SOCIAL SECURITY - child care subsidy (CCS) debt - adjusted taxable income exceeded estimate of taxable income - recoverable debt - redundancy payment - partial administrative error - special circumstances - 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 subsection 201(1A) of the Social Security (Administration) Act 1999.

1. This is an application by Mrs Schreider for the review of a decision made by Services Australia (Centrelink) to raise and recover a child care subsidy (CCS) debt for the 2022‑23 financial year.
2. On 1 May 2024, Centrelink wrote to Mrs Schreider advising of a debt of $23,241.22. That was said to be because her adjusted taxable income for 2022-23 exceeded the estimate of taxable income on which the rate of CCS had been based.
3. Mrs Schreider promptly sought internal review by Centrelink. On 21 October 2024, Centrelink's authorised review officer affirmed the decision raising the debt, finding that the debt was correctly raised and that circumstances justifying waiver of the debt did not exist.
4. On 28 November 2024, Mrs Schreider sought review by the Tribunal. The matter proceeded to a hearing on 21 March 2025. Mrs Schreider attended with her partner, Mr Schreider. Both gave evidence. I had before me the hearing papers numbered 1 to 271, and a statement of financial circumstances completed by Mrs Schreider on 18 March 2025.

1. The issues in the application are:
   • whether Mrs Schreider has a debt in the amount raised by Centrelink and, if so
   • whether that debt is recoverable, or whether there can be any write off (deferral) or waiver (cancellation).

Does Mrs Schreider have a debt in the amount raised by Centrelink?

1. Mrs Schreider had 2 children enrolled in child care in 2022-23, for which CCS payments were made. The children turned [ages] years old, respectively, in that financial year.
2. Section 85BA of the A New Tax System (Family Assistance) Act 1999 (the Act) provides the eligibility criteria for CCS. CCS rates are worked out under the rate calculator in Schedule 2 to the Act.
3. The rate of CCS is sensitive to adjusted taxable income. Payments may be made through the course of the year based on an estimate of income, and then reconciled once tax returns have been filed and the actual entitlement established, which may reveal an underpayment or overpayment.
4. In 2022-23, a person with combined family income between $177,466 and $256,756 could be subsidised 50% of the fee charged for child care, or up to 50% of the hourly rate cap. That percentage would progressively reduce to 20% for income between $256,756 and $346,756, and CCS would not be payable for income above $356,756 (see A guide to Australian Government payments, as at 1 July 2022). Having multiple children who are CCS‑eligible may increase the rate of subsidy but would not affect the income thresholds.
5. Under section 71C of the A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act), an amount paid to a person that is greater than their entitlement is a debt due to the Commonwealth.
6. In the present case, CCS was paid through the year based on an estimate of income of $256,562. Actual adjusted taxable income, though, was $368,162, disentitling Mrs Schreider to CCS at any rate.
7. Having regard to that difference between the estimated and actual income and its effect on Mrs Schreider's entitlement to CCS, I am satisfied that Mrs Schreider has a debt in the amount of $23,241.22, representing all CCS payments made in 2022-23.

1. Despite my conclusion that the debt is properly raised, it is necessary to consider whether there can be any write off (deferral) or waiver (cancellation) of the debt.

1. There are limited circumstances, which are set out in section 95 of the Administration Act, in which it may be possible to write off (that is, defer) a debt. None of those circumstances arise in Mrs Schreider's case.

