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

Cullen and Secretary, Department of Social Services (Social services second review) [2019] AATA 783 (1 May 2019)
Division:GENERAL DIVISION
File Number:2018/7228
Re: StephenCullen
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Member D Mitchell
Date:1 May 2019
Place:Brisbane

The Tribunal affirms the decision under review.
..............................[SGD].......................................
Member D Mitchell
CATCHWORDS
SOCIAL SECURITY – Family Tax Benefit – overpayment – where no administrative error – where no special circumstances – decision under review affirmed
LEGISLATION
A New Tax System (Family Assistance) Act 1999 (Cth)
A New Tax System (Family Assistance)(Administration) Act 1999 (Cth)
CASES
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Ivovic and Director-General of Social Services (1981) 3 ALN N95
Secretary, Department of Social Security v Hales [1998] FCA 219
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190
REASONS FOR DECISION
Member D Mitchell
1 May 2019
INTRODUCTION

Mr Stephen Cullen’s (the Applicant) claim for Family Tax Benefit (FTB) for his son Anthony was received by the Respondent on 16 November 2017.[1]
[1] Exhibit 1, T Documents, T 9, pages 86-121, Claim for Family Assistance (Family Tax Benefit) completed by the Applicant on 2 November 2016 and received by the Respondent on 16 November 2016.
On 24 January 2018, the Respondent sent the Applicant a notice advising him that he had a legally recoverable FTB debt totalling $1,330.10 for the 2016-17 financial year.[2]
[2] Exhibit 1, T Documents, T 18, pages 139-142, Centrelink Notice: Account Payable – Family Tax Benefit 2016-17.
On 13 July 2018, an authorised review officer (ARO) affirmed that decision.[3]
[3] Exhibit 1, T Documents, T 19, pages 143-150, Decision and notes of Authorised Review Officer.
The Applicant sought a first-tier review of that decision by the Social Services and Child Support Division of this Tribunal (SSCSD), who affirmed the decision of the ARO on 19 November 2018.[4]
[4] Exhibit 1, T Documents, T 2, pages 3-8, Decision of the Social Security and Child Support Division.
Following this, the Applicant sought a second-tier review of this matter by the General Division of this Tribunal, by way of an application dated 4 December 2018.[5]
[5] Exhibit 1, T Documents, T 1, pages 1-2, Application for Review.
On 21 March 2019, a Hearing was held for this application. At the Hearing, the Applicant was self-represented and gave sworn evidence in person.
The issues to be determined by the Tribunal is whether the Applicant has been paid more than his correct entitlement to FTB and if so whether the excess payment is a debt that is recoverable in part or in full.
BACKGROUND
On 16 November 2016, the Applicant lodged a claim for FTB in respect of his son Anthony, indicating that he had separated from Anthony’s mother in November 2009 and elected to receive all FTB payments on a fortnightly basis.[6]
[6] Exhibit 1, T Documents, T 9, pages 86-121, Claim for Family Assistance (Family Tax Benefit) completed by the Applicant on 2 November 2016 and received by the Respondent on 16 November 2016.
On 16 January 2017, having received all required information, the Respondent granted the Applicant’s claim for FTB payments with effect from 8 November 2017.[7] The Applicant’s fortnightly FTB payments were calculated on the basis of his estimated income and that he had 100% care for Anthony.[8]
