Avraam and Department of Education, Training and Youth Affairs

DECISION AND REASONS FOR DECISION [2001] AATA 499

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2000/386

GENERAL ADMINISTRATIVE DIVISION       )
           Re      MARIA AVRAAM
  Applicant
           And    SECRETARY, DEPARTMENT OF EDUCATION, TRAINING & YOUTH AFFAIRS
  Respondent

DECISION

Tribunal Dr J D CAMPBELL, Member

Date7 June 2001
PlaceSydney

Decision The Tribunal determines that the decision under review be affirmed.

[sgd] Dr J D Campbell
Member
CATCHWORDS
AUSTUDY - self employed parent - designated parent - benchmark income of notional parent - actual means test - deduction from actual means - ineligibility - overpayment - debt - waiver - write off

Student and Youth Assistance Act 1973 – ss 40, 48, 287, 289, 290C,343

Social Security Legislation Amendment (Youth Allowance Consequential and Related Measures) Act 1998

AUSTUDY Regulations – regulations 122(1)(c), 12C, 12E, 12F, 12L, 12K, 12L, 12M, 12N, 109, 110

REASONS FOR DECISION

DR J D CAMPBELL, Member

In this matter, Ms Maria Avraam ("the Applicant") seeks a review of the decision of the Social Security Appeals Tribunal ("the SSAT") dated 4 February 2000, in so far as it relates to that part of the decision that found that she was ineligible for Austudy payments in 1997, and as a consequence owed a debt to the Commonwealth of $3780.35. This latter decision had affirmed that part of an earlier decision dated 9 May 1998, made by an authorised Centrelink delegate of the Secretary of the Department of Education, Training and Youth Affairs ("the Respondent"), that the Applicant owed a debt of $3780.35 to the Commonwealth. This latter decision was reviewed and affirmed by an officer of the Actual Means Test Compliance Section dated 28 October 1998, in her capacity as a delegate of the Centrelink Chief Executive Officer pursuant to the Commonwealth Services Recovery Act 1997.
A hearing was held before the Administrative Appeals Tribunal ("the Tribunal") on 13 February 2001, at which the Applicant and her father, Mr Avraam, presented oral evidence. The Applicant was self-represented. The Respondent was represented by Mr Peek, a solicitor from the Australian Government Solicitor. Further material (tax returns) were received from the Applicant by the Tribunal on 29 March 2001.
The following material was placed into evidence before the Tribunal:
Exhibit No  Description               Date
T1-T21 pp1-98 Documents prepared pursuant to section 37 of the Administrative Appeals Tribunal Act 1975
A1      Income Tax Return for Mr Avraam for the financial year ending 30 June 1997
A2      Income Tax Return for Mr Avraam for the financial year ending 30 June 1998
A3      Income Tax Return for Harry and Steve Construction Company Pty Ltd for financial year ending 30 June 1997
A4      Income Tax Return for Harry and Steve Construction Company Pty Ltd for financial year ending 30 June 1998
A5      Rate Notice Strathfield Council for financial year 1997/1998
A6      Water Rate Notice for 1997
A7      National Australia Bank letter regarding loan repayments       10 July 1997
A8      Income Tax Return for Miss Joanna Avraam for financial year ending 30 June 1998
A9      Income Tax Return for Miss Maria Avraam for financial year ending 30 June 1998
A10     Statement by Mr Nicola     26 March 2001
A11     ANZ Access Account details for Mr Avraam and Mrs Avram for period 4 April 1997 to 24 November 1997
R1      Respondent's Statement of Facts and Contentions     8 February 2001