1. Family assistance law also recognises that in some circumstances, recovery of a debt must be waived, or can as a matter of discretion be waived. Two provisions warrant consideration in the circumstances of Mrs Schreider's case.
2. First, section 97 of the Administration Act requires waiver of the right to recover the proportion of a debt that is solely attributable to an administrative error of the Commonwealth, if certain conditions are met. Those are, materially, that the recipient received the payments that gave rise to the part of the debt that resulted from the error in good faith and that the debt was raised after the next income year following the year in which the recipient was eligible for the relevant payments.[1]
3. On 23 May 2022 Centrelink wrote to Mrs Schreider requiring her to either make an income estimate for 2022-23, or accept a default estimate (based on the previous year's income and a nominal adjustment) of $256,562. The default estimate was apparently accepted.
4. On 16 December 2022, Mrs Schreider increased the income estimate to $378,799. Mr and Mrs Schreider were unsure, with the passage of time, how they had calculated that figure, but Mr Schreider thought it may have been that they identified that the previous estimate failed to account for the value of shares given to him as part of his remuneration package.
5. That estimate should have had the effect of discontinuing CCS payments from that point. Unfortunately, for reasons that are not clear to me (and not clear to Mr and Mrs Schreider), CCS payments continued - seemingly at the same rate.
6. Mr and Mrs Schreider said it did not occur to them, having supplied correct information (at least to the best of their knowledge at that time), that there was some need to monitor child care invoices and the like, to determine if there was any error.
7. The debt that results from payments made from 16 December 2022 to the end of the financial year is attributable to administrative error of the Commonwealth, by reason of Centrelink not acting on the supplied estimate of income.
8. The difficulty for Mrs Schreider is that the debt was raised within the financial year after the year to which the payments giving rise to the debt relate - that is, it was raised before 30 June 2024.
9. Accordingly, section 97 does not assist Mrs Schreider.
10. Second, section 101 of the Administration Act provides for the discretionary waiver of a debt if, amongst other things, the debt did not result in any part from a person knowingly making a false statement or a false representation, and there are special circumstances (other than financial hardship alone) that make it desirable to waive the debt.
11. There could be no suggestion that the debt resulted from any sort of false representation.
12. It is open, then, to consider whether there are special circumstances that make it desirable to waive the debt.
13. 'Special circumstances' is not a term defined in the legislation. Previous decisions of courts and tribunals 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 (for example, Dranichnikov v Centrelink [2003] FCAFC 133). That may be where it would be unfair, unintended or unjust for the entirety of a debt to stand (Groth v Secretary, Department of Social Security [1995] FCA 1708 at [12] in relation to the usage of the term in another legislative context).
14. The presumptive position is that a debt that is properly raised must be paid. A person should not keep the benefit of funds to which there was no entitlement.
15. In Secretary, Department of Social Security v Hales [1998] FCA 219, French J (then on the Federal Court) explained the statutory scheme as follows:

The taxpayer is entitled to expect that in the ordinary course money paid to people which they are not entitled to receive will be recovered, albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the persons concerned. However, the confining of a recovery regime by rigid rules, particularly in this area of the law, is likely to be productive of unfair or harsh outcomes in some of the great variety of fact situations that can arise. There are provisions in the Act which recognise that reality. They relate to the writing off and the waiver of debts otherwise due to the Commonwealth.

1. With the benefit of Mrs Schreider's correspondence to the Tribunal and oral evidence given at the hearing, the material circumstances are these:
   • In February 2023, Mr Schreider, was notified that he was to be made redundant three months later. On 25 May 2023, he received a redundancy payment of $111,848. That payment is almost exactly the difference between the estimate of income used for CCS payments and actual adjusted taxable income.
   • In 2022-23 Mrs Schreider was studying for [a qualification], limiting her earning capacity. With Mr Schreider's redundancy, they were under a degree of financial strain and she increased her work, further increasing the 2022-23 income.
   • The redundancy caused significant distress for the family, as well as making it difficult to anticipate their financial position at that time.
   • As described above, part of the debt is attributable to Centrelink's failure to act on the income estimate supplied on 18 December 2022. Had CCS stopped in December 2022, Mr and Mrs Schreider thought they would have reduced their usage of child care - possibly by a day or two per week for their younger child (the older child started school and did not use child care after about 1 February 2023).
   • In Mrs Schreider's submission, the purpose of CCS is to increase workforce participation, particularly for women. Mrs Schreider observed that in the following year, the income threshold to receive CCS was significantly increased to $530,000, reflecting that the 2022-23 threshold may have been inadequate to meet that policy objective. Mrs Schreider felt that debt unfairly penalised her for working.
2. Financial hardship does not arise for consideration. Mr Schreider returned to work in August 2023 (and subsequently had a few more months off work between jobs in 2023‑24) and they have savings that could meet the debt, though Mr Schreider said it would be necessary to pay the debt under the auspices of a repayment arrangement.
3. As to the unexpected receipt of a lump sum late in the financial year, I have considered decisions of the Tribunal's predecessor, the Administrative Appeals Tribunal (the AAT), where its members had to consider the situation that the receipt of a lump sum, as in this case, unexpectedly inflated a person's income in a particular financial year, directly leading to a debt.
4. In Verrall and Secretary, Department of Family and Community Services [2000] AATA 133 the applicant's partner - in common with Mrs Schreider's case - received an eligible termination payment very late in a financial year, causing combined income to be higher than the estimate on which family payment (which predated family tax benefit (FTB)) had been made. The AAT, in finding that there were no special circumstances, said that:

Mrs Verrall has endured the same consequence as any other social security recipient who receive an unintended lump sum payment eg. superannuation, retrenchment pay, long service leave ... during the period social security entitlements are received, such that actual income for the financial year differs from their estimate. While this conclusion [that there are no special circumstances] might seem harsh it would be fairer to say the outcome is unfortunate. ...

