Brosnan and Secretary, Department of Social Services (Social services second review)
[2016] AATA 241
•15 April 2016
Brosnan and Secretary, Department of Social Services (Social services second review) [2016] AATA 241 (15 April 2016)
Division
General Division
File Number(s)
2015/4776
Re
Ms Julie Brosnan
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Mr Conrad Ermert, Member
Date 15 April 2016 Place Melbourne The Tribunal affirms the decision under review
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Mr Conrad Ermert, Member
CATCHWORDS
SOCIAL SERVICES – Family Tax Benefits – late lodgement of tax returns – whether special circumstances exist – decision affirmed
LEGISLATION
Administrative Appeals Tribunal Act 1975
A New Tax System (Family Assistance)(Administration) Act 1999
CASES
Beadle and Director-General of Social Security (1984) 6 ALD 1
Groth and Secretary, Department of Social Security (1995) FCA 1708
Davy and Secretary, Department of Employment and Workplace Relations (2007) 94 ALD 693
REASONS FOR DECISION
Mr Conrad Ermert, Member
15 April 2016
INTRODUCTION
During the 2012/2013 income year Ms Julie Brosnan, the Applicant, received Family Tax Benefit (FTB) by fortnightly instalments. The Department of Social Services, the Respondent, assessed Ms Brosnan’s rate of FTB based on, amongst other things, an estimate of the combined taxable income of Ms Brosnan and her partner, Mr Brosnan.
On 21 March 2014 Centrelink issued a notice to Ms Brosnan informing her that she and her partner had only one year instead of two to lodge their 2012/2013 income year tax returns. Centrelink is the service provider for the Respondent. The notice advised that, in order to receive the full FTB entitlement, the tax returns of Ms Brosnan and her partner must be lodged by 30 June 2014.
Ms Brosnan’s accountant lodged their 2012/2013 tax returns with the Australian Tax Office on 8 October 2014. On 16 October 2014 an officer of Centrelink notified Ms Brosnan that, due to the late lodgement of the tax returns, she was not entitled to the FTB supplement and top up payments for the 2012/2013 income year.
Ms Brosnan sought a review of this decision. On 19 February 2015 an Authorised Review Officer (ARO) of Centrelink affirmed the original decision.
Ms Brosnan sought a review of the ARO decision on the grounds that she did not receive the Centrelink notice dated 21 March 2014 and that her bookkeeper failed to lodge the tax returns on time. On 30 July 2015 this Tribunal decided on its first review to affirm the ARO decision.
On 14 September 2015 Ms Brosnan lodged an application for a second review of the decision as she had not received the notice advising of the change of time to lodge the tax returns. She stated that had she received the notice she would have applied for an extension of time.
This matter is the second review of the ARO decision.
THE HEARING
At the hearing Ms Brosnan represented herself and gave evidence by telephone under affirmation. Mr Tim Noonan, a Principal Lawyer with the Department, represented the Respondent, also by telephone.
I had before me the documents provided by the Secretary in accordance with section 37 of the Administrative Appeals Tribunal Act 1975 (the T-documents). As Supplementary T-Document 1 (ST1) I took in Extract from Departmental website: Changes to the time period for lodging lump sum claims and confirming income; Email Annabel Lee to Michelle Glasspool dated 26 September 2013.
For Ms Brosnan I took in as evidence:
·Exhibit A1 - Statement of Tamara Everitt dated 30 November 2015; and
·Exhibit A2 – Statement of Debbie Rielly dated 12 December 2015.
For consideration I also had the Secretary’s Statement of Facts and Contentions dated 2 March 2016.
LEGISLATION
The legislation relevant to this matter is contained in A New Tax System (Family Assistance) (Administration) Act 1999 (the Act).
Sub-section 32C(2) of the Act states relevantly:
32C Relevant reconciliation time – member of a couple, income tax return lodged within years
…
(3) If:
(a)Both members of the couple were required to lodge an income tax return for the relevant income year; and
(b)Each member of the couple lodged an income tax return for the relevant year before the end of:
(i) The first income year after the relevant income year; or
(ii) Such further period as the Secretary allows for that member under subparagraph (1)(c)(ii) or (iii), as the case requires;
…
Subparagraphs (1)(c)(ii) and (iii) of the Act provide in part that the Secretary may allow for additional time to lodge a return if the Secretary is satisfied that there are special circumstances that prevented the members from lodging the returns before the end of that first income year.
