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

[2018] AATA 3960

Essarras and Secretary, Department of Social Services (Social services second review) [2018] AATA 3960 (19 October 2018)

Division:GENERAL DIVISION

File Number:           2017/7072

Re:Khaled Essarras

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Member C Edwardes

Date:19 October 2018

Place:Perth

The decision under review is affirmed.

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

Member C Edwardes

CATCHWORDS

SOCIAL SECURITY – overpayment of Family Tax Benefit – overpayment of Schoolkids Bonus – debts can be written off or waived – whether debt incurred solely due to administrative error – whether special circumstances – decision affirmed

LEGISLATION

A New Tax System (Family Assistance) Act 1999 (Cth) – s 21, s 58(1)

A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) – s 20, s 20A,
s 31, s 35J, s 35UA, s 70, s 95, s 97, s 101

CASES

Angelakos and Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9

Beadle and Director-General of Social Security (1984) 6 ALD 1
Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114
Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Groth and Secretary, Department of Social Security (1995) 40 ALD 541; FCA 1708
In Salsone and Secretary, Department of Family and Community Services [2002] AATA 117 (30 October 2002)

SECONDARY MATERIALS

The Family Assistance Guide

REASONS FOR DECISION

Member C Edwardes

19 October 2018

THE APPLICATION

1. This is an application for review of a decision of the Social Services & Child Support Division of the Tribunal (AAT1), dated 6 November 2017 (T2 3-8)(R1).  AAT1 affirmed a decision to recover in full from the Applicant:

   ·Overpaid Family Tax Benefit (FTB) for the 2013/14, 2014/15 and 2015/16 financial years, in the amounts of $8,687.00, $8,687.00 and $7,480.65 respectively; and

   ·Schoolkids Bonus (SKB) for the financial years 2014/15 and 2015/16 in the amounts of $1,684.00 and $1,712.00 respectively (T2 4)(R1).

2. The Administrative Appeals Tribunal (the Tribunal) has jurisdiction to hear this application pursuant to s 128 of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (the Administration Act).

   BACKGROUND

3. The Applicant applied for FTB on 31 October 2012 (R3).

4. The Applicant’s income for the financial year 2012/13 was $68,206 (R3).

5. The Applicant was advised on 17 June 2013 that he would receive FTB as a result of a combined income of $71,344.00 (T7 131)(R1).

6. The Applicant was advised on the 6 July 2014 he would receive FTB as a result of a combined income of $77,344.00 (T21 175)(R1).

7. The Tribunal notes the Applicant received a total of $1684.00 for SKB on 1 January 2015 and 30 June 2015 (R5).

8. The Applicant was advised on the 27 June 2015 he would receive FTB as a result of a combined income of $81,304.00 (T32 206)(R1).

9. The Tribunal notes the Applicant received a combined income of $1,712.00 for SKB on 1 January 2016 and 30 June 2016 (R5).

10. The Tribunal notes the Applicant and his partner received assessments between July and November for the respective years 2013 to 2016 (T57 297-307)(R1).

11. The Applicant and his partner’s income was noted by the Department of Human Services for the following financial years as:

    ·2013/14:  $77,922 and $33,818, respectively;

    ·2014/15:  $82,811 and $29,617, respectively; and

    ·2015/16:  $88,887 and $24,927, respectively (T59 502-504)(R1).

12. The Applicant was advised on the 1 June 2017 that he had been overpaid FTB for the following financial years:

    ·2013/14:  $8,228.65;

    ·2014/15:  $8,687.00; and

    ·2015/16:  $7,480.65 (R2).

13. The Applicant was also advised at the same time that he had been overpaid SKB for the following financial years:

    ·2014/15:  $1,684.00; and

    ·2015/16:  $1,712.00 (R2).

14. On 23 June 2017 the Applicant requested a review of the decision relating to the debts (T58 321)(R1).

15. On 23 June 2017 the Authorised Review Officer (ARO) affirmed the decision of the Department (T54 277-283)(R1).

16. The ARO found:

    •You were paid fortnightly instalments of Family Tax Benefit during the 2013/2014, 2014/2015 and 2015/2016 financial years.

