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[2010] AATA 1027
mixed. The decision under review was varied so that the balance of the debt owing as at 17 December 2010 was to be written off under s 1236 of the Social Security Act 1991 on the ground that Mr Milne had no...
The Tribunal found that Mr Milne was running a furniture business too actively to count as unemployed for Newstart Allowance, even though he said the business made no money and he was also seeking work. The allowance paid during that period was therefore a debt. The Tribunal did not waive it because it found that Mr Milne knowingly failed to disclose the business when required. However, his income and expenses showed that he could not repay the outstanding balance without severe financial hardship, so the Tribunal ordered that balance written off. The write-off did not extinguish the debt permanently or prevent future recovery if his circumstances changed.
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2,344 words · generated 01/10/2026
Graham Thomas Milne sought review of a decision that he had been overpaid Newstart Allowance while operating a furniture business trading as East Montana. The relevant period was 20 December 2001 to 27 May 2003. The amount paid during that period was $16,595.64. The Tribunal recorded that an Authorised Review Officer and the Social Security Appeals Tribunal had both left the debt decision in place before Mr Milne sought review in the Administrative Appeals Tribunal.
4 cited instruments linked from this judgment.
The central factual conflict was not whether Mr Milne had a business. He accepted that he had been engaged in running one. The questions were whether his business activity meant that he was not “unemployed” for the purposes of s 593 of the Social Security Act 1991, and what should happen to the resulting debt.
Mr Milne said that he looked for paid work while running the shop, attended interviews, and would have closed the shop if he had obtained a job. He also said the business made no money. The Tribunal accepted that he had looked for work, particularly later in the relevant period, and noted that Australian Taxation Office material was consistent with his evidence that he derived no income from the business.
Other evidence showed the extent of his business activity. Mr Milne accepted that he spent time in the shop on about 12 days out of 14. Customs documents recorded two imports of furniture and similar goods, in December 2001 and August 2002. Business account records showed sales-related activity and merchant fees. A Centrelink note referred to shop rental, opening 12 days out of 14, and two trips overseas to buy stock. The Tribunal found that Mr Milne applied himself to the business with “some vigour and intensity”.
The Tribunal concluded that Mr Milne was not qualified for Newstart Allowance during the period. It found that the $16,595.64 paid was an overpayment and a debt due to the Commonwealth under s 1223. It did not waive the debt under s 1237AAD, because it found that the debt arose at least partly from Mr Milne knowingly making a false statement or representation. It did, however, order the balance owing at the date of decision written off under s 1236 because Mr Milne had no capacity to repay it. The decision was varied on that point and otherwise affirmed.
The decision separates three questions that can easily be confused: qualification for the benefit, whether the payments became a debt, and whether that debt could be waived or written off. The answer to one did not determine the answer to the others.
For qualification, s 593 required a person to satisfy the Secretary that they were unemployed throughout the relevant period, subject to exceptions not material to the outcome described in the decision. The Act did not define “unemployed”. The Tribunal relied on the principles drawn from the cases cited in its reasons, including that the term bears its ordinary meaning, that self-employment can amount to work of a remunerative nature, and that a person may be employed despite making no income or profit. It treated the intensity of involvement in the enterprise as central to the factual assessment.
Mr Milne's lack of profit was relevant but not decisive. The Tribunal reasoned that a person can be engaged in a business with a view to producing income even if the business does not, in fact, generate income. It then assessed the actual work and commitment shown by the evidence: frequent time in the shop, importing stock, and operating an active retail business over an extended period. It found that this level of involvement amounted to self-employment and precluded a finding that Mr Milne was also unemployed under s 593.
The Tribunal separately considered s 595. That provision allowed a person to be treated as unemployed in certain circumstances even if the activity would otherwise mean they were not unemployed. The Tribunal considered the nature and duration of Mr Milne's business and the time he spent on it. In light of those matters, and the policy discussion from the explanatory material quoted through Re Polke, it was not satisfied that the discretion should be exercised. The decision does not say that any business activity necessarily defeats qualification. Its conclusion was based on the scale, duration and intensity of this particular activity.
The debt followed from the qualification finding. As the Tribunal found that Mr Milne was not qualified, the $16,595.64 received was an overpayment. It accepted the calculation and applied s 1223, under which the overpayment became a debt due to the Commonwealth.
Waiver and write-off were then considered separately. For waiver under s 1237AAD, the Tribunal examined the precondition concerning whether the debt resulted wholly or partly from a knowing false statement, false representation, or specified non-compliance. It relied on fortnightly forms where Mr Milne answered “no” to whether he had done work, including self-employment, and on declarations that he was unemployed. It also accepted his evidence that he knew he was required to tell Centrelink if he started a business. On those findings, the Tribunal concluded that the statutory preconditions for waiver were not met. It therefore did not go on to decide whether special circumstances existed.
