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

[2015] AATA 1022

Collins and Secretary, Department of Social Services (Social services second review) [2015] AATA 1022 (24 December 2015)

Division	GENERAL DIVISION
File Number(s)	2015/2015
Re	Teresa Collins
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Mr S. Webb, Member
Date	24 December 2015
Place	Perth

The decision under review is varied such that overpayment debts raised against Ms Collins in respect of payments prior to 20 June 2013 must be waived.

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Mr S. Webb, Member

CATCHWORDS

SOCIAL SECURITY – family tax benefit – school kids bonus - overpayment debt – recovery - administrative error – meaning of ‘good faith’ and ‘severe financial hardship’ - 

LEGISILATION

A New Tax System (Family Assistance) Act 1999 s 21, 22, 35UA, 59

A New Tax System (Family Assistance)(Administration) Act 1999 s 71, 77, 82, 95, 97, 101

REASONS FOR DECISION

Mr S. Webb, Member

24 December 2015

1. After separating from her husband, Teresa Collins was paid Family Tax Benefit (FTB) in respect of her three children. She was overpaid FTB following an administrative error by the Commonwealth – she was paid on the basis that she had 100 percent care of the children when this was not so. Debts were raised for which she was liable. Initially, the Respondent Secretary decided that the debts were fully recoverable, but this was changed on review – recovery of a small part of the overpayment debts was waived on grounds of administrative error. This decision was affirmed by the (former) Social Security Appeals Tribunal (SSAT). But Ms Collins is not happy with it and she applied for further review.

   Brief facts

2. The present materials, on balance, establish the following brief facts. Ms Collins separated from her husband on 4 October 2011. She lodged a claim for FTB.

3. From 4 October 2011 to 1 December 2011 she had 100 percent care of her three children.

4. From 2 December 2011 to 7 July 2013 she had 49 percent care of the children.

5. From 8 July 2013 she had 100 percent care of one child and 49 percent care of her other two children.

6. Ms Collins was paid FTB and schoolkids bonus (SKB) on the basis that she had 100 percent care of each of the children up to 4 November 2014. She was sent notices setting out the basis of her FTB and SKB entitlements and payments. The notices prior to 20 June 2013 do not appear to include care percentages for each child, whereas those from 23 June 2013[1] set out this information – 100 per cent for each child.

   [1] T33 folio 188.

7. On 5 November 2014, a delegate of the Respondent Secretary decided to raise and recover the following overpayment debts[2] –

   (a)FTB 4 October 2011 to 30 June 2012:          $3,997.58

   (b)SKB paid 15 January 2012:  $410.00

   (c)FTB 1 July 2012 to 30 June 2013:                 $9,873.25

   (d)SKB paid 1 July 2013:  $410.00

   (e)SKB paid 14 January 2014:  $205.00

   (f)FTB 1 July 2013 to 4 November 2014:         $2,075.34

   (g)SKB paid 1 July 2014:  $205.00

   [2] T67 folio 460.

8. On 30 January 2015, an Authorised Review Officer decided that Ms Collins was liable for the following overpayment debts[3] -

   (a)FTB for 2011-2012: a debt totalling $3,997.58 of which $2,082.01 should be waived as it resulted solely from an administrative error;

   (b)FTB for 2012-2013: a debt totalling $9,873.25;

   (c)FTB from 1 July 2014 to 4 November 2014: a debt totalling $527.05; and

   (d)SKB from 1 January 2013 to 1 July 2014: a debt totalling $1,127.50.

   [3] T62 folio 298 and T63 folio 302.

9. On 9 April 2015, this decision was affirmed by the SSAT and on 28 April 2015, Ms Collins applied for review.

   Issues

10. The issues to be decided are –

    (a)the amount of FTB and SKB Ms Collins was paid in excess of her entitlement for each income year from 4 October 2011 to 4 November 2014;

    (b)the amount of overpayment debts raised against for which she is liable;

    (c)whether recovery of any part of these debts should be written off or waived.