    •Your rate of Family Tax Benefit during the 2013/2014 financial year was based on income estimates of:

    o         $77,922.00 for you

    o         $0.00 for your partner.

    •The ATO advised the department that the combined assessed taxable income for that financial year was actually $111,740.00, consisting of $77,922 in income for you and $33,818.00 in income for your partner.

    •As a result of this, the department reconciled your entitlement for the financial year and raised a Family Tax Benefit debt of $8,228.65.

    •Your rate of Family Tax Benefit during the 2014/2015 financial year was based on income estimates of:

    o         $82,811.00 for you, and

    o         $0.00 for your partner.

    •The ATO advised the department that the combined assessed taxable income for that financial year was actually $112,428.00, consisting of $82,811.00 for you and $29,617 for your partner.

    •As a result of this, the department reconciled your entitlement for the financial year and the following debts were raised:

    o         Family Tax Benefit debt of $8,687.00; and

    o         Schoolkids Bonus debt of $1,684.00.

    •Your rate of Family Tax Benefit during the 2015/2016 financial year was based on income estimates of:

    o         $81,304.00 for you, and

    o         $0.00 for your partner.

    •The ATO advised the department that the combined assessed taxable income for that financial year was actually $88,897.00 for you and $24,972.00 for your partner.

    •As a result of this, the department reconciled your entitlement for the financial year and the following debts were raised:

    o         Family Tax Benefit debt of $7,480.65;  and

    o         Schoolkids Bonus debt of $1,712.00.

    •          You are required to repay these debts (T54 280)(R1).

17. The Applicant filed an application for review of the ARO’s decision on 4 July 2017 (T56 289)(R1).

18. AAT1 affirmed the decision of the department and the ARO on 6 November 2017 (T2 3-8)(R1). AAT1 noted the Applicant did not dispute he was overpaid or that that the taxable income used by department and ARO was inaccurate. Rather, the issue in contention was whether the debt was attributable to solely administrative error, pursuant to s 97 of the Administration Act.

19. AAT1 found:

    35.The tribunal does not consider that Mr Essarras’ circumstances meet the threshold to be considered special such that the waiver provisions of section 101 of the Administration Act are enlivened. The tribunal does not consider that it is unjust, unreasonable or inappropriate in the particular circumstances of this case for him to repay the debt.

20. On 29 November 2017, the General Division of the Tribunal received from the Applicant an application for review for a second review of the decision on the following grounds:

    I am not satisfied with the decision made by the last tribunal hearing, as I do believe, me being overpaid for 5 years was solely an administrative error by Centrelink. Centrelink was provided with all documentation necessary, by me as well as the ATO, to calculate the correct FTB, however centrelink made an error and overpaid me for 5 consecutive years. I have provided the Centrelink with my tax return documentation every time they requested it. This has led to an accumulation of a hefty debt which has placed increased financial strain impacting all of my family. This would have not occurred if centrelink had notified of the error in payment from the first year (2012/2013), instead of waiting for 5 years to inform me. Furthermore, I believe that all the evidence I have provided to the previous hearing was not taken into account when finalising the decision (T1 2)(R1).

    RELEVANT LEGISLATION AND ISSUES

21. The legislation governing the review is contained in the A New Tax System (Family Assistance) Act 1999 (Cth) (the Act) and the Administration Act.

22. The Tribunal is assisted by the policy document The Family Assistance Guide (the Guide). The Guide provides assistance to those who administer the Act. Whilst not bound to apply policy guidelines, the Tribunal will usually do so unless there are cogent reasons not to do so (refer to Drake and Minister for Immigration and Ethnic affairs (No 2) (1979) 2 ALD 634).

    ISSUES FOR DETERMINATION

23. The issues for determination by the Tribunal are:

    ·whether there were FTB and SKB debts, as determined by Centrelink; and

    ·whether special circumstances exist to write off or waive any part of the debt resulting from overpayment.

