Edwards and Secretary, Department of Social Services (Social services second review)
[2016] AATA 625
•22 August 2016
Edwards and Secretary, Department of Social Services (Social services second review) [2016] AATA 625 (22 August 2016)
Division
GENERAL DIVISION
File Number
2016/0952
Re
Dianna Edwards
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Member D K Grigg
Date 22 August 2016 Place Brisbane The decision under review is affirmed.
.......................[Sgd].................................................
Member D K Grigg
Catchwords
SOCIAL SECURITY – family tax benefit –– late lodgement of taxation return – failure of applicant’s accountants to lodge income tax return – no “special circumstances” which prevented this occurring – 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
Andre and Secretary, Department of Social Services [2016] AATA 205
Barnard and Secretary, Department of Social Services [2016] AATA 436
Beadle and Director-General of Social Security (1984) 6 ALD 1
Boscolo v Secretary, Department of Social Security [1999] FCA 106 ; (1999) 90 FCR 531
Brian Murphy and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 115
Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577
Elrington and Secretary, Department of Social Services [2016] AATA 169
Fedigan and Secretary, Department of Social Services [2016] AATA 211
Groth and Secretary Department of Social Security (1995) FCA 1708
Hneidi and Others v Minister For Immigration And Citizenship (2010) 265 ALR 292
Hunnibell and Secretary, Department and Community Services [2004] AATA 992
Ivor Biddlecombe and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 451
Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084
Papps and Secretary, Department of Family and Community Services [2005] AATA 660
Riddell v Secretary, Department of Social Security [1993] FCA 261; (1993) 42 FCR 443
Scott v Secretary, Department of Social Security [1999] FCA 1774
Scott and Another v Secretary, Department of Social Security [2000] FCA 1241
Secretary, Department of Social Services and Bleeker [2016] AATA 290
Secretary, Department of Social Services and Cannon [2015] AATA 1028
Secretary, Department of Social Security v Hales [1997] FCA 1565; (1998) 82 FCR 154
Secretary, Department of Social Services and Irvine [2016] AATA 306
Secretary, Department of Social Services and Johnson [2016] AATA 304
Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones (2012) 89 ATR 267; [2012] FCA 639
Singh v Minister for Immigration and Citizenship (2012) 199 FCR 404
Secondary Materials
Guide to Social Security Law, the Family Assistance Guide (2016, Cth)
REASONS FOR DECISION
Member D K Grigg
22 August 2016
INTRODUCTION
Ms Edwards applied for a lump sum family tax benefit (“FTB”) for the 2013-2014 financial year.[1] On 23 July 2015 the Department of Human Services (“Centrelink”) advised Ms Edwards that because she had not confirmed her income for the 2013-14 financial year by 30 June 2015 that it was unable to pay her full FTB Entitlement.[2]
[1] Exhibit 1, T Documents, T6, page 21, Electronic File Notes (Department of Human
Services).
[2] Exhibit 1, T Documents, T8, pages 31-32, Centrelink letter and decision dated 23 July
2015.
In this instance, to be entitled to FTB, income tax returns for the relevant financial year need to be lodged by 30 June of the following year. That means Ms Edwards needed to lodge her tax returns by 30 June 2015, but they were not lodged with the Australian Taxation Office (“ATO”) until 9 July 2015.[3]
[3] Exhibit 1, T Documents, T10, page 43, Letter from Initiative Accountants to AAT dated 9
October 2015.
Ms Edwards’ application for an extension of time to meet the legislative timelines was rejected by Centrelink.[4]
[4] Exhibit 1, T Documents, T7, page 29, Centrelink letter dated 23 July 2015.
Ms Edwards argues that special circumstances exist such that an extension of time to lodge her tax returns should have been granted.
For the reasons set out below I have affirmed the decision under review. No special circumstances exist such that the time for the lodgement of her tax return should be extended.
Claim History
The Electronic File Records of Centrelink record that Ms Edwards told Centrelink that:[5]
·she had lodged her tax returns with her accountant prior to 30 June 2015;
·she checked with her accountant before going overseas to ensure there were no issues and was advised there were none;
·she was later advised by her accountant that due to her separation from her partner there were issues with the business tax returns; and
·the income tax returns were lodged by Ms Edwards’ accountants after 30 June 2015.
[5] Exhibit 1, T Documents, T6, pages 20-24, Electronic File Notes (Department of Human
Services).
