Ausilio and Secretary, Department of Social Services (Social services second review)

[2018] AATA 4463

Ausilio and Secretary, Department of Social Services (Social services second review) [2018] AATA 4463 (13 November 2018)

Division:GENERAL DIVISION

File Number:           2018/0410

Re:Olga Ausilio

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Member K. Parker

Date of decision: 13 November 2018

Date of written reasons: 30 November 2018

Place:Melbourne

The Tribunal affirms the decision under review.

[sgd]........................................................................

Member K. Parker

SOCIAL SECURITY – Applicant seeking reconciliation of family tax benefits in order to receive supplement – request for extension of time to lodge Applicant’s tax return – whether special circumstances prevented Applicant from lodging tax return before the deadline – decision affirmed

Legislation

Administrative Appeals Act 1975 (Cth)

A New Tax System (Family Assistance) (Administration) Act 1999 (Cth)

Cases
Angelakos v Secretary, Department of Employment and Workplace Relations[2007] FCA 25

REASONS FOR DECISION

Member K. Parker

30 November 2018

1. This application was made by Mrs Olga Ausilio seeking review of a decision that was made by the Social Services and Child Support Division of the Tribunal (which the Tribunal will refer to as the AAT1), on 15 January 2018.  The AAT1 affirmed a decision by an authorised review officer of the Department of Human Services on 19 September 2017 not to pay Mrs Ausilio a recalculated amount of family tax benefit (FTB) in respect of the 2014/2015 financial year.   The effect of the AAT1's decision was that Mrs Ausilio was not entitled to receive any FTB top-up or supplements that she would have otherwise received, had she lodged her tax return on time and a reconciliation of her FTB for the 2014/2015 financial year taken place. 

2. Mrs Ausilio considers this decision to be incorrect and that there were special circumstances that prevented her from lodging her tax return on time.

3. Accordingly, the issue to be decided by this Tribunal is whether in assessing this application under s 32C of the A New Tax System (Family Assistance) (Administration) Act 1999 (Administration Act), there were special circumstances to justify granting an extension of time for Mrs Ausilio to lodge her 2014/2015 financial year tax return with the Australian Taxation Office (ATO) to a date after 30 June 2016. 

4. Mrs Ausilio lodged her 2014/2015 financial year tax return on 29 June 2017, which was approximately 12 months after the statutory deadline. 

5. The Tribunal has considered the documentary materials submitted by both parties, including the additional submissions and documents provided by Mrs Ausilio on the day of the hearing.  The Tribunal has also listened carefully to further oral submissions and evidence given by both parties, and also by Mrs Ausilio's husband, who attended and was involved in the hearing process when invited by his wife to do so and also upon being asked questions by this Tribunal. 

6. Section 32C(3) of the Administration Act provides that:

   The relevant reconciliation time is the time when an assessment is made under the Income Tax Assessment Act 1936 of the first individual's taxable income for the relevant income year, so long as the first individual's income tax return for the relevant income year was lodged before the end of:

   (a)       the first income year after the relevant income year; or

   (b)such further period (if any) as the Secretary allows, if the Secretary is satisfied that there are special circumstances that prevented the first individual from lodging a tax return before the end of that first income year.

7. This meant that unless subsection (b) applied, the deadline for Mrs Ausilio to file her 2014/2015 financial year tax return was 30 June 2016. 

8. The Tribunal is bound to apply this provision in assessing Mrs Ausilio's application as this requirement arises under an enactment of Parliament, as explained at the hearing.   For the Tribunal to find that subsection (b) applied, it must be satisfied that there were special circumstances that existed that prevented Mrs Ausilio from lodging her return before 30 June 2016. 

9. The phrase "special circumstances" is not expressly defined in the legislation.  However, the Tribunal has considered a number of case authorities referred to in the Secretary’s Statement of Facts, Issues and Contentions dated 7 September 2018 considering this same phrase in the context of other provisions under social security legislation.

