Clark and Secretary, Department of Social Services (Social services second review) - [2020] AATA 1970

Clark and Secretary, Department of Social Services (Social services second review) [2020] AATA 1970 (29 June 2020)
Division:GENERAL DIVISION
File Number(s): 2019/5717
Re:Shaye Katrina Clark
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Member G Hallwood
Date:29 June 2020
Place:Adelaide

The decision under review is affirmed.
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Member G Hallwood
CATCHWORDS
SOCIAL SECURITY – Pensions, benefits and allowances – Family Tax Benefit – Claim lodged out of time – Whether special circumstances exist – Whether special circumstances prevented lodgement – Decision under review is affirmed
LEGISLATION
A New Tax System (Family Assistance) Act 1999 (Cth)
A New Tax System (Family Assistance) (Administration) Act 1999 (Cth)
Income Tax Assessment Act 1936 (Cth)
Taxation Administration Act 1953 (Cth)
CASES
Angelakos and Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Dranichnikov v Centrelink [2003] FCAFC 133
Groth and Secretary, Department of Social Security [1995] FCA 1708
Hooker and Secretary, Department of Social Services [2015] AATA 732
Klein v Domus Pty Ltd (1963) 109 CLR 467
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Riddell v Secretary, Department of Social Security (1993) 114 ALR 340
Salangsang and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 55
Secretary, Department of Family, Housing, and Community Services and Indigenous Affairs v Jones [2012] FCA 639
Secretary, Department of Social Security v Le-Huray [1996] FCA 1558
Secretary, Department of Social Services and Cannon [2015] AATA 1028
Secretary, Department of Social Services and Dunford [2016] AATA 567
Secretary, Department of Social Services and Field [2015] AATA 903
Secretary, Department of Social Services and Hollis [2015] AATA 941
Secretary, Department of Social Services and McNamara [2016] AATA 689
Secretary, Department of Social Services and Rech [2016] AATA 543
Secretary, Department of Social Services and Willersdorf [2016] AATA 535
“SRL” and Secretary, Department of Social Security [1998] AATA 326
SECONDARY MATERIALS
Australian Government, Family Assistance Guide 6.4.3: FOR DECISION
Member G Hallwood
29 June 2020