[7] Exhibit 1, T Documents, T 12, pages 126-128, Centrelink Notice: Your family assistance.
[8] Exhibit 1, T Documents, T 12, page 126, Centrelink Notice: Your family assistance.
An officer from Centrelink contacted the Applicant on 16 January 2017 to advise him that his claim for FTB had been granted from 8 November 2016. The officer explained that he was required to take maintenance action.[9]
[9] Exhibit 1, T Documents, T 21, page 229, Centrelink mainframe screen capture.
On 14 July 2017, the Respondent reviewed the Applicant’s entitlement to FTB during the 2016/2017 financial year using his annual family income and family circumstances and paid him an additional $695.60[10]
[10] Exhibit 1, T Documents, T 17, pages 137-138, Centrelink Notice: About your Family Tax Benefit 2016-17.
At the time the Applicant was granted FTB his maintenance entitlement was set at $0. On 9 December 2017, the Respondent received information from the Child Support Agency which provided that the amount of maintenance entitlement that should have been taken into account for the period 8 November 2016 to 30 June 2017 was $5,698.00.[11]
[11] Exhibit 1, T Documents, T 21, page 237, Centrelink mainframe screen capture; Exhibit 2, Secretary’s Statement of Facts & Contentions, Attachment A.
The Applicant had elected to collect child maintenance under a private arrangement.
Based on the Applicant’s maintenance entitlement the Respondent reviewed the FTB paid to the Applicant for the period between 8 November 2016 and 30 June 2017 (the debt period), formed the view that he had received more FTB then he was entitled to and raised a debt of $1,330.10. The Applicant was notified of this decision by a letter dated 24 January 2018.[12]
[12] Exhibit 1, T Documents, T 18, pages 139-142, Centrelink Notice: Account Payable – Family Tax Benefit 2016-17.
The Applicant sought review of the decision.[13] On 13 July 2018, an ARO affirmed the decision to raise and recover the debt.[14]
[13] Exhibit 1, T Documents, T 21, page 236, Centrelink mainframe screen capture.
[14] Exhibit 1, T Documents, T 19, pages 143-150, Decision and notes of Authorised Review Officer.
On 17 August 2018, the Applicant sought review of the decision by the SSCSD.[15] On 19 November 2018, the SSCSD affirmed the ARO’s decision.[16]
[15] Exhibit 1, T Documents, T 20, pages 151-152, Request for Statement.
[16] Exhibit 1, T Documents, T 2, pages 3-8, Decision of the Social Security and Child Support Division.
The relevant law in relation to the payment of FTB and recovery of debts to the Commonwealth is found in the A New Tax System (Family Assistance) Act 1999
(FA Act) and A New Tax System (Family Assistance)(Administration) Act 1999
(FA Administration Act).
ISSUES
The issues for the Tribunal to consider are:
1.Whether, the Applicant has been paid more than his correct amount of family tax benefit during the period of 8 November 2016 to 30 June 2017 (debt period); and
2.If so, whether the excess payments a debt that are recoverable in part or in full?
CONSIDERATION
Did the Applicant receive the correct amount of FTB between 8 November 2016 to 30 June 2017?
Section 21 of the FA Act provides the requirements for when an individual is eligible for FTB and refers to those provisions of the Act which are relevant in working out the individual’s rate of FTB.
Section 58 of the FA Act provides that, subject to sections 60 to 61B, an individual’s annual rate of FTB is to be calculated in accordance with the Rate Calculator in