10. Drawing from those case authorities, the Tribunal considers that the phrase "special circumstances" should be interpreted in the context of s 32C of the Administration Act to mean something unusual or uncommon that distinguishes the case from the ordinary or the usual case. This was an interpretation of this phrase used in a different context by Justice Besanko of the Federal Court of Australia in Angelakos v Secretary, Department of Employment and Workplace Relations[2007] FCA 25.  That case involved a consideration of whether there were special circumstances that justified the waiver of a debt.

11. Returning to this case, Mrs Ausilio explained at that hearing that she had a lot going on for her during the period leading up to the due date for lodgement, being 30 June 2016, and that she was overwhelmed at that time. 

12. At the hearing Mrs Ausilio confirmed that she lives with her husband and their daughter, who is presently “in preps” at school.  At the time leading up to 30 June 2016 Mrs Ausilio's daughter was not at school or at kindergarten and was still at home with Mrs Ausilio.  Mrs Ausilio said that her elderly parents at that time did not live with her, and still do not live with her and her family. 

13. Mrs Ausilio explained that her mother fell and broke her tibia and had complications with her right knee replacement, which had been performed previously.  Mrs Ausilio's mother was hospitalised from 15 May 2016 on account of that fall, and her hospitalisation continued under 6 June 2016.  Her mother was subsequently transferred to a rehabilitation unit for the following six weeks to recover.  The Tribunal acknowledges that an event such as this to a person's elderly parent can cause emotional stress on a person, as well as the additional time demands of making visits to the hospital and later, to the rehabilitation centre.  Mrs Ausilio gave evidence, and the Tribunal accepts that she was visiting her mother daily during this period. 

14. Mrs Ausilio also gave evidence, which the tribunal accepts, that her daughter frequently required medical attention due to ongoing respiratory issues that she has experienced since birth.  Sometimes those respiratory issues required Mrs Ausilio's daughter to be taken to hospital. 

15. Specifically from 1 July 2015 to 30 June 2016, being the window of opportunity that Mrs Ausilio had to prepare her 2014/2015 financial year tax return within time, the Tribunal notes the evidence provided to it by Mrs Ausilio on 19 April 2018 in the form of clinical notes, indicating that her daughter required medical attention on the following dates: 

    (a)on 13 July 2015 her daughter attended, with Mrs Ausilio, at the Montgomery Street Clinic with coughing and a fever;

    (b)on 14 July 2015 her daughter attended the clinic with a barking cough;

    (c)on 28 August 2015 she attended the clinic with a cough;

    (d)in September 2015 her daughter underwent an adenoidectomy and a tonsillectomy at the hospital;

    (e)on 2 October 2015 her daughter attended the clinic again with sore tonsils and with constipation;

    (f)on 14 March 2016 she attended the clinic with swelling, with was considered to be an insect bite most likely, being the notes of the doctor;

    (g)on 28 April 2016 her daughter attended the clinic with respiratory problems, a fever, and a cough;

    (h)on 30 April 2016 her daughter attended with a cold, a fever, and diagnosed as having a viral infection;

    (i)on 5 May 2016 her daughter attended the clinic with respiratory problems, being coughing and fever; and

    (j)on 6 June 2016 her daughter attended the clinic with a cough and had trouble sleeping, which was diagnosed as likely early asthma.

16. Over the course of the 2015/2016 financial year, there were at least 10 visits by Mrs Ausilio to the medical clinic, and other visits Mrs Ausilio was required to make to the hospital for her daughter's respiratory condition to be managed. 

17. One of those visits which took place on 29 August 2015 is evidenced in T19/page 70 of the set of documents produced to the Tribunal by the Secretary pursuant to its obligations under s 37 of the Administrative Appeals Tribunal Act 1975 (Cth) (T-Documents). A review by the Tribunal of the remaining T-Documents revealed evidence of hospital visits that took place in 2013 and 2014. The Tribunal does not consider those visits as relevant to this application, as they took place before the 2014/2015 period ended or in other words, before the commencement of the window of opportunity that Mrs Ausilio had to prepare her 2014/2015 financial year tax return, which only started after 30 June 2015.

