Eleonore Wells, 65, racked up the debt after ticking the wrong box on a Carer Payment form nine years ago while applying for the Carer Allowance, moving her off the Widow Allowance which she was actually eligible for.

Centrelink noticed the discrepancy in January last year and issued the debt notice in September.

Ms Wells claimed she had no knowledge that she had switched to an incorrect payment as the level of pay was similar.

The AAT heard the appeal and handed down its decision last month. Ms Wells now intends to appeal the remaining $200 per fortnight debt for the Carer Allowance, which she believes she was entitled to.

In its decision, the AAT found that while Ms Wells was not eligible for a debt write-off and there was no administrative error, she did qualify under "special circumstances".

"There is no doubt from the evidence that Ms Wells was in receipt of Widow Allowance at the time she successfully applied for Carer Payment and it seems likely she would have remained eligible if she had not successfully applied for Carer Payment," the judgment reads.

"The Tribunal is satisfied that this amounts to special circumstances such that she should receive some relief from the debt which has been raised.

"Given that the debt primarily arose because of Ms Wells' failure to read the claim form carefully, the Tribunal does not believe it would be fair or reasonable to require Centrelink to recalculate Ms Wells' entitlements over such a long period."

Ms Wells intended to apply for the supplementary Carer Allowance in February 2011 as the occasional carer for her sick mother, however she also applied for the primary Carer Payment by mistake - a payment that requires constant care.

Documents tended to the AAT showed that Centrelink initially rejected the claim because the level of care provided was not sufficient for the payment.

But after contacting Ms Wells the following month, the claim was granted.

The AAT stated "it is not entirely clear to the Tribunal what changed between 28 February 2011 and 8 March 2011 or 22 June 2011 to cause Centrelink to grant the claim". Medical reports in support of the claim had been signed by a doctor.

The AAT found there was no administrative error, however.

"The Tribunal does not accept that there was any error on the part of Centrelink in accepting Ms Wells' claim in light of the evidence she provided in the form and the medical evidence provided in the separate reports," the judgment reads.

"Ms Wells also aruged that there were problems with the form. The Tribunal does not accept this argument either. The page on which question 102 appears has a large banner heading 'Carer Payment' and the first question on the page, question 101, is headed: 'Please read this before answering the question'."

Centrelink reviewed the decision to issue a $163,000 debt and found it was valid, resulting in the appeal with the AAT.

The AAT decision to reduce Ms Wells' debt payments by $500 per fortnight will be provided to the chief executive of Centrelink for reconsideration.