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

Case [2015] AATA 767

Brumley and Secretary, Department of Social Services (Social services second review) [2015] AATA 767 (30 September 2015)

Division

GENERAL DIVISION

File Number(s)

2015/1883

Re

Kay Brumley

APPLICANT

And

Secretary, Department of Social Services

RESPONDENT

DECISION

Tribunal

Dr P McDermott RFD, Senior Member
Date 30 September 2015
Place Brisbane

The decision under review is affirmed.

..........................[Sgd]..............................................

Dr P McDermott RFD, Senior Member

CATCHWORDS

SOCIAL SECURITY – family tax benefit – FTB – adjusted taxable income – net rental property loss – overpayment of benefit – waiver – write off – special circumstances – decision under review affirmed

LEGISLATION

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

CASES

Sekhon v Secretary, Department of Family and Community Services (2003) 132 FCR 126

Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Beadle and Director General of Social Security (1985) 60 ALR 225
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Dranichnikov v Centrelink  (2003) 75 ALD 134

Varela; Secretary, Department of Families, Community Services and Indigenous Affairs [2006] AATA 640

REASONS FOR DECISION

Dr P McDermott RFD, Senior Member

30 September 2015

INTRODUCTION

  1. I have to determine whether the applicant had a recoverable debt in relation to overpayments of family tax benefit (“FTB”) for the 2011/2012 income year and, if so, whether all or part of that debt should be written off or waived.

    PRIOR DECISIONS

  2. The applicant seeks the review of a decision of the Social Security Appeals Tribunal (“SSAT”). In that decision dated 19 March 2015 the SSAT affirmed the decision of an Authorised Review Officer (“ARO”) made on 31 January 2015 to affirm a decision of the Department on 19 August 2014 to raise a debt of $3,133.82 for the overpayment of FTB in the 2011/2012 income year.

    BACKGROUND

  3. In the 2011/2012 income year the applicant was in receipt of FTB in relation to her child. The calculation of FTB by the Department was based on the advice of the applicant that her estimate of her income for the 2011/2012 income year was $44,849. At the hearing the applicant stated that in that income year she was renting 8 investment properties. There is evidence that in the previous income year she was renting 12 investment properties. The applicant stated that she had difficulties with bookkeepers and was unable to know with any accuracy the state of her income and expenses.

  4. On 10 August 2010 the applicant contacted the Department regarding an inquiry for FTB. It is fair to say that the applicant was unhappy with the state of the legislation which provides that rental losses are included as income. The file note of that conversation records that the officer provided the applicant with advice so that the applicant “is aware that if it remains at $43000 for 2010/2011 she will have another overpayment”. The file note records: “Customer did not want income changed – as she needs the money to live on”.[1]

    [1] Exhibit A f 39.

  5. On…

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AGLC
Brumley and Secretary, Department of Social Services (Social services second review) [2015] AATA 767
Case
[2015] AATA 767
Decision Date

CaseChat Overview and Summary

In the case under review, the applicant sought to challenge a decision of the Social Security Appeals Tribunal (SSAT) which affirmed a decision of the Secretary of the Department of Social Services to raise a debt of $3,133.82 for the overpayment of family tax benefit (FTB) for the 2011/2012 income year. The applicant argued that the overpayment was due to difficulties with her bookkeepers and her inability to accurately assess her income and expenses. The applicant further contended that the debt should be waived or written off on the basis of special circumstances.

The primary legal issue for the tribunal to decide was whether the overpayment of FTB should be waived or written off under the relevant provisions of the Social Security Act 1991 (Cth). Specifically, the tribunal had to consider whether the overpayment fell under the category of an administrative error and if the applicant would suffer severe financial hardship if the debt were not waived. Additionally, the tribunal examined whether the debt should be written off under section 95(2) of the Act, which provides circumstances under which a debt may be written off.

