The Applicant seeks review of two debt decisions dated 25 January 2024 concerning childcare subsidy (CCS) for her son. The debts Centrelink claimed were $8,694.24 for the period 13 July 2020 to 11 July 2021 and $3,991.34 for the period 12 July 2021 to 10 July 2022. The debt notices sought repayment, or commencement of repayment, by 22 February 2024. To date, the Applicant has made no payments in respect of either debt.
The Applicant disagrees with the debt decisions; she contends any overpaid amount of CCS is much less then claimed by Centrelink. Her position is that the most she might owe is less than $1,000.
The debt decisions were affirmed on internal review and then by the Tribunal on first review. I conducted a hearing by video on 6 January 2026 during which the Applicant further explained her position and gave sworn evidence.
The Respondent Secretary's case is straightforward. The scheme for CCS is that it is paid on the basis of income estimates for a financial year. Where a person is partnered, the combined income of the couple is used. Once actual adjusted taxable incomes (ATIs) for the relevant year are known, following assessment by the Commissioner of Taxation (ATO), a comparison between the CCS that was paid and actual entitlement, based on incomes assessed by the ATO, is undertaken. This "reconciliation" process generally results in a conclusion either that CCS has been overpaid or underpaid, so that either a debt is owed, or a top-up payment is due.
In the Applicant's case, CCS was paid from July 2020 to July 2022 on the basis of income amounts which proved to be less than actual 2021 and 2022 ATIs. On 30 April 2021, the Applicant had notified she had separated from her partner (the son's father) on 27 January 2021 with the effect that combined income was assessed up to 7 February 2021. From 8 February 2021 (the first CCS Monday after separation), only the Applicant's income was relevant. The reconciliation process produced debts for the periods 13 July 2020 to 11 July 2021 and 12 July 2021 to 10 July 2022. The Applicant has accepted that she did not have her son in her care from 30 May 2022 so that she had no entitlement to CCS thereafter. The debts were correctly calculated and recoverable. Since the Applicant had not made any repayment, interest charges of $116.39 and $53.52 had been determined, as provided for in the relevant legislative provisions. These had been miscalculated by a cent or two. At hearing, the Secretary submitted it was open to me to find the Applicant was in the process of exercising her review rights at all material times so that she might be considered exempt from having to bear these interest charges. The Secretary further submitted waiver was not appropriate because the debts were not solely attributable to Centrelink administrative error (no error was conceded) and there were no special circumstances which might warrant waiver (non-recovery) in this case.
The Applicant has spent considerable time and effort trying to understand the key issues and the factual context and has taken active steps to access additional relevant material. She relies on a spreadsheet she has provided which sets out her understanding as to how the matter should be assessed. The "Exec Summary" provided details various income amounts she contends should be used; she says they are based on incomes from tax returns lodged with the ATO. The result of her analysis is that she has been underpaid $625.31 and, also, possibly overpaid $969.22 over the two-year period in issue. I note the nett result would be a debt of $343.91.
[2]
The available material shows that the assessment of CCS from July 2020 was based on combined ATIs until 7 February 2021 after which only the Applicant's ATI was taken into account. Both the Applicant and her former partner had separately advised the date of their separation was 27 January 2021 and the Applicant did not dispute this was the relevant date at hearing. In those circumstances, I consider it was appropriate for their combined income to be applied up to separation and only the Applicant's income to be used from the first CCS Monday thereafter. Notwithstanding that the Applicant notified of the separation some three months after late January 2021, I am prepared to accept the Secretary's submission that it was appropriate for her income only to be used from 8 February 2021: see subsection 105C(3) of the A New Tax System (Family Assistance) (Administration) Act1999 (Administration Act).
The material includes several notices addressed to the Applicant, from 22 May 2020 to 6 April 2022, asking her to update her 2020/21 and 2021/22 incomes and advising, if she did not, what might be termed "default incomes" would be used to assess CCS. I note that sections 67DD and 67DE of the Administration Act permitted the use of indexed prior-year income estimates or ATO-assessed incomes. Importantly, the Applicant was also sent an SMS message on 5 May 2020 asking her to update her 2020/21 family income estimate "to avoid being overpaid or underpaid". She was informed she could do so using myGov or the Express Plus Centrelink mobile app (app). A similar SMS was sent on 5 May 2021 asking the Applicant to update her 2021/22 income estimate.
The notices were sent to the Applicant's myGov account; she had signed up to myGov in July 2018. At hearing, the Applicant explained she had not read these notices or accessed her myGov account in the debt period because she had no reason to do so. It seems advice as to there being communication to read in her myGov account was sent to an email address provided when she signed up to myGov but which, in fact, she no longer used. She accepted she did not update her myGov account with a new email address. There was no specific explanation given for not responding to the SMS messages sent to her on 5 May 2020 and 5 May 2021; they were sent to the mobile phone number she had nominated in her claim for CCS.
