SOCIAL SECURITY - Jobseeker Payment - lump sum compensation preclusion period - 2 or more lump sum payments for the same event - special circumstances - recovery of Centrelink payments and legal costs - financial hardship - seeking suitable employment - preclusion period reduced - decision under review remitted

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. This is an application by Mr Gill for review of a decision by Services Australia (Centrelink) to reject a claim for jobseeker payment because of a lump sum compensation preclusion period.
2. Mr Gill was injured at work in 2017 and has significant shoulder and back injuries. He received periodic compensation payments for incapacity up to 4 December 2022. On 21 January 2022, he was compensated $35,510 for permanent impairment. [In] January 2023, he settled a claim for damages for $450,000 (clear of the past incapacity payments but inclusive of legal costs) in resolution of any claim.
3. On 14 February 2023, Centrelink wrote to Mr Gill to advise that, in view of the lump sum compensation payment, it had calculated a preclusion period that started on 5 December 2022 and would end on 24 January 2027, during which Mr Gill would be unable to receive income support payments. Mr Gill was also advised that he owed a debt for payments already made from 5 December 2022.
4. On 11 August 2023, Mr Gill made a claim for jobseeker payment which was rejected by reference to the preclusion period.
5. On 29 May 2025, Mr Gill made a further claim for jobseeker payment, which was again rejected.
6. Mr Gill promptly sought internal review.
7. On 23 July 2025, Centrelink's authorised review officer (ARO) affirmed the decision to reject the claim, finding the lump sum compensation preclusion period was correctly calculated and special circumstances justifying a change did not exist.
8. On 4 August 2025, Mr Gill applied to the Tribunal. He says he understands why a preclusion period applies but he has no alternative but to seek social security.
9. The matter was given some priority by the Tribunal's Registry and proceeded to hearing on 4 September 2025.
10. The extent of the documentary evidence before me was the hearing papers, numbered 1 to 426. Mr Gill appeared by phone and gave oral evidence.

1. The issue in this application is whether Mr Gill's claim for jobseeker payment was correctly rejected. In view of the basis on which the claim was rejected, that requires determination of whether, and for how long, Mr Gill is precluded from jobseeker payment (and potentially other payments) because of the receipt of lump sum compensation.
2. I have looked first at whether the lump sum preclusion period has been correctly calculated, and then whether the period should be shortened.

Has the lump sum preclusion period been correctly calculated?

1. Section 1169 of the Social Security Act 1991 (the Act) provides that certain social security payments (referred to as 'compensation affected payments' which includes jobseeker payment) are not payable to a person who has received a lump sum compensation payment during a 'lump sum preclusion period'.
2. Where a person receives 2 or more lump sum payments in respect of the same event (as Mr Gill did, in January 2022 and January 2023), and at least one of those payments is made in respect of lost earnings, the person is taken to have received the combined amount on the day on which they received the last of the payments (section 1171 of the Act).
3. The number of weeks in the lump sum preclusion period is calculated under section 1170 of the Act. Relevantly, if a person receives both periodic compensation payments and a lump sum compensation payment, the lump sum preclusion period:
   • starts the day after periodic payments end, and
   • runs for the number of weeks that is the 'compensation part of a lump sum' divided by the 'income cut-out amount' (and rounded down to the nearest whole number).
4. Section 17 of the Act provides that the 'compensation part of a lump sum' is, where the payment is made in settlement of a claim, 50% of the payment. The 'income cut-out amount' is the amount above which no pension is payable to a single person under the ordinary income test. As at January 2023, that amount was $1,121.50.[1]
5. Information provided by [Insurer 1] establishes that Mr Gill received periodic compensation for 5 years up to 4 December 2022.[2]
6. The January 2023 compensation was in respect of lost earnings.[3]
7. Applying the definitions in section 17 of the Act, the compensation part of Mr Gill's settlement is $242,755 being 50% of $485,510 (the sum of the permanent impairment payment and the damages settlement amount). Based on the applicable divisor, subject to resolution of the issue below, the preclusion period should run for 216 weeks after 5 December 2022, which is to 24 January 2027 inclusive, as calculated.[4]

Can the lump sum compensation preclusion period be shortened?