    Overpayment amounts

11. I am satisfied that Ms Collins was eligible for FTB and SKB payments under the A New Tax System (Family Assistance) Act 1999 (the Assistance Act). It should be noted that under s 3, SKB payments are within the meaning of ‘family assistance’ and they are dealt with under Division 1A of Part 3, whereas Education Tax Refunds are dealt with under Part 7A.

12. In the period from 4 October 2011 to 1 December 2011 Ms Collins had 100 percent care of her three children – during this period she was entitled to be paid 100 percent of FTB for each child. From 2 December 2011 to 7 July 2013 she had 49 percent care of the children. Under s 59 of the Assistance Act, her care percentage for the children during this period is 50 percent – during this period she is entitled to 50 percent of the FTB and SKB entitlement for each child. From 8 July 2013 to 4 November 2014, Ms Collins had 100 percent care of one child and 49 percent care of her other two children – during this period she was entitled to 100 percent FTB and SKB for one child and 50 percent FTB and SKB for her two other children.

13. At hearing, Ms Collins told me that she does not dispute that she was overpaid amounts of FTB and SKB and, furthermore, that the amounts of the overpayment debts as determined by the ARO are correct. A number of issues arose during the hearing about the manner in which particular debt amounts were calculated and raised, particularly in respect of the 2013-2014 income year.

14. In written submissions after the hearing, Ms Collins disputed the amount of the debt raised against her in respect of the SKB payments and in respect of the 2013-2014 income year. She asserts that the SKB debt amount in respect of her eldest child is incorrect as her percentage of care for this child from 8 July 2011 is 100 percent, as found by the SSAT[4]. And she says that the first time she heard about an overpayment during the 2013-2014 income year was during the hearing.

    [4] T2 folio 5 at [13].

    SKB overpayment

15. The SSAT reference to 8 July 2011 is not correct.

16. On the present materials, I am satisfied that Ms Collins had 100 percent care of her eldest child from 8 July 2013. Consequently, she was entitled to 100 percent of the SKB for this child from that date.

17. The SKB debt calculation in T23 proceeds on Ms Collins having 50 percent care of this child as of 15 January 2013 and 1 July 2013. I am satisfied that this is correct.

18. I accept Ms Collins’ submission that there is a lack of clarity, and some uncertainty, about the manner in which SKB was calculated in 2013 in respect of her middle child, born in December 2000. This child’s age was the same in January and July 2013 when SKB amounts were paid. In January 2013, SKB was calculated with this child as a primary school student but in July 2013 the child was treated as a high school student. Ms Collins cavils with this assessment.

19. Ms Collins’ evidence is that her middle child (and her youngest child) were attending a school in which the distinction drawn between primary school and high school was somewhat different than the State standard at that time – students in Year 7 were treated as high school students (which otherwise would commence at Year 8) and they were encouraged to take on high school level work. The amount of SKB payable for a primary school student ($410 per year) is half the amount that is payable for a high school student ($820 per year).

20. On the evidence Ms Collins gave, there is a question when the primary school cut off should apply. It appears that the ARO accepted that Ms Collins’ middle child should be treated as a high school student for the last semester of Year 7. To my mind, that is a reasonable assessment on the present evidence and in the particular circumstances of that child. I am not persuaded, however, that this child should be assessed as a high school student for the entire 2013 school year, during which the child was in Year 7. The present evidence is not sufficient to establish that Ms Collins’ youngest child should be treated as a high school student during 2013. To my mind, it is appropriate to assess this child as a primary school student for the 2013 school year.

21. I am satisfied that the SKB debt of $1,127.50 raised against Ms Collins is correct.

    2013-2014 overpayment

22. Despite the initial assessment of an overpayment of $2,075.34 in the 2013-2014 income year, no debt was raised in that amount. But a debt of $527.05 was raised for the period 1 July 2014 to 4 November 2014. These amounts and the manner in which they were calculated was not able explained at hearing - the Secretary’s representative attempted to obtain further instructions on this point, but a detailed explanation was not able to be provided on the day. The Secretary sought further time to address the issue. I acceded to this request and issued orders for additional documents and submissions to be made addressing this and related points. I have received and considered the submissions made by both parties.