    EVIDENCE

24. The Tribunal received the following evidence:

    ·the Applicant’s written submissions, dated 9 May 2018, with accompanying documents (T57 and T58) (Exhibit A1);

    ·the T Documents, including documents T1 to T 59 (Exhibit R1);

    ·the Respondent’s Statement of Facts, Issues and Contentions, dated 26 March 2018 (Exhibit R2);

    ·the Respondent’s list of authorities (Exhibit R3);

    ·Annexure A – an online document recording showing the Applicant’s claim for FTB (Exhibit R4);  

    ·Annexure B – an FTB and SKB explanation (Exhibit R5);  and

    ·Annexure C – record of archived online document recordings (Exhibit R6).  

25. The Tribunal has reviewed all of the material before it. The Tribunal is satisfied that all relevant evidence was before it, and that both parties were provided an opportunity to address the evidence and the matters in issue, either orally or in writing. Relevant aspects of the evidence and material before the Tribunal will be analysed and referred to below.

26. The Respondent makes the following contentions (R2):

    20.Section 21 of the Family Assistance Act provides that an individual is eligible for FTB if they have at least one FTB child and are an Australian resident.

    21.Section 58(1) of the Family Assistance Act provides that the annual rate of FTB is to be calculated in accordance with the rate calculator in Schedule 1, which contains provisions that set out the method for calculating FTB entitlement. An individual's FTB entitlement is calculated with reference to their adjusted taxable income.

    22.An individual’s eligibility for, or rate of, FTB (and associated payments, including SKB) may be determined on the basis of an estimate of their adjusted taxable income (sections 20 and 35J of the FA Administration Act).

    23.Section 20A of the FA Administration Act enables the Department to give notice to an individual of an indexed estimate for the purpose of calculating their entitlement to family assistance.

    24.Pursuant to section 3, ‘adjusted taxable income’ has the meaning given by Schedule 3 which provides that it is the sum of an individual’s taxable income, adjusted fringe benefits, target foreign income, total net investment loss, tax free pension or benefit and reportable superannuation contributions, less deductible child maintenance expenditure. Net investment losses and reportable superannuation contributions have the meaning prescribed by the Income Tax Assessment Act 1997.

    25.Paragraph 35UA(1)(d) provides that an individual is eligible for SKB if, among other things, their adjusted taxable income for the income year in which the bonus test day occurs is $100,000 or less. ‘Bonus test day’ is defined in section 3 as 1 January 2013, 30 June 2013 and each subsequent 1 January and 30 June. As the Applicant’s adjusted taxable income exceeded $100,000 in the 2014-15 and 2015-16 financial years, he was not eligible to receive SKB in either of those financial years.

    26.Section 31 of the FA Administration Act enables a person’s entitlement to receive, or payment rate of, FTB to be varied when an event occurs that means a claimant was not eligible for FTB or that their payment rate should be different. Advice received from the Applicant or the ATO about his and Mrs Essarras 2013-14, 2014-15 and 2015-16 adjusted taxable income constitutes an event after which the Department concluded the Applicant’s entitlement to FTB and SKB should be varied.

    27.Section 70 of the FA Administration Act provides that debts arising in respect of overpaid family assistance, which includes FTB and SKB payments, are a debt due to the Commonwealth.

    Debt write off

    28.Pursuant to section 95 of the FA Administration Act the Secretary may write off a debt for a stated period if it is irrecoverable at law, if the debtor has no capacity to repay it, if the debtor’s whereabouts are unknown or if it is otherwise not cost effective for the Commonwealth to take action to recover it.

    29.Subsection 95(4) provides that where a debt is recoverable by way of social security payment deductions, a debtor is taken to have capacity to repay the debt unless recovery by those means would result in the debtor being in ‘severe financial hardship’.

    30.The term ‘severe financial hardship’ is not defined in the Act, however the Administrative Appeals Tribunal in:

    a.Re Lumsden and Secretary, Department of Social Security [1986] AATA 228 required that for this term to be satisfied, a person’s entire financial position would need to be materially less than the current rate of pension;

    b.Stubbs and Secretary, Department of Family and Community Services [2003] AATA 729 stated that:

    20. Severe financial hardship, while not implying destitution, goes beyond straitened financial circumstances and imports a need for the particular case of a person to include financial suffering of a severe or extreme nature...

    c.L and Department of Social Security [1995] AATA 159; (1995) 38 ALD 176, stated in part as follows:

