Bloomfield and Secretary, Department of Family and Community Serv Ices

[2004] AATA 223

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 223

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2003/878

GENERAL ADMINISTRATIVE DIVISION		)
Re		DAVID BLOOMFIELD

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Ms M Carstairs, Member

Date4 March 2004 

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

.…(Sgd) M Carstairs….

Member

SOCIAL SECURITY-  family tax benefit - overpayment - debt to Commonwealth - provision of revised estimates of income –should debt be waived 

A New Tax System (Family Assistance (Administration) Act 1999 s16, 20, 21, 31A, 71, 97,
     101, 102

A New Tax System (Family Assistance) Act 1999

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

REASONS FOR DECISION

4 March 2004 Ms M Carstairs, Member   

1.      This is an application by David Bloomfield (the applicant) for review of a decision made by the SSAT, affirming a decision made by a delegate of the respondent that the applicant had a debt of family tax benefit for the 2001/2002 tax year (the relevant period) in the sum of $568.24.  That sum has been recovered from him.

2.      At the hearing the applicant represented himself.  The respondent was represented by Mr S Letch. 

3. The Tribunal had before it the documents lodged under section 37 of the Administrative Appeals Tribunal Act1975 numbered T1-T19 as well as exhibits marked A1-A2 for the applicant and R1 for the respondent.

BACKGROUND

4.      In the relevant period the applicant had two children of a former marriage for whom he was receiving family tax benefit on the basis of 25% shared care.  He is employed full time and supplements his income working as a contract courier.  With respect to the relevant period, the applicant estimated that his income for that year would be $36,800 (T19) and later raised the estimate to $37,000 (T19).  When his tax return was completed, his actual assessed income was $38,860.

5.      A decision was made to raise and recover the amount of $568.24 in family tax benefit paid on the basis of the estimates.  The applicant sought review of the decision to recover the amount from him and an authorised review officer and the SSAT affirmed the correctness of the decision.  The applicant then sought review with this Tribunal on 20 October 2003.

EVIDENCE

6.      In a letter dated 19 March 2003 (T11) the applicant set out that his concerns were that he receives income from several sources, it is highly variable, and he provides his best estimate of what income will be.  He said that he based the estimate on his previous year’s earnings, plus a small percentage increase.  He stated that the calculation of the amount of the debt had never been explained to him and was disproportionate to the amount by which he had miscalculated his estimate of income for the relevant period.

7.      In an outline of issues (exhibit A2) and in oral evidence the applicant said additionally that:

§if he had been told that he was near the limit and might incur a debt, he could have ensured that he did not spend the remaining family assistance moneys.

§there was precedent set in the first year of operation of the current family assistance package, where debts were waived.

8.      The applicant said that he had to fight to receive family assistance in the past and has missed out on entitlements.   However he confirmed that he was not disputing the basis of calculation of 25% shared care taking into account the times when the children are with him.  He said however that the legislation takes no account of the fact that there are no discount for the single parent having to provide a home for children to visit, and he has to pay 100% of bills associated with keeping a household (exhibit A1).  He said that it was in order to cover the costs of raising a family that he has the courier business. 

9.      The applicant said that he has remarried.  He and his wife have a son, born on 17 January 2004.  He said that prior to the birth, his wife was earning approximately $50000, however the household income now is limited to his salary, about $41000, plus about $4000 from the courier business.   He is not claiming family tax benefit at the present time.

CONSIDERATION OF THE ISSUES.

10.     The relevant legislation is to be found in the A New Tax System (Family Assistance) Act 1999 and the A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act). The legislation provides for family tax benefit to be worked out taking into account the person’s and, where relevant, their partner’s adjusted taxable income. A person may either claim family tax benefit on an ongoing basis, as in the applicant’s case, or wait until the end of a financial year for it to be paid as a lump sum. From time to time the applicant provided new estimates of income to Centrelink. It was upon these revised estimates that his entitlement to ongoing payments was worked out.

11.     Section 31A of the Act provides:

“31A(1)   If:

(a)a determination is in force on a particular day under which a claimant is entitled to be paid family tax benefit by instalment; and

(b)that determination includes a determination of the claimant’s rate of family tax benefit worked out on the basis of an estimate of the claimant’s adjusted taxable income in a particular income year; and

(c)the claimant, at any time before or during that income year, provides the Secretary with a revised estimate of that amount that is attributable to the occurrence of an event other than an event to which paragraph 31(1B)(c) or (d) applies; and

(d)the Secretary considers the revised estimate to be reasonable; and

(e)if the claimant’s rate of family tax benefit were calculated using the revised estimate—a new rate of family tax benefit would be required;

the Secretary must vary the determination so that the claimant’s rate of family tax benefit is determined on the basis of that revised estimate.

31A(2)     A variation of a determination under subsection (1) has effect:

(a)if it results in an increase in the claimant’s rate of family tax benefit:

(i)unless subparagraph (ii) applies—from the day on which the revised estimate was provided to the Secretary; or

(ii)if the first day of the income year to which the revised estimate relates occurs after the day identified in subparagraph (i)—from that first day; and

(b)if it results in a decrease (including a decrease to nil) in the claimant’s rate of family tax benefit:

(i)unless subparagraph (ii) or (iii) applies — from the day on which the revised estimate was provided to the Secretary; or

(ii)if the first day of the income year to which the revised estimate relates occurs after the day identified in subparagraph (i) and subparagraph (iii) does not apply — from that first day; or

(iii)if the day after the end of the last instalment period before the variation takes place occurs after the days identified in subparagraphs (i) and (ii) — from the day first-mentioned in this subparagraph.”

