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

[2023] AATA 948

Engineer and Secretary, Department of Social Services (Social services second review) [2023] AATA 948 (3 April 2023)

Division:GENERAL DIVISION

File Number(s):      2022/2707

Re:Sonia Engineer

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Mr A. Maryniak KC, Member 

Date:3 April 2023

Date of written reasons:        28 April 2023

Place:Melbourne

For the reasons given orally at the conclusion of the hearing of this matter, the Tribunal affirms the decisions under review.

.....................[sgd]...................................................

Mr A. Maryniak KC, Member

Catchwords

SOCIAL SECURITY - Family Tax Benefit – Family Tax Benefit Top Up – Requirement to lodge tax return on time – Whether special circumstances exist – Whether special circumstances prevented the lodgement of income tax return on time – Decision affirmed

Legislation

A New Tax System (Family Assistance) (Administration )1999 Act (Cth)

Cases

Collins and Department of Social Services [2022] AATA 3805
Fedigan and Secretary, Department of Social Services [2016] AATA 211
Hooker and Secretary, Department of Social Services [2015] AATA 732
Mousawi and Secretary Department of Social Services [2021] AATA 850
Nicholson and Secretary, Department of Social Services [2016] AATA 630
Onody and Secretary, Department of Social Services [2018] AATA 4990
Secretary, Department of Social Services and McNamara [2016] AATA 689

Secondary Materials

Family Assistance Guide (Cth), last reviewed 4 January 2022

REASONS FOR DECISION

Mr A Maryniak KC, Member

28 April 2023

1. At the conclusion of the hearing of this matter, the terms of the decision and the reasons thereof were stated orally.

2. The oral reasons for that decision have been transcribed by Epiq Australia Pty Ltd. Whereas those oral reasons may reflect the inelegance of an extempore decision, they are in fact the reasons for the said decision.

3. An extract of the edited transcript is Annexure “A” hereunto and furnished to the Applicant and to the Respondent.

I certify that the following 15 (fifteen) paragraphs are a true copy of the reasons for the decision herein of Mr A. Maryniak KC, Member

.................................[sgd].......................................

Associate

Dated: 28 April 2023

Date of hearing:	3 April 2023
Advocate for the Applicant:	Mr Paawan Engineer
Advocate for the Respondent:	Ms Aarabi Raveendiran
Solicitors for the Respondent:	Services Australia

ANNEXURE A

1.    MEMBER:  This is an application to review a decision of this Tribunal, which was made on 22 February 2022.  The Applicant has been represented by her husband at this hearing. Oral evidence has been provided by Mr Engineer together with submissions during the hearing. The Tribunal has considered the Applicant’s Statement of Facts, Issues and Contentions, the evidence before it, including the T- and Supplementary T-documents, together with the Respondent’s Statement of Facts, Issues and Contentions and the oral submissions of the parties.

2.    The legislative regime which governs the Family Tax Benefits and in particular the Family Tax Benefit top up is comprised within A New Tax System (Family Assistance) (Administration )1999 Act (the Act) together with the Family Assistance Guide.

3.    There are various applicable provisions within the legislation, including section 28(3)(c) and section 32B.  Relevantly section 32C(3) of the Act identifies the reconciliation time the requisite tax return must be lodged:

(3)  The 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.

4.    It is established on the evidence that the Applicant and her husband failed to lodge their relevant income tax returns for the 2019/2020 year by the due date of 30 June 2021 as required by section 32C and 32D of the Act. 

5.    It is the role of the Tribunal in this case to determine whether special circumstances exist, which prevented the lodgement of those returns.[1]

[1] Hooker and Secretary, Department of Social Services [2015] AATA 732, at [14] and [19].

6.    The Tribunal acknowledges that the Applicant and her husband went through very difficult circumstances and challenging financial circumstances due to COVID, but the Tribunal also notes that the Applicant and her husband were in receipt of various COVID related benefits during the relevant period. Further they were on notice of the lodgement requirement by notices dated 14 May 2019 and 22 March 2021.[2]  

[2] T14, p. 161 and p. 164. 

7.    As the Tribunal has pointed out, the Applicant and her husband had from 1 July 2020 to 30 June 2021 to lodge the return for the 2019/2020 year.  The Applicant’s husband has indicated that various difficulties, including lack of funds prevented them from engaging an accountant until either late 2020 or early 2021.[3]

[3] Cf. Applicant’s SFIC and Applicant’s Review Request T7, p. 110.

8.    The reality is that an accountant was engaged prior to the end of the period within which the tax return was to be lodged. However, the Applicant has provided evidence that the accountant engaged had various difficulties and was unable to lodge the tax return and, in fact, had sought and obtained an extension of time.

9.    The Tribunal is conscious, as was expressed in Onody v Secretary, Department of Social Services [2018] AATA 4990, that each case must be considered on its merits.  It is the essential nature of the provision to create a broad discretion to meet a 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.

10.  The thrust of the Applicant’s application is that their central business district cafe was severely affected by COVID-19 and that they had to relinquish the engagement of their accountant during that period and could not engage an accountant until a latter period prior to June 2021.  Further their accountant was very busy due to staff shortages and COVID and that the ATO had granted an extension of time to lodge their tax returns by 29 October 2021.

11.  The Tribunal whilst accepting that it needs to look at each case individually is also guided by the interpretation and application of the words in the subsection 32C(3)(b) of the Act.  There is a clear line of decisions that an accountant’s failure to lodge income tax returns on time is not a circumstance that is unusual, uncommon or sufficiently out of the ordinary to constitute special circumstances.[4]  It is an obligation on the taxpayer that income tax returns be lodged on time.

[4] Nicholson and Secretary, Department of Social Services [2016] AATA 630 at [54]-[56], Secretary, Department of Social Services and McNamara [2016] AATA 689 at [47]-[48], and Fedigan and Secretary, Department of Social Services [2016] AATA 211 at [31]-[32].

12.  It is also clear from previous decisions that an ATO extension does not provide a sufficient special circumstance that prevents the return from being lodged pursuant the requirement under section 32C of the Act.  There is a different test involved so far as ATO extensions of time are concerned, compared to the requirement under the Act which requires unusual, uncommon or out of the ordinary circumstances that prevented an Applicant from lodging their income tax return on time.[5] The granting of the extension in this instance did not prevent the Applicant from lodging the tax return on time.

[5] Onody and Secretary, Department of Social Services [2018] AATA 4990 at [43] and [48].

13.  That leaves the consideration of COVID and, as Mr Engineer has quite correctly said, the challenges were very great indeed and he and his wife were under severe financial hardship.  But without more, that and the other factors outlined by the Applicant do not take the position away from what all taxpayers, including taxpayers with small businesses, were facing during the COVID epidemic. In particular, the fact that the Applicant was able to engage a new accountant at some time during the period prior to 30 June 2021 means that it could not be said that the Applicant was prevented from lodging the relevant returns.[6] The Tribunal finds that the factors outlined by the Applicant did not prevent the relevant tax returns from being lodged on time.

[6] Mousawi and Secretary Department of Social Services [2021] AATA 850 at [95], Collins and Department of Social Services [2022] AATA 3805 at [36].

14.  In the circumstances the Tribunal is not satisfied that there are sufficient special circumstances that prevented the Applicant from lodging the requisite tax returns for the 2019/2020 financial year by the due date of 30 June 2021.

15.  The Tribunal affirms the reviewable decision.