    66. In Summary, I consider that the matters relating to the personal financial hardship of the individual are always relevant in any decision as to write off under subsection 1236(1). Retrospective considerations may occasionally be relevant. The essential inquiry will always be whether recovery is a feasible proposition, bearing in mind the financial means and obligations of the individual concerned. Will recovery cause such personal hardship as to run contrary to the beneficial nature of the legislation?...

    d.Secretary, Department of Family and Community Services and Birgden [2003] AATA 67 stated:

    77. The next question before the Tribunal is whether recovery of the debt would impose severe financial hardship on the respondent ... the applicant submitted that it would not. He submitted that the respondent and her partner do not qualify for any income-tested Centrelink payments, and earn over $73,000 per year. They currently meet all their expenses and so their situation, were the debt not waived, would not be one of financial hardship, let alone severe financial hardship. No case law was cited on this point before the Tribunal. As the Applicant noted, ‘severe financial hardship’ has not been judicially defined, and probably no inflexible definition is desirable. The Tribunal notes that the respondent and her partner have incurred many expenses in caring for their son, and that her family lives very frugally. However, they are able to make ends meet. Their income exceeds what those relying solely on government payments receive. Recovery of the debt would occasion severe inconvenience, stress and some financial hardship, but the Tribunal is unable to find that such hardship would be ‘severe’ in the context of the Act. The Tribunal consequently cannot find that the respondent satisfies s97(2)(b) of the Act. Hence the Tribunal cannot waived the debt under s97 of the Act ...

    31.The Department’s records indicate the Applicant is repaying the debt by instalments of $150 per fortnight and has been in a voluntary payment arrangement since 28 June 2017.

    32.In addition the Applicant and Mrs Essarras are both employed. The Applicant has provided a statement of financial circumstances, which indicates the families gross fortnightly income is $3,834.20. The Applicant owns his home and there is $150,000 remaining on the mortgage (T57, p 310). The Applicant did not disclose any financial circumstances that would indicate he is experiencing severe financial hardship.

    33.As the AAT1 found, the Applicant’s financial circumstances mean the family live on a restricted budget, however this is not an uncommon situation for recipients of income support payments ([34] T2, p 8).

    34.The whereabouts of the debtor is well known and there is no reason why it would not be cost effective to the Commonwealth to seek to recover the debt.

    35.Therefore the Secretary submits that there is no cause to write-off the debt under section 95 of the FA Administration Act.

    Debt waiver

    Sole administrative error

    36.Where a debt (or part thereof) has arisen solely as a result of administrative error, and the debtor had received the payment in good faith and would suffer severe financial hardship if the debt (or part thereof) were not waived, the Secretary must waive recovery of that debt (section 97 of the FA Administration Act).

    37.The existence of an administrative error is not sufficient to meet the requirement, and the debt must arise from administrative error to the exclusion of all else (see Re Gerhardt v Secretary, Department of Employment & Training (1997) FCA 815).

    38.In Ward and Secretary, Department of Families and Community Services (2000) AATA 212, Deputy President Forgie held:

    47. This means that the Secretary’s duty to waive does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth's administrative error. It makes no difference that those other errors or factors are minor.

    39.The Secretary notes the Federal Court decision in Sekhon and Secretary, Department  of Family  and  Community  Services [2003] FCAFC 190, which states:

    35. 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.

    Whether there was administrative error

    40.The Secretary contends that the Department has not made  an administrative error  in this  instance.  The  Department's  records  indicate  that  the  income  of Mrs  Essarras was not provided to the department  by the Applicant  or the ATO until 7 April 2017   when the Applicant provided his and Mrs Essarras  2015-16  notices of assessment.  A file note made on that day indicates a request was then sent to the ATO to obtain Mrs Essarras income information, it stated ‘completed FRAI request for cust ptr as tax details not received’ (T58, p 317). FRAI is an acronym for FAO Request Actual Income.

    41.Therefore, the Secretary considers that Mrs Essarras 2015-16 tax information was first provided to the department on 7 April 2017 and the income information for previous years was obtained after that and following a request by the Department to the ATO. The debts were subsequently raised on 1 June 2017 for FTB received in prior financial years.