The tribunal found that the applicant had properly conceded that there was an overpayment of FTB in the 2011/2012 income year. The tribunal also reviewed the debt calculations and found that the debt was correctly calculated at $3,133.82. However, the tribunal determined that it was inappropriate to write off the debt as it had already been paid in December 2014. Furthermore, the tribunal found that there was no evidence of the applicant’s capacity to repay the debt or any other circumstances warranting a write-off under section 95(2) of the Act. The tribunal also considered the possibility of waiving the debt under section 97 of the Act but found that the applicant had not demonstrated severe financial hardship.

The tribunal concluded that the decision of the SSAT to affirm the debt should be upheld. The tribunal found that the applicant had not provided sufficient evidence to warrant a waiver or write-off of the debt. Consequently, the tribunal affirmed the decision of the Secretary to raise the debt for the overpayment of FTB.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

The applicant seeks the review of a decision of the Social Security Appeals Tribunal (“SSAT”). In that decision dated 19 March 2015 the SSAT affirmed the decision of an Authorised Review Officer (“ARO”) made on 31 January 2015 to affirm a decision of the Department on 19 August 2014 to raise a debt of $3,133.82 for the overpayment of FTB in the 2011/2012 income year.BACKGROUND In the 2011/2012 income year the applicant was in receipt of FTB in relation to her child. The calculation of FTB by the Department was based on the advice of the applicant that her estimate of her income for the 2011/2012 income year was $44,849. At the hearing the applicant stated that in that income year she was renting 8 investment properties. There is evidence that in the previous income year she was renting 12 investment properties. The applicant stated that she had difficulties with bookkeepers and was unable to know with any accuracy the state of her income and expenses. On 10 August 2010 the applicant contacted the Department regarding an inquiry for FTB. It is fair to say that the applicant was unhappy with the state of the legislation which provides that rental losses are included as income. The file note of that conversation records that the officer provided the applicant with advice so that the applicant “is aware that if it remains at $43000 for 2010/2011 she will have another overpayment”. The file note records: “Customer did not want income changed – as she needs the money to live on”.[1] [1] Exhibit A f 39. On 11 May 2011 the Department wrote to the applicant to invite her to update her income estimate for the relevant income year. In that letter the applicant was advised that the Department would calculate her FTB on the basis of an income of $44,849. The applicant did not respond to that invitation and on 29 June 2011 the Department wrote to the applicant to advise her that her entitlement to FTB had been calculated on an income of $44,849.CONSIDERATION The applicant quite properly concedes that there is no issue that there was an overpayment of FTB in the 2011/2012 income year. I have reviewed the debt calculations.[2] The applicant accepts that the debt was correctly calculated. I find that the applicant was overpaid FTB by $3,133.82. During the hearing I discussed with the parties whether the debt should be written off or waived. The Secretary may under s 95(2) of the Act write off a debt due to the Commonwealth for a stated period or otherwise, if:(a) the debt is irrecoverable at law; or(b) the debtor has no capacity to repay the debt; or(c) the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or(d) it is not cost effective for the Commonwealth to take action to recover the debt. During the hearing it became evident that the debt was paid in December 2014 and I raised with the parties whether it was inappropriate to write off a debt which had already been discharged and no party took issue with this position. I therefore do not consider that the debt should be written off under s 95(1) of the Act. In addition it would be inappropriate to write off the debt where there was no evidence of the applicant’s “capacity to repay” the debts. The applicant was unable to inform the Tribunal of what savings she had or what her assets were worth or the extent of her debts.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