issues

The relevant issues in this matter are whether or not the Applicant was entitled to payment of Austudy in 1997, and if she was not entitled, whether there is a debt of $3780.35 due and payable by the Applicant to the Commonwealth.
legislation
The relevant legislation in this matter is the Student and Youth Assistance Act 1973 ("the Act"), in particular sections 40, 48, 287, 289, 290C, 343, and the Austudy Regulations issues pursuant to the Act, in particular regulations 122(1)(c), 12C, 12E, 12F, 12L, 12K, 12M, 12N, 109(2), 110.
background
The Applicant applied for Austudy for 1997, on 18 February 1997. The claim form was returned to the Applicant, as it was considered to be incomplete. Subsequently a completed claim form, together with a copy of the Applicant's mother's tax return for financial year ending 30 June 1996, was lodged with the Respondent on 1 April 1997 (T3, T4).
The application form contained the following relevant details:
(a) the Applicant's father was a self employed bricklayer (T3, p21);
(b) the Applicant's father was not involved in a partnership, trust, private company or unlisted public company (T3, p23); and
(c) an estimate of expenditure for the Avraam family for 1997 as $28250 (T3, p26).
The Applicant was assessed as eligible for Austudy on the basis of the information provided in her application and was paid a total amount of $3780.35, having been paid at the standard rate for 1997.
On 20 October 1997 Centrelink wrote to the Applicant requesting her to complete a "1997 Actual Means Test Review of Decision Form" (review form) (T9). Further requests to complete such a review form were made on 1 December 1997 and 3 April 1998 (T10, T11).
A completed review form was lodged with Centrelink on 30 April 1998, together with Mr Avraam's tax assessment notices for financial years 1997 and 1998 (T12). The family's expenditure for calendar year 1997 was nominated at $36350, although the Tribunal notes particular discrepancies between item 11 and item 12 which relate to the same property. This inconsistency is further noted in the referral sheet (T13, p63), where the total actual means is nominated at $34850, having transposed the lower of the two nominated expenditures listed for the principal family home, namely $14300, while the higher figure is also bedevilled with an adding mistake and should read $16800 making the family expenditure $37350.
On the basis of such information, the Applicant was reassessed by Centrelink as not eligible for Austudy in 1997. On 9 May 1998 an overpayment was raised against the Applicant in the amount of $3780.35, representing all Austudy payments made to her in 1997.
On 18 May 1998, the Applicant's father requested an internal review by telephone, with Centrelink requesting the Applicant's parents to complete a further review form on 20 May 1998 (T15).
A further review form was completed and lodged with Centrelink on 6 October 1998, having been signed by the Applicant's parents on 23 August 1998 (T16). In this form the Applicant's parents nominated total expenditure for calendar year 1997 as $34196. T hey stated in turn that this money was derived from income earned in the financial year ending 30 June 1996 of $11,062, as nominated in the attached tax return for the two parents for that year, and some $23,134 from a savings account which arose from the sale of a previous family home (T16).
On 28 October 1998, an authorised review officer accepted the expenditure estimate of $34196 and affirmed the decision in relation to overpayment.
On 4 February 2000 the SSAT affirmed the decision concerning the Applicant's overpayment, while finding that the actual means of the family in 1997 was $28297.
evidence
The Applicant's father told the Tribunal he was born in Cyprus where he had minimal education, that he was a bricklayer, and that he and his family had arrived in Australia in 1976. Mr Avraam had detailed to the SSAT that he had an injury at work in 1991 and that in 1993 he sold their home, prior to returning to Cyprus. In 1996 they returned to Australia, purchased their current residence for $590,000 with purchase monies being found from accumulated savings ($400,000), a bank loan ($150,000) and other associated accumulated savings.
Mr Avraam also detailed the formation of a company, namely Harry and Steve Constructions Pty Ltd in 1996, in which he and Harry conducted a subcontracting business to the building industry, with the reason for the company formation being access as workers to workers compensation entitlements. Mr Avraam stated that he was a director of the company.
In discussing matters pertaining to the review form completed by Mr and Mrs Avraam on 23 August 1998, Mr Avraam tabled a document, which was a letter from the National Australia Bank dated 10 July 1997 (Exhibit A7), which nominated the monthly housing repayment against the loan to be an amount of $1117. Further, Mr Avraam tabled a document (Exhibit A5), which indicated that council rates for the family property were $1082.15 for the financial year 1997/98 with $541.35 of this amount being paid in the last six months of calendar year 1997. Mr Avraam also tabled documents (Exhibit A6) which detailed the amount expended on water rates for calendar year 1997 as $726.70.
In discussing matters pertaining to the two cars listed and the variation of private use nominated in the review form at T16, p77, Mr Avraam stated that both vehicles were used by the family, and that in general terms, when working, he obtained a lift to work.
Mr Avraam confirmed general living expenses at $8000, other family expenses at $2000 and educational expenses at $6950.
In material received from the Applicant after the hearing, but referred to during the hearing, the Applicant documented the following:
(a) income earned by Miss Joanne Avraam from activities as a sales assistant for financial year 1997/1998 was $3441 and tax $316 (Exhibit A8);
(b) income earned by the Applicant for activities as a shop assistant for financial year 1997/1998 was $2525 and tax of $612.07 (Exhibit A9);
(c) that money to the sum of $10,000 was loaned to Mr Avraam without any interest, at intervals between November 1996 and March 1997, by Mr Nicola (Exhibit A10); and
(d) that an ANZ account in the name of Vera Avraam and Avraam Avraam contained a balance at varying times between 4 April 1997 of $2495.58 and 31 December 1997 of $243,498.57, with a deposit of $253,526.54 being made on 16 November 1997, and withdrawals during the same period of $12,100 (Exhibit A11).
At the SSAT hearing the Applicant's father is said to have stated:
(a) that he drew $20,000 from the company in 1997, and that this, coupled with $10,000 from his brother-in-law, covered the expenditure during 1997. The Tribunal notes that the tax return for Harry and Steve Constructions Pty Ltd for the financial years 1996/1997 and 1997/1998 indicate salary and wage payments to related persons of $28,000 and $38,700 respectively (Exhibits A3 and A4). The Tribunal also notes that personal tax returns for Mr Avraam for the same years indicate payments from Harry and Steve Constructions Pty Ltd of $14,000 and $20,500 respectively (Exhibits A1 and A2);
(b) that the Applicant worked at Target in November 1997 for between 4 and 12 hours per week and that Joanna worked at Grace Brothers during October 1997.