The Tribunal makes the observation that Mrs Verrall's case, unfortunately, is not the first case before this Tribunal, where lump sum payments have created an equivalent problem for overpayments.

1. In Ibrahim and Secretary, Department of Family and Community Services [2000] AATA 928 the applicant also received a lump sum payment by way of an eligible termination payment. Family payment was paid on the basis of an estimate that excluded that amount, because of a misapprehension that the lump sum did not constitute taxable income. That (together with straitened financial circumstances) did not constitute special circumstances.
2. In Coyne and Secretary to the Department of Family and Community Services [2002] AATA 1156 the applicant received a lump sum and alerted Centrelink but the advice was not acted upon. The applicant assumed the matter resolved and failed to put money away in anticipation of the debt. The AAT found special circumstances, but apparently in reliance on Centrelink's error and the applicant's broader financial situation rather than the receipt of the lump sum itself.
3. In Secretary, Department of Family and Community Services and Howard [2003] AATA 256 the respondent received a lump sum representing an arrears payment for child support. The AAT found special circumstances but not because the respondent had received the lump sum.
4. In Gilbert and Secretary, Department of Family and Community Services [2004] AATA 418 the applicant, as in Howard, received a lump sum in a particular year by way of an arrears payment for child support leading to an FTB debt. The AAT found that the only special circumstance arising was the applicant's financial hardship and not receipt of the lump sum.
5. Mrs Schreider's circumstances have the same feature. Combined family income for 2022‑23 includes a lump sum that was unexpected, caused a departure from the estimate of income and, in other circumstances, might have been income received in later financial years. The AAT consistently found, and I agree, that that alone is not special but rather, to borrow from the reasons in Verrall, unfortunate.
6. Of course, it is necessary to look not only at the effect of Mr Schreider's redundancy on the assessment of income, but the other consequences identified by Mr and Mrs Schreider. In that respect, I accept that the redundancy caused significant distress at a time when their oldest child was starting school, short-term financial uncertainty if not strain, and an increase in Mrs Schreider's work at a time she was also studying for her [qualification].
7. I cannot conclude, though, that those matters rise to the level of special circumstances.
8. The next matter is Centrelink's error. By itself, an administrative error is unremarkable and unlikely to constitute special circumstances. There is some force though in the idea that the error did not merely cause payments to be made to Mrs Schreider (by way of reducing her child care cost) but also caused a reliance on child care that might have been tempered if CCS had ceased in December 2022. Again, though, I cannot conclude that this rises to the level of special circumstances. If there was a decreased reliance on child care because CCS payments ceased in December 2022, it would have occurred in the later part of the financial year and it is difficult to identify any substantial disadvantage suffered by Mr and Mrs Schreider in their reliance on CCS.
9. Finally, while I accept what Mrs Schreider says about the purpose of CCS, the submission that she has been unfairly penalised for working amounts to a submission that the income threshold for CCS should have been higher in 2022-23. That is a matter of policy which is not the Tribunal's remit. The question for me is whether there are special circumstances that make it desirable to waive the debt. The answer, in relation to that issue, is that special circumstances simply cannot lie in the fact that CCS is not payable after a particular income point.
10. Having regard to the circumstances separately and cumulatively, there is nothing unique or compelling about the situation that amounts to special circumstances within the meaning of the family assistance law.
11. Accordingly, section 101 does not assist Mrs Schreider.
12. I acknowledge this is a difficult result for Mrs Schreider. Centrelink's error in not acting on the income estimate supplied in December 2022 is a major driver of the debt and not one of Mrs Schreider's making. There is, though, no legislative pathway to a more favourable result other than those I have considered above.

[1] Alternatively, the recipient must be in severe financial hardship. That does not arise in Mrs Schreider's case.