Craig; Department of Family and Community Services and Indigenous Affairs
[2006] AATA 546
•23 June 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 546
ADMINISTRATIVE APPEALS TRIBUNAL )
) N2005/1631
GENERAL ADMINISTRATIVE DIVISION ) Re
DEPARTMENT OF FAMILY AND COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Applicant
And
KATRINA CRAIG
Respondent
DECISION
Tribunal Ms N Isenberg, Member Date 23 June 2006
PlaceSydney
Decision The Administrative Appeals Tribunal sets aside the decision of the Social Security Appeals Tribunal dated 30 November 2005 and finds that Centrelink’s calculation of Ms Craig’s FTB for 2004/2005 was correct.
..............................................
Ms N Isenberg
Member
CATCHWORDS
SOCIAL SECURITY – Respondent in receipt of Family Tax Benefit and Parenting Payment (Single) – Respondent also in receipt of maintenance payments – reduction in rate of FTB payment in response to maintenance payments received during the financial year – whether there was a debt of FTB owed by the Respondent – whether FTB was correctly calculated – calculation of Respondent’s FTB was correct - decision under review set aside.
LEGISLATION
A New Tax System (Family Assistance) (Administration) Act 1999 – sections 31B, 32A, 32B(b), 32C-32Q, 71(2).
A New Tax System (Family Assistance) Act 1999 – section 58.
Family Assistance Legislation Amendment (More Help for Families – Increased Payments) Act 2004
REASONS FOR DECISION
23 June 2006 Ms N Isenberg, Member
ISSUE BEFORE THIS TRIBUNAL
1. Was Ms Craig’s entitlement to FTB for the 2004/2005 income year correctly calculated?
BACKGROUND
2. Throughout the 2004/2005 income year Ms Craig was in receipt of Family Tax Benefit (“FTB”) for her two children.
3. During that time, Ms Craig also received maintenance payments from the children’s fathers through the Child Support Agency (‘CSA”) totalling $7,091.97. Amounts ranged from $10 to $3,856.97, the largest amount being paid on 16 February 2005.
4. Ms Craig’s FTB payments varied throughout the period, depending on the maintenance payments she received. In total her FTB payments were $10,906.58 (p.99, T15).
5. Ms Craig contacted Centrelink on 2 May 2005 and 12 July 2005 to complain about the reduction in her rate of FTB payment in response to maintenance received (p.122, T21 and p121, T21).
6. On 26 July 2005, following the annual reconciliation of FTB, Ms Craig was sent a letter explaining her FTB entitlement for 2004/2005. It stated in part:
Total Family Tax Benefit you are entitled to $11,029.12
This includes:
Standard Family Tax Benefit $9,652.49
Family Tax Benefit Part A Supplement $1,226.40
Family Tax Benefit Part B Supplement $150.23
Less what you have already received $10,906.58
Sub Total $122.54
Balance the Australian Government will pay you $122.54The letter also stated:
“Your Family Tax Benefit includes a Part A and Part B Supplement amount of $1,376.63. This is included in your entitlement after the end of the financial year, when your payments are checked. The Supplement amount may be used to reduce overpayments received during the financial year.”
7. Ms Craig received an FTB top-up payment of $122.54 on 28 July 2005.
8. On 3 August 2005 Ms Craig complained about the decision to use her FTB supplement to off-set an overpayment of FTB throughout the year (p119-120, T21).
9. An Authorised Review Officer (“ARO”) reviewed the decision regarding Ms Craig’s FTB entitlement for 2004/2005 and affirmed it on 30 August 2005 (T19). The ARO stated:
“Part of the Family Tax Benefit Part A Supplement amount of $1376.63 you were entitled to receive during the 2004/2005 financial year was used to offset the excess Family Tax Benefit Part A you received during this period.” (p.115, T19)
10. The Social Security Appeals Tribunal (“SSAT”) set aside the ARO’s decision and substituted the following decision:
“that recovery of the debt amount of $1,254.09 is waived according to section 101 of the Family Assistance (Administration) Act 1999 (the FAA Act). This amount is to be refunded to Ms Craig” (p3, T2).
11. Centrelink sought a review of the SSAT decision on 23 December 2005. (T1)
CONSIDERATION OF THE EVIDENCE
12. Ms Craig’s main concern was that it is unfair that the whole of the ‘back pay’ from the father of one of her children, notably the lump sum payment of $3,856.97 in February 2005 was wholly taken into account for FTB purposes in the 2004/5 year. Unfortunately for Ms Craig, the legislation does not distinguish between the receipt of regular and receipt of arrears of maintenance: the maintenance income test applies to all maintenance received during a financial year, as set out in Clause 20A of the Rate Calculator. Therefore, notwithstanding that some of Ms Craig’s maintenance payments may have related to past child support obligations by her children’s fathers, that income was counted in the financial year it was received by her.