For write-off, the Tribunal considered s 1236 and the debtor's capacity to repay. The findings were based on Mr Milne's current income and expenses, including rent, utilities, food, debts and other costs. The respondent questioned whether some expenses were discretionary. The Tribunal tested the position by excluding discretionary spending and found that the resulting budget remained substantially negative. It also noted that even removing certain debt repayments still left a deficit of approximately $220 per fortnight. The Tribunal accepted that recovery by deductions would continue to cause severe financial hardship and that Mr Milne had no capacity to repay the debt.
This decision concerned the application of existing statutory provisions and cited authorities to Mr Milne's circumstances. The reasons do not announce a statutory amendment or purport to establish a new general test. They explain how the Tribunal assessed the undefined term “unemployed” in s 593, the s 595 discretion, and the separate statutory routes for waiver and write-off.
Before the Tribunal's review, the administrative decisions had maintained both the debt and its recovery. After review, the debt itself remained established: the Tribunal affirmed the finding that Mr Milne was not qualified, that $16,595.64 had been overpaid, and that this amount was a debt. The practical change was that the balance owing on 17 December 2010 was to be written off because of Mr Milne's lack of capacity to repay.
The distinction between waiver and write-off is important to the result. The Tribunal rejected waiver under s 1237AAD because of its finding about the knowingly false representation. It nevertheless found the separate conditions for write-off under s 1236 were satisfied. The write-off was not equivalent to extinguishing the debt: the Tribunal expressly noted that s 1236 did not prevent future recovery if the debt later became recoverable, in whole or in part.
The decision therefore does not treat financial hardship as automatically erasing a debt or curing the original qualification issue. It treats hardship as relevant to capacity to repay and the statutory write-off power. Nor does it establish that a business with no profits is always incompatible with unemployment. The Tribunal's reasons stress a fact-and-degree assessment and apply it to Mr Milne's substantial and sustained participation in the business.
The Tribunal described the relevant factual test as “the intensity with which a person applies him or herself ... to a particular enterprise”. In plain English, the inquiry was not simply whether money was earned. It also concerned how much work and commitment the person put into the business.
The Tribunal accepted that Mr Milne looked for work but found that “he applied himself to the business with some vigour and intensity”. It relied on his own evidence about time spent in the shop, alongside the importing and trading evidence. In plain English, searching for employment at the same time did not outweigh the amount and nature of the business activity on these facts.
The decision states that Mr Milne's involvement “precludes a conclusion that he was also ‘unemployed’ within the meaning of s 593”. That was the finding that resolved the qualification issue. The Tribunal also found that s 595 should not be used to disregard the activity, having regard to the business's nature, time commitment and duration.
On waiver, the Tribunal found that Mr Milne knew he was required to report the business and chose not to do so. It consequently held that the preconditions for s 1237AAD were not met. In plain English, the Tribunal did not reach the separate question of special circumstances because it had already found that the statutory gateway to waiver was unavailable.
On write-off, the Tribunal found that “ongoing recovery of the debt by deductions” would continue to cause severe financial hardship and that Mr Milne had no capacity to repay. It relied on the overall financial position, not merely on the existence of individual discretionary expenses. Its final clarification was that write-off “is not equivalent to waiver” and does not prevent future recovery if the debt becomes recoverable.
The supplied text does not preserve the Tribunal's own numbered paragraphs in a usable way. These passages are therefore identified by their subject matter and section of the reasons, rather than by an invented paragraph number.
The decision may be relevant to a benefit-debt review where a person received Newstart Allowance while actively operating a business, particularly where the business produced little or no income. The Tribunal's reasoning indicates that no profit is not, by itself, conclusive. Evidence about actual activity, time spent, trading, stock purchases, business premises, and the duration of the activity may be material to the fact-and-degree assessment.
It may also be relevant where a person says they were seeking paid employment while running a business. The Tribunal accepted that Mr Milne looked for work but still found that the business commitment meant he was not unemployed. The relevant question in this decision was not only whether employment was sought, but also the extent to which he was engaged in the enterprise.
The s 595 discussion may matter where a person seeks to have work or another activity disregarded for the unemployment requirement. The Tribunal considered the nature, duration and time commitment involved, as well as the policy discussion quoted from the explanatory material. The case should not be read as deciding that the discretion could never apply to a person involved in self-employment. It rejected its exercise in the circumstances before it.
The debt provisions are relevant to a different factual question. A person may dispute the original debt and also raise separate issues about waiver or write-off. Here, the Tribunal found that Mr Milne's reporting conduct prevented waiver under the provision it considered, while his financial position supported write-off under another provision. The decision illustrates that the evidence relevant to benefit qualification and reporting may differ from the evidence relevant to current capacity to repay.