Ms Edwards sought a review of Centrelink’s original decision by an Authorised Review Officer (“ARO”). The appeal to the ARO was unsuccessful on the grounds that no “special circumstances” existed to extend the lodgement period for her tax returns.[6]
[6] Exhibit 1, T Documents, T9, pages 33-36, Authorised Review Officer’s letter and decision
dated 8 September 2015.
Ms Edwards then lodged an application for review with the Social Services and Child Support Division (“SSCSD”).[7] The SSCSD rejected Ms Edwards’s claim and affirmed the ARO’s decision on 18 January 2016.[8]
[7] Exhibit 1, T Documents, T10, pages 39-44, Application for Review dated 9 October 2015.
[8] Exhibit 1, T Documents, T2, pages 5-9, SSCSD’s Decision and Reasons for Decision
dated 18 January 2016.
Ms Edwards has sought a review of the SSCSD’s decision by this Tribunal.[9]
[9] Exhibit 1, T Documents, T1, pages 1-4, Application for Second Review dated 19 February
2016.
ISSUES FOR DETERMINATION
Centrelink advised Ms Edwards on 23 July 2015 that because her tax returns for the 2013-14 financial year had not been lodged by 30 June 2015, she was not entitled to be paid a top-up supplemental FTB. If she had lodged her tax returns on time Ms Edwards would have been entitled to a further $7,897.86 in FTB payments.[10]
[10] Exhibit 1, T Documents, T8, pages 31-32, Centrelink letter and decision dated 23 July
2015.
The issues for determination are whether or not “special circumstances” exist such that the time for the lodgement of Ms Edwards’ tax returns should be extended.
LEGISLATIVE REQUIREMENTS
Pursuant to the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (“Administration Act”), a valid claim for FTB must be made in accordance with the Act: section 5(1), Administration Act.
If a claim is not effective, it is taken not to have been made: section 13(1), Administration Act.
Relevantly here, section 10(2)(b) of the Administration Act provides that a claim for FTB for a past period is only effective if the claim is made within:
(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 claimant from making the claim before the end of that first income year.
An individual's annual rate of FTB is to be calculated in accordance with the Rate Calculator in Schedule 1: section 58(1), A New Tax System (Family Assistance) Act1999 (Cth) (“Family Assistance Act”).
Section 32A of the Administration Act is entitled “FTB Part A supplement and FTB Part B supplement to be disregarded unless and until individual has satisfied the FTB reconciliation conditions”.
Relevantly here, the FTB reconciliation conditions are satisfied if section 32C is satisfied: section 32B, Administration Act. Section 32C provides relevantly:
3The relevant reconciliation time is the time when an assessment is made under the Income Tax Assessment Act 1936 of the first individual's taxable income for the relevant income year, so long as the first individual'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, if the Secretary is satisfied that there are special circumstances that prevented the first individual from lodging the return before the end of that first income year.
4The further period under paragraph (3)(b) must end no later than the end of the second income year after the relevant income year.
MS EDWARDS’S TAX RETURNS WERE NOT LODGED IN TIME: SECTION 32C(3)(a)
It is not in contention that Ms Edwards’ tax returns were not lodged within the first income year (that is, between 1 July 2014 and 30 June 2015).[11] They were lodged on 9 July 2015.[12]
[11] Exhibit 2, Respondent’s Statement of Facts and Contentions dated 6 May 2016, para [4.7].
[12] Exhibit 1, T Documents, T10, page 43, Letter from Initiative Accountants to AAT dated 9
October 2015.
Therefore, section 32C(3)(a) is not satisfied and it is necessary to consider whether there are any “special circumstances that prevented” Ms Edwards from lodging her tax returns before the end of 30 June 2015.
ARE THERE SPECIAL CIRCUMSTANCES THAT PREVENTED MS EDWARDS FROM LODGING HER TAX RETURNS BEFORE THE END OF 30 JUNE 2015 FOR THE PURPOSES OF SECTION 32C(3)(b)?
What does “special circumstances” mean?
The Act does not define what constitutes “special circumstances”.
There has been considerable judicial consideration of the phrase in the context of other social security legislation, for example:
·“Special” denotes something different from the usual or ordinary: Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541 at 545 per Kiefel J.
