Bird and Secretary, Department of Family and Community Services

[2004] AATA 484

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 484

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No D2003/36

GENERAL ADMINISTRATIVE  DIVISION		)
Re		ALISON BIRD

Applicant

And SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES

Respondent

DECISION

Tribunal Deputy President Don Muller

Date14 May 2004  

PlaceBrisbane

Decision The Tribunal affirms the decision to not pay top up arrears of Family Tax Benefit to Alison Bird for the financial year ending on 30 June 2001.

...............SIGNED...............................

D.W. MULLER

DEPUTY PRESIDENT

CATCHWORDS

Social Security – Family Tax Benefit – Applicant failed to lodge tax return in the required time-unable to receive arrears of Family Tax Benefit- decision affirmed

A New Tax System (Family Assistance Act) 1999

New Tax System (Family Assistance)(Administration) Act 1999 s20,28

REASONS FOR DECISION

Deputy President Don Muller        

1.      This is an application by Alison Bird for review of a decision to not make a back payment of “top up” Family Tax Benefit (FTB) for the financial year ending 30 June 2001 (the 2000/2001 year).

2.      Mrs. Bird was in receipt of FTB during the 2000/2001 year for her three children.  The FTB was paid in instalments at a rate assessed on the basis of an income estimate provided by Mrs. Bird on 1 July 2000.  She estimated that her income would be $3,740 and that her partner’s income would be $41,740.

3.      Mrs. Bird’s fortnightly instalments of FTB totalled $6,991.72 for the 2000/2001 year.

4.      The family assistance law is contained in A New Tax System (Family Assistance Act) 1999 (the FA Act) and A New Tax System (Family Assistance)(Administration) Act 1999 (the FAA Act).

5.      The legislation allows families to receive fortnightly payments of FTB, or, alternatively as an end of year lump sum claimed with their tax returns.  The total amount of FTB payable to a specific family during a financial year will be the same irrespective of whether it is paid in fortnightly instalments or as a lump sum.  Either way the rate is subject to the same eligibility criteria, rate calculators and administrative arrangements.

6.      Recipients of FTB who elect to claim for a financial year by fortnightly instalments are required by the legislation to provide income estimates, so that the rate of FTB can be assessed (see s.20 of the FAA Act).  Later, when the actual adjusted taxable income is known, a review takes place to determine the correct entitlement for the financial year.  If a recipient has been underpaid the family would usually be entitled to a “top up” payment.  If a recipient has been overpaid a debt is raised.  If a recipient has accurately estimated the taxable income and been paid the correct amount there is no adjustment.

7.      It turned out in Mrs. Bird’s case that her estimate of combined taxable income of $41,740 for the 2000/2001 financial year was too high.  The combined taxable income of her and her partner for the 2000/2001 financial year was $23,980 ($3740 for Mrs. Bird and $20,240 for her partner).   This means that Mrs. Bird would have been entitled to $11,053.73 for the financial year 2000/2001.  She could have been eligible for a potential $4,062.01 top up.

8.      However, the legislation in force at the time, required recipients of FTB to lodge their tax returns on or before 30 June in the year following the year in which the FTB was to be paid.  That is, in Mrs. Bird’s case for the year 2000/2001, on or before 30 June 2002.  Failure to file the tax return by the date specified results in the non-payment of any arrears of top up to which the recipient of FTB might otherwise be entitled.

9.      The relevant legislation at the time was contained in s.28 of the FAA Act.

“Variation of instalment and past period entitlement determinations where income tax return not lodged

28.(1)  This section applies if:

(a)a determination under section 16 or 17 is in force at, or was in force before, a particular time;  and

(b)there are one or more days (the cancellation days) before the particular time in respect of which the following conditions are satisfied:

(i)the cancellation days occur in the income year (the cancellation income year) that began 2 years before the beginning of the income year in which the particular time occurs;

(ii)the claimant is entitled to be paid family tax benefit under the determination for the cancellation days;

(iii)the claimant, or the claimant’s partner at the particular time (if he or she was also the claimant’s partner at some time in the cancellation income year), or both, are required to lodge an income tax return for the cancellation income year but have not done so by the particular time;

(iv)by the particular time, an assessment has not been made under the Income Tax Assessment Act 1936 of the taxable income for the cancellation income year of everyone to whom subparagraph (iii) applies.

Consequence of section applying

28.(2)  If this section applies, the Secretary must vary the determination so that it has the effect that the claimant is not, and never was, entitled to family tax benefit for the cancellation days

Consequence where income tax returns are later lodged.

28.(3)  If:

(a)after the Secretary varies the determination under subsection (2), an assessment is made under the Income Tax Assessment Act 1936 for the cancellation income year for everyone:

(i)who was required to lodge an income tax return as mentioned in subparagraph (1)(b)(iii);  and

(ii)in respect of whom an assessment had not been made before the determination was varied;  and

(b)the Secretary is satisfied that the claimant was eligible for an amount of family tax benefit for the cancellation days;

The Secretary must again vary the determination so that it has the effect that, for the cancellation days, the claimant is entitled to be paid the lesser of:

(c)       that amount of family tax benefit;  and

(d)the amount that the claimant was entitled to be paid before the variation under subsection (2) was made.”

10.     Unfortunately for Mrs. Bird, her partner was unable to file his income tax return for 2000/2001 until 5 April 2003.

11.     Mrs. Bird had dealt with Centrelink before the year in question and she knew the rules.  She was also sent a reminder by Centrelink on 22 April 2002 to tell her to lodge her partner’s tax return before 30 June 2002.

12.     However, the matter was beyond the control of Mrs. Bird and her partner.  Her partner was involved in a business partnership.  Despite his best endeavours he could not prevail upon his business associate to furnish to their accountants the material needed for the accountant to prepare the relevant tax returns until well after 30 June 2002.

13.     Unfortunately, the rule allows for no concessions nor any discretion to be used.  I note that at the date of hearing of this review, the two year rule was in the process of being amended to three years.

14.     The decision to not pay top up arrears is affirmed.

I certify that the 14 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President Don Muller

Signed:         .....................................................................................
           C. O’Donovan, Associate

Date/s of Hearing  20 April 2004
Date of Decision  14 May 2004
Applicant  Mrs. Bird
Respondent  Ms. H. Wallis-Dunn, departmental advocate