Welfare Rights Centre:

Take our advice

For NSW-based members seeking free legal assistance or advice on social security or Family Tax Benefit matters, the Welfare Rights Centre is an invaluable resource.

The IEU supports the community legal centre, which can advocate directly to Centrelink on your behalf if necessary or represent you at the Social Security Appeals Tribunal or Administrative Appeals Tribunal.

Avoiding debts

A common problem that casual teachers have with Centrelink is declaring their income to Centrelink so that they can avoid incurring debts.

Where a person is receiving a social security payment (eg Newstart Allowance) and is working as a casual teacher they are required to inform Centrelink of their gross earnings each fortnight, even if they have not received payment from their employer. Failure to do so may result in a debt.

Another common problem is where the person is in receipt of Parenting Payment and FTB. The income test for Family Tax Benefit (FTB) and Parenting Payment is completely different.

Where a person is to receive FTB on a fortnightly basis Centrelink requires the person to estimate their income for the relevant financial year. At the end of the financial year Centrelink ‘reconciles’ the person’s income with their estimated income amount to work out if the person was underpaid or overpaid.

However for Parenting Payment (or Newstart Allowance) Centrelink requires the person to advise of gross income received in the fortnight of their Centrelink payment, even if the salary has not yet been received. Where a person is receiving Parenting Payment or Newstart Allowance they are required to contact Centrelink each fortnight to ensure that Centrelink pays the correct amount for that fortnight. It is important for a person to understand the different reporting requirements to ensure that they avoid incurring a debt (see case study one).

Leaving work

Another common issue that the Centre is often contacted about by teachers is where the person is to leave the profession and is enquiring about any waiting periods they may be subject to before being eligible for social security. There are a range of social security rules that a person must be aware of in this situation to
ensure that they do not leave themselves in hardship.

Where a person is no longer working they may be subject to an Income Maintenance Period (IMP). An IMP is applied where the person receives any annual leave, sick leave, redundancy payment or long service leave at the time they leave their job. If they do receive such payments this money is counted as income for the length of time covered by the payments.

An IMP can extend for 12 months or more, depending on the period the leave payments represent. Often a person is not aware that they are subject to an IMP and spend their leave payments without realising the consequences, leaving themselves in hardship for the remainder of the IMP. An IMP may be reduced but only where a person has had reasonable or unavoidable expenditure (see case study two).

A person may also be subject to a Liquid Assets Waiting Period (LAWP). A LAWP applies for a maximum of 13 weeks and generally starts on the day after a person becomes unemployed. Where a person is single the LAWP applies if they have more than $5,000 in liquid assets. For each $500 in liquid assets the person has in excess of $5,000 they are subject to one week waiting period, up to the maximum of 13 weeks. Where the person is a member of a couple, or is single and has a dependent child, the LAWP applies if their liquid assets are greater than $10,000. In this case for each $1,000 in liquid assets the person has above $10,000 they are subject to one week of the waiting period, up to the maximum of 13 weeks. A LAWP may be waived where the person is in severe financial hardship.

Income and assets test

In addition to the various waiting periods nearly all social security payments have income and assets tests which may either prevent a person from receiving social security or FTB, or reduce the fortnightly rate of their payment.

If you require advice or assistance with a social security or Family tax Benefit matter please call the Centre on 9211 5300 or 1800 226 028 if calling from outside the Sydney metropolitan area.

Case study An honest mistake

Sarah is a casual school teacher and a single mother of two young children. To supplement her causal income from teaching she also receives Parenting Payment single and Family Tax Benefit.

Sarah was going through very difficult period with her ex-husband and this was impacting on her mental health. She kept Centrelink informed of her income for FTB purposes but did not understand that there is a separate income test for Parenting Payment and separate reporting requirements for this payment. Centrelink processed the information Sarah provided about her income for FTB but did not do so for Parenting Payment. This meant that Sarah incurred a Parenting Payment debt of $12,000. Centrelink referred the matter to the Commonwealth Director of Public Prosecutions (CDPP) for consideration of prosecution action.

The Welfare Rights Centre interviewed Sarah a number of times and obtained her file from Centrelink under Freedom of Information laws. The Centre identified that Sarah had told Centrelink about her income for FTB purposes and that Centrelink did not transfer that information to its Parenting Payment section. This resulted in Sarah incurring the debt. The Centre represented Sarah at the Social Security Appeals Tribunal (SSAT). The SSAT acknowledged that Sarah made an honest mistake and that Centrelink had failed to act on the information that it had been given about her income. In addition Sarah’s health and difficult relationship with her ex-partner and the stress that was causing her was taken into account by the SSAT.

The SSAT waived 50% of the debt meaning that Sarah only had to repay $6,000. Also the CDPP dropped prosecution action against Sarah.

Case study Assistance in retirement

Dave is in his early 60s and was to be medically retired from teaching. He is single and contacted the Welfare Rights Centre wanting to know what payment, if any, he may be able to receive from Centrelink when he was no longer working. Dave was to receive annual leave and long service leave payment from his employer upon retirement.

The Centre advised Dave that as he was below the age pension age his superannuation is not counted as an asset. He was advised that he should apply for Newstart Allowance (NSA) and Disability Support Pension (DSP).

As Dave received both annual leave and long service leave payments, these payments would be treated as income by Centrelink for the period that they represented. As these payments were for a 12-week period they precluded Dave from receiving NSA or DSP for the 12 weeks directly after he stopped working. This is known as the Income Maintenance Period (IMP).

The Centre advised Dave that should he incur reasonable or unavoidable costs during the IMP then the IMP may be reduced. However as he had none he was required to serve the entire IMP.