23. As I understand the Secretary’s submissions, Ms Collins was overpaid $2,075.34 in the period from 1 July 2013 to 4 November 2014, of which $1,548.29 arose from periodic instalment overpayments to her in the 2013-2014 income year and $527.05 arose in the period from 1 July 2014 to 4 November 2014. I have checked the figures in T23 and, on those figures, adding the ‘period total’ amounts, I am reasonably satisfied that the total instalment overpayment amount for 2013-2014 ($1,548.29) is correct.

24. It appears, however, that the instalment overpayment debt of $1,548.29 was offset against an amount owing to Ms Collins on reconciliation of her family assistance entitlements and payments for the 2013-2014 income year - $4,512.28. Ms Collins was paid periodic instalments of FTB, with the instalment amounts calculated on her projected income estimate for the year. Even though the periodic instalment amounts she received were in excess of her entitlement in respect of her actual percentages of care for her children, day by day, the overall amount she received ($5,825.25) was less than the overall amount of her entitlement for that year ($10,337.53).

25. For this reason, the Secretary contends that the periodic amounts Ms Collins was overpaid were in the ‘background’ when her FTB entitlements for that year were reconciled on or about 9 December 2014 and, as the overall amount of her entitlement exceeded the amount of FTB she was actually paid, the debt was recovered from the family assistance she was owed by the Commonwealth.

26. In effect, this approach subsumes three distinct processes under the A New Tax System (Family Assistance)(Administration) Act 1999 (the Administration Act) – calculation of an overpayment and determination of a debt under Division 2 of Part 4; notification of the debt under s 77; and recovery, or non-recovery, of the debt under Division 3 and Division 4 of Part 4. While it may be convenient to collapse these processes into one for reasons of timing or efficiency, to my mind, it is not appropriate to do so. Quite clearly, a family assistance debt may be offset against a person’s entitlement to FTB under s 82 or s 84A. But it does not follow that this voids the requirement for the debt to be properly determined and for the debtor to be properly notified of the debt amount raised for which he or she is liable.

27. The scheme of the Administration Act provides for determination of a person’s FTB entitlements. It also provides for mechanisms for the review of determinations. Administrative processes of the kind this case brings to light, involving the conflation of legislative requirements (and the likelihood of administrative shortcuts), risk subverting or undermining the proper scheme of the legislation.

28. It is a matter of some concern that Ms Collins was not notified in a timely manner of the periodic overpayment in FTB instalments she received and the resulting debt she owed to the Commonwealth, which was promptly offset against her family assistance entitlements for the 2013-2014 income year. Until the hearing in these proceedings, Ms Collins was not aware of the debt she owed in respect of the 2013-2014 income year, and she was not provided with an opportunity to exercise her rights to review of the determination and recovery of that debt – the matter arose in these proceedings when examining debts raised against Ms Collins from 4 October 2011 to 4 November 2014.

29. To my mind, this raises a procedural issue that may require attention. The amount of each periodic FTB instalment payment must be the subject of a determination, or a varied determination, for the purposes of Part 3 of the Administration Act. In the event that determinations of this kind are found to be in error, and the benefit recipient is found to have been paid an amount greater than that to which he or she is not entitled, the proper course is for the person to be notified and an overpayment debt raised under s 71. Subject to challenge, the amount of the outstanding debt may subsequently be offset under s 82 (or any other applicable provision) against any residual amount that is due to the person on reconciliation of their entitlements, following confirmation of their actual income for that year. In this way, the person would have an opportunity to exercise legal rights to review of the debt decision.

    Overpayments

30. In view of Ms Collins’ care percentages for each of her children, I am satisfied that she was overpaid the following amounts in the period from 4 October 2011 to 4 November 2014 –

    (a)FTB for 2011-2012 income year: $3,997.58;

    (b)FTB for 2012-2013 income year: $9,873.25;

    (c)FTB for 2013-2014 income year: $1,548.29, which was wholly offset against Ms Collins’ overall FTB entitlements for the year;

    (d)FTB 1 July 2014 to 4 November 2014: $527.05; and

    (e)SKB paid from 1 January 2013 to 1 July 2014: $1,127.50.

