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

[2016] AATA 619

Baban and Secretary, Department of Social Services (Social services second review) [2016] AATA 619 (19 August 2016)

Division	GENERAL DIVISION
File Number	2016/0395
Re	Vlatka Baban
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Senior Member A Poljak
Date	19 August 2016
Place	Sydney

The decision under review, being the decision of the Social Services & Child Support Division of the Administrative Appeals Tribunal made 6 January 2016, is affirmed.

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

Senior Member A Poljak

CATCHWORDS

SOCIAL SECURITY - Family Tax Benefit - top-up payment and supplementary payments - where tax return not lodged by due date - whether special circumstances exist which prevented lodgement - financial hardship - decision affirmed.

LEGISLATION

A New Tax System (Family Assistance) Act 1999 (Cth) ss 21, 26

A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) ss 28, 32B, 32C

CASES

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

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

REASONS FOR DECISION

Senior Member A Poljak

19 August 2016

INTRODUCTION

1. Ms Baban was in receipt of the Family Tax Benefit (“FTB”) during the 2013/14 financial year. In the ordinary course, she was entitled to receive a FTB ‘top-up’ payment at the end of the financial year after she lodged her tax returns, in this case, before 30 June 2015.

2. It is common ground that Ms Baban and her husband both lodged their tax returns for the 2013/14 financial year on 4 September 2015.

3. Ms Baban seeks review of a decision made by the Social Services & Child Support Division of the Administrative Appeals Tribunal (“SSCS”), dated 6 January 2016, affirming a decision of the Department of Human Services (“the Department’) made on 27 October 2015, not to pay a FTB top-up payment and supplementary payments for the 2013/14 financial year because she did not lodge her tax return on time (“the decision”).

4. The issue before the Tribunal is whether the time for Ms Baban to lodge her 2013/14 tax return should be extended to 4 September 2015 by reason of special circumstances which prevented her from lodging it before 30 June 2015.

5. Ms Baban submits that there were special circumstances which prevented her and her husband from lodging their tax returns on time. She claims financial difficulties which resulted from unfortunate circumstances, prevented her from lodging her tax return on time. She also claims that the Australian Tax Office (“ATO”) granted her an extension of time to lodge her and her husband’s tax returns by 4 September 2015.

   LEGISLATION

6. Ms Baban satisfied the eligibility requirements for the payment of FTB under section 21 of the A New Tax System (Family Assistance) Act 1999 (Cth) (“the Act”). Section 26 of the Act provides that only one member of a couple may be eligible for the payment of FTB.

7. The relevant law at the time is contained in A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (“the AdministrationAct”).

8. Where a person has received instalments of FTB for a particular year, and that person and/or their partner are required to lodge a tax return, but have not done so by the due date, then the Department must determine that there was no entitlement to FTB for that year pursuant to section 28 of the Administration Act.

9. Subsection 28(3)(d) provides that if a person (and/or their partner) lodges their tax return  after the due date, then the person will only be entitled to the lesser of what they were already entitled to, based on their income estimates at the time, or the recalculated amount.

10. Section 32B of the Administration Act enables there to be reconciliation of entitlement to FTB for the year once the actual income of a couple in that year had been determined. Under section 32B of the Administration Act, reconciliation may be made where Ms Baban (as the first individual) satisfies section 32C of that Act.

11. Section 32C of the Administration Act deals with reconciliation times for persons who are members of a couple and requires that tax returns be filed by the end of ‘the first income year after the relevant income year’, in this case by 30 June 2015, or pursuant to section 32C(3)(b) within:

    …such further period (if any) as the Secretary allows…[to lodge the return]…if the Secretary is satisfied that there are special circumstances that prevented the… individual from lodging the return before the end of that first income year. (emphasis added)

12. In other words, I have discretion to extend the statutory time period for lodging a tax return but only where firstly, there were special circumstances and, secondly, the special circumstances prevented Ms Baban from filing her tax return by the statutory time period; in this case by 30 June 2015.

13. Special circumstances are not defined in the Act however the Tribunal is provided some guidance by the decision of ReBeadle and Director-General of Social Security (1984) 6 ALD 1 at [3]:

    An expression such as “special circumstances” is, by its very nature, incapable of precise or exhaustive definition.  The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special (emphasis added).

