In the opinion of the Tribunal, the gift characterisation is an ex post facto (or retrospective) attempt to outflank the accounting treatment of the loans made beforehand. Having regard to the totality of the evidence before the Tribunal (and particularly the accounting records of the company in question), the Tribunal is not satisfied on the balance of probabilities that the Applicants intended to make a gift of cash injections to their company. Even the statement of the Applicants that they did not expect to recover their money which they injected does not necessarily mean that they were making a gift of that money. This statement goes more to the expectation of recovery than to the basal nature of the transaction.

19. In Bysouth and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 59, Senior Member Cunningham of the AAT said, at [34], that:

...[t]he authorities make it clear the issue of recoverability is not determinative of the characterisation of funds as a loan or gift... a reference in financial records to a sum as a loan represents a strong indication it was a loan and that such references suggest expectations of eventual repayment.

20. Based on the S Trust Financial Statements for the period from 1 July 2023 to 31 August 2023, the Applicant contends that the transferred monies are loans for the purpose of the assets test.
21. In respect of an allegation by the Respondents that the S Trust financial records were altered to include the sums as loans because they were told that was required by a CAO, the Applicant submitted that no record of that was made by the CAO who dealt with the matter.
22. The Applicant submits that topic 4.6.5.65 of the Guide provides for circumstances when a loan no longer exists - loans made to a company, trust, or individual. It does not appear that any of the circumstances which are provided for at topic 4.6.5.65 of the Guide apply in the present circumstances. There is no evidence that the Respondents have forgiven the loan or sought to wind up the trust. In fact, it was conceded by the Respondents that they have been advised by their accountant that if they forgave the loans this would trigger a capital gains event.
23. The Applicant accepts that, should I find that the transferred monies were gifts, then in accordance with s 1208K, and topic 4.12.10.20 of the Guide, the transferred monies would not be considered as deprived assets of the Respondents.
24. Topic 4.12.10.20 of the Guide states as follows:

This topic has effect to controlled private trusts and controlled private companies from 1 January 2002. > > Disposal of assets to a private trust or private company by an attributable stakeholder If a person gives an asset (whether fixed or financial) to a private trust or private company on or after 1 January 2002, and the person is an attributable stakeholder or as a result of the transfer, is subsequently attributed with a percentage of the assets of the structure, the asset will NOT be a deprived asset of the person. (Subject to the percentage of the assets of the structure attributed to the person.) > > Example: Bill gifts a holiday home worth $150,000 and financial investments of $30,000 to a private family trust on 5 June 2002. Bill is the appointor and trustee of the trust and is attributed with 100% of the assets and income of the trust. The deprivation rules do not apply to Bill as he is the SOLE attributable stakeholder and he cannot 'gift to himself'. Note: This would also be the case for members of a couple (1.1.M.120) who were the ONLY attributable stakeholders.

1. The Respondents do not cavil with the Applicant's submissions as to the law to be applied.
2. They say that the transferred monies did not represent loans. They never expected to receive any return by way of interest payments and no agreement was ever entered into between them and the S Trust.
3. The transferred monies were gifted to the S Trust with no expectation of it being repaid until such time as the property was sold and they could receive distributions as beneficiaries of the trust.

