188.8.131.52 Duty of care
What does duty of care mean?
Australian Government employees have a duty of care to the public when performing their duties. This extends to any advice given and/or any actions performed.
Breaches of duty of care
A breach of duty of care can result from negligent advice and/or a negligent action or failure to advise or act.
Compensation can only be paid if the Department or Centrelink has breached its duty to exercise reasonable care.
The payment is made under Public Governance, Performance and Accountability Act 2013 (PGPA Act) section 23.
Act reference: Public Governance, Performance and Accountability Act 2013 section 21 Non‑corporate Commonwealth entities, section 23 Power in relation to arrangements and commitments
Decisions under PPL law
The majority of decisions made under PPL law are decisions that are subject to a right of review and these are determined by this legislative mechanism, rather than being settled under PGPA Act section 23. Therefore, if negligent advice is given and/or a negligent action occurs, it will rarely result in a common law duty of care and settlement under PGPA Act section 23.
Policy reference: PPL Guide Part 8 Review of decisions
Contributory negligence may arise if Centrelink gave negligent advice and/or acted negligently, and either the person affected by the negligence or a third party also contributed to the negligence. In such a case, a reduced payment could be made to compensate for that part of the loss that resulted from Centrelink's negligence.
Loss because of taxation liability on arrears payments
The Income Tax Assessment Act 1936 allows for a 'lump sum payment in arrears' tax offset (formerly called a rebate) on arrears of income payable to a recipient for previous financial years. The tax offset applies retrospectively to payments made on or after 1 July 1986 and includes assessable pensions, benefits and allowances under the SSAct and the Veterans' Entitlement Acts 1986 and PLP and DAPP under the PPLAct.
The tax offset is designed to alleviate the problem of more tax being payable in the year in which the lump sum is received than would have been payable if the lump sum had been taxed in each of the years in which it had accrued.
If a person seeks compensation for a loss in these circumstances, they should first be referred to the ATO for clarification of their entitlement to this tax offset. It may be that after application of the tax offset, no economic loss may exist.
If the tax offset does not apply, or does not relieve the person of the additional taxation liability in full, the claim should be considered under PGPA Act section 23. If it can be accepted that the taxation liability in question arose from DHS negligence, then the claim may be settled under that direction. If no negligence occurred, the matter may still be considered under the Compensation for Detriment Caused by Defective Administration Scheme.
Act reference: Income Tax Assessment Act 1936 Part III Division 17 Subdivision AB Lump sum payments in arrears
Public Governance, Performance and Accountability Act 2013 section 21 Non‑corporate Commonwealth entities, section 23 Power in relation to arrangements and commitments