ISSUES
Both parties agree that Ms Brosnan’s accountant did not lodge their income tax returns until 8 October 2014. This date is after 30 June 2014, being the end of the 2013/2014 income year which is the first income year after 2012/2013, the relevant income year. The provisions of section 32C of the Act provide that the reconciliation time can only be extended to 8 October 2014 if the Secretary is satisfied that there are special circumstances that prevented Ms and Mr Brosnan from lodging their tax returns before the end of that first income year.
The issue I must determine is whether there are special circumstances that prevented them from lodging their returns before 30 June 2014.
EVIDENCE
In her evidence Ms Brosnan stated that she did not receive the letter of notification that the law had changed. Had she received it she would have done something about it. Ms Brosnan also said her son had depression. She had split up with her husband and because the atmosphere in the home was so toxic she took up an employment position in Tasmania. She returned home every three weeks.
Ms Brosnan said she first became aware of the change in the law when she was informed that her benefits had been denied. She said that her bookkeeper and accountant did not know of the change in the law at the time they were dealing with her tax returns.
Mr Noonan referred to Ms Brosnan’s evidence to the Tribunal’s first review where, at paragraph 16, she said “Because she was away, she did not see the Centrelink letters as they came in. Mr Brosnan never opened the mail”. Ms Brosnan explained that Mr Brosnan would leave all the mail unopened and put it on a desk. She said that is why she knows the letter was not received as she would have seen it otherwise. Ms Brosnan said they had problems with the mail all the time. They used to have a roadside mail box but she said it was not unusual for them to receive mail addressed to other people and snails used to get at the mail in the box. They then changed their mail to a Post Office box. Ms Brosnan said neither her nor her partner notified Centrelink of their problems with the mail and that they had very little contact with Centrelink.
Mr Noonan referred to Ms Brosnan’s evidence to the Tribunal’s first review where, at paragraph 18, she said “…the reason their income tax returns were lodged out of time was because their bookkeeper developed a serious problem with alcohol … They had been using her for the last seven or eight years but her behaviour had been deteriorating in the last few years. Ms Brosnan said she would ring up to make a time to bring the bookwork over but when she arrived the bookkeeper would be extremely hung over … Because the bookkeeper was a family friend it was extremely difficult for Ms Brosnan to be assertive with her …”. Ms Brosnan stated that she delivered all the necessary papers to the bookkeeper by the end of December 2013.
When asked how she knew that the bookkeeper and the accountant were unaware of the change of the law Ms Brosnan said she assumed so because they did not inform her of any changes, and if they were aware they would have done so.
Ms Brosnan said that her accountant, Ms Brusamarello, took over her tax returns in about May 2014. She said she had weekly or fortnightly email contact with her. Ms Brosnan said that she asked Ms Brusamarello to do the returns as soon as possible as she needed the money. Ms Brosnan agreed as correct the statement by Ms Brusamarello in her letter of 17 July 2015 which stated “I believe Julie did everything on part (sic) possible so that her tax return could be lodged on time”.
Ms Brosnan did not know why her tax returns were not lodged until 8 October 2014. She said that her accountant was not aware of any urgency to do so. Ms Brosnan stated that the delay in lodging her tax returns was not a mistake by the accountant. They did not know of the change in the law.
Mr Noonan referred to Ms Brosnan’s evidence to the Tribunal’s first review where, at paragraph 24, Ms Brosnan provided details of her personal circumstances, including marital problems and a son developing depression. When asked whether she had seen a doctor in relation to her own stress Ms Brosnan said she did not have time to go to doctors or take medications. She just kept going.
Ms Brosnan said her job in Tasmania was full time. She did not take any time off from work for personal issues or family ill health. She said that she resigned from the job and returned home when her son developed depression.
When asked what circumstances should be considered in this case as special circumstances Ms Brosnan said:
·Her estranged relationship,
·The mental and physical abuse she suffered from her husband,
·Her best friend’s cancer,
·Her eldest son’s drug addiction
·Her youngest son’s depression
·Living away from home in Tasmania,
·She did not receive the Centrelink notice and did not know about the change in the law; and
·Her accountant did not know about the change in the law.
