Curran and Department of Family and Community Services

[2000] AATA 525

DECISION AND REASONS FOR DECISION [2000] AATA 525

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q1998/931

GENERAL ADMINISTRATIVE  DIVISION       )          
           Re      CATHERINE CURRAN    
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        
  Respondent

DECISION

Tribunal       Mr. D.W. Muller, Senior Member

Date28 June 2000  

PlaceBrisbane

Decision     The Tribunal: 1. Varies the decision under review by determining that:  (a) Catherine Curran was not overpaid family payment and additional family payment from 26 October 1995 to 3 March 1996, and (b)  Catherine Curran was overpaid family payment from 4 March 1996 to 7 November 1996.  2.  Remits the matter to the respondent for re-calculation of the debt owing to the Commonwealth in the light of this decision.            
  ............(Signed)....................
  D.W. MULLER
  SENIOR MEMBER
CATCHWORDS
 SOCIAL SECURITY – Overpayment of Family Payment/additional family payment – notifiable event – base tax year – change of appropriate tax year

REASONS FOR DECISION

Mr. D.W. Muller, Senior Member             

1. This is an application for review of a decision of the Social Security Appeals Tribunal dated 19 August 1998 affirming a decision of a delegate of the respondent of 23 April 1998 as affirmed by an Authorised Review Officer on 9 June 1998 raising an overpayment of family payment/additional family payment in the sum of $4,986.10 for the period 26 October 1995 to 7 November 1996 and ordering the recovery of the consequent debt due to the Commonwealth.

2. The alleged debt represented an overpayment of additional family payment of $867.50 for the period 26 October 1995 to 25 December 1995 and an overpayment of basic family payment of $4,118.60 for the period 4 January 1996 to 7 November 1996.

3. The applicant was represented by Ms. Heyworth-Smith of Counsel and the respondent was represented by Mr. J. Walsh of the Administrative Law Section of Centrelink.

4. There is no dispute as to the facts.  It is common ground that Catherine Curran did all things that she was required to do under the Social Security Act 1991 (the Act) and that all estimates that she made of taxable incomes were reasonable at the time of the estimates. The Tribunal finds as follows:

   (i)For the income tax year ended 30 June 1994, Catherine Curran had a taxable income of $3,144 and her husband, Brian Curran, had a taxable income of $4,514.

   (ii)In 1995, Catherine Curran was receiving rental allowance, child disability allowance, family payment and additional family payment in respect of her daughter, Zoe.

   (iii)On 6 October 1995, Mrs. Curran completed a social security form headed "Family Payment and Childcare Assistance, Answer Form".  The form was received at the Mitchelton Branch of the Department of Social Security on 18 October 1995.  On the form, Mrs. Curran supplied the following information (among other things):

   (a)Mrs. Curran and her husband, Brian Curran, were self-employed.

   (b)The estimated taxable incomes for 1994/95 was $6,500 for each of Mr. and Mrs. Curran.  That is, a combined taxable income of $13,000.

   (c)The income of each of them was likely to increase due to business growth.

   (d)Estimated taxable income for 1995/96 was $7,500 each.  That is, a combined taxable income of $15,000.

   (iv)On 19 December 1995, the Department of Social Security wrote to Mrs. Curran and informed her that:

   (a)From 4 January 1996, she would be paid $273.10 per fortnight.

   (b)The income used to work out the rate "is your and your partner's combined income of $13,000 for the 1995/96 financial year".

   (c)She must tell the Department of Social Security if the combined income of her and her partner was more than $24,915.00.

   (v)The information supplied by the Department of Social Security in the letter of 19 December 1995 seems to contain an error in that the appropriate tax year for 1996 was the 1994/95 tax year not 1995/96.  It was the 1994/95 tax year for which the estimate of $13,000 was given, not 1995/96.

   (vi)For the 1994/95 tax year, the taxable income of the applicant turned out to be $7,068 and that of her husband, $7,067.  That is, a combined taxable income of $14,135.

   (vii)On 4 April 1996, the applicant filed a document headed "Changes to your Income and Assets", at the Mitchelton Branch of the Department of Social Security.  She said that:

   (a)Her occupation category had changed to home duties.