Schedule 1. The rate calculator for FTB takes into consideration the individual’s income and maintenance entitlement.
Clause 20 of Schedule 1 to the FA Act outlines how to reduce a person’s rate of FTB by reference to their maintenance income. In this instance the definition of maintenance income that applies is set out in clause 20D of Schedule 1to the FA Act. Clause 20D provides:

20D Working out amounts of child maintenance for administrative assessments privately collected
(1) This clause applies if, during a period in an income year:
(a) an individual is entitled to receive an amount of child maintenance for an FTB child of the individual under a liability under an administrative assessment (within the meaning of the Child Support (Assessment) Act 1989); and
(b) the liability is not an enforceable maintenance liability (within the meaning of the Child Support (Registration and Collection) Act 1988); and
(c) the child maintenance is not maintenance to which clause 20B applies; and
(d) the Secretary considers that it is reasonable for the individual to take action to obtain the amount.
Individual taken to have received full entitlement
(2) For the purposes of this Act, the individual is taken to have received, for the period in the income year, the amount of child maintenance for the child that the individual is entitled to receive under the liability, disregarding so much of that amount as is attributable to the individual receiving disability expenses maintenance.
Where it is determined that a person is eligible to receive FTB, their rate is calculated and the general proposition is that a reconciliation will be undertaken to ensure that the person is paid the correct amount of FTB during the relevant period.
When a person’s income is verified, no later than 30 June of the following income year (through the lodgement of their and if applicable their partners income tax return for the benefit year) and the other reconciliation conditions are met they become entitled to any additional FTB that may be payable, including FTB supplements. Where a person does not satisfy the reconciliation conditions there will be a limit placed on the amount of FTB that may be paid. Where a reconciliation shows that a person received more than their entitlement a debt will occur.
Section 71(1) of the FA Administration Act provides that, if a person receives a FBT payment that they were not entitled in respect of a period or event, the amount of the payment is a debt owed to the Commonwealth.
Section 71(2) of the FA Administration Act provides that if a person has been paid an amount and received an amount that is greater than the amount that should have been paid to the person the difference between the received amount and the correct amount is a debt due to the Commonwealth by the person.
The Respondent contends that:
·    Clause 20D(1) of Schedule 1 to the FA Act applies to the Applicant as he is entitled to receive an amount of child maintenance for an FTB child under a liability under an administrative assessment; the liability was not an enforceable maintenance liability as there is no court order in place in relation to maintenance of the child; and it was reasonable for the Applicant to take maintenance action.[17]
·    Pursuant to clause 20D(2) of Schedule 1 to the FA Act the Applicant is taken to have received the full amount of child maintenance that he was entitled to receive under the liability, whether or not he received this amount from his     ex-partner.[18]
·    Following an assessment by Child Support, the Applicant’s ex-partner was found to be liable to pay him maintenance in relation to their son in the amount of $5,698.00 for the period 8 November 2016 to 30 June 2017. Further after a reconciliation of the Applicant’s entitlement to FTB the Applicant was overpaid $1,330.10 during that period and that amount constitutes a legally recoverable debt due to the Commonwealth.[19]
[17] Exhibit 2, Secretary’s Statement of Facts & Contentions, paragraphs 29-37, pages 4-6.
[18] Exhibit 2, Secretary’s Statement of Facts & Contentions, paragraph 38, page 6.
[19] Exhibit 2, Secretary’s Statement of Facts & Contentions, paragraphs 39-41, page 6.
At Hearing the Applicant told the Tribunal that he agreed that he was overpaid, however, contended that it was not his fault as he did not know what his ex-partner was doing, he said it was up to Centrelink to know what they should be paying him.
The Applicant also told the Tribunal that he has a financial agreement with his ex-partner and that she was contributing to school fees and other things for their son. Upon cross-examination by the Respondent the Applicant told the Tribunal that he elected to get a fixed amount of FTB as it helped him plan with his savings.
The Respondent also took the Applicant to the Notes for Claim for Paid Parental Leave and Family Assistance[20] and asked him if he agreed with the two following passages:
[20] Exhibit 6, Notes for Claim for Paid Parental Leave and Family Assistance.
“If you are claiming Family Tax benefit for a child from a previous relationship, you are required to take reasonable action to obtain child support in order to receive more than the base rate of Family Tax Benefit Part A.”[21]
[21] Exhibit 6, Notes for Claim for Paid Parental Leave and Family Assistance, page 9.
“If any dependent child, in your care, is from a previous relationship you must apply for a child support assessment within 13 weeks (91 days) of the latest of the following dates:
·     the date the child was born
·     the date you separated from the child’s other parent
·     the date the child came into your care
·     the date your percentage of care increased to 35 per cent or above
·     such later date that you first became entitled to apply for child support.
To receive more than the base rate of Family Tax Benefit Part A you are required to apply for a child support assessment with us form the other parent of your child if you are not currently partnered to that person.
