Fedigan and Secretary, Department of Social Services (Social services second review)
[2016] AATA 211
•5 April 2016
Fedigan and Secretary, Department of Social Services (Social services second review) [2016] AATA 211 (5 April 2016)
Division
GENERAL DIVISION
File Number(s)
2015/5265
Re
Miss Shelley FEDIGAN
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Mr Conrad Ermert, Member
Date 5 April 2016 Place Melbourne The Tribunal affirms the decision under review
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Mr Conrad Ermert, Member
CATCHWORDS
SOCIAL SERVICES - Family Tax Benefits - top up and supplement payments - late lodgement of partner tax return - whether special circumstances exist - decision affirmed
Legislation
Administrative Appeals Tribunal Act 1975
A New Tax System (Family Assistance) (Administration) Act 1999
Cases
Beadle and Director-General of Social Security (1984) 6 ALD 1
Groth and Secretary Department of Social Security (1995) FCA 1708
Davy and Secretary, Department of Employment and Workplace Relations (2007) 94 ALD 693
REASONS FOR DECISION
Mr C Ermert, Member
5 April 2016
INTRODUCTION
In the 2012/2013 income year Miss Fedigan, the Applicant, received Family Tax Benefits (FTB) by fortnightly instalments. On 1 July 2012 the Department of Human Services (the Department), the Respondent, assessed Miss Fedigan’s rate of FTB on an estimate of the combined income of Miss Fedigan and her partner, Mr Ronald Preston.
On 21 March 2014 Centrelink issued Miss Fedigan with a notice informing her of the requirement to lodge her and her partner’s income tax returns for the year 2012/2013 by 30 June 2014. Centrelink is the service provider for the Department. Miss Fedigan lodged her individual tax return on with the Australian Tax Office on 7 November 2013. Mr Preston’s tax return was not lodged until 4 July 2014.
On 7 August 2014 an officer of Centrelink notified Miss Fedigan that, due to the late lodgement of her partner’s tax return, she was not entitled to the payment of FTB supplement and top-up payments for the 2012/2013 income year.
Miss Fedigan applied for a review of the decision. On reconsideration the decision was affirmed on 8 April 2015 and affirmed again by an Authorised Review Officer (ARO) of Centrelink on 12 May 2015.
Miss Fedigan sought a first review of the ARO decision by this Tribunal on the grounds that the delay in lodging her partner’s tax return was the result of the personal circumstances of her accountant. On 4 September 2015 the Tribunal affirmed the ARO decision.
On 7 October 2015 Miss Fedigan lodged an application for a second review by the Tribunal on the grounds that her accountant’s circumstances constitute special circumstances which would allow the Respondent to extend the lodgement date.
This matter is the second review.
THE HEARING
At the hearing Miss Fedigan represented herself and gave evidence by telephone under affirmation.
Mr Tim Noonan, a Principal Lawyer with the Department, represented the Respondent, also by telephone.
I had before me the documents provided by the Secretary in accordance with section 37 of the Administrative Appeals Tribunal Act 1975 (the T-documents). For consideration I also had the Secretary’s Statement of Facts and Contentions dated 24 February 2016.
For the respondent I took in as Exhibit R1 a Centrelink notice to Miss Fedigan dated 24 February 2015 confirming the amount of the adjustments to her entitlements as $5,016.69.
LEGISLATION
The legislation relevant to this matter is contained in A New Tax System (Family Assistance) (Administration) Act 1999 (the Act).
Sub-section 32C(2) of the Act states relevantly:
2If only one member of the couple was required to lodge an income tax return for the relevant income year, the relevant reconciliation time is the time when an assessment is made under the Income Tax Assessment Act 1936 of the member’s taxable income for the relevant income year, so long as the member’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 as the Secretary allows for that member under subparagraph (1)(c)(ii) or (iii), as the case requires.
Subparagraph 32C(1)(c)(iii) provides in part that the Secretary may allow additional time for a partner to lodge a return if the Secretary is satisfied that there are special circumstances that prevented the other member from lodging the return before the end of that first income year.
ISSUES
Both parties agree that Mr Preston did not lodge his individual tax return until 4 July 2014. This date is after the after the end of financial year (FY) 2013/2014 which is the first income year after FY 2012/2013, the relevant income year. Sub-section 32C(1)(c)(ii) of the Act provides that the reconciliation time can only be extended to 4 July 2014 if the Secretary is satisfied that there are special circumstances that prevented Mr Preston from lodging the return before the end of that first income year.
The issue I must determine is whether there are special circumstances that prevented Mr Preston from lodging his return before the end of FY 2013/2014.
EVIDENCE
In her evidence Miss Fedigan said that she and Mr Preston had passed all their tax returns to Mr Ian Ballantyne, their accountant, in time for them to be lodged with the Australian Tax Office ATO before the end of the year. At the time she was unaware that Mr Ballantyne was having a number of personal issues which prevented him from lodging the tax returns in time. She found out about his problems only after making enquiries of Mr Ballantyne after receiving the notice from Centrelink that Mr Preston’s tax return had not been lodged in time.