1. Despite that finding, section 1184K of the Act provides a discretion to treat all or part of a compensation payment as not having been made, if it is appropriate to do so, in the special circumstances of the case. If part of a compensation payment is treated as not having been made, the 'compensation part of a lump sum' and in turn the length of the lump sum preclusion period calculated under section 1170 of the Act will reduce.
2. Previous decisions of courts and of the Tribunal (and its predecessor, the Administrative Appeals Tribunal (AAT)) establish that for special circumstances to be found to exist it is necessary to examine the individual circumstances of the case and find something about a person's circumstances to take their situation out of the usual or ordinary course.[5] That may be where it would be unfair, unintended or unjust for the entire lump sum preclusion period to apply.[6]
3. The exercise of the discretion should not, though, frustrate the aims of the compensation provisions.[7] The provisions are to mitigate against people who receive compensation for a loss of income also receiving income support from Centrelink for the same loss of income over the same period. The presumptive position is that the lump sum preclusion period will apply as calculated.
4. The exercise of a discretion is often accompanied by policy guidance on when the discretion ought or ought not to be exercised, to foster consistency in decision‑making. The Department of Social Services' policy guidance is relevantly contained in the Social Security Guide (the Guide). The Tribunal is not bound to apply government guidelines but will usually do so unless there are cogent reasons not to.[8]
5. Topic 4.13.4.20 of the Guide gives a non-exhaustive list of factors that may be relevant to an assessment of whether there are special circumstances. Those factors include:
   • the person's ill health (particularly unrelated to the injury for which compensation was received),
   • the impact of their emotional state and decision-making capacity on their behaviour,
   • whether the person has deliberately, recklessly or inappropriately deprived themselves of their means of support,
   • whether the person has readily realisable assets that could be used to resolve a current financial problem,
   • whether the person has addictions,
   • whether the person has had incorrect or insufficient legal advice, or advice from Centrelink about the implications of the compensation preclusion period,
   • whether there has been an unjust or unintended consequence of applying the legislation, and
   • whether the person's circumstances have significantly changed since the commencement of the preclusion period in some relevant sense.
6. With the benefit of Mr Gill's oral evidence, the material circumstances are these:
   • Of the $450,000 damages, he received $351,810.10. That was deposited into his bank account on 21 February 2023. The balance went to legal costs, Medicare and Centrelink (it appears he received jobseeker payment for a few weeks from 12 December 2022,[9] the amount of which was presumably recovered as a debt).
   • He is in financial hardship.
7. I have examined and commented on those 2 matters before returning to the question of whether it is appropriate to exercise the discretion to treat all or part of a compensation payment as not having been made.

1. In Fuller and Secretary, Department of Family and Community Services [2004] AATA 615, the AAT constituted by its then President, Downes J, pointed to the inconsistency that results in outcomes depending on whether a settlement sum is inclusive or exclusive of costs.
2. A number of AAT decisions, relying on that reasoning, have had the effect of excising the costs amount from a compensation lump sum, treating that component as not having been received. Others have done so only where the amount of costs was unusually high, or declined to follow the reasoning at all.[10].
3. I note there is authority to the effect that special circumstances will not usually be found (and indeed may not be able to be found) for the reason that the '50% rule' that is part of the calculation under section 1170 of the Act deems a disproportionate amount of a settlement sum to be economic loss.[11] However, the consideration of whether an amount of legal costs included in a settlement sum gives rise to special circumstances has generally been treated by the AAT as a separate matter, one concerned with how much a person received and not how much of what they received was for economic loss.
4. As is clear from the AAT's reasons in Cooper there is no clear line of authority as to whether or when legal costs should be excised from a compensation sum because the inclusion of that amount is unfair (compared to other sorts of settlement agreements). It is at least the case that the inclusion of a costs amount (and, analogously, any other amount that does not reach the compensated person) does not automatically amount to special circumstances without consideration of the person's specific circumstances. I also observe that the policy guidance adopted in the Guide (referred to above) calls attention to considering whether there have been excessive legal costs.
5. Here, Mr Gill received $351,810.10 of $450,000. I assume he received the full amount of compensation for permanent impairment ($35,510) the previous year. He was unable to tell me what of the money he did not receive went to legal costs and what went to reimbursing statutory authorities.
6. That amount of compensation he actually received, then, is materially lower than the total amount of damages. The amount withheld from Mr Gill for costs and other matters is a high proportion of his compensation, though perhaps not 'excessive'.