I have to determine whether the applicant had a recoverable debt in relation to overpayments of family tax benefit (“FTB”) for the 2011/2012 income year and, if so, whether all or part of that debt should be written off or waived. PRIOR DECISIONS The applicant seeks the review of a decision of the Social Security Appeals Tribunal (“SSAT”). In that decision dated 19 March 2015 the SSAT affirmed the decision of an Authorised Review Officer (“ARO”) made on 31 January 2015 to affirm a decision of the Department on 19 August 2014 to raise a debt of $3,133.82 for the overpayment of FTB in the 2011/2012 income year.BACKGROUND In the 2011/2012 income year the applicant was in receipt of FTB in relation to her child. The calculation of FTB by the Department was based on the advice of the applicant that her estimate of her income for the 2011/2012 income year was $44,849. At the hearing the applicant stated that in that income year she was renting 8 investment properties. There is evidence that in the previous income year she was renting 12 investment properties. The applicant stated that she had difficulties with bookkeepers and was unable to know with any accuracy the state of her income and expenses. On 10 August 2010 the applicant contacted the Department regarding an inquiry for FTB. It is fair to say that the applicant was unhappy with the state of the legislation which provides that rental losses are included as income. The file note of that conversation records that the officer provided the applicant with advice so that the applicant “is aware that if it remains at $43000 for 2010/2011 she will have another overpayment”. The file note records: “Customer did not want income changed – as she needs the money to live on”.[1] [1] Exhibit A f 39. On 11 May 2011 the Department wrote to the applicant to invite her to update her income estimate for the relevant income year. In that letter the applicant was advised that the Department would calculate her FTB on the basis of an income of $44,849. The applicant did not respond to that invitation and on 29 June 2011 the Department wrote to the applicant to advise her that her entitlement to FTB had been calculated on an income of $44,849.CONSIDERATION The applicant quite properly concedes that there is no issue that there was an overpayment of FTB in the 2011/2012 income year. I have reviewed the debt calculations.[2] The applicant accepts that the debt was correctly calculated. I find that the applicant was overpaid FTB by $3,133.82. During the hearing I discussed with the parties whether the debt should be written off or waived. The Secretary may under s 95(2) of the Act write off a debt due to the Commonwealth for a stated period or otherwise, if:(a) the debt is irrecoverable at law; or(b) the debtor has no capacity to repay the debt; or(c) the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or(d) it is not cost effective for the Commonwealth to take action to recover the debt.

Ratio Decidendi

Legal Principle Established

On 11 May 2011 the Department wrote to the applicant to invite her to update her income estimate for the relevant income year. In that letter the applicant was advised that the Department would calculate her FTB on the basis of an income of $44,849. The applicant did not respond to that invitation and on 29 June 2011 the Department wrote to the applicant to advise her that her entitlement to FTB had been calculated on an income of $44,849.CONSIDERATION The applicant quite properly concedes that there is no issue that there was an overpayment of FTB in the 2011/2012 income year. I have reviewed the debt calculations.[2] The applicant accepts that the debt was correctly calculated. I find that the applicant was overpaid FTB by $3,133.82. During the hearing I discussed with the parties whether the debt should be written off or waived. The Secretary may under s 95(2) of the Act write off a debt due to the Commonwealth for a stated period or otherwise, if:(a) the debt is irrecoverable at law; or(b) the debtor has no capacity to repay the debt; or(c) the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or(d) it is not cost effective for the Commonwealth to take action to recover the debt. During the hearing it became evident that the debt was paid in December 2014 and I raised with the parties whether it was inappropriate to write off a debt which had already been discharged and no party took issue with this position. I therefore do not consider that the debt should be written off under s 95(1) of the Act. In addition it would be inappropriate to write off the debt where there was no evidence of the applicant’s “capacity to repay” the debts. The applicant was unable to inform the Tribunal of what savings she had or what her assets were worth or the extent of her debts. I have also considered whether the debt should be waived under s 97 of the Act which provides:(1) The Secretary must waive the right to recover the proportion (the administrative error proportion) of a debt that is attributable solely to an administrative error made by the Commonwealth if subsection (2) or (3) applies to that proportion of the debt.(2) The Secretary must waive the administrative error proportion of a debt if:(a) the debtor received in good faith the payment or payments that gave rise to the administrative error proportion of the debt; and(b) the person would suffer severe financial hardship if it were not waived.(3) The Secretary must waive the administrative error proportion of a debt if:(a) the payment or payments were made in respect of the debtor's eligibility for family assistance for a period or event (the eligibility period or event ) that occurs in an income year; and(b) the debt is raised after the end of:(i) the debtor's next income year after the one in which the eligibility period or event occurs; or(ii) the period of 13 weeks starting on the day on which the payment that gave rise to the debt was made;whichever ends last; and(c) the debtor received in good faith the payment or payments that gave rise to the administrative error proportion of the debt.(4) For the purposes of this section, the administrative error proportion of the debt may be 100% of the debt.