submissions

applicant

The Applicant submitted that the necessary claim forms had been completed with all necessary diligence and that there existed an error of appreciation as to the family's actual income in 1997. Further, it was submitted that where particular figures and percentages have varied in different documents, this has arisen as a consequence of misunderstanding as to which figures were required. The Applicant submitted that entitlement to Austudy did exist for 1997.
respondent
In acknowledging that the Austudy scheme was repealed from 1 July 1998, which included provisions relating to lodging appeals to both the SSAT and the Tribunal, the Respondent recognised that this application fell properly within the jurisdiction of the Tribunal, as the matter related to 1997 Austudy.
The Respondent contended that the Applicant's father was a designated parent pursuant to regulation 12L(1)(e), as he was self-employed in 1997 (regulation 12L(2)), and that it is evident that he had an interest in a proprietary company (regulation 12L(1)(b)(ii)). It was further contended, that the relevant "benchmark", or after tax income of a notional parent for the purpose of regulations 12K and 12M, was $28,584 for 1997.
As a consequence of the actual means of the Avraam family for 1997 being at least $34,196, the Respondent contended that this exceeded the benchmark figure for a notional family, and as such, the Applicant was ineligible for Austudy during 1997.
consideration and findings
In initial comment, the Tribunal observes that both the Applicant and the Respondent were both primarily concerned with the issue of expenditures constituting the actual means of a designated parent. There was no serious disagreement or concern on other material before the Tribunal.
statutory framework
The Tribunal, in addressing this matter, notes the following statutory framework:
· Regulation 12N(1) of the Austudy Regulations defined the actual means of a designated parent for the eligibility period as "the amount that equates to total expenditure and savings made in that period by the parent and each member of his or her family";
·     Regulation 12N(1A)(j) indicated, at the relevant time, that "expenditure from the income from a business activity of the parent or a family member for the business activity" is to be excluded from the actual means;
·     Regulation 12N(1A)(h) provided that "expenditure or savings from an amount of Austudy to which the parent or family member is entitled under part 2 of the Act "is excluded from calculation of the actual means";
·     Regulations 12N(1A)(f) and (g) provided that expenditure by the parent or family member of money borrowed for the purchase price of the sole or principal residence of the parent or family member, or expenditure to repay the principal and/or interest in relation to money borrowed by the parent or family member for any other purpose, should be excluded;
·     Regulations 12N(3) provided for the Secretary, where he reasonably believes that a transaction engaged in by a person other than a parent or member of the family, is a transaction engaged in for the benefit of the parent or member of the family, to impute a value to that transaction and include the amount in the actual means of a designated parent;
·     Regulation 12N 4(b) provided that an amount of expenditure or savings is taken to be expended or saved in a particular period, if the Secretary reasonably believes that the expenditures or savings should be taken to have occurred in that period;
·     Regulation 12N(5) defined independent employment to be employment engaged in by a person that is not provided by a member of the family or a proprietary company, an unlisted public company, a partnership or trust, in which the person or member of the family has an interest;
·     Regulation 12N(1A)(1) excluded "independent income" from actual means of the designated parent;
·     Regulation 12N(1B) defined how the independent income is to be calculated;
·     Regulation 12C allowed for an Austudy rate to be recalculated if the original calculation was based on wrong information;
·     Regulation 12E provided for the determination of overpayment when recalculations indicate that such has occurred;
·     Section 40(1) of the Act provides for the overpayment to be a debt due and owed by the individual to the Commonwealth;