    Debts

31. As Ms Collins received amounts of FTB and SKB in excess of her entitlement, under s 71(2) of the Administration Act, the amounts overpaid are debts due to the Commonwealth.

32. It appears that debts were raised against Ms Collins on 5 November 2014 and 9 December 2014[5]. The present evidence does not establish that a debt in the amount of $1,548.29 was formally raised against Ms Collins in respect of the periodic FTB instalment overpayments during 2013-2014.

    [5] Exhibit 2. See also Respondent’s Post-Hearing Submissions, 21 December 2015, Attachment D and T67 folio 454.

    Recovery

33. In the Secretary’s submission, there are sufficient grounds to waive recovery of Ms Collins’ FTB debt for the period from 4 October 2011 to 19 June 2012, but otherwise her debts are fully recoverable and there are no sufficient grounds for them to be written off or for recovery to be waived. The Secretary says that Ms Collins was sent a notice on 20 June 2012 which contained sufficient information for her to realise that she was being paid amounts of FTB and SKB in excess of her entitlement, based on the percentage of care she had for each child.

34. Ms Collins says that this is not correct. In her submission the notice and other letters she received from the Family Assistance Office (FAO) were not clear and did not contain sufficient information to alert her to any possible overpayment. She maintains that the debts should not be recovered as they arose from administrative errors of the Commonwealth that she had no knowledge of, and which she did not suspect, until she was informed of the overpayments by the FAO on or about 5 November 2014. In her submission, she received the amounts of FTB and SKB in good faith and recovery of the debts for which she is liable would result in severe financial hardship.

    Write off

35. Under s 95 of the Administration Act, a debt to the Commonwealth may be written off if one of the four preconditioning criteria are satisfied, including if the debtor has no capacity to repay the debt, such that, under s 95(4) recovery of the debt would result in severe financial hardship to the person.

36. Ms Collins told me that she experiences financial stress as a result of the debts she owes to the Commonwealth. She explained that amounts have been recovered from her through the tax system without notice and this caused financial hardship. She asserts that the level of her employment income is not sufficient to cover the cost of raising her children. In support of this proposition she points to information published by the Department of Social Security addressing the cost of a sole-parent raising a 14 year old child in Perth.[6] She argues, furthermore, that her superannuation is unlikely to be sufficient to meet her needs on retirement and in order to address this possibility she was contributing a greater proportion of her employment income to her superannuation account, using salary sacrifice mechanisms. This, in her submission, should be taken into account when assessing issues relating to financial hardship.

    [6] Dr Paul Henman, Updated Costs of Children Using Australian Budget Standards, May 2005.

37. I accept that Ms Collins may experience financial stress as a result of debt-recovery action by the Commonwealth. But, to my mind, this does not equate to ‘severe financial hardship’ for the purposes of s 95(4). The conception of ‘severe financial hardship’ is a relative measure that must be assessed objectively. The existence of financial stress or some financial hardship will not meet this test unless it is established by evidence that the hardship endured is severe. This does not mean that the financial hardship must be extreme, or that the recovery of the debt would render the debtor destitute. But it does mean that something more than financial hardship in the form of financial stress or straightened financial circumstances resulting from debt recovery actions using the methods available under s 95(4) is required.

38. General measures of financial costs of raising children, including the duplicate costs separated parents bear in respect of children under shared care arrangements, are indicative only. It is the particularity of Ms Collins’ financial circumstances that must be considered.

39. While I accept that it may be difficult for a woman raising children as a sole-parent to accumulate sufficient superannuation to support herself on retirement, the extent of Ms Collins’ additional voluntary superannuation contributions must be weighed against other cost variables and debts for which she is liable, in the particular circumstances. While making contributions of this kind may be sensible for a person in her position, and her efforts to provide for her retirement income independent of Commonwealth pension support should be applauded, it remains a matter of her choice.

