Borthwick; Secretary, Department of Family and Community Services

[2005] AATA 1030

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 1030

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2005/682

GENERAL ADMINISTRATIVE DIVISION		)
Re		Secretary, Department of Family and Community Services

Applicant

And Tracey Borthwick

Respondent

DECISION

Tribunal M.A. Griffin

Date19 October 2005

PlaceSydney

Decision The Tribunal sets aside the decision under review and in substitution thereof decides that:
(a)   Debts of family tax benefit of $2941.90 and $6922.28 for tax years 2002/03 and 2003/04 respectively are to be recovered from Ms Borthwick.

[Sgd] M.A. Griffin, Member

CATCHWORDS

SOCIAL SECURITY - family tax benefit - overpayment - accountant's error on tax return - no special circumstances  - decision set aside.

A New Tax System (Family Assistance) (Administration) Act 1999, sections 71, 95, 97, 101

Beadle v Director General of Social Security (1984) 6 ALD 1

Dranichnikov and Centrelink [2003] FCAFC 133

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

REASONS FOR DECISION

19 October 2005 M.A. Griffin             

1.      This is an application to review a decision of the Social Security Appeals Tribunal (“the SSAT”) dated 27 April 2005. The SSAT relevantly decided to waive half of a debt for overpayment to Ms Borthwick of Family Tax Benefit (“FTB”) for the 2003/04 tax year. 

2. At the hearing, Mr Duri, a Centrelink advocate, represented the Secretary, Department of family and Community Services (“the Department”) and Ms Borthwick represented herself. The Tribunal received into evidence the T - documents lodged under section 37 of the Administrative Appeals Tribunal Act 1975 (T1-T26), a bundle of documents marked as A1 for the Department and a letter marked as R1 for Ms Borthwick.

History

3.      Ms Borthwick has been married since 1995. She lives with her husband and three dependent children, two of whom are twins.

4.      It is not in dispute that Ms Borthwick was overpaid FTB in the years 2002/03 and 2003/04; the amount of those overpayments being $2941.90 for 2002/03 and $6922.28 for 2003/04.  These overpayments arose because Ms Borthwick’s husband’s income was not included in the calculations for FTB the payments.  The family’s accountant, who completed the relevant documentation, failed to include Mr Borthwick’s details in the 2002/03 return and failed to enter the relevant code in the “Spouse number” section of the 2003/04 return.  The 2003/04 return did, however, identify Mr Borthwick in the “Your spouse’s name” section.

5.      It is not in dispute that Ms Borthwick chose to lodge lump sum claims for FTB at the end of the tax years so as to avoid the possibility of overpayment.

6.      The SSAT affirmed the decision to recover the 2002/03 overpayment. However, the SSAT found that there were ‘special circumstances’ which made it desirable to waive half of the 2003/04 debt of $6922.28, leaving a debt of $3461.14 owing.

Consideration of Issues

7. The legislation relevant to this review is found in sections 71, 95, 97 and 101 of the A New Tax System (Family Assistance) (Administration) Act 1999 (“the Act”).

8. Section 71 of the Act provides that any amount paid to a person greater than the amount that should have been paid to the person under the family assistance law is a debt due to the Commonwealth. It is clear that Mrs Borthwick was overpaid FTB and the amount of overpayment is a debt due to the Commonwealth.

9 Section 95 provides for write-off of a debt if certain strict conditions are met, such as the debtor’s whereabouts being unknown or incapacity to repay the debt. None of those criteria are satisfied in Mrs Borthwick’s case. Therefore a write off of the debt is not allowed.

10. Under section 97 of the Act, the Secretary must waive the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth in certain circumstances. Mrs Borthwick submits that Centrelink and the Tax Office knew that she was married and that the debt is due to Centrelink’s error in not identifying this fact. However, the evidence reveals that Mrs Borthwick’s accountant did not complete a relevant section relating to spouse on the forms for both years. In these circumstances, I find that the error was not solely attributable to the Commonwealth.

