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

[2016] AATA 567

Dunford; Secretary, Department of Social Services and (Social services second review) [2016] AATA 567 (3 August 2016)

Division	GENERAL DIVISION
File Number	2016/0078
Re	Secretary, Department of Social Services
APPLICANT
And	Julie Dunford
RESPONDENT

DECISION

Tribunal	Senior Member S Raymond
Date	3 August 2016
Place	Adelaide

The Tribunal sets aside the decision under review dated 27 November 2015. In substitution the Tribunal affirms the decision made by the authorised review officer of the applicant on 7 September 2015, affirming the delegate’s decision made on 20 July 2015, that the respondent is not able to be paid her full entitlement of Family Tax Benefit (FTB), including the FTB supplement, in respect of the 2013-2014 income year.

.................... [Sgd] ...........................................

Senior Member S Raymond

CATCHWORDS

SOCIAL SECURITY – Family Tax Benefit – late lodgement of taxation return – income tax return lodged late by accountant – whether special circumstances prevented applicant from lodging income tax return – decision set aside.

LEGISLATION

A New Tax System (Family Assistance) (Administration) Act 1999, ss 32B, 32C and 32D

CASES

Bleeker; Secretary, Department of Social Services and (Social services second review) [2016] AATA 290

Johnson; Re Secretary, Department of Social Services and (Social services second review) [2016] AATA 304
Irvine; Secretary, Department of Social Services and (Social services second review) [2016] AATA 306
Fedigan; Secretary, Department of Social Services and (Social services second review) [2016] AATA 211
Secretary, Department of Social Services and Cannon [2015] AATA 1028
Elrington; Secretary, Department of Social Services and (Social services second review) [2016] AATA 169
Beadle & Director-General of Social Security, Re (1984) 6 ALD 1
Brian Lewis Groth v Secretary, Department of Social Security [1995] FCA 1708
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Hooker and Secretary, Department of Social Services [2015] AATA 732
Hollis and Secretary, Department of Social Services [2015] AATA 941
Re Secretary, Department of Social Security v Noga Sevel and Brenda Dorothy O’Connell [1992] FCA 559

De Jager; Secretary, Department of Social Services and (Social services second review) [2015] AATA 828

SECONDARY MATERIALS

Family Assistance & Other Legislation Amendment Act (No 70 of 2013), Schedule 2B

REASONS FOR DECISION

Senior Member S Raymond

3 August 2016

1. Mrs Julie Dunford was in receipt of family tax benefit (FTB) in respect of her daughter during the 2013-2014 financial year, and for that financial year, she had an entitlement of FTB of $11,361.97. Mrs Dunford was paid $8,770.47 by way of fortnightly instalments[1] and in the ordinary course, if the taxation returns of her and her husband had been lodged by 30 June 2015, she would have received a ‘top up’ and supplement payment of $2,591.50. However, in this case that did not happen as Mr Dunford’s taxation return was not lodged until 17 July 2015, being outside the required timeframe, and an extension of time was not granted.

   [1]     Exhibit A1, T6 p 33.

2. On 20 July 2015 Mrs Dunford was notified that she was not able to be paid her full entitlement of FTB, including the FTB supplement in the amount of $2,591.50, for the 2013-2014 financial year[2], and that the relevant decision maker was not satisfied an extension of time for lodgement of Mr Dunford’s tax return should be given. This decision was reviewed and found to be correct by an authorised review officer of the applicant on 7 September 2015.

   [2]     Exhibit A1, T6 p 33.

3. The matter was originally the subject of review by the Social Services and Child Support Division of this Tribunal, which decided to set aside the Centrelink decision on 27 November 2015[3]. The relevant member determined that there were “special circumstances” which prevented Mr Dunford from lodging his tax return within the applicable timeframe, and extended the time for lodgement of Mr Dunford’s return.

   [3]     Exhibit A1, T2 pp 4-8.