·French J (as he then was) said in in Secretary, Department of Social Security v Hales (1998) 82 FCR 154, at 162:
23. The concept of special circumstances is broad. A constellation of factors, including financial circumstances, may fall within it. The express exclusion of financial hardship alone as a special circumstance is an indicator that it would otherwise be included. This gives some measure of the range of circumstances which will qualify as special. But as a matter of grammar and ordinary logic, the exclusion of financial hardship alone as a special circumstance does not mandate its inclusion in the range of matters constituting such circumstances for the purpose of enlivening the Secretary's discretion…It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words. It may be that there will be few cases in which the Secretary will be satisfied that there are special circumstances in the absence of financial hardship. It may be that there are few cases in which having found special circumstances to exist, the Secretary would exercise the discretion to waive in the absence of financial hardship. But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose.
·The Full Federal Court in Riddell v Secretary, Department of Social Security (1993) 42 FCR 443 held, at 450:
Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other.
·Jacobson J in Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones (2012) 89 ATR 267; [2012] FCA 639 explained the effect of the authorities as follows [emphasis added]:
[51] ...the phrase “special circumstances”, although lacking in precision, is sufficiently understood as including events or things that render the operation of the statue in a particular case as unfair, unintended or unjust. What is required is something that takes the case out of the ordinary, and unfairness or unintended consequences may show that this exists. Moreover, the circumstances of the case are not confined to matters that are external to the operation of the statutory scheme: see Smith per von Doussa J at 60, 61–62; Groth per Kiefel J at 545, Kertland v Secretary, Dept of Family and Community Services (1999) 95 FCR 64 per Merkel J at 71, 73; Kirkbright v Secretary, Dept of Family and Community Services (2000) 106 FCR 281 per Mansfield J at [22], [26]–[27] and [31]–[32]; see also Secretary to the Department of Family and Community Services v Allan (2001) 116 FCR 1 per Heerey J at [17].
The AAT has also considered the phrase and held that the interpretation in Beadle and Director-General of Social Security (1984) 6 ALD 1, at [12] (i.e. that the circumstances must be unusual, uncommon or exceptional), applies to the Act.[13]
[13] See Hunnibell and Secretary, Department and Community Services [2004] AATA 992, at
[19]; Papps and Secretary, Department of Family and Community Services [2005] AATA 660, at [37].
In summary the circumstances relied upon to be “special” must be unusual, different, uncommon or exceptional.[14]
[14] The core requirement for “special reasons” is that there be something “unusual or
different”: French J in 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].
The Respondent referred me to extracts from the Guide to Social Security Law, the Family Assistance Guide (“the Guide”) which is used by the Department. The Tribunal is not bound to apply the Guide but it may, and it should, apply it in exercising its discretion unless it is unlawful or “tends to produce an unjust decision”.[15]
[15] Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634, at 645.
I also note the comments of Bowen CJ and Deane J in Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 at 70,[16] that:
....the Tribunal is not, in the absence of specific statutory provision, entitled to abdicate its function of determining whether the decision made was, on the material before the Tribunal, the correct or preferable one in favour of a function of merely determining whether the decision made conformed with whatever the relevant general government policy might be.
[16] Referred to by Deputy President Dr P McDermott RFD in Secretary, Department of Social
Services and Irvine [2016] AATA 306, at [24]-[25].
Do special circumstances exist?
On 25 March 2015 Centrelink wrote to Ms Edwards advising, among other things, that her tax returns for the 2013-14 financial year needed to be lodged by 30 June 2015 and that if they were not she would not be eligible for any further FTB, including the FTB supplements for the 2013-14 financial year.[17]
[17] Exhibit 1, T Documents, T5, pages 17-19, Letter from Centrelink to the Applicant dated 25
March 2015.
Ms Edwards told the Tribunal that she knew that her tax returns had to be lodged by 30 June 2015.
At the hearing before me and in her application for this review Ms Edwards explained that:[18]
·she signed and returned the tax returns to her accountant on 4 June 2015;
·she was told after 30 June 2015 that the tax returns were withheld from lodgement by her accountant because she owed her accountant’s money;
·at the time she was going through a “very difficult separation from [her] ex-husband and had great difficulty attaining the information needed for the lodgement” of her return; and
·she was able lodge the returns as soon as her ex-husband made the information available which was on 4 June 2015.
[18] Exhibit 1, T Documents, T1, page 4, Application for Second Review dated 18 January
2016.