The supplied judgment does not identify any later court or tribunal decisions that considered or applied Milne. It therefore cannot establish how later decision-makers have treated it, whether they have followed it, or whether they have limited its reasoning.
The authorities discussed in the decision are earlier authorities, not later treatment of Milne. The Tribunal relied on Secretary, Department of Employment and Workplace Relations v Joss for the approach to “unemployed”, referred to Re Skarzynski for a summary of principles drawn from Joss, considered Re Polke in relation to s 595, and cited Re Lumsden and Re Stubbs in its discussion of severe financial hardship. Those references explain the sources the Tribunal used; they do not show later treatment of Milne.
The decision is an AAT decision by Senior Member K Bean. Its reasoning is tied to the statutory text and the evidence before the Tribunal. Any assessment of how it has been treated in subsequent cases would require later sources not included in the supplied judgment.
The decision does not set out a numerical threshold for how many hours, days, or business activities make someone self-employed rather than unemployed. It describes the inquiry as one of fact and degree and focuses on intensity. As a result, other cases may turn on differences in time commitment, trading activity, the nature of the business, or the person's ability to undertake paid work.
The Tribunal accepted that Mr Milne sought work, but it did not set out a general rule about how job-search activity should be weighed against self-employment. Nor did it decide whether a less active or intermittent business, or a business involving investment of capital without substantial personal work, would produce the same result. Those are examples mentioned in the Guide to Social Security Law reproduced in the judgment, not conclusions reached on different facts in this case.
The reasons also do not develop a comprehensive test for “severe financial hardship”. They refer to earlier Tribunal decisions and make a detailed assessment of Mr Milne's budget, including the effect of excluding discretionary expenses. The assessment was fact-specific. The judgment does not establish that every deficit, or every particular level of expenditure, would meet the statutory condition.
Finally, the decision found that write-off was appropriate at the date of decision but expressly left open the possibility of future recovery if the debt became recoverable. It does not determine what later financial change would be sufficient to support recovery, or how that question would be assessed in a later decision. Those matters would depend on the statutory framework and evidence applicable at that time.
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(a) whether Mr Milne was qualified for NSA in the period 20 December 2001 to 27 May 2003;
(b) if not, whether Mr Milne was overpaid NSA in that period;
(c) if Mr Milne was overpaid NSA, whether the amount overpaid is a debt due to the Commonwealth; and
(d) if there is a debt to the Commonwealth, whether there any grounds upon which the debt should be waived or written off, in whole or in part.
"593 Qualification for newstart allowance
(1) Subject to sections 596, 596A, 597 and 598, a person is qualified for a newstart allowance in respect of a period if:
(a) the person satisfies the Secretary that:
(i) throughout the period the person is unemployed; or
(ii) the person is a CDEP Scheme participant in respect of the period; and
..."
"3.2.2.40 Self-employment
Impact on qualification for NSA
A customer who is substantially involved in running a business would not normally be regarded as unemployed (1.1.U.30). It is irrelevant whether the business is being run at a profit or loss, or whether any income is currently being received.
A customer engaged in business can sometimes be regarded as unemployed if:
In these cases, the customer needs to meet normal activity test (1.1.A.40) requirements and they must be willing and able to undertake any suitable work (1.1.S.410). Although spending a certain amount of time on odd jobs associated with their business would not preclude qualification for NSA.
Example: The time without work cannot be devoted to the overhaul of machinery or other activities related to self-employment."
"36 ... His Honour reviewed a number of earlier decisions of the Federal Court and of this tribunal. The following principles that have relevance to the issues arising in the present proceedings are stated in effect in, or may be deduced from, Graham J's judgment or the authorities to which he referred.
(a) The word "unemployed" bears its colloquial or popular meaning of not being engaged in work of a remunerative nature.
(b) This meaning must, however, be modified to some extent in that the income test provisions of the SS Act recognise that some income may be earned by a person in receipt of newstart allowance resulting in the diminution of the allowance, but not rendering the person ineligible for it.
(c) Work of a remunerative nature encompasses not only the normal employer-employee relationship but also a person who is self-employed.
(d) A person may be employed even though his activities do not produce an income or profit.
(e) The question of whether a person is unemployed is a question of fact and degree, and regard should be had to the intensity with which the person applies himself or herself to particular work or a particular enterprise."
"595 Persons may be treated as unemployed
(1) The Secretary may treat a person as being unemployed throughout a period if:
(a) during the period, the person undertakes:
(i) paid work that, in the Secretary's opinion, is suitable for the person to undertake; or
(ii) any other activity;
as a result of which he or she would, but for this subsection, not be taken to be unemployed; and
(b) the Secretary is of the opinion that, taking into account:
(i) the nature of the work or other activity; and
(ii) the duration of the work or other activity; and
(iii) any remuneration received for the work or other activity; and
(iv) any other matters relating to the work or other activity, or to the person's circumstances, that the Secretary considers relevant;
the activity should be disregarded."