The Applicant referred to having waited in a Centrelink office and on telephone calls to Centrelink for lengthy periods; she agreed she had not actually spoken with an officer on these occasions. She gave evidence her tax agent had told her that Centrelink would base her relevant income on the most recently assessed taxable incomes available and, on this basis, she did not think there was any real issue about income used during the debt period. This might explain why she failed to respond to the SMS message requests referred to above. She also considered that the significant gap payments she had to pay childcare providers was commensurate with her current income during the debt period.
CCS was paid from 13 July 2020 on the basis of combined income of $155,977 ($7,695 for the Applicant and $148,282 for her partner). From 14 December 2020, the combined income used was $167,590 ($7,695 and $159,895). From 5 April 2021, the combined income used was to be $219,340 ($59,445 and $159,895). However, after the Applicant notified of the separation on 30 April 2021, her CCS entitlement was reassessed on the basis only her income should be used from 8 February 2021, the first CCS Monday following separation on 27 January 2021. The result was that income of $7,695 was then used from 8 February 2021 and $59,445 was used from 5 April 2021. In September 2019, the Applicant had provided a 2019/20 income estimate of $7,500. I accept that this amount was indexed to $7,695 from 13 July 2020 in the absence of a further income estimate from the Applicant. A Centrelink notice dated 9 March 2021 again asked the Applicant to provide an updated income estimate. Otherwise, an income of $59,445 would be used. This was explained to be an increased amount based on current taxable income provided by the ATO (likely her 2019/20 ATI).
On 3 May 2021, an arrears payment of $6,875.70, for the period 8 February 2021 to 25 April 2021, was paid to the Applicant to give effect to the CCS reassessment. At hearing, she explained that she was not aware this payment, or other later small arrears payments, had been made until more recently. These payments were made to a bank account she did not routinely check; she queried why the funds were paid into this account. The answer was that this was the account she nominated in her CCS claim. She also complained she received no notification of these payments. Had she been made aware of the first large arrears payment, she would have queried matters and then been in a position to sort things out. The Secretary conceded there had been no notification of the arrears payments. I consider providing notification would have been good administrative practice. However, it seems likely any notification, if sent, would have been sent via the Applicant's myGov account, which she did not access during the relevant period. I am not persuaded the lack of notification has any real bearing on the matter.
The Applicant's assessed ATI for 2020/21 was $127,267; her former partner's 2020/21 ATI was $169,497. The combined 2020/21 ATI was $296,764 which is a much higher figure than the incomes which had been used from July 2020 to 7 February 2021. The Applicant's ATI of $127,267 was also significantly above the incomes used for her from 8 February 2021 ($7,695 until 4 April 2021 and $59,445 thereafter). The reconciliation process, based on actual assessed incomes for 2020/21, resulted in a debt of $8,694.24 for the period 13 July 2020 to 11 July 2021. I am satisfied this is correct.
From July 2021, CCS was assessed on the basis of income for the Applicant of $60,575 (based on indexation of the previous income of $59,445 being used). From 16 May 2022, the income used was $129,686. The Applicant's assessed ATI for 2021/22 was $117,446. The reconciliation process based on this actual income resulted in a debt of $3,991.34 for the period 12 July 2021 to 10 July 2022. Again, I am satisfied this is correct.
In accepting the debts as calculated, I have not accepted the analysis of income or conclusions claimed by the Applicant. The income amounts she relies on in her spreadsheet generally and the periods they are indicated to relate to do not reflect actual ATIs as assessed by the ATO and it is the ATO-assessed incomes for 2020/21 and 2021/22 which must be used in the reconciliation process to confirm her CCS entitlements.
An issue arose as to periods when the child was in his father's care in another state. There were three periods: from late November 2020 for three months; from mid-July 2021 for four weeks; and from mid-November 2021 for a week. The Secretary accepted that short or temporary periods in the father's care would not affect the Applicant's CCS entitlements. However, in written submissions, the Secretary took issue with the child being considered as her FTB child, so that she remained entitled to CCS, after separation in late January 2021 until 28 February 2021. That the Applicant made no financial contribution in respect of the child during the three-month period from late November 2020 was also relied upon. The Applicant gave evidence of an informal parenting plan which provided that she retained overarching responsibility for major decisions affecting the child, even when he was in the father's care. Whilst financial contribution would ordinarily be a material consideration, I do not consider this aspect to be significant in the circumstances of this case. It seems to me unsurprising that the father would meet any costs when the child was staying with him temporarily. I accept the Applicant's evidence that she retained overall responsibility for the child and proceed on the basis she did not lose entitlement to CCS at any time before 30 May 2022.
