was provided to Mr Costlow prior to the hearing. Further information was also provided by Centrelink following the hearing (17 pages).

1. The issues which arise in this case are:
   • Whether Mr Costlow owes debts of FTB for the financial years 2022/23 and 2023/24, as calculated by Centrelink; and, if so,
   • Should the debts be recovered?

1. The legislation relevant to this application is found in the A New Tax System (Family Assistance) Act 1999 (the Act) and the A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act).
2. A person's rate of FTB is subject to an income test that takes into account the adjusted taxable income of the person. An individual's adjusted taxable income for a particular income year is defined in Schedule 3 to the Act to be the sum of the following amounts:
   • the individual's taxable income for that year;
   • the individual's adjusted fringe benefits total for that year;
   • the individual's target foreign income for that year;
   • the individual's total net investment loss (within the meaning of the Income Tax Assessment Act 1997) for that year;
   • the individual's tax-free pension or benefit for that year;
   • the individual's reportable superannuation contributions (within the meaning of the Income Tax Assessment Act 1997) for that year;

less the amount of the individual's deductible child maintenance expenditure for that year.

1. For the purposes of the Act, if an individual is a member of a couple, the individual's adjusted taxable income for an income year includes the adjusted taxable income for that year of the individual's partner.
2. The provisions of the Administration Act allow payments such as FTB to be paid in a number of different ways - including as an ongoing fortnightly payment (that is, payment by instalments - section 16) or in a lump sum at the end of the financial year (past period entitlement - section 17). If a person requests that their FTB is paid by instalments, the rate of their payment will have to be based on an estimate (or estimates) of their adjusted taxable income, in accordance with section 20. That section specifically refers to the situation where a person's actual taxable income is not known until after the end of the relevant financial year (that is, until the ATO has issued an assessment of taxable income for the relevant year). A person can therefore be paid fortnightly instalments of FTB based on an estimate they have given of their income for the current year.
3. Subsections 105(1) and (4) of the Administration Act provide that, if there is sufficient reason, a decision about the rate of FTB may be reviewed and changed. In summary, the rate of FTB is recalculated once there is an assessment by the ATO of the actual taxable income of each person whose taxable income is relevant to the determination of a person's rate of FTB.
4. In this case, Mr Costlow was paid FTB for the financial years 2022/23 and 2023/24 based on estimates of combined adjusted taxable income (as set out above) that were less than actual combined income as assessed by the ATO. The Tribunal is satisfied that the legislation required a reassessment of Mr Costlow's entitlement to the FTB that he was paid in the financial years 2022/23 and 2023/24, and that the overpaid amounts for those years have been correctly calculated by Centrelink when actual adjusted taxable income, as assessed by the ATO, is taken into account.

1. Section 71 of the Administration Act provides that if a person was not entitled to FTB in respect of a period or they were paid too much, the difference between the received amount and the amount they were entitled to receive is a debt due to the Commonwealth by the person. Therefore, the amounts overpaid by way of FTB in the financial years 2022/23 and 2023/24 are debts that Mr Costlow owes to the Commonwealth.