    Whether there was sole administrative error

    42.Should the Tribunal disagree and find that all relevant income information was available but that the Department did not properly action that information, the Secretary further contends that the debt cannot be waived for sole administrative error because the Applicant contributed to the error that caused the debt.

    43.The debt in this case relates to a period of three years within which the Applicant was provided with a multitude of letters that set out the information being used to calculate the amount of FTB paid to the Applicant.

    44.In 2013-14 the Applicant was advised on 17 June 2013 and 22 June 2013 that the information being used to calculate his FTB payments was ‘Combined Income for FTB Part A $71,344.00’ and the income of the ‘Part B lower earner $0.00’ (T7, p 131 and T8, p 135). Similar letters were also sent in 2014, 2015 and 2016 (see for example, T21, p 175; T30, p 200; and T44, p 244).

    45.On 10 May 2013, 29 April 2014 and 28 April 2015 the Applicant was also sent letters advising him that he could update his income for the forthcoming financial year. Each of these letters advised the Applicant of his current income and stated (T6, p 128; T15, p 155; and T31, p 203) (emphasis in original):

    The estimate of family income that would be used to calculate your Family Tax benefit Part A payment is:

    $71,344.00

    Note: this estimate is for combined family income

    The estimate of income that would be used to calculate your Family Tax Benefit Part B payment is:

    $0.00  Note: This estimate is for the person with the lower income.  If these figures are accurate you do not need to do anything. We will start using these figures from 1 July 2013 to calculate your Family Tax Benefit.

    If these figures are not accurate, you need to use Option 1 to update your income estimate.

    46.The Applicant told the AAT1 that he had noticed the figures in the notices and wondered about them but had not queried them with the Department ([22] T2, p 6).

    47.The Secretary contends that the notices sent to the Applicant in the debt period made it clear that the Applicant’s FTB was being calculated on the basis of his adjustable taxable income only and that he was required to update the Department if the information or estimate being used to calculate the rate of FTB was wrong.

    …

    Conclusion

    51.The Secretary contends principally that there was no administrative error by the Department because Mrs Essarras’ income information was not available until after the debt period.

    52.In the alternative, the Secretary contends that the Applicant's failure to contact the Department to update his and Mrs Essarras’ income information during the debt period and following receipt of the notices described above, precludes a finding by this Tribunal that the debt was due solely to administrative error by the Department.

    53.Therefore the Secretary contends the debt cannot be waived under section 97 of the FA Administration Act.

1. The Applicant submits (A1):

   1.Physical copies for both my wife and my tax return have been provided to Centrelink prior to the 7^th April 2017.

   2.Physical copies of both our tax returns were personally handed to Centrelink by me every financial year upon Centrelink’s request. These were handed over to the Armadale office mainly, and once to the Cannington office. Centrelink staff failed to send requests for information to the Australian Taxation office to verify the information until I provided my tax return statement for 2015-16 (as I do every year) on the 7^th April 2017. 

   3.Please find document attached labelled T57 Page which is a copy of ‘Notice of assessment’ for my wife, Khadija Essarras. This document is for the tax period 2015-16 and was handed to Centrelink in 2016, prior to my meeting with them on the 7^th April 2017. This was provided by the Department and located from their records. document attached labelled T57 Page.

   4.Providing a copy of my wife’s and my tax return where it clearly states our income is a form of notifying Centrelink of our income. Copies of my tax return statements were meant to be taken and appropriate case notes were meant to be completed by staff, which did not occur. Centrelink can verify me visiting their offices through CCTV footage.

   5.Physical copies were provided to Centrelink due to receiving a letter from Centrelink asking me to lodge my Tax return. The following letters also stated that ‘If you do not lodge your tax return or tell us that you do not need to lodge your tax return’ … ‘you will not be eligible to receive any additional Family Tax Benefit for the relevant year, including the family tax benefit supplement …’ as according to Centrelink policy. My payments were never cut from 2013-2017, which also supports my statement that I continued to provide Centrelink with my tax return papers, and hence centrelink was aware of my wife’s and my income for the given financial years.