   (b)Her partner's occupation category had changed to wage or salary earner-full time.

   (c)Both changes had occurred on 31 March 1996.

   (d)Estimated combined taxable income, $24,000, for the financial year 1995/96.

   (viii)Mrs. Curran received no letter from the Department of Social Security after she informed the Department of Social Security of the changed occupation categories, the increase in her partner's income and the increased estimated combined taxable income of $24,000.  However, she noticed that her benefits were still the same.  On 12 April 1996, Mrs. Curran telephoned the Department of Social Security to ask whether she had been re-assessed properly.  She was worried about the possibility of being overpaid.  She was reassured that the assessment was correct and that there would be no risk of overpayment.  In fact, there would not have been an overpayment if the estimate of $24,000 had proven to be accurate.  There would have been no reduction of benefits until the combined taxable income reached $24,915.  She was not told that she risked an overpayment if the estimate of $24,000 was too low.

   (ix)Notices of Assessment issued by the Australian Taxation Office on 1 May 1997 for the 1995/96 year, show:

   (a)Catherine Curran had a taxable income of -      $ 8,656

   (b)Brian Curran had a taxable income of -              $24,747

   Combined Taxable Income  $33,403

   This was made up of $17,308 earned jointly in the business from 1 July 1995 to 30 March 1996 and $16,093 earned by Mr. Curran from 31 March 1996 to 30 June 1996 as wages.

   (x)On 1 November 1996, the applicant completed a form headed "Changes to your Income and Assets".  She said that since 30 June 1995 the taxable income of both her and her husband had reduced.  She estimated their combined taxable income for the 1996/97 tax year to be $30,000.  Her rate of family payment was reassessed using this new estimate from 21 November 1996.

   (xi)On 24 December 1996, the Department of Social Security wrote to Mrs. Curran to inform her that:

   (a)Her current rate of family payment was based on the information which had been supplied about their combined taxable incomes for 1994/95.

   (b)To work out the rate of payment for 1997, the Department of Social Security would have to be supplied with the figures for the 1995/96 financial year.

   (xii)On 30 December 1996, Mrs. Curran replied to the Department of Social Security letter of 24 December 1996 and said that the returns for 1995/96 had not been lodged and would not be lodged until May 1997.  She provided an estimate of $5,000 for herself and $22,500 for her husband, giving an estimated combined taxable income of $28,000 for 1995/96.  (In fact the figure turned out to be $33,403, see paragraph (vii) above.)

5. In 1998, a Delegate of the Department of Social Security made a Determination to raise and recover overpayments of family payment and additional family payments for the period 26 October 1995 to 7 November 1996.  The alleged debt was split into two parts due to a name change in the benefit.  It was "additional family payment" from 26 October 1995 to 21 December 1995, amounting to an overpayment of $867.50 and "family payment" (minimum or more than minimum) from 4 January 1996 to 7 November 1996, amounting to an overpayment of $4,118.60.

6. The alleged overpayment of $867.50 for the period 26 October 1995 to 21 December 1995 is said to have come about because:

   (i)Until October 1995, Mrs. Curran was being paid at a rate calculated on the combined taxable incomes of her and her husband for the appropriate base year which was the previous year, that is, 1993/94, when their combined taxable incomes amounted to $7,658.

   (ii)Upon informing the Department of Social Security on 18 October 1995 that her estimate of combined taxable income for 1995/96 was likely to increase to $15,000, Mrs. Curran was then paid on the estimate of $15,000.  (It made absolutely no difference to the rate of payment because it was still low enough for her to get the maximum benefit.)

   (iii)The estimate proved to be incorrect because the combined taxable income turned out to be $33,403.

   (iv)Hence a re-calculation was done for the period 26 October 1995 to 21 December 1995 based on the actual figure of $33,403.

7. The alleged overpayment of $4,118.60 is said to have come about because:

   (i)From 1 January 1996, Mrs. Curran received family payment having regard to the form Mrs. Curran completed on 18 October 1995, on which she estimated combined taxable incomes of $13,000 for 1994/95 and $15,000 for 1995/96.  She received more than the minimum rate of family payment.