18. The Tribunal acknowledges there was one surgical operation of Mrs Ausilio's daughter during the period of relevance, in September 2015.  No doubt this would have caused stress to Mrs Ausilio at the time, however, the Tribunal notes that it was a relatively standard adenoidectomy and tonsillectomy. 

19. The Tribunal acknowledges the additional demands placed on Mrs Ausilio from having to care for a child experiencing ongoing health issues.  However, by itself, the Tribunal does not consider respiratory issues to have presented as a major health issue in the broader scheme of things, and importantly, it was not the type of health issue that is uncommon or unusual in a family setting that included a pre-school aged child.  Unfortunately, asthma and respiratory issues, even such that it requires occasional visits to the hospital, are circumstances that a number of families are required to manage.

20. Similarly, by itself, the additional demands on Mrs Ausilio arising from her mother requiring hospitalisation in May 2016 were not particularly uncommon or unusual in a family setting involving a person of Mrs Ausilio's age, having an elderly parent or parents who are experiencing health issues. 

21. The Tribunal notes that Mrs Ausilio was not called upon to provide the personal care to her mother during the time of her hospitalisation or at all for that matter.  The Tribunal accepts that Mrs Ausilio was nevertheless providing emotional support to her mother.  However, it was the staff at the hospital, and subsequently, at the rehabilitation unit that attended to her mother’s daily and medical needs.  

22. Mrs Ausilio also gave evidence at the hearing that she had two other siblings based in Melbourne.  Those siblings were available to provide additional emotional support to Mrs Ausilio's mother during this difficult period in May and June 2016. Mrs Ausilio contends that her brother was unable to provide primary care to her mother because he worked full-time. The Tribunal notes that Mrs Ausilio’s brother was not prevented from helping Mrs Ausilio to provide the emotional support their mother needed, outside of working hours. 

23. At the hearing Mrs Ausilio said that she was also required to attend medical appointments herself.  However, the Tribunal notes that there was no evidence of any such appointments relevant to the period 1 July 2015 to 30 June 2016 before it.  The Tribunal also notes that the surgery for the medical condition referred to by Mrs Ausilio took place on 30 December 2014, some six months before the 2014/2015 financial year ended, and that the subsequent treatment occurred in August 2015 when Mrs Ausilio had engaged a fitness consultant to provide her with an exercise regime to assist with her circulation.

24. Mrs Ausilio's requirement to tend her own medical issues based on the evidence presently before the Tribunal was insufficient for the Tribunal to be satisfied that it was, by itself, a special circumstance that prevented her from lodging the 2014/2015 financial year tax return before 20 June 2016. 

25. Mrs Ausilio also contends that she did not attend to her 2014/2015 tax return before 30 June 2016 due to the competing priorities of completing her husband's business tax returns and his personal tax return.  Mrs Ausilio said she made a decision to prioritise in this way based on advice from her family's accountant so as to avoid fines that might be issued by the ATO for the late lodgement of the tax return and Business Activity Statements from her husband's business. 

26. At the time Mrs Ausilio made a decision to prioritise her time in this way, she had received from Centrelink a letter dated 21 March 2016, clearly stating that both Mrs Ausilio and her husband needed to lodge their 2014/2015 tax returns before 30 June 2016 in order to receive their full FTB entitlement. This letter can be found in the T-Documents at T4/page 13. The consequences of a person's failure to meet the stated deadline were spelt out clearly in writing at the base of the first page of this letter.

27. Two months later, Mrs Ausilio requested an extension of time to submit her 2014/2015 financial year tax return.  A further letter was sent to Mrs Ausilio by Centrelink on 15 June 2016 advising that a decision had been made to reject her request or refuse her request for an extension of time.

28. At this point Mrs Ausilio was clearly advised in writing that no extension of time would be granted.  This meant that Mrs Ausilio had two more weeks, from that letter, within which to lodge the 2014/2015 financial year tax return before the statutory deadline of 30 June 2016 was reached.  There were no clinical notes suggesting that her daughter was sick during these two weeks.  There was also no further evidence provided by Mrs Ausilio as to why she was otherwise prevented from undertaking the task of preparing her tax returns, either by herself or through the family accountant during those two weeks, knowing that her request for an extension had been rejected.  The Tribunal does not consider that her decision to prioritise her time on completing her husband's tax returns and his business tax returns constitute special circumstances, even if she was advised by her accountant to do so.  Ultimately, to prioritise her time as Mrs Ausilio did, was a decision for her to make.