11. Section 101 of the Act allows for waiver of a debt where there are ‘special circumstances’. In Dranichnikov v Centrelink [2003] FCAFC 133 at paragraph 65, Hill J in considering the term “special circumstances” said:

“65. … The origin of the test apparently adopted by the Secretary appears to be the decision of the first instance Judge in Beadle v Directory-General of Social Security (1985) 60 ALR 225.  That was a decision under previous legislation, the history of which is referred to by French J in Secretary of Department of Social Security v Hales (1998) 82 FCR 154.  The Full Court in Beadle comprising Bowen CJ, Fisher and Lockhart JJ, however, was of the view that it was not possible to lay down precise rules as to what constituted special circumstances under the then s 102(1)(a) of the Social Security Act 1947 (Cth).  Their Honours point out that the question whether there were special circumstances was one for the decision maker (in that case the Director-General) bearing in mind the purpose for which the power was given.  The reference to the first instance decision from which the words “unusual, uncommon or exceptional” come was not actually affirmed by the Full Court.

66. To some extent the question whether there were special circumstances must depend on how it came about that the error occurred.  Again that is not a matter to which the decision maker apparently averted.  Other cases which have considered analogous words such as “special reasons” has tended to conclude, albeit in different contexts, that what is required will be circumstances which distinguish the case in consideration from the usual case.  There will be a requirement that the circumstances are such that takes the case out of the ordinary: Jess v Scott (1986) 12 FCR 187 and the cases in various contexts in the decision which Lockhart, Shepherd and Burchett JJ discuss.

67. It is possible to read the decision statement as suggesting that the present case was one incapable of falling within the words “special circumstances”.  If that is what was held, it would involve legal error.  However, the real problem with the exercise of discretion under s 101 as with the mandatory provisions of s 97, is that the decision maker appears not to have considered at all what the circumstances were which gave rise to the overpayment.  Whether those circumstances were or were not special will obviously be a matter for the decision maker when the factual circumstances have been ascertained.”

12.      In the present case, the SSAT found that

“In regards to the 2003/04 debt Ms Borthwick’s 2003/04 income tax return did show that she had a spouse. Consequently ideal administrative practice would have resulted in the discrepancy…being identified and rectified, preventing any overpayment occurring”.

13.      The SSAT found that this was a ‘special circumstance’. I am not satisfied this is sufficient reason to distinguish this matter from the usual case of overpayment or to take it out of the ordinary. Whilst a past period claim for FTB can be made at the same time that a tax return is lodged, it is a separate form.  Moreover, the forms are used for computerised data entry purposes by both the Tax Office and the Department of Family and Community Services. It may be that “ideal administrative practice” would prevent errors such as this but I am not satisfied that is a special circumstance. The fact remains that but for the accountant’s error the problem would not have arisen.

14. Mrs Borthwick is employed part time although her hours are to be reduced. Her husband is employed. They own their own home and have substantial equity in the property. There are no major health problems in the family. On the evidence presented, I find that there are no personal or financial matters raised by Mrs Borthwick that could constitute special circumstances, nor is there anything in the circumstances which gave rise to the overpayment that constitutes “special circumstances”. As a result, Mrs Borthwick does not satisfy section 101 of the Act, and the debt may not be waived.

15.      For these reasons, the Tribunal finds that the overpayment of FTB for the relevant periods is a debt due to and recoverable by the Commonwealth and that there are no grounds to waive or write off the debt.

DECISION

16.      The Tribunal sets aside the decision under review and substitutes therefore, a decision to recover debts of family tax benefit of $2941.90 and $6922.28 for tax years 2002/03 and 2003/04 respectively.

I certify that the 16 preceding paragraphs are a true copy of the reasons for the decision herein of  

Signed:         A. Krilis
  Associate

Date/s of Hearing  14 September 2005
Date of Decision  19 October 2005
Advocate for the Applicant  Mr Duri
Representative for the Respondent          Self