40. Considering Ms Collins’ financial circumstances and the amount of the debts she owes the Commonwealth, I am satisfied that recovery of the debts would not cause her to experience ‘severe financial hardship’.

41. As all other criteria for writing off a debt under s 95 of the Administration Act are not satisfied, it follows that her debts cannot be written off.

    Waiver – administrative error

42. Under s 97 of the Administration Act, the ‘administrative error proportion’ of a person’s debt to the Commonwealth must be waived in certain circumstances -

    97 Waiver of debt arising from error

    (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.

1. As can be seen, waiver under this provision will only arise if it is established that the debts are attributable solely to Commonwealth error and other preconditioning criteria are satisfied.

   Commonwealth error

2. The debts for which Ms Collins is liable arose primarily because information she provided about changes to the shared care arrangements for her three children on and after 2 December 2011 were not transferred by the Child Support Agency to the FAO. The actual shared care percentages were not applied, therefore, when calculating her FTB and SKB payments.

3. Ms Collins was sent notices about her FTB and SKB payments. Up to 20 June 2013, these letters did not contain the shared care percentage being applied when calculating Ms Collin’s FTB and SKB payments in respect of each child. The letters she was sent on 20 June 2013[7] and subsequently clearly set out the shared care percentage for each child. As can be seen in the 20 June 2013 letter, this is said to be 100 percent for each child. Reading this and later letters, Ms Collins would have known that her shared care percentage for two of her children was 49 percent, and not 100 percent as shown in the letter.

   [7] T33 folios 188-191, for example.

4. Ms Collins denies that she noticed this error, suggesting that the shared care percentage information was not obvious in the original format of the letter – this cannot presently be ascertained as the letter, as originally formatted, is not presently available. Even so, the contents of the 20 June 2013 letter and those following are sufficient, to my mind, to alert Ms Collins to the possibility of an error. She, like any recipient of family benefit payments, bears an obligation to carefully consider the information provided to her by Centrelink and to raise any uncertainty or possible errors in the material with Centrelink. In this case, at least from 20 June 2013, the FTB and SKB notices Centrelink sent to Ms Collins from 20 June 2013 clearly contain errors she could have identified if she had carefully considered their contents. By failing to notice, or by noticing and failing to act, Ms Collins may be taken to have contributed to the debt accruing thereafter.

5. It follows that from 20 June 2013, the debt cannot be said to be attributable solely to Commonwealth error for the purposes of s 97(1) of the Administration Act and the overpayments accrued thereafter as debts to the Commonwealth cannot be waived under this section.

   Good faith

6. The Secretary alleges that a notice sent to Ms Collins on 19 June 2012[8] contained sufficient information to alert her, at that time, to the existence of an error in the calculation of her FTB and SKB payments.

   [8] T14 folio 89.

7. Ms Collins says that this is not so. She maintains that the letter provided only generic information about a new payment (the SKB) that was due to commence in January 2013 in place of the previous Education Tax Refund (ETR), and about payment of the full ETR for the 2011-2012 year. In Ms Collins’ submission, the letter did not provide sufficient information to alert her to the possibility of an error in the amounts of FTB or ETR (or SKB) she was receiving, or that she was entitled to receive.

8. The 19 June 2013 letter contains the following information –

   The Australian Government is introducing a new payment for families with children at school to help out with education costs. This new Schoolkids Bonus will be paid on an ongoing basis to eligible Family Tax benefit Part A recipients in January and July each year from 2013 onwards. It will be $410 per year for each primary school child and $820 for each high school child. This automatic payment will replace the Education Tax refund and will be paid into your account…. As part of the transition to the Schoolkids Bonus, a one-off payment for school costs has been paid into your account. This payment is the full amount of the Education Tax Refund you could have claimed through the Australian Tax Office for 2011-2012 financial year. This means you are receiving your full payment now without having to make a claim in your tax return. The payment is worked out using the number of school-aged children in your family and their ages on 8 May 2012. For each child in primary school the payment is $409 and for each child in high school the payment is $818. If you share your child(ren)’s care with another parent or carer, you will have received an amount of the payment in accordance with your shared care or blended family percentage…

9. As can be seen, the letter does not specify the amount actually paid to Ms Collins or the basis of shared care on which the amount was calculated for each of her children. To my mind, this letter, alone, does not provide sufficient information to alert Ms Collins to the existence of an error. For her to identify an error it would be necessary to compare the total amount and the methodology in the 19 June 2012 letter with the amounts of ETR and SKB she was actually paid. This is what she did.