12.     Section 71 of the Act provides:

“71       If:

(a)an amount (the received amount) has been paid to a person by way of assistance; and

(b)the received amount is greater than the amount (the correct amount) of assistance that should have been paid to the person under the family assistance law;

the difference between the received amount and the correct amount is a debt due to the Commonwealth by the person.”

13.     The provision for non-recovery of certain family assistance debts is made in Part IV of the Act.  Sections 101 provides:

“101     The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:

(a)the debt did not result wholly or partly from the debtor or another person knowingly:

(i)making a false statement or a false representation; or

(ii)failing or omitting to comply with a provision of the family assistance law; and

(b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and

(c)it is more appropriate to waive than to write off the debt or part of the debt.”

14.     A debt may be waived on the basis of administrative error only if the error is solely that of the Commonwealth and “… the person would suffer severe financial hardship if it were not waived” (s97 of the Act).  Administrative error does not arise for consideration in this case, as the applicant does not dispute that he gave the estimates on which the family tax benefit was paid to him, nor does he dispute that actual taxable income proved to be an amount higher than the estimated amount.

15.     The applicant’s submissions are outlined in his issues set out above.  He submitted that his circumstances were exceptional, particularly as the legislation does not take account of the real costs of providing for children where care is shared, though he acknowledged that this applied to all who were in these circumstances. The respondent submitted that the SSAT had correctly decided that the legislation allows for payments of family tax benefit on the basis of estimated income: s20 of the Administration Act. The applicant had provided two estimates, each lower than his actual taxable income. Mr Letch said that s71 allows for the overpayment to be raised in such a case where an estimate proves to be incorrect.

16.     Mr Letch submitted that the debt should be recovered from the applicant and he had not made out a case for special circumstances, which is a discretionary provisions limited to the most uncommon and exceptional cases.  He said that Mr Bloomfield’s circumstances were not of this kind and his debt had arisen from the normal and expected operation of the scheme and waiver was not appropriate.

17.     The Tribunal reached its decision taking into account the oral and documentary material and submissions of the parties. 

18.     Sections 16 and 21 of the Act provide for payment of family tax benefit by instalments, this being by a determination that remains in force until another determination is made.  Amongst other circumstances, another determination may be made under s31A where a person provides a new estimate of income.   In applying the new estimate given by the applicant the respondent complied with the provisions of the Act in applying s31A.

19.     The income received in 2001/2002, ascertained at the end of the tax year, was higher than the amounts estimated.  Section 71 provides for this situation.  The overpayment is a debt under the Act because of the effect of s71(2), which requires that the difference between a received amount and a correct amount be raised as a debt.  The Tribunal, therefore, finds that there is a debt in the amount of the difference.

20.     The applicant acknowledged that the Act allows for adjustments to a family tax benefit rate when different estimates are given, but he considered the amount raised was disproportionate.   Mr Letch explained that in calculating an overpayment, thirty cents in the dollar affects the amounts above an income free area and the Tribunal accepts that the debt calculations in this case were carried out correctly and in accordance with the legislation.

21.     With respect to waiver of all or part of the debts under s101 of the Act, the respondent must satisfy ss101(b) and (c).  In relation to s101(b) concerning special circumstances, Court and Tribunal decisions establish that special circumstances are circumstances having a particular quality of unusualness that sets one case  apart from others.  In Re Beadle and Director‑General of Social Security (1984) 6 ALD 1 this was described as circumstances that are unusual, uncommon or exceptional. The applicant pointed to the unfairness of the legislative system that does not take account of the fact that shared care households will have costs in excess of the percentage basis on which family tax benefit is worked out. However these matters apply to all parents who share the care of children and so this is not a matter that sets the applicant’s case apart in order to support the debt being waived. The Tribunal accepts the submission of the respondent that the debt here has arisen from the ordinary operation of a system based on estimated income and the financial circumstances of the applicant confirm that recovery of the amount overpaid was the correct course.

22.     The applicant referred to another circumstance, namely that there are now warnings provided by Centrelink where people may incur a debt, and the option is given to cease or reduce the family tax benefit payment.   However, the fact that this practice is now adopted by Centrelink is not a justification for an exercise of the discretion as to special circumstances where the debt has already been incurred.   This change is intended to prevent overpayments arising, not to avoid recovery of debts already incurred.  It is not itself a special circumstance.

23.      The Tribunal decides that the applicant’s circumstances were not sufficiently special to warrant the debt being waived in whole or in part. 

24.     With reference to the applicant’s submission about waiver of debts arising from the first year of operation of new provisions for family tax benefit, this was a special provision, requiring a Ministerial determination under s102 of the Act and ceased to be available after that year.  The applicant cannot take the benefit of that provision.

DECISION

25.     The Tribunal affirms the decision under review.

I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of Ms M Carstairs, Member

Signed:   J Lauriston

Associate

Date/s of Hearing  2 March 2004
Date of Decision  4 March 2004

The Applicant appeared in person
For the Respondent                  Mr S Letch, Departmental Advocate