Section 289(1) of the Act provides for a waiver of any debt where it has arisen as a result of sole administrative error by the Commonwealth and where such payments have been received in good faith;
Section 290C(a) of the Act precludes waiver of a debt, where overpayment has arisen as a result of the debtor or another person knowingly making a false statement or a false representation, or failing or omitting to comply with a provision of the Act;
Section 48 of the Act provides obligations as regards notification by a person receiving Austudy to inform within seven days of prescribed events;
Regulation 109(1)(a) prescribed a notifiable event to include circumstances when a designated parent becomes aware that his or her actual means are substantially more than that originally notified at the time of lodgement of the Austudy application;
Regulation 109(2) prescribed that the parent must give the information to Centrelink in the circumstance that the parent is receiving the payment and pursuant to Regulation 110 this must be in writing;
Section 343 of the Act provides for the requirement of an Applicant to comply with the request to complete a review form; and
Section 287 of the Act provides for write off of the debt in specified circumstances.
findings

The Tribunal, in noting the statutory framework and having considered the evidence of the Applicant and her father, finds that the father was a self-employed person pursuant to regulation 12L(2) and held an interest in a proprietary company (regulation 12L(1)(b)(ii)). As a consequence, the Applicant's father is a designated parent pursuant to regulation 12L. As the parent is a designated parent in this matter, pursuant to regulation 12K(1), for the Applicant to successfully claim for Austudy allowance the actual means of the designated parent must be equal to or less than the after tax income of a notional parent.
A notional parent is defined in regulation 12K(2), and the after tax income of a notional parent is calculated pursuant to regulation 12M for the eligible period. The Tribunal in noting both the method of calculation of the after tax income of the notional parent, the actual calculation performed and the absence of any disagreement on the process, concludes that the after tax income for the notional parent for the period in question, namely 1997, is $28,584.
In addressing the actual means of the designated parent, the Tribunal, having considered all the evidence before it, makes the following finding of facts:
(a) Item 11 – Family Home Expenditure
In noting the letter from the National Bank of Australia, the Tribunal concludes that loan repayments in 1997 would have been $13,404 (12 x $1117); council rates for the family property were $541.35, plus an amount for the first half year rates for 1997 of an equivalent amount; water rates were $726.70 as nominated in Exhibit 6; fuel and power $1400; and telephone $400. In summary, the Tribunal finds that the family home expenditure for 1997 was $16,472, plus an amount for the council rates for the first half year in 1997, which the Tribunal values conservatively at $500, making a total expenditure on the family home of $16,972;
(b) Item 14 – Transport
Despite receiving particular evidence from Mr Avraam in relation to the two vehicles nominated, the Tribunal remains unable to ascertain the reason for the considerable variability in the percentage "private use by assessable family", both within the review form at T16, p77 and earlier review forms relating to the same issue. As best the Tribunal could discern, the Applicant only occasionally used one of the vehicles for work purposes, and further that vehicle expenses claimed within the tax returns for Harry and Steve Constructions Pty Ltd, clearly indicate the existence of a business vehicle. It is the Tribunal's finding that 80% of vehicle 1 was used for private purposes and 50% of vehicle 2 was used for such purposes. As such the expenditure on transport for 1997 was $2096 plus $1490 making a total of $3586;
(c) general living expenses of $8000 is accepted (item 17);
(d) other family expenses of $2000 is accepted (item18);
(e) education expenses of $6950 is accepted (item 20)
As a consequence of the Tribunal's findings, the actual means of the designated parent for 1997 was $37508.
In addressing concessions available to the actual means test, the Tribunal notes that expenditure from the Austudy allowance should not be included (regulation 12N(1A)(h)) in the calculation of actual means. The Tribunal notes that such an exclusion is specifically mentioned on the review form at question 20. The Tribunal also notes the relative amounts nominated as education expenses against each family member at question 20 and the amount of Austudy received by each family member, finding that there is no evidence to suggest that Austudy allowance has been included in such educational expenditure.

