Charmaine Nickolson v Secretary, Department of Families, Community Services and Indigenous Affairs

[2007] AATA 42

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 42

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2006/524  

GENERAL ADMINISTRATIVE  DIVISION		)
Re		CHARMAINE NICKOLSON

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Senior Member P.M. McDermott, R.F.D.

Date31 January 2007

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

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

P McDermott

SENIOR MEMBER

CATCHWORDS

SOCIAL SECURITY – overpayment of family tax benefits – entitlement to receive family tax benefit – recovery of overpayment – whether debt should be written off – whether debt should be waived – special circumstances – decision affirmed

A New Tax System (Family Assistance) Act 1999 (Cth) ss 21(1)(a), 22, 59

A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) ss 71(2), 95, 97, 101

Auckland Harbour Board v R [1924] AC 318

Dranichnikov and Another v Centrelink and Another (2003) 75 ALD 134

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

Secretary, Department of Social Security v Hales (1998) 51 ALD 695

REASONS FOR DECISION

31 January 2007   Senior Member PM McDermott

INTRODUCTION

1.      In this application I have to consider whether the applicant was overpaid family tax benefit, whether the amount of the overpayment is a debt due to the Commonwealth, and whether the debt has to be repaid.

DECISIONS

2.      Centrelink made decisions on 17 March 2006 and 20 March 2006 to raise and recover family tax benefits in the amounts of $290.10 (for the period from 1 July 2005 until 7 March 2006); $1,109.58 (for the period from 1 July 2003 until 30 June 2004) and $753.20 (for the period from 1 July 2004 until 30 June 2005) [T32, folio 135; T38, folio 161; T39, folio 164].

3.      On 26 April 2006 an authorised review officer affirmed these decisions [T46, folio 174]. On that date a letter was sent to the applicant which contains the reasons of that officer for making that decision.

4.      On 27 June 2006 the Social Security Appeals Tribunal affirmed the decision of the authorised review officer [T2, folio 2].

5.      The applicant has sought a review of the decision of the Social Security Appeals Tribunal. 

HISTORY OF THE MATTER

6.      From 1 July 2003 until 7 March 2006 (“this period’), the applicant was paid family tax benefit for her two children (B and K). She was paid 100% of the family tax benefit on the basis that they were in her care for 100% of the time. However, these children have also been in the care of the father and former husband of the applicant during this period. It is common ground that the children have been in the care of their father for 20% of this period and in the care of the applicant for 80% of this period. 

7.      In March 2006 the father made a claim for 20% of the family tax benefit that was paid from 1 July 2003 until 7 March 2006. It was only then that Centrelink made the decisions that the applicant had been overpaid family tax benefit. An amount of $10 per fortnight is being deducted from the family tax benefits of the applicant.

8.      It is difficult not to feel any sympathy for the applicant who has pointed out that the father is in considerable arrears for child support payments. She has pointed out that one arm of the Commonwealth is making payment of family tax benefit to the father who is still under a liability to make child support payments to another arm of the Commonwealth. This may be a situation which should be brought to the attention of the Child Support Registrar. 

ENTITLEMENT OF THE APPLICANT TO FAMILY TAX BENEFIT

9.      At the outset I have to examine the entitlement of the applicant to receive family tax benefit. That entitlement is derived from the A New Tax System (Family Assistance) Act 1999. Under that Act an individual is eligible for family tax benefit if the individual has at least one “FTB child”: see s 21(1)(a). An “FTB child” is essentially defined by s 22 of that Act to be a child of an adult where the child is aged under 18 years and where the adult is legally responsible for the day-to-day care, welfare and development of the child, and the child is in the care of the adult and the child is an Australian resident: see s 22(1) and (2). I am satisfied that the two children of the applicant are each an “FTB child” of the adult applicant who is entitled to family tax benefit for these children.

10.     However, under the A New Tax System (Family Assistance) Act 1999 it is possible for a child to be an “FTB child” of more than one individual. That will occur where the Secretary is satisfied that there has been or will be a “pattern of care” where the child is an “FTB child” of more than one individual: see s 22(7). I have already mentioned that the children have been in the care of their father for 20% of the relevant period and in the care of the applicant for 80% of the relevant period.  In these circumstances the Secretary was, in my view, justified in coming to the conclusion that each child was an “FTB child” of the applicant and father.

11.     Where a child is an “FTB child” of more than one individual, the Secretary may under the A New Tax System (Family Assistance) Act 1999, determine which percentage of family tax benefit will be paid to each individual: see s 59. In these circumstances the Secretary was, in my view, justified in coming to the conclusion that the applicant was entitled to receive 80% of family tax benefit.

