A Melbourne woman has won the right to appeal her welfare fraud charges to the High Court, which could affect thousands of others charged under the same law.
Kelli Keating, 36, worked casual shifts that varied from week to week when she failed to declare changes in her income to Centrelink between 2007 and 2009.
Last year, the single mother was charged with welfare fraud after she received overpayments of $6942.
The Social Security and Other Legislation Amendment (Miscellaneous Measures) Bill, which came into effect last year, makes it a criminal offence from March 2000 to fail to report any changes that could affect Centrelink entitlements within two weeks of them occurring.
Victoria Legal Aid, representing Ms Keating, challenged the law, saying it was unconstitutional because it retrospectively criminalised such behaviour, and interfered with judges' ability to determine the law at the time of the offence.
Justice Kenneth Hayne, Justice Virginia Bell and Justice John Dyson Heydon granted Ms Keating leave to appeal to the High Court, with a hearing expected next year.
Victoria Legal Aid's director of civil justice, access and equity, Kristen Hilton, said the organisation had 52 clients in the same position as Ms Keating, with about 15,000 people across the country charged under the law for mistakes dating back to 2000. If successful, their charges could be overturned, she said.
"If someone's going to commit a crime, they should know what the law is at the time at which they commit it," Ms Hilton said.
"In this case, because the legislation is backdated by 10 years, parliament is effectively saying 'pretend the law was different from what it was', and our view is that that interferes with the exercise of judicial power."
Ms Hilton said that those who had not actively sought to claim higher benefits should not face criminal charges.
"A whole lot of vulnerable people could be caught up in the criminal justice system simply because they don't understand their Centrelink obligations or they make a mistake in reporting them.
"Lots of clients we see may have a mental health issue, live with an intellectual disability, come from a non-English speaking background or their lives may simply just be quite chaotic and they don't always report in time," she said.
Wendy Abraham, QC, for the Commonwealth, could not be reached for comment on Friday morning.