This is an application for review of a decision of the Social Services & Child Support Division of the Administrative Appeals Tribunal dated 29 August 2019, affirming the decision of an Authorised Review Officer (ARO) of the Department of Human Services, now Services Australia, (the Department) dated 26 June 2019. The ARO affirmed the Department’s decision dated 20 December 2018 to reject Ms Clark’s lump sum claim for Family Tax Benefit (FTB) for the 2016/2017 income year.
THE ISSUES
There is no dispute that Ms Clark’s FTB claim was lodged on 11 December 2018 and that this date is after the legislatively required lodgement date, which in this case was 30 June 2018, and twelve months after the end of the relevant income year, being 2016/2017.
As the claim was not lodged within time, Ms Clark requests that the Tribunal grant an extension of time to lodge the relevant tax return.
For Ms Clark to be successful, the Tribunal must be satisfied that special circumstances existed which prevented Ms Clark from lodging her claim on time. This is a two-part test requiring consideration of whether:
(a)Ms Clark’s circumstances were “special”; and, if so, whether
(b)those special circumstances prevented Ms Clark from lodging her FTB claim within the required timeframe.
BACKGROUND
The facts outlined below are based on documentary and oral evidence of Ms Clark and her accountant, Mr RT Bakewell. I believe both witnesses presented their evidence honestly, openly and to the best of their recollection. The facts appear to be undisputed.
Ms Clark and her partner had responsibility for one child during the 2016/2017 income year. They live some 60 kilometres from Adelaide and 70 kilometres from where Ms Clark and her partner run a mechanic repair business. They are the only employees of the mechanical repair business and they also have been building up another small business renting out horses and carriages for weddings.
In oral evidence, Ms Clark explained that she would normally reconcile the businesses books as soon as she had an opportunity after the end of the financial year. She estimated that the reconciliation process typically took about three weeks of uninterrupted office time. Ms Clark said that preparing her tax returns is a detailed and tedious process. It is only once the reconciliation was completed that she could send the paperwork to her accountant for the tax return to be finalised and lodged with the Department. Ms Clark explained that in the year following the 2016/2017 income year, there were a number of circumstances that particularly affected her and her family.
Ms Clark was heavily pregnant in July 2017 and she was facing some complications requiring her to make weekly, and sometimes twice weekly, trips to the medical centre, a 50-kilometre round trip, on top of her long journeys to and from work.
At work, in addition to her role managing the office, Ms Clark also helped out ‘on the tools’, performing mechanical repairs and collecting and returning cars from and to customers.
In August 2017, Ms Clark’s second child was born by caesarean section due to positioning problems. Ms Clark was not at work for two months while settling the baby in. During September 2017, her eldest child was struggling at school with bullying, which, with hindsight, Ms Clark suspects may have been due to the adjustment of having a new baby at home.
When Ms Clark returned to work in October 2017, her family had been living on a reduced income and were struggling financially. Her work time was taken up with getting jobs and bills out, as a result the rest of the paperwork was somewhat neglected through October and November 2017. Ms Clark was also travelling to appointments at her son’s school trying to resolve the bullying issues. By December 2017, the business was just starting to get back on track financially and then on New Year’s Eve her husband was bitten by a dog and hospitalised. He was unable to return to work until February 2018 and Ms Clark had to keep the business running on her own, performing mechanical repairs and ensuring there was some income. During this period, she was also taking her baby to work. The transmission also broke on Ms Clark’s car, leaving her and her husband financially desperate.
When her husband returned to work, their entire focus was on making money to help them to get through the financial straits they were facing. Ms Clark told the Tribunal that it was not until April 2018 that she had any opportunity to catch up on paperwork and she did not deliver the taxation paperwork to her accountant until mid-May 2018, the accountant had six weeks to complete and lodge the tax return within the required timeframe.
Mr Bakewell, the sole director of Norwood Accountants Pty Ltd, and Ms Clark’s accountant, provided oral evidence to the Tribunal explaining that several circumstances had contributed to a delay by his firm in completing Ms Clark’s tax return. Norwood Accountants was recovering from some debilitating computer problems from the previous August and September that had caused a backup of work; Mr Bakewell had been providing care and support to his frail and aged mother who lived about 400 kilometres away; and there were some complex aspects of Ms Clark’s tax returns, this added to the delay.
Ms Clark lodged her FTB claim for the 2016/2017 income year on 11 December 2018.
On 20 December 2018 Centrelink wrote to Ms Clark refusing her FTB claim.
THE LEGISLATION
FTB is a payment made to eligible families to help with the cost of raising children. The relevant law is contained in the A New Tax System (Family Assistance) Act 1999 (the Act) and A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act).
The Policy relevant to this matter is contained in the Family Assistance Guide.[1] While the Tribunal is not bound by policy, relevant policy will normally be applied unless there are cogent reasons not to.[2]
[1] Australian Government, Family Assistance Guide 6.4.3: align="left">[2] Re Drake and the Minister for Immigration and Ethnic Affairs(No2) (1979) 2 ALD 634, 639-645.