4. The Secretary, Department of Social Services, subsequently lodged an application for review of that decision on the basis that “the SSAT [sic] erred in finding special circumstances existed, such that sections 32C and 32D of the A New Tax System (Family Assistance) (Administration) Act are satisfied”[4], giving rise to this matter.

   [4]     Exhibit A1, T1 p 2.

   THE LEGISLATION

5. The relevant law is contained in the A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act).

6. Section 32B of the Administration Act enables reconciliation of the entitlement to FTB. Sections 32C and 32D are relevant to Mrs Dunford and Mr Dunford, respectively. Section 32D relates to the situation in the current case where the couple are not separated and the partner must lodge a tax return. Section 32D provides as follows:

   32DRelevant reconciliation time—no separation of couple and partner must lodge tax return

   (1)This section applies to the first individual for a same-rate benefit period if:

   (a)    the first individual was a member of a couple throughout that period; and

   (b)    the other member of the couple (the partner) is or was required to lodge an income tax return for the relevant income year; and

   (c)    the first individual continues to be a member of the couple until the end of:

   (i)     the first income year after the relevant income year; or

   (ii)such further period (if any) as the Secretary allows, if the Secretary is satisfied that there are special circumstances that prevented the partner from lodging the return before the end of that first income year.

   (2)The relevant reconciliation time is the time when an assessment is made under the Income Tax Assessment Act 1936 of the partner's taxable income for the relevant income year, so long as the partner's income tax return for the relevant income year was lodged before the end of:

   (a)    the first income year after the relevant income year; or

   (b)    such further period (if any) as the Secretary allows under subparagraph (1)(c)(ii).

   (3)The further period under subparagraph (1)(c)(ii) must end no later than the end of the second income year after the relevant income year.

7. It follows that the issue for me is whether there were special circumstances which prevented Mr Dunford from filing his return within the year ended 30 June 2015 (being the first income year) after the relevant income year, namely the year ended 30 June 2014) such that the discretion to extend time should be exercised in his favour.

   THE EVIDENCE

8. There is little dispute about the facts of the case which I will set out hereunder. The facts are drawn from the documentary exhibits before the Tribunal and the oral evidence which was given at the hearing

   The relevant facts of the case

9. Mrs Dunford was partnered to her husband during the whole of the relevant income year, 1 July 2013 to 30 June 2014 and up until 17 July 2015.

10. She has one child, for whom she was receiving fortnightly payments of FTB throughout the 2013-2014 financial year. During the relevant period she lived in South Australia.

11. Mrs Dunford’s taxation return was lodged on 30 October 2014. She described her return as easy and her husband’s as ‘more in depth’.

12. A letter dated 25 March 2015[5] was sent to Mrs Dunford by Centrelink reminding her that to receive her full FTB entitlement she and her partner needed to lodge a 2013-2014 taxation return by 30 June 2015. It outlined the consequences of not doing so, including not being eligible for any further FTB, including the FTB supplements.

    [5]     Exhibit A1, T5 pp 30-32.

13. Mrs Dunford received that letter. She and her husband were mindful of the need to lodge their taxation returns by 30 June 2015.

14. Mr Dunford was required to lodge a taxation return. On 17 July 2015 Mr Dunford’s 2013-2014 individual taxation return was lodged with the Australian Taxation Office (ATO) by his accountant.

    The dealings by Mr Dunford with his accountant

15. Mr Dunford’s taxation affairs had been carried out by the same accountant since approximately 2007. In his evidence to the Tribunal, Mr Dunford stated that his taxation affairs are not straightforward because his business involved web and software development and included many international transactions. I note that there was a company taxation return in addition to Mr Dunford’s individual taxation return.

16. On 30 March 2015 Mr Dunford communicated by email with his accountant[6] and provided information to him in order that his [Mr Dunford’s] taxation returns could be prepared. There were several communications between Mr Dunford and his accountant in relation to the provision of the necessary information. Mr Dunford indicated that his accountant was aware of the need for his taxation return to be lodged by 30 June 2015.