It is important to remember that regardless of your personal income both parents of the child are responsible for providing support for the care of that child. ”[22]
[22] Exhibit 6, Notes for Claim for Paid Parental Leave and Family Assistance, page 12.
The Applicant said that he agreed with what the notes said, however, he would not do what they said. He told the Tribunal that he had not contacted Child Support to say he had trouble getting maintenance as he did not want maintenance, he was concerned with honouring their agreement. The Applicant said he would not take reasonable steps to collect child support as he was not interested in getting his ex-partner to pay for anything outside of their agreement as their agreement was amicable.
Based on the evidence before the Tribunal, in particular the Applicant’s own admission that he was over paid FTB, I find that the Applicant received more FTB than he was entitled to during the debt period and as such this overpayment is a FBT debt owed to the Commonwealth.
FTB Debt repayable in part or in full?
As I have found that the FTB debt exists, I must consider whether the debt must be repaid.
It is generally expected that debts to the Commonwealth are recovered. This proposition was expressed by French J in relation to debt recovery in Secretary, Department of Social Security v Hales [1998] FCA 219 as:
The taxpayer is entitled to expect that in the ordinary course money paid to people that they are not entitled to received will be recovered, albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the persons concerned.
The Respondent contends that the Applicant was put on notice that any overpayments of FTB would need to be repaid to the Department. Noting that, despite the following warning at question 195 of the Family Assistance Claim form, the Applicant elected to receive both FTB Part A and Part B payments fortnight, as opposed to the base rate or a lump sum:[23]
All overpayments need to be paid back. There are several payment options which allow you to choose how and when you will receive Family Tax Benefit Part A and Part B.
Choosing the right payment option can help you reduce the risk of an overpayment when we balance your payment after the end of the financial year.
For more information see Payment options – to reduce your risk of an overpayment in the Notes Booklet, or go to humanservices.gov.au/families.[24]
[23] Exhibit 2, Secretary’s Statement of Facts & Contentions, paragraphs 43-44, page 7.
[24] Exhibit 1, T Documents, T9, page 120, Claim for Family Assistance (Family Tax Benefit) completed by the Applicant on 2 November 2016 and received by the Respondent on 16 November 2016.
However, there are circumstances where the recovery of debts is either put on hold for a period of time (written off) or are no longer pursued (waived). Relevant to the Applicant’s FTB debt, the Respondent may write off, or waive, his FTB debt if the requirements set out in sections 95, 97 or 101 of the FA Administration Act are met.
Should the Debt be written off pursuant to section 95 of the FA Administration Act?
Section 95(1) of the FA Administration Act provides the Respondent may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise, but only if subsection (2),(4A) or (4B) applies. Relevantly, section 95(2) of the FA Administration Act allows the Respondent to decide to write off a debt 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.
Section 95(4) of the FA Administration Act provides that for the purposes of paragraph (2)(b), if a debt is recoverable by means of:
(a) deductions under section 84; or
(aa)deductions under section 1231 of the Social Security Act 1991; or
(b) setting off under section 84A family assistance; or
(c) application of an income tax refund under section 87; or
(d) setting off under section 87A against a payment referred to in paragraph 82(2)(a);
the person is taken to have capacity to repay the debt unless recovery by those means would cause the person severe financial hardship.
The Respondent contends that there is no basis to write off the debt as the Applicant has capacity to repay the debt, noting he is currently in receipt of Newstart Allowance and repaying the debt via withholdings at a rate of $60 per fortnight.[25] At the Hearing the Respondent told the Tribunal that the debt in question had an outstanding balance of $126.11.
[25] Exhibit 2, Secretary’s Statement of Facts & Contentions, paragraph 48, page 7.
At the Hearing, the Applicant told the Tribunal that:
·     He is not working, he closed his business at the end of 2014 and has been looking for work.
·     He sold his truck.
·     He owns his home, however, he is renovating and it is not finished.
·     He has no debt and that is how he survives.
·     He has approximately $40,000 in the bank, it dwindles down as he has to pay bills.
·     Some of the money in the bank he received from his son’s superannuation when he passed away and that this is money that he does not touch as it is all he has left of his son.
·     His two youngest children, who are both now adults, currently live with him.
Based on the evidence before the Tribunal I am satisfied that the debt is recoverable at law. The Applicant has the capacity to repay the debt, his whereabouts are known and it is cost effective for the Commonwealth to take action to recover the debt. Consequently, I find that the Applicant’s FTB debt cannot be written off pursuant to section 95 of the FA Administration Act.
Should the Debt be waived due to sole administrative error pursuant to section 97 of the FA Administration Act?
Section 97 of the FA Administration Act provides that the Respondent must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received, in good faith, the payment or payments that gave rise to that proportion of the debt and the person would suffer severe financial hardship if it were not waived.
Selway J, in Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190 at paragraph [35] stated:
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.