13. Centrelink contended that the SSAT erred in law by finding that there was a debt of $1,254.09 under section 71(2) of the A New Tax System (Family Assistance) (Administration) Act 1999 (“the FAA Act”) and referred me to aspects of the FTB scheme, of which the SSAT, apparently, had been unaware.
Calculation of FTB
14. Pursuant to s.58 of the A New Tax System (Family Assistance) Act 1999 (“the FA Act”) the rate of FTB is worked out using Schedule 1 (“The Rate Calculator”).
15. FTB comprises FTB Part A and FTB Part B. Clause 1 of the Rate Calculator sets out that as a recipient of PPS, Ms Craig’s FTB Part A rate had to be determined using Part 2 (Method 1) of the Schedule. FTB Part B is determined using Part 4 of the Schedule. As a recipient of an income support payment, Ms Craig has an entitlement to the maximum Part B rate.
16. Clause 3 of the Rate Calculator sets out the overall calculation process for FTB Part A, and, as it applies to Ms Craig, can be represented by the following formula:
FTB Part A rate = (FTB Part A standard rate + FTB Part A supplement + Rent
Assistance) - maintenance income reduction17. Ms Craig was subject to the maintenance income test set out in Division 5 of Part 2 of Schedule 1 (clause 19A ff; p30,T3 refers). The maintenance income test can be summarized, as it applied to Ms Craig, as follows:
(total maintenance received in 2004/05 - maintenance income free area) ÷ 2 = reduction for maintenance income
18. The 2004/05 maintenance income free amount for Ms Craig was $1,533.00. The total maintenance she received was $7,091.97. Applying the above formula, the annual reduction for maintenance received in 2004/05 was $2,779.48 or $106.61 per fortnight.
19. As Ms Craig’s maintenance varied throughout the income year, her fortnightly rate was worked out by estimating her maintenance received, by striking a new annual rate whenever additional maintenance was received. Such variations occur pursuant to s31B of the FAA Act.
The FTB Supplement
20. The FTB Supplement first became available in the 2003/2004 income year. Pursuant to s32A of the FAA Act the FTB Part A supplement can only be included in the entitlement calculation after a person has met his or her FTB ‘reconciliation conditions’, that is, the supplement is not payable until that time.
21. Section 32A was inserted into the FAA Act by the Family Assistance Legislation Amendment (More Help for Families—Increased Payments) Act 2004. The Explanatory Memorandum to that Act explains the process insofar as is relevant as follows:
… the supplement will not be paid in respect of a particular income year until reconciliation occurs (which will generally be after the end of that income year).
22. Therefore throughout 2004/2005 the fortnightly payments made to Ms Craig did not include an allowance for FTB supplement.
23. Reconciliation of payments to Ms Craig occurred on 26 July 2005 and a letter was sent to her on that day (T13). That letter set out that Ms Craig was entitled to total FTB of $11,029.12. This included Supplements totaling $1,254.09. However, she had already been paid FTB totaling $10,906.58 during 2004/2005. Following the reconciliation the difference of $122.54 was paid to her as a top-up payment on 28 July 2005. Had Ms Craig not received the maintenance payments then her entitlement to FTB would have been higher.
24. The SSAT apparently was unaware of the reconciliation process. Had it not been for the legislative arrangements whereby no supplement is payable until the reconciliation occurs, the approach adopted by that tribunal was probably correct. However, the effect of Section 32A of the FAA Act is that Centrelink is required to undertake the reconciliation, which by necessity involves the re-calculation of entitlement having regard to maintenance payments, before a beneficiary is entitled to supplementary payments at all. Only after the reconciliation occurs is a person’s final entitlement to FTB able to be calculated. In this case, Centrelink was found to owe Ms Craig $122.54 and this amount was paid.
DECISION
25. The Administrative Appeals Tribunal sets aside the decision of the SSAT and finds that Centrelink’s calculation of Ms Craig’s FTB for 2004/2005 was correct.
I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg, Member
Signed: .....................................................................................
AssociateDate of Hearing 29 May 2006
Date of Decision 23 June 2006Advocate for the Applicant Ms Hannelore Schuster
Advocate for the Respondent Self-Represented
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