FTB can be paid either fortnightly, or as a lump sum after the end of the relevant income year. Payments are based on a set of factors, including income, during the relevant income year.
Services Australia calculates the family’s entitlement from the relevant return to the ATO under the Income Tax Assessment Act1936 once the tax return is lodged. Relevantly, s 10(2) of the Administration Act states:
(2)A claim for payment of family tax benefit for a past period is not effective if:
(a) …
(b) the period does not fall wholly within one income year (the relevant income year) but the claim is made after the end of:
(i)the first income year after the relevant income year; or
(ii)such further period (if any) as the Secretary allows, if the Secretary is satisfied there are special circumstances that prevented the claimant from making the claim before the end of that first income year.
CONTENTIONS
Ms Clark contends that due to poor communications from Centrelink, she was unaware that she was required to make her FTB claim and submit her tax return before the end of the first income year after the relevant income year.
Ms Clark also contends that during the period in which she had to submit her FTB claim there were special circumstances in the form of significant interruptions to normal life that prevented her from making the claim before the end of that first income year.
Ignorance of the law
Various examples were provided by Ms Clark of experiences she believes demonstrated that communication from Centrelink was inadequate for her to have an understanding of the rules relating to claiming FTB. Ms Clark told the Tribunal that she did not receive a letter sent to her by Centrelink on 14 February 2014,[3] notifying her that the deadline for lodgement of FTB lump sum claims was before the end of the first income year following the relevant income year. The Tribunal has no reason to doubt this evidence.
[3] T12/161.
In Secretary, Department of Social Services and Field,[4] Deputy President Forgie considered the question of whether there is a requirement for the Secretary to give information about people’s rights and responsibilities in matters such as this in writing, as a result of legislation and she found at [28], ‘there is no requirement that [the Secretary] give written information to recipients, or potential recipients, under the social security law’.
[4] [2015] AATA 903.
As difficult as it may be for social security recipients, or potential social security recipients, the Tribunal is aware that it is not realistic for a government to write to every citizen, at a time when it is relevant to a potential need, explaining every right and responsibility they may have in relation to social benefits.
In relation to this matter, the only reason ignorance of the law could be applicable is if it were a special circumstance that prevented Ms Clark from lodging her FTB claim within the relevant timeframe.
A two-step test
A two-step test is necessary in order for the Secretary to extend the timeframe in which to lodge a return. In order to satisfy the test, the Secretary must be satisfied: [5]
(a)that special circumstances existed; and
(b)that those special circumstances prevented them from meeting the timeframe.
[5] Hooker and Secretary, Department of Social Services [2015] AATA 732, [14], [19]; Secretary, Department of Social Services and Hollis [2015] AATA 941, [30]-[31].
At the heart of this review is the question of whether there were special circumstances which prevented Ms Clark from lodging her 2016/2017 FTB claim by 30 June 2018.
Did special circumstances exist?
The term “special circumstances” is not defined in the Act, the Administration Act, or related legislation. It has been considered on many occasions by the Federal Court and the Tribunal. While, in the interests of consistency, previous decisions will help inform future decisions, every matter has its own facts, and each will be determined on its own merits.
It is generally upheld that “special circumstances” in relation to people that fall within this legislation are circumstances that are unusual, uncommon or out of the ordinary.[6]
[6] Groth and Secretary, Department of Social Security [1995] FCA 1708, [12]; Dranichnikov v Centrelink [2003] FCAFC 133, [33]; Angelakos and Secretary, Department of Employment and Workplace Relations [2007] FCA 25, [33].
As described earlier, the circumstances faced by Ms Clark during the period included:
(a)a difficult pregnancy and childbirth requiring time off work;
(b)taking time off work to deal with her child who was being bullied at school;
(c)her partner requiring time off work after being bitten by a dog and requiring surgery;
(d)commuting 140 kilometres to work and back daily; and
(e)both her car and her partner’s car breaking down requiring extra work to fix.
All of the time off work by Ms Clark and her partner required extra time and effort to generate income as Ms Clark indicated they were not in a position to pay bills, pay their mortgage, pay for petrol to run their cars, and on occasion, to buy food. Ms Clark’s priority was certainly not on paperwork to complete her tax return which she knew was required in order to claim FTB.
While the Tribunal has great sympathy for the situation Ms Clark and her family were in during the period from 1 July 2017 to 30 June 2018, noting that the effort and resilience demonstrated by this young family building two businesses is noteworthy, the circumstances they faced are not unusual, uncommon or out of the ordinary. For these reasons the Tribunal is not satisfied that the circumstances faced by Ms Clark were enough to enliven the “special circumstances” requirement of s 10(2) of the Administration Act.
Was there a “perfect storm” that enlivens special circumstances?
In Willersdorf and Secretary, Department of Social Services,[7] then Senior Member Britten-Jones described a combination of circumstances coming together in something of a “perfect storm” representing special circumstances.