SUBMISSIONS
Ms Brosnan contends that the special circumstances in her case arise from a combination of:
·her not receiving the Centrelink notice of 21 March 2014;
·the accountant not knowing about the change in the law; and
·her personal and family circumstances.
She submits that all these things were happening in her life at the same time but the crux of the matter is that she did not receive the Centrelink notice.
TRIBUNAL CONSIDERATIONS
In considering the issue I note the decision in Beadle and Director-General of Social Security (1984) 6 ALD 1 where the Tribunal stated at 12:
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 the 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 particularly quality of unusualness that permits them to be described as special.
I note also the decision in Groth and Secretary Department of Social Security (1995) FCA 1708 in which the Federal Court stated at 12:
The phrase “special circumstances”, it has been said, although imprecise is sufficiently understood not to require judicial gloss … it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case. … It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary …
The effect of these decisions is that for circumstances to be considered as special they must, in their context, be unusual, uncommon or out of the ordinary and that nothing unfair, unintended or unjust had occurred as a result.
I will apply these tests to the circumstances contended by Ms Brosnan as being special circumstances that prevented her from lodging her tax return by 30 June 2014.
Not Receiving the Centrelink Notice
In considering Ms Brosnan’s contention that she did not receive the Centrelink notice dated 21 March 2014 I note the following:
·Section 29(1) of the Acts Interpretations Act 1901 (the Interpretations Act) provides relevantly:
Meaning of service by post
Where an Act authorizes or requires any document to be served by post … then the service shall be deemed to be effected by properly addressing, prepaying and posting the document as a letter and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post;
and
·Section 224(3) of the Administration Act provides:
Notice of decisions
...
(3)If notice of a decision is given in accordance with subsection (2), notice of the decision is taken to have been given to the person at the time at which the notice would be delivered in the ordinary course of the post, unless the contrary is proved.
I note Ms Brosnan’s evidence of problems in receiving mail addressed to other people. Although not specifically contended I accept the implication of her evidence that some of Ms Brosnan’s mail might also have been misdirected. I note also her evidence that it was because of problems with the mail that she arranged for a post office box.
Ms Brosnan’s evidence raises a possibility of mail not being delivered correctly. However I am not satisfied that a mere possibility is sufficient to meet the requirement of the Act that the contrary is proved. Accordingly I find that the Centrelink notice is deemed to have been delivered. The finding means that Ms Brosnan is deemed to have received the notice and as a consequence the claimed non-delivery cannot be a circumstance that prevented her from lodging the income tax returns by the due date.
Accountant Unaware of the Change in Law
Although I have found that Ms Brosnan is deemed to have received the Centrelink notice I accept her evidence that she was not aware of the advice contained in that letter. In any case the evidence of Ms Brosnan is that by December 2013 she had provided to her bookkeeper all the material necessary to complete the tax returns. The material was passed to the accountant in May 2014. The accountant did not complete and lodge the tax returns until 8 October 2014. Ms Brosnan’s contention is that the accountant was unaware of the change in the law and hence did not see a need for urgency.
As a general principle, ignorance of the law is no excuse for a person’s failure to comply with it. I do not accept that, by itself, ignorance of a statutory requirement is unusual, out of the ordinary or uncommon. Without evidence of some circumstance that prevented the accountant from making herself aware of the extant statutory requirements I do not accept that her lack of awareness leading to her lack of urgency is unusual, uncommon or out of the ordinary. Nor did the lack of awareness prevent the accountant from lodging the returns by the due date.
In addition I note also that Centrelink has issued a policy relevant to such an issue. eReference 007.36060 states in part:
Note: an extension must not be granted if a tax agent/accountant advises that they were the cause of the late lodgement of tax returns even if the customer provided financial records before 30 June.
I see no reason to not apply the policy in this case.
Personal Circumstances
Ms Brosnan contends that the combination of all her personal circumstances should be considered as a special circumstance. She describes her circumstances as including her marital problems, the drug addiction of her eldest son, the depression of her youngest son and the death of a close friend. Her evidence regarding her personal circumstances is well supported by the statements of Tamara Everitt and Debbie Rielly taken in as Exhibits A1 and A2.