Before me Ms Edwards acknowledged that she had had 12 months to lodge her tax returns and could have done so any time after 30 June 2014. However, she was going through a difficult separation and property dispute with her ex-husband and he had withheld information relevant to completing the returns. When she finally had this information the returns were able to be finalised and were signed and lodged by her in person with her accountant on 9 June 2015. Ms Edwards said her accountants did not indicate there was any reason why they could not or would not be lodged by 30 June 2015. Further, Ms Edwards submits that the 3 weeks prior to 30 June 2015 is ample time for her accountants to have lodged the tax returns with the ATO. Ms Edwards believes she should have been able to rely on her accountants to lodge the tax returns on time.
On 19 June 2015 Ms Edwards went to Bali for 2 weeks for a holiday and to attend her sister’s wedding. She says she had no reason to believe the tax returns would not be lodged. She says she was easily contactable via mobile or email while away and at no time, either before or after her departure for Bali, did her accountant notify her of any problems. There is no reason why Ms Edwards could not have followed up her accountants herself to ensure that they had lodged the tax returns on time but she did not do so.
After Ms Edwards returned to Australia she followed up why the FTB top up payment was not in her account and then realised it was because the tax returns had not been lodged in time.
Ms Edwards knew when the claim had to be lodged. Even if she was not aware, ignorance of the legal requirements is not a special circumstance. “Centrelink is not required to advise claimants about their legal rights to any particular social security payment or the rate of payment”.[19]
[19] See Brian Murphy and Secretary, Department of Families, Housing, Community Services
and Indigenous Affairs [2010] AATA 115, at [17]; Ivor Biddlecombe and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 451; Barnard and Secretary, Department of Social Services [2016] AATA 436, at [47]; Scott v Secretary, Department of Social Security [1999] FCA 1774, and on appeal Scott and Another v Secretary, Department of Social Security [2000] FCA 1241.
A letter from Ms Edwards’ accountant, Janenne Poulter from Initiative, says that:[20]
·Ms Edwards signed off on the tax returns on 4 June 2015 as soon as the relevant information was made available;
·the tax returns were then lodged on 9 July 2015;
·a junior office administrator did not lodge the tax returns straight away because of an outstanding debt in breach of the firm’s debtor policy;
·despite being a long standing client of the practice they were not aware that Ms Edwards had elected to receive her FTB part B annually. If they had been aware of this they would not have withheld lodgement; and
·this is in no way the fault of Ms Edwards.
[20] Exhibit 1, T Documents, T10, page 43, Letter from Initiative Accountants to AAT dated 9
October 2015.
The issue is whether the failure of Ms Edwards’ accountant to lodge the tax returns is “uncommon”, “out of the ordinary” or constitutes an “exceptional” circumstance.
The Guide provides examples of reasons which would not generally meet special circumstances criteria including that a:[21]
Failure by an accountant or tax agent to lodge a tax return within the lodgement period… will not ordinarily constitute special circumstances.
[21] Exhibit 1, T Documents, T4, page 15, Extracts from Guide to Family Assistance Guide.
Brennan J explained the relevance of an adopted policy to decision-making in Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 640:[22]
Decision-making is facilitated by the guidance given by an adopted policy, and the integrity of decision-making in particular cases is the better assured if decisions can be tested against such a policy. By diminishing the importance of individual predilection, an adopted policy can diminish the inconsistencies which might otherwise appear in a series of decisions, and enhance the sense of satisfaction with the fairness and continuity of the administrative process.
[22] Singh v Minister for Immigration and Citizenship (2012) 199 FCR 404.
The Full Federal Court in Hneidi And Others v Minister For Immigration And Citizenship (2010) 265 ALR 292 set out the four propositions which emerge from Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 (“Drake”) when considering the entitlement of an administrative decision-maker to take into account a statement of governmental policy:
[41]…The first is that the decision-maker is entitled, in the absence of specifically defined criteria for the exercise of the discretion, to take into account “government policy”. Thus, where the tribunal is not under a statutory duty to regard itself as bound by the policy, it is entitled to treat the policy as a relevant consideration.
[42] Second, in the absence of a specific statutory provision (which would no doubt be unusual) the tribunal is not entitled to abdicate its function of determining whether the decision under review was, on the material before the tribunal, the correct or preferable one, to a more passive function of determining whether the decision conformed to the relevant policy.
[43] Third, it is not desirable to frame a general statement of the part which government policy should ordinarily play in the determinations of the tribunal. That is a matter for the tribunal to determine in the context of the particular case, informed by considerations of the desirability of consistency of administrative decisions but balanced against the ideal of justice in the individual case.