   6.On My last visit to Centrelink on the 7^th April 2017, to provide Centrelink with proof of lodging my tax return. The staff member I spoke to informed that she was not able to access my record due to a technical issue’s unknown to me. I was at the Centrelink office for almost 45 minutes while she resolved this issue. At the end, she only managed to access my records and was unable to access my wife’s records. I was informed by the staff member that she will write a note on the system, and I would receive a response from Centrelink in approximately 10 days. (Please see document attached labelled T58)

   7.I believe due to this administrative error they were not able to detect over payments until 7th April 2017.

   8.In the Secretary’s statement of Facts and Contentions document, it was stated that ‘the secretary further contends that the debt cannot be waived for sole administrative error because the Applicant contributed to the error that caused the debt’, which identifies that the Department has also contributed to the debt through an administrative error. The Department did not make me aware that they cannot access our records on their system, or that they did not receive my tax return statements from the ATO or myself until the 7^th April 2017. This means I had no knowledge that I was not eligible for the family tax benefit prior to 2017, hence I did not knowingly contribute to this error.

   9.Should the Tribunal disagree and find that I have contributed to the error, I further contend that the debt must be waived or reduced significantly as Centrelink had sufficient income information available but they did not action it appropriately which lead to the accumulation of this debt. I kindly request that Centrelink takes responsibility for their administrative error.

   I believe that Centrelink had sufficient information to reduce or cease our Family tax benefit as I have complied with all requests and provided documents that clearly state my wife’s and my income, such as the Tax return documents. Centrelink continued to pay me the family tax benefit due to errors made by their staff and system combined. I kindly request that the debt is completely waived or reduced based on the above information.

   Regarding my new circumstances, I’m still unable to purchase a hearing aid. I have also recently had to cover the costs of my daughter’s surgery $7012, in addition to things I have previously brought to your attention eg: home loan, home insurance, school fees for 2 high school children, uniform (including sports uniform), shire rate, cars insurance and registration, electricity gas and water bills.

   HEARING

2. The application for review was heard in Perth on 3 October 2018. The Applicant appeared in person and was accompanied by his son, who provided some assistance during the hearing. The Respondent was represented by Ms Zinn from Mills Oakley, who also appeared in person.

3. The Tribunal would like to thank both the Applicant and the Respondent for their assistance during the hearing.

4. The Respondent opened by resting on its Statement of Facts, Issues and Contentions (R2). The Respondent addressed how the debt was created, whether the debt could be written off, whether there was a sole administrative error and whether special circumstances existed.

5. The Respondent submitted that there was no evidence to suggest the debt arose as a result of a sole administrative error by Centrelink.

6. The Applicant opened his case by agreeing that a debt did occur as a result of FTB and SKB payments. He agreed to the amount as stated in (R2).

7. The Applicant stated that since the time of receiving the benefits, he had provided Centrelink with all documentation requested of him. He was repaying the debt at a rate of $150 per fortnight.

8. The Applicant gave the following evidence in cross-examination:

   ·He believed that as a result of providing his and his wife’s tax returns to the Australian Taxation Office (ATO), this information would be used by Centrelink to provide an accurate assessment of his joint income.

   ·He was referred to (T7 131)(R1) by the Respondent and was questioned as to why he did not follow up with Centrelink when only his income, and not his partner’s,  was being used for the purpose of calculating the allowances. He stated he did his best by providing his financial year tax returns and assumed this information would be used by Centrelink to automatically adjust his entitlements

   ·He was asked by the Tribunal why he had assumed this, and he was referred to (T7 132) (R1) which states “…This is important because your and/or your partner’s income will be checked with the Australian Tax Office at the end of each financial year to make sure you have been paid the right amount. Your Family Tax Benefit may be automatically adjusted when your income changes, helping to avoid or reduce overpayments.”

   ·The Applicant was referred to (T58 314)(R1) and was asked why he had no contact with Centrelink prior to 2015. He stated CCTV would demonstrate that he had visited Centrelink prior to that date and that he had provided all documentation as requested.

   CONSIDERATION

   Was the debt against the Applicant appropriately raised?