1. The Administration Act also includes provisions which allow for waiver or write off of a debt in certain circumstances. Waiver of a debt means that a decision is made not to recover the debt, while write off means that recovery is paused for a temporary period.
2. Section 97 of the Administration Act provides that recovery of a debt must be waived if it was:
   • solely due to administrative error on the part of the Commonwealth,
   • the overpayment was received in good faith, and
   • the person would suffer severe financial hardship if it were not waived. However, if the payment or payments were made in respect of the debtor's eligibility for family assistance for a period that occurs in an income year; and the debt is raised after the end of the debtor's next income year after the one in which the eligibility period occurs, then the criterion relating to severe financial hardship does not apply.
3. Mr Costlow disagreed with the decision to raise debts of FTB in this case because he said that he had supplied the correct information about his income to Centrelink. According to Centrelink, Mr Costlow provided estimates of income on 7 March 2022 and 18 May 2023.
4. The Centrelink records indicate that, on 7 March 2022, Mr Costlow provided an estimate of income for 2021/22 of $45,408 ($21,399 for himself and $24,009 for his partner). Following this update, Mr Costlow was paid FTB Part A and FTB Part B, with the latter being paid on the basis of the lower income estimate. Centrelink sent Mr Costlow a letter dated 17 May 2022 asking him to provide an estimate of income for 2022/23 by 14 June 2022. He was able to choose one of 2 options - Option 1: going online and selecting the 'Update Family Income Estimate' task or Option 2: using the family income estimate Centrelink had calculated. According to the letter, Centrelink had calculated a 2022/23 estimate for Mr Costlow of $22,213 and $24,922 for his partner based on "adjusting your and your partner's current income estimates in line with changes to the Australian Average Weekly Earnings". If Mr Costlow wanted Centrelink to use those estimates he was not required to do anything, and Centrelink would automatically apply them from 1 July 2022.
5. Mr Costlow was subsequently sent another letter dated 13 June 2022 stating that his fortnightly FTB Part B was cancelled because his or his partner's income for the current year was too high for payment of FTB Part B. This letter appeared to indicate that Mr Costlow went online and updated his estimate of income (as suggested by Option 1) rather than do nothing (as suggested by Option 2). However, Centrelink advised that the cancellation of FTB Part B that was notified in the letter of 13 June 2022 occurred as a result of Centrelink applying automated adjustments of estimated income, rather than any new information supplied by Mr Costlow. The automated adjustment had the effect of cancelling FTB Part B in order to avoid an overpayment of FTB Part B, but FTB Part A continued to be payable. Accordingly, there is no evidence to show that Mr Costlow provided an estimate of income for 2022/23 as requested by the letter dated 17 May 2022.
6. From 1 July 2022, FTB continued to be paid based on a combined income estimate of $47,135 (the amount stated in the letter of 17 May 2022). On 18 August 2022, the estimated income was automatically "uplifted" to $62,249. According to a Centrelink document dated 31 January 2025, this revised income estimate figure was based on actual adjusted taxable income as advised by the ATO for the financial year 2022/23.
7. The automatic estimate of $62,249 ceased to be used when Mr Costlow responded to a letter dated 16 May 2023 asking him to update his income estimate for 2023/24. In that letter, he was again able to choose one of 2 options - Option 1: going online and selecting the 'Update Family Income Estimate' task or Option 2: using the family income estimate Centrelink had calculated. According to the letter, Centrelink had calculated a 2023/24 estimate for Mr Costlow of $23,634 and $40,919 for his partner based on "adjusting your and your partner's current income estimates in line with changes to the Australian Average Weekly Earnings". If Mr Costlow wanted Centrelink to use those estimates he was not required to do anything, and Centrelink would automatically apply them from 1 July 2023.
8. On 18 May 2023, Mr Costlow provided a combined income estimate of $144,000. At that time, his FTB was reduced to a zero rate because his income was too high for payment.
9. A further document dated 31 January 2025 states that Centrelink recorded the income estimate of $144,000 as being provided for 2022/23. Further, as Mr Costlow did not provide an income estimate for 2023/24, Centrelink's system coded an "automatic uplift" using the information on the letter sent on 16 May 2023. This automatic uplift had the effect of restarting FTB payments from 1 July 2023, even though Mr Costlow went online to update his estimated income (as suggested in Option 1) rather than doing nothing (as suggested in Option 2). On 28 August 2023, the system applied another "automatic uplift" based on actual adjusted taxable as advised by the ATO for 2022/23, which effectively cancelled the payment of FTB.
10. Regarding the automatic uplift that resulted in Mr Costlow again receiving FTB from 1 July 2023 based on an estimated 2023/24 income for Mr Costlow of $23,634 and $40,919 for his partner, Centrelink explained that this was:

based on the information in the letter dated 16 May 2023. This letter stated if Mr Costlow did not provide an income estimate for 2023-24, income estimates of $23,634 and $40,919 would be used for Mr Costlow and Mr Costlow's partner. Mr Costlow did not provide an income estimate for 2023-24, therefore the indexed estimates stated in the letter were applied. The estimates of $23,634 and $40,419 used from 1 July 2023 were based on adjustments to the most recent estimates available at the time the letter was issued. These were estimates of $22,790 and $39,459, which had been in place from 18 August 2022. The estimates from 18 August 2022 were based on the most recent ATO information available, which was from the 2021-22 financial year.

Section 20(2A) of the A New Tax System (Family Assistance) (Administration) Act 1999 provides the Secretary may use the indexed estimate or indexed actual income stated in the notice.