   (ii)From early April 1996, regard was had to the new estimate of $24,000 for the 1995/96 year, which made no difference to the rate of payment of benefits.

   (iii)The actual combined taxable income for 1995/96 was $33,403.  Hence a recalculation was done using the correct figure.

8. The rate at which additional family payment/family payment was paid depended on the combined taxable income of the family unit.  The higher the taxable income, the lower the benefit.  The payment for a particular calendar year was made at a rate which was referable to the combined taxable income in the tax year which ended on 30 June in the previous calendar year, unless there were significant variations in taxable income from year to year which made the general rule inappropriate.  The relevant provisions of the Social Security Act 1991 (the Act) were:

   "1069-H11.  Appropriate tax year
   Subject to the following provisions of this Submodule, the appropriate tax year for a family payment payday is the base tax year for that payday.
   1069-H12.  Base tax year
   The base tax year for a family payment payday is the tax year that ended on 30 June in the calendar year that came immediately before the calendar year in which the payday occurs."

1. In applying sub-sections 1069-H11, H12, without any proviso to Mrs. Curran's case, the appropriate tax year for payments made in 1995 was the tax year which ended on 30 June 1994, and the appropriate tax year for payments made in 1996 was the tax year which ended on 30 June 1995.

2. Since the combined taxable income of the family unit was $7,658 for the 1993/94 tax year, Mrs. Curran should have been entitled to maximum benefits for all of 1995, provided that no other provisions of s.1069 applied to her.

3. Similarly, the combined taxable income of the family unit for the tax year 1994/95 was $14,135, and therefore, Mrs. Curran should have been entitled to maximum benefits for 1996, provided that no other provisions of s.1069 applied to her.

4. The appropriate tax year for a family payment payday could have changed from the base tax year to a different tax year in two ways.

   (i)Upon the recipient making a request for change.  This occurred when the recipient earned less in the year of payment than they did in the base tax year.   The request would have been for an increase in benefits during a year in which there was a greater need for assistance due to a decrease in income.  The relevant sections of the Act were:

   "Change to appropriate tax year at recipient's request
   1069-H18.  If:
   (a)     a person requests the Secretary to make a determination under point 1069-H19;  and
   (b)     as a result the Secretary determines under that point that the appropriate tax year, for the purposes of applying this Module to the person for a family payment payday on or after the day on which the request is made, is the tax year in which the person makes the request;
   the appropriate tax year, for those purposes, is the tax year in which the person makes the request.

   FP recipient may ask Secretary to change appropriate tax year
   1069-H19.  If:
   (a)     family payment:

   (i)        is not payable to a person because of this Module;  or

   (ii)is payable to a person at a reduced rate because of this Module;  and

   (b)the person asks the Secretary to make a determination under this point;  and

   (c)the person's income for the tax year in which the request is made is likely to be:

   (i)not more than 75% of the person's income for the appropriate tax year at the time when the request is made;  or

   (ii)less than the person's income free area;

   the Secretary must determine that the appropriate tax year, for the purposes of applying this Module to the person for a payday on or after the day on which the request is made, is the tax year in which the request is made.
   Note:  For "income" see point 1069-H12.

   Form of request
   1069-H20.  A request under point 1069-H19 must be made in writing in accordance with a form approved by the Secretary."

(ii)As the result of a notifiable event

The notifiable event in the context of this case would usually be a change in occupation resulting in an increase in income and a corresponding reduction in benefits.  The scheme of the Act was to give assistance to families during a period of need but to reduce, or terminate, the benefit after the family was able to earn sufficiently well to not require assistance to the previous degree.  The relevant sections of the Act were:

"Change to appropriate tax year because of notifiable event
          1069-H16.  If:
          (a)       a notifiable event occurs in relation to a person;  and

(b)the person's income for the tax year in which the notifiable event occurs exceeds:

(i)125% of the person's income for the base tax year;  and

(ii)125% of the person's income free area;

the appropriate tax year, for the purposes of applying this Module to the person for the remainder of the family payment period, is the tax year in which the notifiable event occurs.
1069-H14.  Secretary may determine that an event is a notifiable event.
If the Secretary gives a person a notice under subsection 872(1) relating to the payment of family payment to the person, the Secretary may specify in the notice that an event described in the notice is a notifiable event for the purposes of this Module.
872(1)  The Secretary may give a recipient of family payment a notice that requires the recipient to inform the Department if:
(a)       a specified event or change of circumstances occurs;  or

(b)the recipient becomes aware that a specified event or change of circumstances is likely to occur."