OVERPAYMENT OF FAMILY TAX BENEFIT

12.     I find that the applicant was overpaid family tax benefits in the amounts of $290.10 (for the period from 1 July 2005 until 7 March 2006); $1,109.58 (for the period from 1 July 2003 until 30 June 2004) and $753.20 (for the period from 1 July 2004 until 30 June 2005).

13. The amount of the overpayment is a debt due to the Commonwealth under s 71(2) of the A New Tax System (Family Assistance) (Administration) Act 1999. Even in the absence of statute the amount of the overpayment can be recovered under the principles laid down by the Privy Council in Auckland Harbour Board v R [1924] AC 318 at 327.

14.     It is understandable in this case for the Secretary to recover the overpayment. As French J explained in Secretary, Department of Social Security v Hales (1998) 51 ALD 695 at 696: “The taxpayer is entitled to expect that in the ordinary course money paid to people which they are not entitled to receive will be recovered”.

RECOVERY OF OVERPAYMENT

15.     I must now consider whether there are any reasons why the overpayment should not be recovered. Under the A New Tax System (Family Assistance) (Administration) Act 1999 it is possible for an overpayment of family tax benefit to not be recovered where the Secretary writes off the debt (see s 95), where the Secretary is required to waive the debt due to error (s 97) or where the Secretary may waive the debt due to special circumstances (s 101).

DEBT WRITE-OFF

16.     I do not consider that the debt should be written off. Under the A New Tax System (Family Assistance) (Administration) Act 1999 the Secretary can write off the debt where the debtor does not have any capacity to repay the debt: see s 95(2)(b). That Act also provides that if the debt can be recovered by deductions from payments of family tax benefit then a debtor is taken to have capacity to repay the amount unless the deductions would result in severe financial hardship: see s 95(4). I have already mentioned that an amount of $10 per fortnight is being deducted from the family tax benefits of the applicant.

17.     While I accept that the applicant has a tight budget, I do not consider that her case is one of severe financial hardship. I have come to this conclusion by reason of the fact that the applicant has disclosed significant household expenditure for entertainment of $350 per month in her financial information statement of 28 September 2006.

18.     One concern of the applicant is that she did not agree to the amount that was being regularly deducted from her family tax benefit payments. However, the applicant did not complete the offer to repay a portion in her financial information statement of 28 September 2006.

19.     It was open to her to have nominated a lesser amount than $10 per fortnight for consideration by Centrelink. It is still open to her to nominate a lesser amount if any debt is still outstanding.

WAIVER OF DEBT ARISING FROM ERROR

20. I have also considered whether the Secretary should be required to waive the debt due to error under s 97 of the A New Tax System (Family Assistance) (Administration) Act 1999.  This provision is applicable where the debt arose solely as a result of administrative error, and where the payments were received in good faith and where payment of the debt would cause severe financial hardship.

21. As I have previously ruled that payment of the debt would not cause severe financial hardship, I do not consider that the debt should be waived. Having made that ruling it is unnecessary for me to express an opinion on whether the debt arose solely as a result of administrative error or whether the payments were received in good faith. However, even if the debt arose from administrative error (as contended by the applicant), that of itself would be insufficient to enable the debt to be waived under s 97.

WAIVER OF DEBT DUE TO SPECIAL CIRCUMSTANCES

22. I have already mentioned that under s 101 of the A New Tax System (Family Assistance) (Administration) Act 1999, the Secretary may waive the debt due to special circumstances. In considering this issue I mention that I am bound by the Federal Court of Australia which has held that “special circumstances” are circumstances which take a “case out of the ordinary”: see Dranichnikov and Another v Centrelink and Another (2003) 75 ALD 134 at 148. As Kiefel J explained in Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545 “there must be some feature out of the ordinary” for there to be special circumstances in a case.

23. Having examined the material before me I find that there are no special circumstances present which would justify me in exercising the discretion which is vested in the Secretary under s 101 of the A New Tax System (Family Assistance) (Administration) Act 1999.

DECISION

24.     I affirm the decision of the Social Security Appeals Tribunal.

I certify that the 24 preceding paragraphs are a true copy of the reasons for the decision herein of

Signed:         Fiona Kamst
  Legal Research Officer

Date/s of Hearing  24 November 2006
Date of Decision  31 January 2007
The Applicant was self represented
For the Respondent                  Ms J Forsyth, Departmental Advocate