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

[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.

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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 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

6. 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.

7.       A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (“the Act”) provides that if an amount is paid to a person by way of FTB and that person was not entitled to the payment, the amount so paid is a debt due to the Commonwealth by the person: s 71(1). The Act also provides that if an amount has been paid to a person by way of FTB, and that amount is greater than the amount that should have been paid to the person under family assistance law, the difference between the amount paid to the person and the amount the person should have been paid is a debt due to the Commonwealth by the person: s 71(2).

[2] Exhbiit A ff 69-72.

1. During the hearing I discussed with the parties whether the debt should be written off or waived.

2. 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.

3. 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.

4. 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.

5. Section 97 requires, among other things, that the debt is attributable “solely” to an administrative error by Centrelink.

6. In Sekhon v Secretary, Department of Family and Community Services (2003) 132 FCR 126, the Federal Court of Australia considered the meaning of “attributable solely to an administrative error.” Selway J at [35] remarked:

   The ordinary or usual interpretation of the phrase “attributable solely to” is that it refers to the single or sole cause of the relevant act or event. The word “attributable” means “capable of being attributed”. It involves an objective assessment of causation. The words “a debt attributable solely to an administrative error” can be paraphrased as meaning that the only cause that objectively can be ascribed to the relevant debt is an administrative error.

   I have already mentioned that on 10 August 2010 the applicant was advised by the Department that there would be an overpayment if she did not amend her estimate of income. There is no contention by the applicant and no evidence that the debt arose from any administrative error of the Department. I find that the debt is not “solely” attributable to any administrative error by the Department and the debt cannot be waived under s 97(2)(a) of the Act.

7. The applicant relies upon s 101 of the Act which provides that the Secretary “may” waive the right to recover all or part of a debt if 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.

8. There is no evidence that the applicant made a false statement or a false representation in terms of s 101(b) of the Act. In giving evidence the applicant stated that she was “never in a position to accurately estimate income or losses”; her evidence in that regard was not challenged. I accept the evidence of the applicant that she was not aware of the extent of the relevant investment losses during that time.

9. I have to consider whether there are “special circumstances” (other than financial hardship alone) in her case that make it desirable to waive the right to recover all or part of the debt to the Commonwealth for the purposes of s 101(b) of the Act. The expression “special circumstances” is not defined in the Act but has been considered on a number of occasions by the Federal Court of Australia in considering social security law. The cases indicate that for circumstances to be “special” they must be “unusual, uncommon or exceptional”, “markedly different from the usual run of cases”, “special” or “out of the ordinary” and they include “events which would render the [strict application of the rule in question] unfair or inappropriate” see, e.g., for example: Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3 per Toohey J; Beadle and Director General of Social Security (1985) 60 ALR 225 at 228 as per Bowen CJ, Fisher and Lockhart JJ; Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545 per Kiefel J; Dranichnikov v Centrelink (2003) 75 ALD 134 at [66] per Hill J.

10. The applicant contends that her circumstances are special because of her anxiety and depression condition. Even if I were to hold that there were special circumstances present, I have to consider whether the special circumstances make it desirable to exercise the discretion to waive the right to recover the debt under s 101 of the Act in favour of the applicant. In Varela; Secretary, Department of Families, Community Services and Indigenous Affairs [2006] AATA 640 at [35] Deputy President Hack explained that “the discretion in s 101 is, by and large, unfettered.” A case where it would be appropriate to exercise the discretion is where a customer has not been advised of the need to declare net investment losses as part of an individual’s adjusted taxable income.[3] However this is not the case. The applicant had previous to the 2011/2012 income year been overpaid FTB and during that year (on 10 August 2010) she had been advised that she would be overpaid FTB in the relevant year if she did not correctly estimate her income and investment losses. The applicant was well aware of this possibly but gave as a reason for not providing a variation of her estimated income that “she needs the money to live on”.

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

    DECISION

11. I affirm the decision under review.

I certify that the preceding 18 (eighteen) paragraphs are a true copy of the reasons for the decision herein of Dr P McDermott RFD, Senior Member

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Associate

Dated 30 September 2015

Date(s) of hearing	7 September 2015
Applicant	In person
Solicitors for the Respondent	Department of Human Services