29. At the hearing, the Tribunal requested a copy of the 2014/2015 financial year tax return from Mrs Ausilio lodged with the ATO, in order to understand the degree of complexity of the information that was ultimately required to be inputted into it. It had not been provided to the Tribunal at any time leading up to or at the hearing.  At the hearing Mrs Ausilio confirmed that her personal income was $0 for that financial year, because although she had hoped to work that financial year this did not occur, on account of everything that was going on.  At the hearing, Mrs Ausilio confirmed that she held some shares in Telstra Corporation Ltd and an investment property in her name. 

30. Mrs Ausilio provided the requested tax return to the Tribunal during an adjournment of the hearing.  The information on the tax return revealed that Mrs Ausilio in fact has two investment properties in her name. 

31. Mrs Ausilio’s first investment property was at Pearcey Grove, Pascoe Vale, for which she received $23,250 in rent for the financial year and for which deductions of $23,688 were claimed, including depreciation of $6765 and capital works special build write-off of $6475. 

32. Mrs Ausilio’s second investment property was at Derby Street, Pascoe Vale, for which she received $25,250 in rent for the financial year and $26,415 in total deductions, again including $6773 in depreciation and $6475 for capital works special build write-off. 

33. At the resumption of the hearing Mrs Ausilio explained that those two properties were adjacent properties, and they involved the construction of a new building located side-by-side which explained the similarities in the figures applicable for those two investment properties. 

34. The Tribunal considers that the tax return provided was relatively straightforward.  Although it was required to particularise financial activity in relation to two investment properties, one shareholding in Telstra, and required Mrs Ausilio to complete the initial depreciation worksheets for the two investment properties, the Tribunal nevertheless considers that Mrs Ausilio would have been greatly assisted in the collation of this information, by the provision of information from her managing agents about the income and expenses for both of those properties.   Mrs Ausilio also clarified at the resumed hearing that the depreciation information was able to be used for both properties as they were built at the same time.

35. An accountant was also engaged at that time by Mrs Ausilio who was at her disposal to assist her with respect to obtaining the information that was required to be inputted into her tax return.  Aside from that, the Tribunal considers that the burden that was imposed on Mrs Ausilio in completing the 2014/2015 financial year tax return, now having reviewed the document provided after the hearing, was not overly burdensome.  The Tribunal considers that it did not give rise to special circumstances that could be considered unusual or uncommon justifying an extension of time to Mrs Ausilio to lodge her tax return.

36. Mr Ausilio gave evidence at the hearing that the reason he needed to rely on Mrs Ausilio to attend to his personal and business tax affairs was because he was not able to do the books himself. 

37. When asked, Mr Ausilio said he worked about eight to 10 hours per day, six days a week in his business.  He said he was operating a wrought iron gate business.  The Tribunal noted with surprise that Mr Ausilio's total income from his business was only approximately $26,000 for the 2014/2015 financial year.  This appeared to be at odds with the amount of time Mr Ausilio was working in the business.  Mr Ausilio did not seek to provide an explanation.  Mrs Ausilio sought to explain this by giving evidence that her husband had experienced business losses.   

38. The reason the Tribunal has taken note of such matters is that in effect, Mrs Ausilio by requesting an extension of time which will trigger a reconciliation is seeking further monies from the public purse by reason of her and Mr Ausilio’s claim that they had a combined actual income which was much less than was initially estimated. This was in circumstances where this Tribunal considers there to be a real question arising from Mr Ausilio’s evidence about the number of hours he works in his business and about whether all of the income he has received from his customers has been lawfully declared by him to the ATO.