The child was enrolled at an interstate childcare service during these periods with the father. The Applicant was concerned that the father had enrolled the child under his own CRN (his personal Centrelink reference number) and yet she was responsible for any debt arising for these periods. The material establishes that CCS was paid for the child during the first and last of the three periods with the father. However, Centrelink's records show that he was enrolled under the Applicant's CRN and that his enrolment was confirmed via the app under her CRN. The Applicant gave evidence of confirming several enrolments during the period. Based on confirmation under her CRN, I am satisfied that the Applicant confirmed the child's enrolments during the periods CCS was paid when he was with his father. I note the evidence indicates the Applicant disputed enrolment in July 2021 and CCS was not paid for this period with the father.
In the result, I find the original debts decisions were correctly made under subsections 71B(1) and 71C(1) of the Administration Act. I do not consider this to be a case where any of the pre-conditions for write-off (a temporary stop on recovery) under section 95 of the Administration Act are met. It is then necessary to consider whether there are grounds for waiver, or non-recovery, of the debts.
Waiver is available under section 97 of the Administration Act provided, amongst other things, any proportion of the debt is attributable solely to Commonwealth administrative error. The essential basis of the present debts is that CCS was assessed on incomes which proved to be too low. The Applicant was notified several times that she should provide updated income estimates for 2020/21 and 2021/22 or stated default incomes would be used. She did not access these notices in her myGov account because she had failed to update her email address in myGov. She also failed to respond to SMS messages sent to her in May 2020 and May 2021 asking her to update income estimates. The result was she did not provide any updated income estimates during the two-year period of the debts. Centrelink was permitted to use indexed incomes in the circumstances. I do not consider any part of the debts to be attributable solely to administrative error by the Commonwealth. It follows that waiver under section 97 of the Administration Act is not open.
Section 101 of the Administration Act provides for waiver if, amongst other things, there are special circumstances which make waiver desirable. Financial hardship alone is not sufficient in this context. In this respect, I need to consider whether there are any circumstances which are unusual or uncommon such that there should be a departure from the general rule that debts should be repaid.
The Applicant is employed and earns about $125,000 per annum. She lives in her own home on which she owes some $311,000. She receives child support for her son from the father. She also receives rental income on an interstate investment property she owns. She owes $350,000 or more on this property. She paid $475,000 for the property some years ago: its current value is in the range of about $400,000. She does not wish to sell and crystallise a loss. She has about $4,000 in savings. She recently married but she does not co-reside with her husband; they each have their own separate property. Her current job will cease in February 2026 after which she will revert to her previous position, on a lower income.
I am satisfied that the debts here largely arose because the Applicant failed to update her myGov email address, so that she did not receive emails notifying her that she should provide updated income estimates relevant to 2020/21 and 2021/22. She did not respond to SMS messages asking her to provide updated estimates. The result was she did not provide any updated income estimates in respect of the debt period. As was permitted, Centrelink then used indexed estimates or indexed ATO-assessed incomes. The evidence showed that the Applicant did respond when prompted by the app; she complained of inconsistent communication methods Centrelink used. In hindsight, I accept that notification via the app of correspondence to be read in her myGov account may well have been of assistance here. However, I do not consider the lack of such notification via the app constituted an administrative error by Centrelink. Contrary to the Secretary's written submissions, I am not prepared to find there was any "knowing" failure by the Applicant to comply with her obligations in the circumstances.
In my view, the Applicant's financial position is not special in any relevant sense. It is clear she has had difficulty understanding and accepting the debts and their magnitude. This does not justify waiver. I am satisfied the scheme has operated as intended with the reconciliation process resulting in debts in this instance. I note the material shows the Applicant was previously paid a CCS top-up of $4,220.87, also in May 2021, in respect of the 2019/20 financial year reconciliation process. In the result, I do not consider there are any special circumstances which would justify waiver, in whole or part, in this case. The debts will have to be repaid.
I note that small amounts of interest have been charged. These were not considered on internal review or by the Tribunal in its first review decision. I consider the interest charges to be separate decisions which are inextricably linked to the primary debt decisions in this case. I take the view I have jurisdiction to review the interest charge decisions. The Secretary's policy is to exempt a person who is exercising their review rights from such interest charges: see section 78E of the Administration Act. It seems to me that the Applicant has been diligently exercising her review rights throughout. I will set aside the imposition of interest changes on that basis. This does not preclude interest being charged in future.
[3]
The decisions under review relating to debts of $8,694.24 and $3,991.34 owed by the Applicant are affirmed. The decisions as to interest charges of $116.39 and $53.52 are set aside and decisions substituted that the Applicant has not incurred any interest charges.
[4]
Ms A Raveendiran, Litigation Branch, Legal Services Division, Services Australia
Legislation Cited (1)
New Tax System (Family Assistance) (Administration) Act 1999
Cases Cited (1)
GQGB and Secretary, Department of Education [2026] ARTA 26 (12 January 2026)