In considering her personal circumstances I note from her evidence that she was able to provide all the required information to both her bookkeeper and her accountant by May 2014. I accept this as being sufficient time for the accountant to complete and lodge the tax returns by 30 June 2014. It is to her great credit that Ms Brosnan continued to manage her affairs to this extent. However the evidence is that her personal circumstances did not prevent her from lodging the returns by the due date. The late lodgement was the result of the accountant’s lack of urgency.
Unusual, uncommon or out of the ordinary
I have found that none of the contended circumstances are unusual, uncommon or out of the ordinary or prevented Ms Brosnan from lodging the returns in time. I must now consider whether the findings would produce an outcome that is unfair, unintended or unjust.
Unfair
In considering whether something unfair has occurred I note the decision of the Tribunal in Davy and Secretary, Department of Employment and Workplace Relations (2007) 94 ALD 693 in which, at paragraph 80, Deputy President Forgie found:
… The “special circumstances” are not merely directed to the person’s own circumstances. Rather, they are directed to those that are “special circumstances … that make it desirable to waive”. That necessarily requires a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system … The system of administration of the SS Act … did not lead to any injustice or unfairness on Mr Davy that is not visited, or potentially visited, upon all other recipients of social security payments under the Act. Therefore, I am not satisfied that there are special circumstances that make it desirable to waive the debt under s 1237AAD of the Act.
Although Ms Brosnan considers the original decision to be unfair, the requirements of the Act apply equally to her and all other recipients of FTB. A decision in favour of Ms Brosnan could be considered unfair to all others whose benefits have been withheld in accordance with the provisions of the Act. The choice of bookkeeper and accountant are clearly matters wholly within the control of Ms Brosnan. I see no fairness in other taxpayers bearing the burden of the failures of the bookkeeper and the lack of knowledge and urgency of the accountant in not lodging the tax returns in time.
Time limitations within the provisions of the legislation are clearly a measure to effectively manage the general administration of the social security system. Over-ruling those time limits without compelling reasons could be considered as unfair to the management of the system.
Adopting the reasoning in Davy I find that there is no unfairness in this case.
Unintended
In considering whether something unintended has occurred I note that the intent of the relevant provisions of section 32C of the Act are quite clear. The reconciliation time can only be extended if the Secretary is satisfied that there are special circumstances that prevented the other person from lodging the return before the end of the first income year. Without special circumstances the intended consequences are that the person is not entitled to an extension of time and is not entitled to the consideration and receipt of the relevant benefits.
I am satisfied that nothing unintentional has occurred in this case.
Unjust
As the decision to not extend the reconciliation time is in accordance with the provisions of the Act and is not unfair it cannot be classified as unjust. I find accordingly.
Special Circumstances
I have found that Ms Brosnan’s circumstances are not unusual, uncommon or out of the ordinary within the context of the administration of the Act and did not prevent her from lodging the income tax returns by the due date. I have found also that nothing unfair, unintended or unjust has occurred as a result of the decision.
Accordingly I find that Ms Brosnan’s circumstances are not special circumstances that prevented her from lodging the income tax returns by the due date.
CONCLUSION
I have found that the contended circumstances are not special circumstances that prevented Ms Brosnan from lodging the income tax returns within the required time. There are no other circumstances claimed as special and that prevented her from lodging her tax returns for the 2012/2013 income year by 30 June 2014.
As a result I am not able to exercise the discretion contained in subsection 32C(3)(b)(ii) of the Act. Without the exercise of the discretion Ms Brosnan is not entitled to receive an increased reconciled amount of FTB for the 2012/2013 income year based upon her actual combined adjusted taxable income.
DECISION
I affirm the decision under review.
I certify that the preceding 54 (fifty -four) paragraphs are a true copy of the reasons for the decision herein of Mr Conrad Ermert, Member
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Associate
Dated 15 April 2016
Date(s) of hearing 5 April 2016 Applicant In person Advocate for the Respondent Mr Tim Noonan
Key Legal Topics
Areas of Law
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Administrative Law
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Social Security Law
Legal Concepts
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Judicial Review
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Natural Justice & Procedural Fairness
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Administrative Discretion
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Special Circumstances
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