The Respondent contends that the FTB debt arose following the reconciliation of the Applicant’s maintenance income and entitlement to FTB; none of these actions amount to an administrative error; the Applicant was advised that his could occur in the various notices he received throughout the financial year and therefore the debt cannot be waived due to sole administrative error.[26]
[26] Exhibit 2, Secretary’s Statement of Facts & Contentions, paragraphs 52-53, page 8.
The Applicant told the Tribunal at the Hearing that he agreed that he was overpaid however contended that it was not his fault as he did not know what his ex-partner was doing. The Applicant said it was up to Centrelink to know what they should be paying him. On that basis, the Applicant told the Tribunal he should not have to repay the amount he had been overpayment.
The Applicant was provided with information in relation to how the FTB was calculated, what was taken into consideration, notification that where a debt arises it would need to be repaid and was offered alternative means to receiving his FTB to assist in avoiding a situation where a debt may arise.[27] The Applicant chose not to take a conservative approach to how he received his FTB payment and as such upon reconciliation of his circumstances a FTB debt arose.
[27] Exhibit 1, T-Documents, T 12, pages 126-128, Centrelink Notice: Your family assistance; T 15, pages 133-135, Centrelink Notice: Your family assistance; T 17, pages 137-138, Centrelink Notice: About your Family Tax Benefit 2016-17.
Based on the evidence before the Tribunal, while I am satisfied that the Applicant received the amount of FTB in good faith, I am not satisfied that the Applicant’s FTB debt was a result of a sole administrative error. Consequently, I find that the Applicant’s FTB debt cannot be waived pursuant to section 97 of the FA Administration Act.
Should the Debt be waived due to special circumstances pursuant to section 101 of the FA Administration Act?
Section 101 of the FA Administration Act provides that the Respondent may waive the right to recover all or part of a debt if they are 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.
The Act does not provide a definition of special circumstances, however the general proposition established by relevant Federal Court decisions make it clear that special means something different from the usual or ordinary.[28]
[28] Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541, at 545per Kiefel J; Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones(2012) 89 ATR 267; [2012] FCA 639, at [51]; Boscolo v Secretary, Dept of Social Security[1999] FCA 106; (1999) 90 FCR 531, at [18]; Barker J in Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs[2010] FCA 1084, at [37].
In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 the Tribunal held at paragraph 3:
An expression such as “special circumstances” is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.
In Re Ivovic and Director-General of Social Services (1981) 3 ALN N95, the Tribunal stated:
Whilst it would be unwise, if not impossible, to attempt to lay down any precise delineation of what may amount to “special circumstances” …., the use of the word “special” is, we think, intended to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case … In the exercise of the discretion …., the decision-maker must have regard to whether, by exercising the discretion in a particular case, he will be achieving or frustrating ends or objects which are conformable with the scope and purpose of the …. Act.
The Respondent contends that the Applicant’s circumstances are not sufficiently out of the ordinary, such that they could be considered special for the purposes of section 101 of the FA Administration Act.[29]
[29] Exhibit 2, Secretary’s Statement of Facts & Contentions, paragraph 59, page 9.
The Respondent contends that there is no evidence that the Applicant has attempted to obtain the amount of child support owed; that he would have difficulty obtaining the owed amount if sought; or, that he has special circumstances, other than financial hardship.[30]
[30] Exhibit 2, Secretary’s Statement of Facts & Contentions, paragraph 60, page 9.
I accept that the debt did not result due to the Applicant knowingly making a false statement or representation or failing to comply with a provision of the family assistance law.
Based on the evidence before the Tribunal set out above, in particular that the Applicant had nearly repaid the debt, there is no reason outside of his agreement with his ex-partner that makes the collection of his maintenance entitlement difficult or unreasonable. While his financial situation is not ideal, I do not consider that the Applicant’s circumstances are sufficiently special or unusual to warrant the exercise of the discretion in section 101 of the FA Administration Act to waive the debt. Consequently, I find that the Applicant’s FTB debt cannot be waived pursuant to section 101 of the FA Administration Act.
CONCLUSION
I find that the:
(a)Applicant was paid more than his correct amount of family tax benefit during the period 8 November 2016 to 30 June 2017;
(b)Applicant’s family tax benefit debt for the period 8 November 2016 to 30 June 2017 is correctly calculated as $1,330.10 and is a debt owed to the Commonwealth;
(c)Requirements of sections 95, 97 and 101 of the FA Administration Act are not met; and
(d)Applicant’s family tax benefit debt is recoverable in full.
Accordingly, the decision under review is affirmed.

I certify that the preceding 56 (fifty-six) paragraphs are a true copy of the reasons for the decision herein of Member D Mitchell

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Associate
Dated: 1 May 2019

Dates of hearing: 21 March 2019

Applicant: In Person

Advocate for the Respondent: Ms Lisa Palmer

Solicitors for the Respondent: Department of Human Services

[2019] AATA 783

1 May 2019

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Appeal

Judicial Review

Remedies

Statutory Construction

Dates of hearing:	21 March 2019
Applicant:	In Person
Advocate for the Respondent:	Ms Lisa Palmer
Solicitors for the Respondent:	Department of Human Services