10. Her bank statement for the relevant period is in Exhibit 1. Her evidence is that on examination of the bank statement several weeks after receiving the 21 June 2012 payment, she could not distinguish specific amounts with sufficient accuracy or certainty to determine whether they were correct, but the overall picture was consistent with what she expected to receive. She assumed that the payment of $1805.26 she received on 21 June 2012 included an amount of FTB – she regularly received two FTB payments on or about the same day, which is what occurred on 21 June. The amount of one of the payments each fortnight varied – on 10 May 2012 the second payment was $169.26; on 24 May 2012 it was $483.16; on 7 June 2012, it was $169.26; and on 21 June 2012 it was $1,805.26. The $1805.26 payment was labelled “FAMILY ALLOWANCE ETR payment” whereas the second payment was usually labelled “FAMILY ALLOWANCE AUS GOV FAMILIES”. On her evidence, she assumed that the $1,805.26 amount included an amount of FTB as well as the full ETR payment foreshadowed in the 19 June 2012 letter. By her estimate, the $1,805.26 amount could have comprised an FTB amount of 169.26 and ETR payments at the high school rate for each of her three children. At that time she had 100 percent care of her eldest child who was in high school, and fifty percent care for her two younger children who were attending a college in which Year 7 students were treated as high school students. On that basis, her calculation was for one full ETR amount of $810, two 50 percent ETR amounts of $410 plus the usual second FTB amount of $169.26. Her evidence is that she considered the resulting total of $1,789.26 was close enough to the $1,805.26 she was actually paid for it to be correct – the discrepancy of less than $20 might have been the result of some change in the rate of one of the payments, perhaps as a result of her two younger children having birthdays on 7 and 21 June. For this reason she did not suspect there was an error in the amounts she was paid, and she took no action to alert Centrelink to any such possibility – in her mind, everything seemed much as it should be.

11. I accept her evidence on this point. And I am satisfied that the information she was provided in 19 June 2012 was not sufficient to alert her to the possible existence of an error in the calculation of her FTB, ETR or (then prospective) SKB payments.

12. On balance, I find that Ms Collins received the administrative error proportion of the FTB, ETR and SKB payments she received in good faith until 20 June 2013.

13. It follows that the administrative error proportion of the amounts of FTB, ETR and SKB she was paid up to and including 19 June 2013 must be waived if recovery of these debts would result in severe financial hardship or the debts were raised after the end of the income year after that in which they arose.

    Severe financial hardship

14. I have found that Ms Collins does not meet the ‘severe financial hardship’ test for the purposes of s 95 of the Administration Act. And I am satisfied that she does not meet the similar test for the purposes of s 97(2) of that Act.

    Raising of debts

15. Thus, the only ground remaining under s 97 is that relating to the raising of the debts under s 97(3).

16. The FTB and SKB debts prior to 20 June 2013, for the 2011-2012 and the 2012-2013 income years, were raised on 5 November 2014 and on 9 December 2014.[9]

    [9] Exhibit 2.

17. As can be seen, the FTB debt for 2011-2012, an amount of $3,997.58, and the FTB debt for the 2012-2013 income year, an amount of $9,873.25, were raised on 5 November 2014 - after the end of the 2013-2014 income year. This means that the administrative error proportion of these debts, being the total amount of the 2011-2012 debt and the part of the 2012-2013 debt arising before 20 June 2013, must be waived under s 97(3).

18. The SKB debt raised on 9 December 2014 relates to payments of SKB on 13 January 2013, 1 July 2013, 13 January 2014 and 1 July 2014. As debts relating to these payments were raised on 9 December 2014, after the end of the 2013-2014 income year, the part of the debt arising in relation to the 13 January 2013 SKB payment must be waived under s 97(3).