[7] [2016] AATA 535, [62] (‘Willersdorf’).
Before the Tribunal are some similarities to the Willersdorf matter, including that Ms Clark got the paperwork to her accountant on time, her accountant being trusted, and the accountant failing to meet the Department’s timeframe.
The challenges faced by Ms Clark were far from trivial; however, her circumstances did not represent anything particularly out of the ordinary for people in her position. They did not include the unexpected circumstances considered in Willersdorf as contributing to the “perfect storm” such as, the death of a brother, termination of staff and estrangement from family members.
There are several decisions of the Federal Court and the Tribunal that indicate unusual circumstances are not enough to be considered special circumstances. The circumstances must be unusual so as to produce an injustice in a situation where the sections were applied rigidly.[8] In particular, in Riddell v Secretary Department of Social Services[9] the Full Federal Court observed at 347:
Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet a great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other.
[8] Secretary, Department of Family, Housing, and Community Services and Indigenous Affairs v Jones [2012] FCA 639, [51]; Secretary, Department of Social Security v Le-Huray [1996] FCA 1558, [21]-[23]; Salangsang and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 55, [66]; “SRL” and Secretary, Department of Social Security [1998] AATA 326, [55]; Klein v Domus Pty Ltd (1963) 109 CLR 467, 467, 471.
[9] (1993) 114 ALR 340.
One of the reasons s 10(2) of the Administration Act exists in the legislation is to set the timeframe for claims and tax returns to be lodged in order for Services Australia to reconcile claims with actual income. There appears to be no injustice if the only penalty for failing to lodge the claim on time is the penalty intended in the legislation.
For this reason, the Tribunal is not satisfied that a “perfect storm” of circumstances existed in this case to the extent required to enliven the special circumstances required to support a further period in which to lodge a claim.
Had these circumstances, either individually or as a “perfect storm”, been enough to be considered special circumstances, the second step of the test would need to be met in order to enliven the discretion available to extend the timeframe in which the claim could be lodged.
Did the circumstances in this matter prevent Ms Clark from lodging her FTB claim within the required timeframe?
While it is not necessary to go beyond the question of whether special circumstances existed in this matter, for completeness the Tribunal has considered whether the circumstances faced by Ms Clark resulted in her FTB claim being lodged late.
Despite all of the difficulties faced by Ms Clark throughout the lodgement period, Ms Clark provided her tax paperwork to her accountant by mid-May 2018, being six weeks before her FTB claim was due to be lodged.
In oral evidence, Mr Bakewell indicated that Ms Clark’s tax returns could have been completed ‘in a couple of days with a clear run at them’. Mr Bakewell also indicated that he was unaware that Ms Clark’s FTB was dependent on his completing her tax return by 30 June 2018. Ignorance of the law has already been discussed in relation to Ms Clark and is further removed from the requirements of the Act if considered in relation to her accountant.
Had the late lodgement of Ms Clark’s FTB claim been as a result of error on her accountant’s behalf, and this is not an issue the Tribunal has considered in this case, tax agent error should not ordinarily constitute a special circumstance,[10] and the proper course would be to seek redress from the tax agent that made the error.[11]
[10] Australian Government, Family Assistance Guide 6.4.3: Secretary, Department of Social Services and Rech [2016] AATA 543, [21]; Secretary, Department of Social Services and Cannon [2015] AATA 1028, [23]; Secretary, Department of Social Services and McNamara [2016] AATA 689, [48]; Secretary, Department of Social Services and Dunford [2016] AATA 567, [41].
Based on both Ms Clark’s and Mr Bakewell’s evidence there was enough time for the claim to be lodged after Ms Clark had prepared her paperwork and delivered it to her accountant as he only needed a couple of days to complete the return.
For this reason, the Tribunal cannot find that the late lodgement was as a result of the circumstances faced by Ms Clark, even if those circumstances had been found to be special circumstances.
CONCLUSION
Ms Clark and her partner appear to be working hard to build small businesses while bringing up a young family and paying off a mortgage. Ms Clark, it seems, would have qualified for FTB had she lodged her claim on time. A range of circumstances affected her, and her accountant, contributing to the late lodgement of her FTB claim. Ms Clark was also unaware of the timeframe in which she needed to lodge her FTB claim for it to be effective.

The Tribunal was not satisfied that the circumstances Ms Clark faced were special circumstances, or that the circumstances she faced prevented her from lodging the claim, as is required to enliven the Secretary’s discretion to offer a further period in which to lodge her 2016/2017 income period FTB claim.
DECISION
For the above reasons, the Tribunal affirms the decision under review.

I certify that the preceding forty-eight [48] paragraphs are a true copy of the reasons for the decision herein of Member G Hallwood.

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Administrative Assistant Legal
Dated: 29 June 2020

Date of hearing: 19 June 2020

Applicant:
Witness for Applicant:

Ms Shaye Clark

Mr RT Bakewell

Advocate for the Respondent: Ms Lee-Anne Odgers

Solicitors for the Respondent: Services Australia

Date of hearing:	19 June 2020
Applicant: Witness for Applicant:	Ms Shaye Clark Mr RT Bakewell
Advocate for the Respondent:	Ms Lee-Anne Odgers
Solicitors for the Respondent:	Services Australia