    [6]     Exhibit A1, T2 p 11.

17. On or about 6 May 2015 an invoice[7] was sent to Mr Dunford, together with the taxation returns for his signature. The invoice stated terms of payment of seven days. Consequently, I conclude that the work to complete the taxation returns had been finalised by about 6 May 2015.

    [7]     Exhibit A1, T2 p 13.

18. Mr Dunford cannot recall exactly when the taxation returns were signed by him and sent back to the accountant but he thought that it would have been within the seven days of receiving the invoice. Consequently, I conclude that the signed taxation returns for the 2013-2014 financial year were sent back to the accounting firm in approximately mid-May 2015.

19. Based on his previous dealings with the accounting firm, Mr Dunford understood that he needed to pay the invoiced professional fees before his taxation returns would be lodged with the ATO. He explained that on one occasion in the past he had had a discussion with his accountant and arranged to have the taxation returns lodged with the ATO in advance of the payment of the invoiced fees. That did not occur in this case.

20. The fees were paid to the accountant on 24 June 2015. There is a Commonwealth Bank transfer receipt evidencing the transfer of funds on that date[8].

    [8]     Exhibit A1, T2 p 14.

21. The expectation of Mr Dunford was that his taxation returns would be lodged with the ATO thereafter, by the next day, as had happened in the past. He did not communicate with his accountant  to check that this had occurred as he felt he did not need to do so.

22. His individual taxation return was lodged with the ATO on 17 July 2015.

    The accountant’s personal circumstances

23. After Mrs Dunford was notified that she would not receive the top up FTB payment, including supplements, there were communications by Mr Dunford with his accountant.

24. In an email to Mr Dunford dated 8 September 2015[9], the accountant said that the taxation return was not lodged until 17 July 2015. He then said, “I was away from work for a few weeks with my mom’s passing.”

    [9]     Exhibit A1, T2 p 15.

25. In an email dated 22 February 2016, the accountant advised Mrs Dunford’s representative[10] that his mother had been very ill around April and subsequently passed away on 20 May. He said, “After my bereavement leave, I returned to my office and the return was lodged late.”

    [10]    Via email - Annexure 1 to Exhibit R1.

26. I accept that the accountant suffered the bereavement of losing his mother. The information about the impact on the accountant’s work is scant. I accept that his mother passed away on 20 May and that the accountant was absent from work for a period of time. What is not clear is the period of his absence from his office and when he returned to work.

27. Nevertheless, I find that the work in relation to Mr Dunford’s taxation return had been completed by about 6 May 2015; the taxation return had been signed and returned to the accountant about mid-May 2015 and what remained to be done was for Mr Dunford to arrange payment of the invoiced fees in order that the accountant would proceed to arrange lodgement of the taxation return with the ATO.

28. I find that the payment of the fees took place on 24 June 2015, some six weeks after the date of the invoice. Pursuant to the arrangements made with Mr Dunford, I find that the accountant would proceed to lodge the taxation return on or after 24 June 2015, after the professional fees were paid. I note that Mr Dunford said that he had to obtain the funds to pay the invoice and this was a reason for the payment being made on 24 June, rather than any earlier.

    The circumstances of Mrs and Mr Dunford

29. Mrs and Mr Dunford gave detailed evidence at the hearing. I accept that Mr Dunford worked long hours in a job with Qantas Freight and in running his own business. He started the Qantas job in May 2015. In addition to the hours he worked in his job and in his business, during the relevant period was a difficult family situation in which his grandfather became ill and died in April 2015. I accept that Mrs Dunford also worked and that she and her husband have responsibility for the care of their child. The care arrangements were impacted by the situation involving Mr Dunford’s grandfather. I accept that these matters had a significant impact on Mr and Mrs Dunford during the first half of 2015.