1. From Mr Gill's perspective, this is the only issue. He has run out of money.
2. As above, Mr Gill received the bulk of his lump sum compensation in January 2023, soon after 5 years of incapacity payments ran out. At that time, he was living with his parents in western Sydney and helping to care for his father. His mother, though, had a cancer diagnosis. She was persuaded by Mr Gill's siblings to sell the house and moved into aged care, with Mr Gill's father going to live with one of his siblings (though he has since moved into aged care). Mr Gill had to move out. His mother passed away close in time to the sale of the house.
3. Mr Gill initially looked for rental accommodation but with no real rental history, no current or recent employment and with care of pets (including [details deleted]), was unable to find anywhere to live. He looked instead for the cheapest property he could purchase. In June 2023, he used most of his money - $323,000 including stamp duty, conveyancing fees and the like - to buy a small house in [Town 1] NSW. He had no prior connection to the town but preferred it to another town in NSW where he went to see a similarly priced house. His savings account had $13,655 left at that point.[12]
4. Mr Gill has had 2 periods of employment in [Town 1], from October 2023 to March 2024 (a series of [occupation 1] roles, which he said were based on seasonal demand), and from September to October 2024 at a [business 1] (where he was not kept on after his probationary period because his injuries made it hard to keep up with the pace of work). He has been desperate for work, but has found nothing available that is suitable for his physical condition and in view of his age, work history, status as a long-term compensation recipient, and poor literacy and computer skills attributable to [a medical condition]. Employment that he might have found suitable, particularly in food outlets, has tended to go to younger people.
5. In September 2024, Mr Gill derived $80,000 from the sale of [an asset 1] .
6. As at 27 September 2024, as a result of the sale of the [asset 1], the balance of Mr Gill's savings account was $75,000.[13] By 10 June 2025, it was $3,011.[14] He said that, at the time of the hearing, it was negative.
7. As to the pace at which his money has been exhausted in 2025, Mr Gill acknowledged that he had had a drinking problem (exacerbated by the grief of losing his mother) and made excessive usage of poker machines at a local club. His bank statements indicate that there were days on which he withdrew more than $2,000, across multiple transactions, from a particular ATM, which he said was located at the local club. That behaviour seems to have increased as the money ran out - at some point, he was relying on gambling winnings to resolve his problem.
8. Unless he finds work, Mr Gill does not have any source of income. As to assets, in his claim form he declared that he had 2 cars and a motorcycle but told me (and told the ARO) that one of the cars (which [is] of some value) was actually his daughter's, passed down within the family, but registered in his name because of insurance costs. His daughter has since taken over the registration. He needs the other car. He would make some use of the motorcycle but cannot currently afford the insurance. Neither Mr Gill's car nor the motorcycle is of any significant value.
9. He has contemplated selling his property but other houses in the same complex (which is a retirement village of some sort) have sold for less than he bought his for. If he sold it, he would be back to looking for a rental property (which he had been unable to find before), unlikely to get back into the property market, and would likely have to live out of his car.
10. Mr Gill has already disposed of any asset he realistically can so to have money to live off, the [asset 1] sold in September 2024.
11. I asked Mr Gill how he subsists with no money. He can get food from a church 4 days a week. He does not buy anything even though he needs medication and his dog needs insulin. His other concerns now are mounting bills, including quarterly strata fees. He is concerned that if he cannot access any income, he will become homeless.
12. As set out in the Guide, one relevant consideration is whether the person deliberately or recklessly deprived themselves of their assets.[15] Mr Gill has squandered a proportion of the money he needed to support himself through his gambling activity. Clearly, multiple large withdrawals on a single day is not consistent with rational behaviour and good decision‑making, and could be called reckless. I accept what Mr Gill says, though, about the role of grief and alcohol addiction in his behaviour.
13. It is not for the Tribunal to supervise or, except to the limited extent necessary to assess special circumstances, judge a person's spending choices.[16] But other than the gambling activity, Mr Gill has not been unusually profligate with his money. The bulk of the money was spent on buying a house. He had to do that because he could not find rental accommodation and had money in the bank. He did not buy lavishly, instead buying about the cheapest property he could afford even though he had to move to a town he had no prior connection to, away from his daughters.
14. Mr Gill does not have assets he could use to support himself. He has already sold the [asset 1] and needs his car. He could probably sell the motorcycle, but that money would not go far.