"15. ... The policy intent of the section was explained in this way in the Explanatory Memorandum to the Employment and Workplace Relations Legislation Amendment (Welfare to Work and Other Measures) Act 2005 (Cth):
'Section 595 is concerned with the Secretary's power to treat people as unemployed in certain circumstances. As a result of the Welfare to Work measures, some people who might previously have sought to claim either Parenting Payment or Disability Support Pension will now need to establish entitlement to other payments such as newstart allowance. One qualification criterion for newstart allowance is that the person must be unemployed. However, it is recognised that some people in the affected group will already be working to capacity or undertaking other appropriate activities, with the effect that they might not be correctly described as 'unemployed'. Accordingly, new subsection 595(1) creates a power for the Secretary to treat a person as unemployed in the circumstances specified in proposed new subsection 595(1).'
16. The criteria in sub-paragraphs (i) to (iv) seem to me to run counter to the notion that full time employment of the nature engaged in by Mr Polke is the type of employment that ought be disregarded. Rather, they suggest that sporadic or intermittent work, or work on a week to week basis, might properly be disregarded. ..."
"... Mr Milne did not bring in the copies of the leases for shops as requested, again discussed a shop rental of $375 per week and open 12 days out of 14. Shows major time and financial commitment to the business, plus he had gone offshore twice (December and July) to purchase more stock for the shop. ..."[5]
"I wish to advise Centrelink that I have been selling Javanese furniture trading as East Montana. I previously advised a Centrelink officer about these plans and I attended SEDS training. I have now been advised that this self-employment disqualifies me from receiving Newstart payments. I understand my payments will be cancelled and I may have an overpayment which must be repaid."[6]
"1237AAD Waiver in special circumstances
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false statement or a false representation; or
(ii) failing or omitting to comply with a provision of this Act, the Administration Act or the 1947 Act; and
(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c) it is more appropriate to waive than to write off the debt or part of the debt."
operating the business East Montana between December 2001 and 27 May 2003.
"1236 Secretary may write off debt
(1) Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.
(1A) The Secretary may decide to write off a debt under subsection (1) if, and only if:
(a) the debt is irrecoverable at law; or
(b) the debtor has no capacity to repay the debt; or
(c) the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d) it is not cost effective for the Commonwealth to take action to recover the debt.
(1B) For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:
(a) the debt cannot be recovered by means of deductions, or legal proceedings, or garnishee notice, because the relevant 6 year period mentioned in section 1231, 1232 or 1233 has elapsed; or
(aa) the debt cannot be recovered by means of deductions or setting off because the relevant 6 year period mentioned in section 86 of the A New Tax System (Family Assistance) (Administration) Act 1999 has elapsed; or
(b) there is no proof of the debt capable of sustaining legal proceedings for its recovery; or
(c) the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or
(d) the debtor has died leaving no estate or insufficient funds in the debtor's estate to repay the debt.
(1C) For the purposes of paragraph (1A)(b), if a debt is recoverable by means of:
(a) deductions from the debtor's social security payment; or
"Severe financial hardship, while not implying destitution, goes beyond straitened financial circumstances and imports a need for the particular case of a person to include financial suffering of a severe or extreme nature."
(a) varies the decision under review so as to provide that the balance of the debt amount which is owing as at the date of this decision is to be written off pursuant to s 1236 of the Social Security Act 1991 on the grounds that Mr Milne has no capacity to repay the debt; and
I certify that the 43 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member K Bean
Signed: ...............J Coulthard......................................
Secretary, Department of Employment and Workplace Relations v Joss [2006] FCA 884; (2006) 152 FCR 541
Re Secretary, Department of Education, Employment and Workplace Relations and Skarzynski [2008] AATA 1104
Re Polke and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 776
Re Stubbs and Secretary, Department of Family and Community Services [2003] AATA 729
(2006) 152 FCR 541
The decision under review was varied so that the balance of the debt owing as at 17 December 2010 was to be written off under s 1236 of the Social Security Act 1991 on the ground that Mr Milne had no capacity to repay. The decision was otherwise affirmed.
(b) deductions under section 84 of the A New Tax System (Family Assistance) (Administration) Act 1999; or
(c) setting off under section 84A of that Act;
the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe financial hardship.
(2) A decision made under subsection (1) takes effect:
(a) if no day is specified in the decision - on the day on which the decision is made; or
(b) if a day is specified in the decision - on the day so specified (whether that day is before, after or on the day on which the decision is made).
(3) Nothing in this section prevents anything being done at any time to recover a debt that has been written off under this section."