9. Having considered all the evidence before, the Tribunal finds that the Applicant was overpaid. The Tribunal finds as did AAT1 did, that the taxable income amounts were assessed in order to determine the amount the Applicant owes the Commonwealth.

10. The Tribunal asked the Applicant if there was any dispute relating to his overpayment and the amounts calculated – he answered “no”.

11. The debt amount has not been challenged. The Tribunal is therefore satisfied that the amount is correct.

12. On this basis, the Tribunal finds that the Applicant has incurred the following FTB debts:

    ·2013/14 financial year:  $8,228.65;

    ·2014/15 financial year:   $8,687.00; and

    ·2015/16 financial year:  $7,480.65

13. The Tribunal also finds the Applicant has incurred the following SKB debts:

    ·2014/15 financial year:  $1,684.00

    ·2015/16 financial year:  $1,712.00

    Is there any basis to waive the debt?

14. The Tribunal notes that Division 4 of part 4 of the Administration Act deals with the non-recovery of debts. The Tribunal finds that, generally, all debts incurred must be recovered.

15. The Tribunal finds there is no basis to waive the debt.

    Waiver of debt due solely to administrative error of the Commonwealth

16. The Tribunal notes that between 2013 and 2016 the Applicant received a number of notices from Centrelink. These notices contained calculation of the rate of FTB.

17. The Tribunal notes each of the notices contained the following:

    You need to tell us about any changes to you and your partner’s income as soon as possible after they happen. This is important because your and/or your partner’s income will be checked with the Australian Tax Office at the end of each financial year to make sure you have been paid the right amount

    Your Family Tax Benefit may be automatically adjusted when your income changes, helping to avoid or reduce overpayments (T7 132)(R1).

18. The Applicant told AAT1:

    22 … that he had noticed these figures and wondered about them but did not query them with the Department. By failing to contact the Department to query whether the figures were correct when Mr Essarras wondered about them, he contributed to the ongoing overpayment. That means that the overpayments that gave rise to the debt cannot be attributed solely to administrative error by the Department (T2 6)(R1).

19. The Tribunal notes the Applicant maintains he was diligent in “personally” handing his and his wife’s tax returns to Centrelink each financial year (A1).

20. The Tribunal agrees with the Respondent that the Applicant received a number of letters clearly detailing how his benefits were being calculated.

21. Equally, the Tribunal finds it is not inconceivable to come to the same conclusion that the Applicant did: that Centrelink had all his and his wife’s information before them and adjustments would be made accordingly.

22. The Tribunal notes AAT1 stated: “There appears to have been a mistake by the Department in that its records recognised that Mrs Essarras was Mr Essarras’ partner but did not record her income when calculating his rate of FTB even though that information had been provided to the Department” (T2 6)(R1).

23. The Tribunal notes the case contained in the Respondent’s Statement of Facts, Issues and Contentions (R2):

    60.In Salsone and Secretary, Department of Family and Community Services [2002] AATA 117 (30 October 2002) the Tribunal found that administrative error does not amount to special circumstances and stated at [43]:

    As this tribunal sees it the legislation recognises several facts of life, unfortunate though they may be, about social security administration. These include:

    …

    * That Centrelink makes mistakes, perhaps too many mistakes, in assessing rates of pensions, allowances and benefits and has to rely on the most interested parties, its customers, to check their assessments and contact Centrelink if there is an error.

    * That Parliament, in passing the legislation in the Act on waiver of debts, leant in favour of debts being generally recoverable unless there are good, largely circumscribed, reasons for waiving them. Mere error by Centrelink is not alone sufficient to bring about a waiver (R2).

24. The Tribunal has applied s 97 of the Administration Act:

    Waiver of debt arising from error

    (1)The Secretary must waive the right to recover the proportion (the administrative error proportion) of a debt that is attributable solely to an administrative error made by the Commonwealth if subsection (2) or (3) applies to that proportion of the debt.

25. It is not clear to the Tribunal as to why the information from the tax returns the Applicant and his wife lodged with the ATO from 2013/14 and thereafter were not received by Centrelink for the purposes of clarifying the income statements they had submitted in order to receive the benefits. However, the Tribunal finds that Centrelink is not solely responsible for the debt that accrued.