1. It is not immediately evident to the Tribunal how Mr Costlow's online estimate of income of $144,000 could be coded as for the current financial year only and not also for the next financial year. The questions asked of Centrelink's customers using the online system titled 'Update Family Income Estimate' are not known. However, it is evident that the system was not correctly utilising or taking account of Mr Costlow's advice. If a customer advises Centrelink in May using the 'Update Family Income Estimate' that their current estimated annual income is too high for payment, it makes no sense for the system to ignore that information and instead apply an income estimate that is clearly outdated to the next financial year.
2. The Tribunal considered it highly likely that the 2023/24 debt was caused solely by Commonwealth administrative error in this case on the basis that Centrelink systems failed to take into account, and adjust estimates, using the most recent income information provided by Mr Costlow on 18 May 2023. However, section 97 of the Administration Act requires that the person who is incorrectly paid must receive the amounts in good faith, in essence in the belief they are entitled to the payments.
3. In his evidence to the Tribunal, Mr Costlow said that following a cardiac arrest he required a significant amount of time off work and he claimed jobseeker payment, but when he returned to work, he again advised Centrelink. He asked that his jobseeker payment stop. He did not know what happened with the FTB. He thought that once he started back at work, his and his partner's income was too high for payment of FTB. The FTB money went straight to their bank account and was mixed in with other funds. He did not realise he was receiving FTB on an ongoing basis, especially given all the stresses in his life. He could no longer recall whether he received letters advising him he was still being paid FTB in the relevant period.
4. Mr Costlow's evidence therefore is that he did not think he was entitled to FTB in the periods relevant to this review, he just did not realise he was being paid.
5. Good faith is absent if the person knows or has reason to know that he or she is not entitled to a payment received. This can be the case even if the person is not aware they have received the payment (Secretary, Department of Education, Employment Training and Youth Affairs v Prince [1997] FCA 1565; (1998) 152 ALR 127). As Mr Costlow did not consider he was eligible for FTB, he did not receive the overpaid amounts in good faith and accordingly the 2023/24 debt cannot be waived under section 97.
6. The only other relevant section that provides for a debt to be waived is section 101 of the Administration Act which enables the Secretary to waive a debt, or part of a debt, if 3 conditions are all met. Those conditions are:
   • that the debt did not result wholly or partly from the debtor or another person knowingly making a false statement or a false representation, or knowingly failing or omitting to comply with a provision of the family assistance law;
   • that there are special circumstances (other than financial hardship alone) that make it desirable to waive the debt; and
   • that it would be more appropriate to waive than write off the outstanding debt or part of the debt.
7. The Tribunal is satisfied that Mr Costlow did not knowingly make a false statement or knowingly fail to comply with the family assistance law. The Tribunal next considered whether there were special circumstances in this case.
8. The term 'special circumstances' is not defined in the Act, however, the Federal Court and the former Administrative Appeals Tribunal (the AAT) have considered the issue of special circumstances on many occasions. The individual circumstances of the case were examined to determine whether the circumstances were such that it would be unjust, unreasonable or inappropriate for the debt to be recovered. In particular, the Full Federal Court in the matter of Dranichnikov v Centrelink [2003] FCAFC 133 determined that whether there are special circumstances in a particular case is dependent on whether there are circumstances that would distinguish the case from the usual case. Further, the Federal Court in Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 emphasises that it is not the intention of Parliament that the exercise of this discretion be confined to the "exceptional" case, but rather that there is something that distinguishes the case from the ordinary or usual case.
9. The FTB scheme is specifically designed to ensure that payments are made in accordance with income, so that if a person chooses to be paid FTB fortnightly rather than at the end of a financial year when income is known, there must be a reconciliation of their entitlement when tax returns are completed. If the person is entitled to further FTB, a top-up payment is made by the Commonwealth, but if they have been paid too much, a debt is raised. Variable income, a change in income or other circumstances in which an underestimate of income occurs are not generally unusual circumstances that would make it unfair for a FTB recipient to repay monies to which they were not entitled.
10. However, in this particular case, Centrelink was not using the most recent income information Mr Costlow provided on 18 May 2023 and the automated system appears to be the main reason for the debt of $2,502.66 occurring.
11. In relation to his current situation, Mr Costlow said that in January 2025, he underwent a triple bypass operation, and he was again off work for 8 weeks, but he was paid during this time. In the last 3 to 4 years he has experienced significant family turmoil, with one child accused of a sexual assault, threats of significant violence to the family and intervention orders in place between family members. His wife is now under treatment for depression. They are suffering both financially and psychologically. Mr Costlow and his wife are both working, and Mr Costlow is able to do some overtime, but they are only just making ends meet. He could repay perhaps $20 per fortnight. He had made an offer to pay $50 per fortnight to Centrelink but was told it was not enough. Mr Costlow said that the debts are contributing to the significant stress on himself and his family at this time, through no fault of his own, as he told Centrelink about his income and that he did not require Centrelink support.
12. The Tribunal carefully considered the manner in which the debts arose and Mr Costlow's personal circumstances, which have clearly been very difficult. On balance, the Tribunal concluded that in combination there were unusual circumstances in this case that would make it unfair or inappropriate to recover the debt of $2,502.66 occurring in the financial year 2023/24. The debts are contributing to significant family stress, and this particular debt ultimately occurred despite Mr Costlow's efforts to give Centrelink the right information about his income for FTB purposes. The Tribunal also concluded that it was more appropriate to waive rather than write off this debt, as Mr Costlow did not indicate that any of the strict circumstances for write off were applicable.
13. The Tribunal concluded that it was appropriate to waive recovery of the debt of $2,502.66 occurring in the financial year 2023/24, under section 101 of the Administration Act. However, the debt for 2022/23 is recoverable and Mr Costlow can negotiate with Centrelink regarding repayment of this debt via modest weekly or fortnightly amounts, taking into account his current family income and expenses.

The Tribunal affirms the decision under review to raise and recover a family tax benefit debt of $13,807.18 for 2022/23.

The Tribunal sets aside the decision under review and remits the matter for reconsideration in accordance with the order that Mr Costlow has incurred a family tax benefit debt of $2,502.66 for 2023/24 but recovery of the debt is to be waived in the special circumstances of the case.