A further concession relates to independent employment income of family members, pursuant to regulation 12N(1A)(l) from the actual means of the designated parent. Independent employment is defined within regulation 12N(5) and independent employment income is calculated pursuant to regulation 12N(1B). Two family members in this matter received independent income during 1997 in accordance with the regulation. Documentation provided by the Applicant revealed that she earned $2625 less tax of $612 for the financial year 1997/98. On the evidence before the Tribunal relating to the period of work during 1997, the Tribunal concludes that the Applicant received independent employment income of $956, this being equivalent to her having commenced working in mid 1997 as stated to the Tribunal.
For the Applicant's sister, the independent income for 1997 is found to be $1560, the Tribunal having considered the income tax return for 1997/98, and the period when it was stated that she started work – the second half of 1997. The total concession for independent income is $2516.
The Tribunal also notes that a sum of $10,000 was loaned to the designated parent at intervals between November 1996 and March 1997. From this, the Tribunal concludes that it was not a lump sum loan and as such was not expended in terms of providing the purchase price for the family home. Thus, it does not fall within the exclusion nominated in regulation 12N(1A)(f) and (g). Further, the Tribunal concludes that the loan transaction was of benefit to the parent and members of the family, and that as such should be included in the actual means, pursuant to both regulations 12N(3) and 12N(4)(b).
In relation to actual savings, the Tribunal notes that regulations 12N(1) defines actual means to include such savings. The Tribunal notes the deposit of $253,526.54 being made on 16 November 1997 into the ANZ account of the Applicant's parents, but in the absence of any definition surrounding the notion of the deposit, the Tribunal is unable to conclude as to what status the deposit should have in these considerations.
In relation to the issue of the $600 paid to the Accountant in 1997, the Tribunal was unable to elicit what the exact purpose for which the payment was made, as it is clear to the Tribunal that Harry and Steve Constructions Pty Ltd maintained separate accounting records, which included business expenditure. The Tribunal, in the absence of specific evidence on this issue, does conclude that any such payment must relate to personal accounting expenditure, for even if such were made on behalf of the company, reimbursement could have been secured from the company. As such, exclusion is not available pursuant to regulation 12N(1A)(j).
As a consequence of the Tribunal's findings, the Tribunal concludes that the actual means for the designated parent for 1997 was $37,508 less concessions of $2516, namely $34,992. As this is more than the after tax income of the notional parent of $28584 for 1997, the Tribunal determines that there has been an overpayment of Austudy for 1997 to the Applicant of $3780.35, as the Applicant was ineligible for such Austudy allowance. Further, pursuant to section 40 of the Act, this is a debt due and payable by the Applicant to the Commonwealth.
In addressing the issue of waiver under sections 289 or 290C of the Act as it stood prior to 1 July 1998, the Tribunal concludes that there is no evidence of sole administrative error on the part of the Commonwealth in this matter under section 280 of the Act.
In addressing section 290C, the Tribunal notes that pursuant to section 48 of the Act a person receiving Austudy has to notify Centrelink in writing within seven days of a notifiable event. Regulation 109(1)(c) states that when a designated parent becomes aware that his or her actual means were or are substantially more than when the actual means were lodged with the Austudy application form, or when last notified to Centrelink, then he or she has a duty to notify Centrelink in writing within seven days. Hence, the onus falls on the parent to notify Centrelink, when the parent is being paid the Austudy for the student pursuant to regulation 109(2). In this matter the parent did not do so and further failed to comply with requests, pursuant to section 343 of the Act, to complete review forms issued on 1 December 1997 and 30 April 1998. As such, and in view of the Applicant's parent failing to comply with a provision of the Act, the Tribunal concludes that waiver of the debt under section 290C of the Act is not available to the Applicant. Similarly, the Tribunal also notes that no particular matters were put forward for consideration as special circumstances in this matter.
Finally, in addressing the issue of write off under section 287 of the Act, the Tribunal concludes that no evidence has been adduced which would allow the Tribunal to contemplate such a measure.
determination
The Tribunal determines that the decision under review be affirmed.
I certify that the 43 preceding paragraphs are a true copy of the reasons for the decision herein of DR J D CAMPBELL, Member
Signed:         .....................................................................................
  Associate
Date/s of Hearing  13 February 2001
Date of Decision
Counsel for the Applicant        Self-represented
Solicitor for the Respondent    Mr Peek

[2001] AATA 499

7 June 2001

Key Legal Topics

Areas of Law

Administrative Law

Social Security Law

Legal Concepts

Statutory Interpretation

Administrative Review

Overpayment

Limitation Periods

Statutory Construction

Administrative Law

Costs