[44] Fourth, the borderline between cases in which the tribunal has abdicated its functions to those of an unthinking application of “government or ministerial policy” to the facts may sometimes be blurred. But where the tribunal considers that the correct or preferable decision results from the application of such a policy, it should make it clear that:
… it has considered the propriety of the particular policy and expressly indicates the considerations which have led it to that conclusion.
In Drake, Brennan J (as President of the AAT) noted that:
(a)“An argument against the policy itself or against its application in the particular case will be considered, but cogent reasons will have to be shown against its application”.[23]
(b)“The Tribunal’s duty is to make the correct or preferable decision in each case on the material before it, and the Tribunal is at liberty to adopt whatever policy it chooses, or no policy at all, in fulfilling its statutory function”.[24]
(c)Further, consistency with comparable cases and decisions is “[o]ne of the factors to be considered in arriving at the preferable decision… and one of the most useful aids in achieving consistency is a guiding policy”.[25]
[23] Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 645.
[24] Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 642.
[25] Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 643.
The Respondent also referred me to numerous other Tribunal decisions where it has been found that an accountant’s failure to lodge tax returns within time was found to not constitute a “special circumstance” for the purposes of the Act.[26]
[26] Secretary, Department of Social Services and Cannon [2015] AATA 1028; Andre and
Secretary, Department of Social Services [2016] AATA 205; Fedigan and Secretary, Department of Social Services [2016] AATA 211; Elrington and Secretary, Department of Social Services [2016] AATA 169; Secretary, Department of Social Services and Bleeker [2016] AATA 290; Secretary, Department of Social Services and Irvine [2016] AATA 306.
A similar situation to that suffered by Ms Edwards occurred in Secretary, Department of Social Services and Johnson [2016] AATA 304. In that matter the accountants failed to act on the applicant’s instructions to file his tax returns by 30 June 2014 and as a result the applicant did not receive his “top up” FTB payment. Deputy President McCabe found that the failure of the accountant to act in time did not constitute “special circumstances” and said (at [11]):
I take into account the fact Mr Johnson clearly knew (or should have known) of his obligation to file his tax returns before 30 June 2014. There is no dispute he received notices to that effect from the Secretary, and ignorance of the law would not ordinarily be an excuse in any event. I also take into account the fact Mr Johnson’s accountants were aware of the obligation. Most importantly, though, I am conscious of the fact Mr Johnson was not actually prevented from filing the return by the admittedly unusual behaviour of his accountant. The evidence suggests Mr Johnson was not aware of the bad behaviour while it was going on. If he had tried to contact the accountant before the deadline to ask about the fate of his tax returns and then been prevented from making other arrangements - because the firm would not respond to his calls or release the documents he needed to take his business elsewhere or complete the returns himself – that may have amounted to special circumstances that prevented him from filing the return in a timely way. But that is not what happened. As far as Mr Johnson was concerned, his accountants simply failed to file the returns in a timely way because of internal issues. Their behaviour did not prevent him from acting; they just failed to act on his instructions. There is nothing unusual or extraordinary about that.
I do not consider the failure of Ms Edwards’ accountant to lodge her tax return in this instance a cogent reason for departing from the Department’s policy. Ms Edwards had the responsibility of ensuring her tax return was lodged in time. She did not follow this up before she left for her holiday or before 30 June 2015.
If Ms Edwards had followed her accountant up before the deadline she would have been informed of the reason they had been withheld from lodgement. Her accountant would then have been made specifically aware that Ms Edwards had elected to receive her FTB part B annually and they could have been lodged.
Ms Edwards took no steps to follow up even though she knew the deadline was crucial. Nothing prevented her from doing so.
Ms Edwards may have a means of redress against the accountant for the loss that she has sustained.
CONCLUSION
Ms Edwards’s appeal fails. No special circumstances exist such that the time for the lodgement of her tax returns should be extended.
The decision under review is affirmed.
I certify that the preceding 46 (forty -six) paragraphs are a true copy of the reasons for the decision herein of Member D K Grigg ......................[Sgd]..................................................
Associate
Dated 22 August 2016
Date of hearing 19 July 2016 Applicant In person Solicitors for the Respondent Department of Human Services
Key Legal Topics
Areas of Law
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Administrative Law
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Statutory Interpretation
Legal Concepts
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Appeal
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Judicial Review
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Procedural Fairness
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Statutory Construction
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