1. There are sound reasons why prior representations in financial statements of a company or trust should be taken as strong prima facie evidence that what they contain is correct. They are, of course, official documents. They are signed by trustees, or the directors of companies to represent their accuracy. They are also frequently prepared with accounting advice and relied upon to obtain taxation and other benefits, that should not later be easily resiled from.
2. However, that is not the history of this matter. Here, the Respondents, wrongly, did not include the PPR property as an asset of the S Trust in the years leading up to their interactions with Centrelink. Only after a long-delayed process did they engage in a hasty revision of the financial position of the S Trust that showed the PPR property as its asset and included the loans for the first time. I am satisfied that the retrospective consideration of the matter by the Respondents came at that point, and not when they later realised their mistake.
3. I am persuaded to that view by several factors, including that I found both of the Respondents to be credible in their evidence before me.
4. The starting point is that the Respondents did not represent to anyone that they had loaned the transferred monies to the S Trust until immediately after PRLZ's conversation with the CAO on 4 December 2023. It was also apparent from their non-inclusion of the value of the PPR property, or of the loan from VJDP's sister in the earlier financial statements, that they considered the PPR property to be apart from the trust, even though they were wrong in that view. If they thought of the PPR property as their own asset, then how could they believe that they had loaned themselves the transferred monies? In contrast, the W Trust financials did show loans to it by the Respondents prior to July 2023, as did the S Trust, albeit not in respect of the transferred monies.
5. I have then considered the difficult personal circumstances the Respondents were in, and the long delay they experienced in the processing of their claims for Centrelink benefits. I am satisfied from that situation, and from listening to not only the content but also the tone of PRLZ's conversations with Centrelink officers in the relevant period, that there was a level of desperation he was experiencing in trying to ensure the Respondents' claims for benefits were advanced. He also gave evidence before me that he had made representations to his local member about his concerns.
6. Whilst I have found that the CAO did not tell PRLZ to amend the financial statements of the S Trust to show the transferred monies as loans on 4 December 2023, the conversation was wide ranging, lengthy, and in several respects clear communication was impeded by PRLZ's obvious impatience.
7. He was also told during the conversation that he would receive a letter setting out what would need to occur as a result of the conversation, which I am satisfied would contribute to him not paying absolute heed to what he was told.
8. I have examined the resultant letter. It did not detail all of the necessary steps that the Respondents needed to take, which led to PRLZ making further contact with Centrelink. I am satisfied that he was confused about what was required of him.
9. I recognise that, in a Centrelink 'MODPC' form signed on 29 July 2023, the Respondents answered 'no' to a question that included reference to whether any gifts had been made to the S Trust since 9 May 2000. However, as the Applicant properly conceded, the question was a compound question that may have led to confusion. Furthermore, in the same form, the Respondents did not include the transferred monies as loans to the trust either. The completed form does not assist me, given the inherent inconsistencies in the way it was completed.
10. Lastly, I do not accept that the financial statements of the S Trust were accurate, either before or after they were amended. In respect of the financial statements before they were amended, the PPR property and the loan from VJDP's sister were both omitted in the financial year 2021/22 balance sheet.
11. It must be recalled that the unchallenged evidence is that the purchase price of the PPR property was approximately $600,000, funded by a documented loan from VJDP's sister of $480,000 with the balance, which must have been about $120,000[15] coming from another trust controlled by the Respondents. In 2022, VJDP inherited $500,000. $280,000 was transferred into the S Trust and the trust took out a $200,000 loan from First Mac secured against the PPR property. These funds were then used to pay back the loan to VJDP's sister.
12. As a result, one would expect the corrected balance sheet to show a secured loan of approximately $200,000 to First Mac and beneficiary loans (if that is what they were) of approximately $140,000 to each of the Respondents.
13. However, after the financial statements were revised, they showed the S Trust as owning only the same in specie asset (being the PPR property) but its liabilities had increased to approximately $680,000. That is a secured loan from First Mac of about $200,000, and unsecured beneficiary loans of about $240,000 from each of the Respondents.
14. Whilst it is unnecessary for me to make such a finding to resolve the application, the only logical explanation seems to be that each of the beneficiary loan amounts were miscalculated by $100,000.
15. Ultimately, I am satisfied that it was PRLZ's confusion, and hasty subsequent action, that led to the transferred monies being shown in the updated S Trust financial statements as beneficiary loans. That was wrong, as the transferred monies had been gifted to the S Trust.
16. As that was the conclusion reached by the Tribunal in the first review decision, it must generally be affirmed, but I will vary the decision to correct the errors I have identified. It is then necessary to craft orders that recognise that:
    • there were beneficiary loans in the S Trust as at 30 June 2021 that must be taken into account as assets of the Respondents; but
    • the beneficiary loan amounts shown in the 31 August 2023 balance of the S Trust must be inaccurate; and
    • I must be careful to ensure that any actual beneficiary loans subsequently made are not inadvertently caught by my orders.
17. I therefore give liberty to the parties to apply if they feel that my order, insofar as it relates to the S Trust issue, does not accurately reflect the outcome of my decision as evidenced by my reasoning.
18. My order in each review will end the stay granted on 1 May 2025.

1. The Tribunal varies the decision under review. The decision is now:

The Tribunal sets aside the decision under review and remits the matter for reconsideration in accordance with the order that:

(a) The value of the W Trust assets as of the date of claim are to be reassessed on the basis that the value of the loans owed to the Respondents ($25,590) by the W Trust should be deducted from the capital value of the assets of the W Trust ($25,445) pursuant to subsection 1208E(2) of the Social Security Act 1991 (Cth).

(b) The disposition of assets made by the Respondents to S Trust between 30 June 2021 and 31 August 2023 is to be assessed as nil pursuant to section 1208K of the Social Security Act 1991 (Cth).

(c) The date of effect of any favourable determination arises under subsection 109(1) of the Social Security (Administration) Act 1999 (Cth).

I certify that the preceding 91 (ninety-one) paragraphs are a true copy of the reasons for the decision herein of Senior Member Suthers

[2] Conversation between PRLZ and the CAO 4 December 2023 at 26m:10s.

[3] MZZZW v Minister for Immigration and Border Protection [2015] FCAFC 133 at [60].

[5] PRLZ received notice of his decision on 21 December 2023 and VJDP received notice of her decision on 2 January 2024.

[6] Many of the figures used in the ARO decision and the first review decision were rounded, and that rounding has no effect on the overall outcome.

[7] Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634; G v MIBP [2018] FCA 1229; Minister for Home Affairs v G and Another [2019] FCAFC 79.

[8] Minister for Immigration and Ethnic Affairs v Pochi [1980] FCA 85; (1980) 31 ALR 666, 671 (Smithers J).

[9] Frugtniet v Australian Securities and Investments Commission [2019] HCA 16, [51] discussing relevantly indistinguishable provisions of the Administrative Appeals Tribunal Act 1975 (Cth).

[11] Gorton and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2012] AATA 127 at [36].

[12] Woolley and Repatriation Commission [2007] AATA 2059 at [18].

[13] The Executor of the estate of the late Peter Sweeney; Secretary, Department of Social Services and (Social services second review) [2022] AATA 3152, Boyd and Secretary, Department of Social Security [1994] AATA 580, and Bell; Secretary, Department of Social Services and (Social services second review) [2023] AATA 190.

[14] See, for example, Saunders and Secretary, Department of Family and Community Services [2002]

[15] Plus statutory duties and expenses.