1. If the appropriate tax year was changed due to either (i) a request by the recipient, or (ii) the occurrence of a notifiable event, the recipient had to estimate the combined taxable income for the appropriate tax year so that the calculation could be made of the quantum of benefit to be paid from the date of the request or notifiable event.  If the estimate  turned out to be too low and consequently the benefit paid was higher than it should have been, a recalculation was done using the correct figure and an overpayment representing the difference between what was paid and the correct amount was raised against the recipient.  It was not required that the estimate be accurate to the dollar.  A margin of 25 per cent was allowed before a recalculation was made.

2. It is common ground that Mrs. Curran made no request for a change to the appropriate tax year.   Indeed there was no point in her doing so because she received maximum benefits in 1995 and 1996 (until 7 November).

3. The question for the Tribunal is whether or not a notifiable event occurred to trigger a change to the appropriate tax year, and if so, when that notifiable event occurred.

4. A notifiable event is an event listed on a notice to a recipient of benefits.  In 1995, Mrs. Curran received two notices which listed "notifiable events".

   (i)On 10 April 1995 a notice was sent to her which (among other things) required her to notify the Department of Social Security if the combined incomes of her and her husband was likely to be more than $27,125.

   (ii)On 19 December 1995, a notice was sent to her which required her to notify the Department of Social Security (among other things) if:

   (a)The combined income of her and her husband "will be more than than $24,915  in the 1995/96, 1996/97 financial year", or

   (b)       she or her husband changed jobs.

5. There was no notifiable event until Mr. Curran started working for wages on 4 March 1996.

6. Mrs. Curran was entitled to be paid the maximum benefit for the whole of 1995 based on the combined taxable income of $7,658 for the tax year ending 30 June 1994.  There was no justification for suggesting that the calculations of benefits for 1995 were based on an estimate of income for the 1995/96 tax year.  They were not, nor should they have been.

7. Similarly, Mrs. Curran was entitled to be paid the maximum benefit for that part of 1996 from 1 January 1996 to 3 March 1996, based on the combined taxable income of $14,135 for the tax year ending 30 June 1995.  There was no justification for suggesting that the calculations of benefits for the early part of 1996 were based on an estimate of income for the 1995/96 tax year.  The letter of 19 December 1995, said that the calculation of benefits for 1996 was based on a combined income of $13,000, which was the estimate for 1994/95.  It was not based on an estimate of income for 1995/96, nor should it have been.

8. Happily, the legislation accords with common sense.  Recipients of benefits get maximum benefits while their income is low and reduced benefits when their income goes up.  It would certainly not accord with common sense to make Mrs. Curran refund the benefits she received in 1995 and early 1996 when her family was in need of assistance.

9. Mrs. Curran was not overpaid for the period 26 October 1995 to 3 March 1996.

10. She was, however, overpaid for the period 4 March 1996 to 7 November 1996.  That is, she was overpaid from the date of the notifiable event, upon which she had to make an estimate of future income within the tolerances allowed for by the legislation.  Her estimates were not within those tolerances and a re-calculation pursuant to section 855 of the Act was made.

11. The decision under review is varied in that Mrs. Curran was not overpaid additional family payment and family payment from 26 October 1995 to 3 March 1996 but she was overpaid from 4 March 1996 to 7 November 1996.

12. The matter will be remitted to the respondent for re-calculation of the debt owing to the Commonwealth.

I certify that the 24 preceding paragraphs are a true copy of the reasons for the decision herein of Mr. D.W. Muller, Senior Member

Signed:         .....................................................................................
           R. Hayes, Associate

Date/s of Hearing  22 April 1999
Date of Decision  28 June 2000
Counsel for the Applicant        Ms Heyworth-Smith
Solicitor for the Applicant         Welfare Rights Centre
Respondent  Mr. J. Walsh, departmental advocate