39. Of relevance to this application, the Tribunal is not satisfied that Mr Ausilio was in any way prevented to engage an accountant or a bookkeeper (other than Mrs Ausilio) to tend to his own business and tax affairs, and his personal tax affairs. From the evidence, Mr Ausilio’s business was clearly thriving, with a high demand being made for his services requiring him to work between 48 and 60 hours per week. The Tribunal infers from this that there was sufficient income coming into the business to fund the services of an accountant or bookkeeper (other than Mrs Ausilio) to attend to the preparation of his and his business’s tax returns, which would have allowed Mrs Ausilio to focus on her own affairs. Importantly, this would have left Mrs Ausilio free to complete her own tax return before 30 June 2016, as required under the Administration Act.

40. Ultimately, it was for Mrs Ausilio to decide whether to prioritise her husband's and his business’s tax affairs over her own.  However, the Tribunal does not consider, taking into account all of the relevant matters referred to above, that the fact that she chose to prioritise her husband’s affairs before her own (regardless of whether she did so on advisement by others or not), comprised circumstances that were either special, in that they were uncommon or unusual. 

1. Returning to the words of the provision in s 32C of the Administration Act, the Tribunal considers that those circumstances did not prevent Mrs Ausilio from lodging her tax return before 30 June 2016. Steps could have been taken by her, and assistance could have been provided by Mr Ausilio, but was not, which would have allowed Mrs Ausilio to focus on completing her own tax return by 30 June 2016, and in particular in the last two weeks before the deadline after she was advised clearly in writing by Centrelink that her request for an extension of time had not been granted.

2. Further upon consideration by the Tribunal of all of the various circumstances referred to above, i.e. the health issues affecting Mrs Ausilio, her mother, and her daughter at the time, and her father and others in the earlier years, and the advice provided by the family accountant, that Mrs Ausilio decided to act upon, to focus her time and attention elsewhere, the Tribunal is still not satisfied that together, they constitute special circumstances that prevented her from lodging what the Tribunal considers to be a relatively straightforward (albeit not completely simple) 2014/2015 financial year tax return before 30 June 2016. 

3. Issues were also raised about the problems said to be encountered by Mrs Ausilio and her accountants with online lodgement of tax returns.  The documentary evidence, including the letter from the family's accountant before the Tribunal, referred only to outages that occurred in December 2016 and February 2017, which was six months and eight months respectively after Mrs Ausilio's 2014/2015 financial year tax return was due to be lodged with the ATO. 

4. At the hearing Mrs Ausilio also gave evidence that the outage problems arose continuously from May 2016 to February 2017.  However, when asked by the Tribunal whether any attempt to lodge her 2014/2015 financial year tax return during that period was made, either by herself or by her accountant, she answered, "No".  This being the case, even if the Tribunal were to accept Mrs Ausilio's oral evidence that the outages occurred during this earlier period, including a short time of an overlap with the window of opportunity that she had to prepare her 2014/2015 financial year tax return, this did not prevent her from lodging her return before 30 June 2016, because no attempt to lodge the return online was made in May or June 2016 by her or by her accountant.

5. A further incidental observation for the Tribunal is that a cursory search of the ATO website, which the Tribunal considers was well within Mrs Ausilio's capabilities to access and navigate given her involvement in managing the bookwork and the tax affairs of what appeared to be a successful and thriving business operated by her husband, would have allowed her or her accountant to download the ATO 2014/2015 financial year tax form, print it, complete it (or complete it online and then print it), and send it to the ATO by ordinary post. 

6. Taking all of the above matters in account (except those not relevant to this application as indicated), the Tribunal is not satisfied that Mrs Ausilio should be granted an extension of time to 29 June 2017 to lodge her 2014/2015 financial year tax return. 

7. Accordingly, the Tribunal affirms the decision of the AAT1 under review in this application.           
   
   

I certify that the preceding 47 (forty-seven) paragraphs are a true copy of the written reasons for the decision herein of Member K. Parker

[sgd]......................................................................

Associate

Dated:  30 November 2018

Date of hearing:

Date of request by Applicant for written reasons:         

13 November 2018

20 November 2018

Representative for the Applicant:

         Self-represented

Representative for the Respondent:

Ailsa Bramley, Senior Government Lawyer, Department of Human Services