30. However, Mr Dunford had provided all the necessary information to complete his taxation return by 6 May 2015. The accounting firm had undertaken the work to complete the returns (both that for the company and for Mr Dunford’s individual return) by about 6 May 2015 when Mr Dunford was sent the invoice and the relevant taxation returns. The hold up in lodgement was the receipt of the accountant’s fees which occurred on 24 June 2015. Once those fees were paid, I accept that Mr Dunford had an expectation that the taxation returns would be lodged by the next day. Unfortunately that did not occur.

31. It is also asserted on behalf of Mrs Dunford[11] that Mr Dunford “fulfilled his obligations in his dealings with his accountant for the ATO, he followed up with emails and he had no control over the accountant from that time.” However, approximately six weeks of the time between the invoice being rendered and the payment of the fees, whilst explicable in terms of Mr Dunford obtaining the funds, was not a period of time over which Mr Dunford had “no control”. There was not an expectation by Mr Dunford that the accountant would lodge the return before 24 June 2015 when the professional fees were ultimately paid.

    [11]    Exhibit R1, [48].

    CONSIDERATION

32. As I have indicated, the relevant reconciliation time can only be extended to 17 July 2015 if I am satisfied that “there are special circumstances that prevented [Mr Dunford] from lodging the return before the end of [30 June 2015]”.

33. The Tribunal was provided with references to relevant case law by both the applicant and the respondent. I have considered those cases. A number of the cases were recent decisions of the Tribunal which dealt with various situations involving accountants and the lodgement of income taxation returns[12]. I am mindful that other AAT decisions are not binding on me but, nevertheless, consistency of decision-making in like cases is desirable.

    [12]    Bleeker; Secretary, Department of Social Services and (Social services second review) [2016] AATA 290; Johnson; Secretary, Department of Social Services and (Social services second review) [2016] AATA 304; Irvine; Secretary, Department of Social Services and (Social services second review) [2016] AATA 306; Fedigan; Secretary, Department of Social Services and (Social services second review) [2016] AATA 211; Secretary, Department of Social Services and Cannon [2015] AATA 1028; Elrington; Secretary, Department of Social Services and (Social services second review) [2016] AATA 169.

34. I am also mindful that each case must be considered on its own facts.

35. Of significance is the precise terminology of the relevant legislative provision. Section 32D of the Administration Act does not simply refer to the term “special circumstances” but contains a nexus such that those circumstances must have “prevented the partner from lodging the return before the end of [30 June 2015]”. This is significant. Whilst there is a significant body of case law[13] as to the meaning of the term “special circumstances” in social security law, the additional wording in section 32D(1)(c)(ii) is material.[14]

    [13]    Beadle & Director-General of Social Security, Re (1984) 6 ALD 1; Brian Lewis Groth and Secretary, Department of Social Security (1995) FCA 1708; Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25.

    [14]    A reference to a two stage test is referred to in Hooker and Secretary, Department of Social Services [2015] AATA 732 and Hollis and Secretary, Department of Social Services [2015] AATA 941

36. Mrs Dunford’s representative asserted[15] that, “the purpose of FTB payments is to assist parents and other carers with the expenses of caring for children: it has been held that in remedial or beneficial legislation if there is an ambiguity it should be construed in favour of the family.”

    [15]    Exhibit R1 paragraph 46 and two authorities were cited in support of this contention.

37. The respondent’s representative directed my attention to the case of Re Secretary, Department of Social Security v Noga Sevel and Brenda Dorothy O’Connell[16] which is a decision of the Full Federal Court in relation to the receipt of family allowance. I am mindful that their Honours cautioned, at page 546 of the judgment, “Given the evident Parliamentary intention to protect the interests of dependent children, an interpretation of the Act leading to a loss of allowance by qualified people should be adopted only in the clearest of cases.”[17]

    [16] [1992] FCA 559.

    [17]    The respondent also referred to the case of De Jager; Secretary, Department of Social Services (Social Services second review) [2015] AATA 828 in which the Tribunal determined that a more benevolent construction was available.