    Waiver – special circumstances

19. The Secretary maintains that there are no special circumstances in Ms Collins’ case that would render it appropriate to waive recovery of any part of the debts for which she is liable under s 101 of the Administration Act.

20. Ms Collins cavils with this on the basis that the manner in which she has been treated, and the manner in which the debts arose should be treated as special circumstances that make it desirable to waive recovery of the debts raised against her.

21. Section 101 of the Administration Act provides –

    101 Waiver in special circumstances

    The Secretary may waive the right to recover all or part of a debt if the Secretary is 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.

22. I am not persuaded that either of the grounds pressed by Ms Collins give rise to ‘special circumstances’ that enliven the discretion to waive recovery of any part of the debts she owes the Commonwealth.

23. I understand that she is frustrated and unhappy with the manner in which the raising and recovery of her debts has occurred.

24. It may well be that Ms Collins was surprised when the FTB payment error came to light in November 2014 and, without any warning, she received the notices in Exhibit 2. I also understand her concern when findings were made that she had not received the overpayments in good faith. While the conception of good faith requires an innocent ignorance, void of suspicion or reasonable doubt; want of good faith is not confined to circumstances in which a person who receives a payment harbours a positive belief that a payment has been made by mistake. It extends to include circumstances in which a person may have objective, reasonable grounds to suspect that the payment has been made by mistake or that it is in some regard not correct, or a doubt that he or she is entitled to receive the payment made. These elements are somewhat removed from the conception of criminality that Ms Collins attached to the findings made against her.

25. I have found that Ms Collins received the overpayments prior to 20 June 2013 in good faith, but that on and from 20 June 2013 she had reasonable and objective grounds to know that an error had been made. To my mind, her failure to read the notices she was given containing the obvious error contributed to the debt that accrued thereafter and for this reason I have found that her debts to the Commonwealth from 20 June 2013 to 4 November 2014 cannot be waived under s 97 as they were not solely attributable to Commonwealth error, they are also attributable to Ms Collins’ error whether or not there was any want of good faith on her part (and I make no such finding).

26. I have commented upon the manner in which Ms Collins’ overpayments debts were dealt with, to my mind, unsatisfactorily. I do not think, however, that these administrative failings are consistent with ‘special circumstances’, such that the debt she owes should be waived. Even though Ms Collins was not aware of the precise debt amount for 2013-2014, she was aware of the overall amount she owed, and she exercised her review rights in respect of all of the debts raised against her. For this reason, any lack of justice or unfairness that may have resulted from the deficient administrative processes that were employed has been addressed.

27. In all of these circumstances, I am not persuaded that any special circumstances exist that make it desirable to waive the parts of her debts to the Commonwealth that cannot be waived under s 97.

    Decision

28. Ms Collins has overpayment debts to the Commonwealth. Prior to 20 June 2013, she received the overpayments in good faith. The proportion of her overpayment debts arising up to 19 June 2013 must be waived under s 97(3) of the Administration Act – they were raised after the end of the subsequent income year.

29. Other parts of her overpayment debts arising on and after 20 June 2013 cannot be waived under s 97 and there are no special circumstances that render it desirable for these debts to be waived under s 101 of the Administration Act.

30. It follows that the decision under review must be varied to the extent that Ms Collins’ overpayment debts arising in respect of payments she received prior to 20 June 2013 must be waived.

31. The matter is remitted to the Secretary to determine the amount of the debts to be recovered from Ms Collins in accordance with this decision and to reconcile this with the amounts already recovered from her.

I certify that the preceding 73 (seventy -three) paragraphs are a true copy of the reasons for the decision herein of Mr S. Webb, Member

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Administrative Assistant

Dated 24 December 2015

Date of hearing	14 December 2015
Date final submissions received	22 December 2015
Applicant	In person
Representative for the Respondent	Ms S Yik Long
Solicitors for the Respondent	Australian Government Solicitor