26. The Tribunal does not accept that the Applicant was solely responsible for the debt incurred. It found the Applicant to be truthful with an honest belief that between the ATO and Centrelink, appropriate adjustments would have been made accordingly to his entitlements.

27. However, the Applicant’s failure not to address concerns he had with some of the figures resulted in the overpayments continuing. His failure to take responsibility in addressing the many letters from Centrelink to update his income estimates resulted in the debt be incurred. The Tribunal, whilst sympathetic to the Applicant’s predicament is, however, satisfied that the debt incurred is not due solely to administrative error of Centrelink.

    Waiver due to special circumstances

28. Section 101 of the Administration Act states:

    Waiver in special circumstances

    The Secretary may waive the right to recover all or part of a debt if the Secretary is 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.

29. “Special circumstances” is not a term defined by the legislation, however, it is discussed in a number of cases.

30. The Tribunal is guided by the following cases which have dealt with the concept of

    
    

    “special circumstances”:

    Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3, where the Tribunal stated:

    An expression such as ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether 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.

    Groth and Secretary Department of Social Security [1995] FCA 1708 where the Federal Court stated at [12]:

    The phrase ‘special circumstances’, it has been said, although imprecise is sufficiently understood not to require judicial gloss...it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary. The enquiry l have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied.

    Angelakos and Secretary Department of Employment and Workplace Relations [2007] FCA 25 where the Federal Court stated at [33]:

    ...There is less risk of overstatement if the words ‘unusual’ or ‘uncommon’ are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case.

    Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114 where Deputy President Forgie stated in part at [80]:

    ...‘special circumstances’ are not merely directed to the person’s own circumstances. Rather, they are directed to those that are ‘special circumstances … that make it desirable to waive’. That necessarily requires a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system. Waiver of the debt would mean that Mr Davy would have had the benefit of part of his DSP in circumstances in which he was not entitled to it ... He has had the benefit of the money and there is no injustice in requiring him to repay the money of which he has had the benefit but not the entitlement ... The system of administration of the [Social Security Act] does not visit any injustice for many if not all social security recipients but it did not lead to any injustice or unfairness on Mr Davy that is not visited, or potentially visited, upon all other recipients of social security payments under the Act. Therefore, I am not satisfied that there are special circumstances that make it desirable to waive the debt under s 1237AAD of the Act.

31. The Applicant contends there are special circumstances that warrant waiving the debt. He says his special circumstances are that:

    ·he is not debt free;

    ·his household comprises of six people;

    ·two of his adult children attend University and the other two children are in high school;

    ·he has a number of very large medical expenses;

    ·he has a number of household expenses, in the form of home insurance, school fees, shire rates, car insurance, electricity, gas, and water;

    ·he is on a very tight budget and finds it difficult to manage financially;

    ·he and his wife are both teachers, however she only works four days per week; and

    ·he has a mortgage in the form of a Keystart loan.

32. The Tribunal has found no evidence that the Applicant attempted to hide or distort the information he provided to Centrelink.

33. The Tribunal notes the Applicant has entered into arrangement with Centrelink to repay the debt at $150.00 per fortnight (R2, para [31]). The Tribunal finds the Applicant takes his responsibilities seriously.

34. Having reviewed the evidence before it, the Tribunal finds the circumstances are such that they are not “special”.

35. There is no evidence before the Tribunal to suggest that the circumstances of the Applicant “are out of the ordinary” such that they fall within the term “special circumstances”.

36. Whilst the Tribunal is sympathetic to the position the Applicant finds himself in, the evidence before the Tribunal does not show the Applicant’s circumstances as falling into the category of being circumstances that are unusual, uncommon, exceptional, markedly different, special or out of the ordinary that they represent “special circumstances” as that expression is understood to mean.

    DECISION

37. For the reasons outlined above, the Tribunal affirms the decision,

I certify that the preceding 63 (sixty -three) paragraphs are a true copy of the reasons for the decision herein of Member C Edwardes

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

Administrative Assistant - Legal

Dated: 19 October 2018

Date of hearing:	3 October 2018
Applicant:	In person
Representative for the Respondent:	Ms Zinn
Solicitors for the Respondent:	Mills Oakley