14. In Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 at [33], Besanko J explained what is required for there to be special circumstances:

    I also note that the authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances.  The danger is that the test will be overstated if the word ‘exceptional’ is emphasised.  It was not the intention of Parliament to confine the exercise of the discretion to an exceptional case.  There is less risk of overstatement if the words ‘unusual’ or ‘uncommon’ are emphasised.  Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case.  It may not be easy to postulate the ordinary or usual case other than in quite general terms and, in doing so, close attention must be given to the particular statutory context. (emphasis added)

    SPECIAL CIRCUMSTANCES

15. The Secretary contends that there were no special circumstances which prevented Ms Baban from lodging her tax return within the requisite timeframe.

16. Ms Baban claims that severe financial hardship prevented her and her husband from lodging their 2013/14 tax returns by 30 June 2015. It is her evidence that the circumstances which caused financial hardship during the relevant period make this case unique and unusual, amounting to special circumstances.

17. At hearing, Ms Baban said that her husband’s work truck was stolen in October 2013. She claims that the truck was specially designed and modified, was unique and was crucial to the success of her husband’s business. The theft of the work truck had an adverse effect. Ms Baban said that her husband’s income decreased significantly and he lost a number of clients, causing her and her husband severe financial hardship.

18. In January 2014, Ms Baban said that her husband received insurance money for the lost truck which went towards the repayment off debts incurred in hiring a replacement truck and the remainder went towards purchasing a new truck. Ms Baban said that they still needed to borrow some money in order to obtain a specialty truck, but could not obtain all the finance which they needed. As a result, the new truck was unable to meet the needs of the business and her husband lost all but one of his clients as a result.

19. Due to financial pressures, Ms Baban secured full time employment in March 2015.

20. At hearing, Ms Baban said that prior to 30 June 2015, her and her husband were trying to put money aside in savings so that they would be able to pay their accountant to do their tax returns on time. In June 2015 they received a letter from the ATO requesting the payment of an overdue amount to be paid immediately. Ms Baban claims that this overdue payment used up all of their saving and as a result they did not have enough funds to pay their accountant. 

21. There is no evidence before me from the accountant verifying how much would be charged to lodge the tax returns and whether or not payment needed to be made prior to lodging the tax returns. I am therefore not satisfied, on the evidence before me, that Ms Baban’s inability to pay the accountant prevented her and her husband from lodging their tax returns by 30 June 2015.

22. Ms Baban claims that she notified the ATO that she would need an extension of time to lodge her tax return until 4 September 2015 due to special circumstances. She contends that the requested extension of time was granted (“extension of time”).

23. Ms Baban and her husband in fact lodged their tax returns for the 2013/14 income year on 4 September 2015, which is consistent with the alleged extension of time.

24. I do not however, have before me any evidence of correspondence between Ms Baban and the ATO in support of the extension of time. She maintained at hearing that all communication between her and the ATO was verbal and over the telephone. She claims that she never received any correspondence from the ATO confirming the extension of time.

25. It is plain that the Department was not informed by Ms Baban about the alleged extension of time approved by the ATO. Ms Baban gave evidence at hearing that she was aware that she had to file her tax return by 30 June 2015 to reconcile the FTB. She assumed that the ATO and Department were connected and that the extension of time given by the ATO would also be applicable to her claim for the FTB.

26. I am not satisfied that firstly, the ATO granted such an extension and secondly, that the Department was notified of it. 

27. Ms Baban and her husband had from 30 June 2014 to 30 June 2015 to lodge their tax returns for the 2013/14 financial year. The circumstances surrounding the theft of the work truck, the payment of insurance money and Ms Baban’s commencement of full time employment all occurred before this period. Although I accept Ms Baban’s evidence that the circumstances resulted in financial hardship, this does not alone amount to special circumstances. Financial hardship is not uncommon or unique.

    CONCLUSION

28. I am not satisfied there are special circumstances that prevented Ms Baban from filing her tax return by the deadline. It follows that I find that Ms Baban has not satisfied the reconciliation conditions required under section 32C of the Administration Act and is not entitled to the FTB top up and supplement for the 2013/14 income year.

29. I affirm the decision under review.

I certify that the preceding 29 (twenty-nine) paragraphs are a true copy of the reasons for the decision herein of Senior Member A Poljak

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

Associate

Dated 19 August 2016

Date of hearing	22 July 2016
Date final submissions received	22 July 2016
Applicant	In person
Solicitors for the Respondent	Ms B Salaji, Department of Human Services