38. Nevertheless, I must give effect to the words of section 32D of the Administration Act. Parliament has included the phrase after the reference to “special circumstances”, “that prevented [Mr Dunford] from lodging the return before the end of [30 June 2015]”. I do not accept that there is ambiguity in the terminology of section 32D(1)(c)(ii) of the Administration Act.

39. The Supplementary Explanatory Memorandum[18] in relation to the amending legislation, states that, “Families will be able to access extensions in special circumstances, similar to arrangements for tax returns”. However, the wording of section 32D (1)(c)(ii) of the Administration Act is not ambiguous and must be accorded its meaning.

    [18]    Family Assistance & Other Legislation Amendment Act (No 70 of 2013) Schedule 2B include at page 11 of Exhibit R1.

    Other matters

40. The applicant’s representative made two submissions which warrant comment:

    ·That there is a ‘well-worn path of case law’ [apparently referring to the AAT cases in footnote 12] in relation to accountant error. The implication being that a failure to lodge a taxation return due to a mistake by the accountant was not a special circumstance.

    ·The respondent would have a means of redress against the tax agent and that is what they should do.

    However, in my view the case law cited does not mean that the discretion in relation to section 32D of the Administration Act can never be invoked when an accountant is involved in the lodgement process and some mistake, delay or error has occurred. Each case will depend on its own facts.

41. The fact of any redress against the taxation agent is not something which can be assessed by this Tribunal (and noting in this case an absence of detail as to exactly what occurred). The question of whether the provision in section 32D(1)(c)(ii) is made out should not be determined on the basis of whether an alternative remedy may be available to the taxpayer client. Rather, the focus must be on whether the requisite special circumstances have been established in accordance with the terms of the legislative provision.

    CONCLUSION

1. The combination of the circumstances in this case is unfortunate. In this case the circumstances of Mr and Mrs Dunford and their accountant evoke sympathy—each had experienced the death of a close family member. However, I must consider the effect of the circumstances as disclosed in the evidence before me and whether they prevented the lodgement of Mr Dunford’s return.

2. The evidence before me does not allow me to make a finding as to exactly what occurred which caused the delay between 24 June and 17 July 2015 when Mr Dunford’s taxation return was lodged. Whilst the evidence suggests that there was an absence from the office of Mr Dunford’s accountant due to the death of his mother, it is not clear as to the exact period of absence nor the exact cause of the delay of lodgement of Mr Dunford’s return from 24 June 2015. However, of significance is the fact that all the work relating to the return was completed by about 6 May 2015 and the taxation returns signed and returned by mid-May 2015. The delay between that time and 24 June 2015 is explained by the fact that the professional fees were not paid until then which was in accordance with the usual practice in Mr Dunford’s dealing with his accountant. There was no approach made to the accountant by Mr Dunford for the taxation return to be lodged before the fees were paid, as had occurred once before.

3. I have accordingly concluded that I am not satisfied that there are special circumstances that prevented Mr Dunford from lodging his 2013-2014 return before the end of the first income year, 30 June 2015, after the relevant income year, namely the year ended 30 June 2014.

   DECISION

4. The Tribunal sets aside the decision under review dated 27 November 2015. In substitution the Tribunal affirms the decision made by the authorised review officer of the applicant on 7 September 2015, affirming the delegate’s decision made on 20 July 2015, that the respondent is not able to be paid her full entitlement of Family Tax Benefit (FTB), including the FTB supplement, in respect of the 2013-2014 income year.

I certify that the preceding 45 (forty-five) paragraphs are a true copy of the reasons for the decision herein of Senior Member S Raymond

............. [Sgd] ....................................

Administrative Assistant

Dated 3 August 2016

Date of hearing	11 July 2016
Solicitor for the Applicant	Mr C Visser Department of Human Services FOI & Litigation Branch
Solicitor for the Respondent	Ms M Riley Welfare Rights Centre (SA) Inc.