1. By itself, the proportion of legal costs and other money withheld from Mr Gill's compensation is not 'special'. However, that matter is not severable from his wider financial situation. Because of his housing situation, Mr Gill had to use almost all his remaining money to buy the house in [Town 1]. He was able to sustain himself with some short-term employment and the sale of his [asset 1] but has now run out of money.
2. The purpose of a lump sum preclusion period is to prevent a person getting the benefit of compensation and social security for the same incapacity for employment. It is not to require people to live off credit or in destitution.[17] Mr Gill potentially faces homelessness if he cannot access income support (or obtain employment income). These are special circumstances. I am satisfied that it is appropriate to exercise the discretion to find that some part of the lump sum should be regarded as not having been received.
3. As to the amount of the lump sum that should be set aside, having regard to my reasons for exercising the discretion, I find that it is appropriate to shorten the lump sum compensation preclusion period so that Mr Gill can have income support (if he is otherwise entitled to it) from the point his savings reduced below $5,000.[18] That is 6 June 2025 (or, where the preclusion period must be a number of whole weeks, the appropriate day in the week before that date).
4. That date is within 13 weeks of the date of his claim for jobseeker payment,[19] which means the claim made on 29 May 2025 can be granted if Mr Gill is otherwise qualified.

The decision under review is set aside and remitted for reconsideration in accordance with the order that, in assessing Mr Gill's claim for jobseeker payment made on 29 May 2025, so much of his lump sum compensation is to be treated as not having been made as would cause the lump sum compensation preclusion period to end on, or in the week before, 6 June 2025.

[1] Page 370 of the hearing papers contains a list of the 'divisor' amount over time.

[2] Pages 33 and 67 of the hearing papers. Under section 39 of the Workers Compensation Act 1987 (NSW), a worker has no entitlement to weekly payments in respect of an injury after an aggregate of 260 weeks unless the injury results in more than 20% permanent impairment as assessed under that legislation.

[3] See section 151G of the Workers Compensation Act 1987 (NSW).

[4] $242,522 divided by 1,212.50 is 216.46 weeks, which is to be rounded down. The 216th week commencing on Monday 5 December 2022 ends on Sunday 24 January 2027.

[5] For example, Dranichnikov v Centrelink [2003] FCAFC 133 in relation to the usage of the term special circumstances in the family assistance legislation.

[6] Groth v Secretary, Department of Social Security [1995] FCA 1708 at [12].

[7] For example, Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67; Secretary, Department of Social Security v Hulls [1991] FCA 58.

[8] Re Drake and Minister for Immigration and Ethnic Affairs (No 2) [1979] AATA 179.

[10] See Secretary, Department of Social Services and Cooper [2015] AATA 41 at [25]- [31].

[11] I set this out in Beesley and Secretary, Department of Social Services (Social security) [2025] ARTA 658 at [37]-[50] and need not repeat it here.

[14] Pages 123-124 of the hearing papers.

[15] See Davis and Secretary, Department of Family and Community Services [1999] AATA 84.

[16] See Hardiman and Secretary, Department of Social Services [2020] AATA 1794.

[17] See Secretary, Department of Social Security and Vys [1995] AATA 371.

[18] It is not directly applicable to this issue, but I note that is the amount of the 'minimum reserve' for liquid assets, over which people are required to support themselves for a time before accessing jobseeker payment.

[19] Sections 41 and 42 and Schedule 2 to the Social Security (Administration) Act 1999.