Miss Fedigan stated that had she known of Mr Balantyne’s problems earlier she would have changed accountants to ensure that their tax returns were lodged on time before the end of the year.
SUBMISSIONS
Miss Fedigan contends that her not being informed of Mr Ballantyne’s problems in time for her to take action to ensure the tax returns were lodged in time constitute special circumstances.
TRIBUNAL CONSIDERATIONS
In considering the issue I note the decision in Beadle and Director-General of Social Security (1984) 6 ALD 1 where the Tribunal stated at 12:
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 the 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 particularly quality of unusualness that permits them to be described as special.
I note also the decision in Groth and Secretary Department of Social Security (1995) FCA 1708 in which 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. … 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 effect of these decisions is that for circumstances to be considered as special they must, in their context, be unusual, uncommon or out of the ordinary and that nothing unfair, unintended or unjust had occurred as a result.
Unusual, uncommon or out of the ordinary
In this case Miss Fedigan relies on the contention that she was not aware of the personal circumstances of her accountant. Had she been aware she would have ensured the tax returns were lodged in time. In support of her contention she referred to the letter from her accountant, Ian Ballantyne, dated 3 July 2015. In that letter Mr Ballantyne accepted that he had received the relevant tax documentation in a timely manner. He said that he did not forward the documents to the ATO as he had been going through a number of personal issues for which he was seeking treatment from a psychologist or psychiatrist.
I accept that Miss Fedigan and Mr Preston had provided their tax returns to their accountant in time for processing to the ATO. I accept also that the accountant incurred the delay. I do not accept that this is an unusual, uncommon or out of the ordinary occurrence
I note that Centrelink has issued a policy relevant to such an issue. eReference 007.36060 states in part:
Note: an extension must not be granted if a tax agent/accountant advises that they were the cause of the late lodgement of tax returns even if the customer provided financial records before 30 June.
I accept that the policy has been issued as the late lodgement of tax returns by accountants is not an unusual, uncommon or out of the ordinary event.
In addition I accept that Miss Fedigan was not informed by her accountant that the tax returns had not been lodged with the ATO. In his statement Mr Ballantyne wrote in part:
I had previously provided a letter to Centrelink dated the 26th March 2015 advising Ronald Preston and Shelley Fedigan’s tax return was lodged with the ATO on 29th June from my office however it was actually lodged with the ATO on 4th July 2015.
…
As I mentioned previously I have being going through some very personal issues of the last couple of years and I do regret not being up front with both my clients and Centrelink …
No sworn evidence has been offered in support of the personal issues. Mr Ballantyne’s statement could not be tested and was not supported by medical evidence. There is no evidence that he was not capable at the time of lodging the tax returns or that he was prevented from doing so. Nor or is there any evidence that he was unable to advise Miss Fedigan and Mr Preston of his inability to lodge the returns.
I find that the failure of the accountant to lodge the tax returns is not unusual, uncommon or out of the ordinary in the context of this case.
Unfair
In considering whether something unfair has occurred I note the decision of the Tribunal in Davy and Secretary, Department of Employment and Workplace Relations (2007) 94 ALD 693 in which, at paragraph 80, Deputy President Forgie found:
… The “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 … The system of administration of the SS Act … 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.
Although Miss Fedigan considers the decision to be unfair, the requirements of the Act apply equally to her and all other recipients of FTB. Indeed, a decision to favour Miss Fedigan could be considered unfair to all others whose benefits have been withheld in accordance with the provisions of the Act. I also see no fairness in other taxpayers bearing the burden of the failure, for whatever reason, of the accountant not lodging the tax returns in time.
Time limitations within the provisions of the legislation are clearly a measure to effectively manage the general administration of the social security system. Over-ruling those time limits without compelling reasons could be considered as unfair to the management of the system.
Adopting the reasoning in Davy I find that there is no unfairness in this case.
Unintended
In considering whether something unintended has occurred I note that the intent of the provisions of section 32C(1)(c)(iii) of the Act are quite clear. The relevant reconciliation time can only be extended if the Secretary is satisfied that there are special circumstances that prevented the other person from lodging the return before the end of the first income year. Without any special circumstances present the intended consequences are that the person is not entitled to an extension of time and is not entitled to consideration of the relevant benefits.
I am satisfied that nothing unintentional has occurred in this case.
Unjust
As the decision to not extend the reconciliation time is in accordance with the provisions of the Act and is not unfair it can not be classified as unjust. I find accordingly.
Special Circumstances
I have found that Miss Fedigan’s circumstances are not unusual, uncommon or out of the ordinary within the context of the administration of the Act. I have found also that nothing unfair, unintended or unjust has occurred as a result of the decision.
I find that Miss Fedigan’s circumstances are not special circumstances within the terms of the Act.
CONCLUSION
I have found that the circumstances of Mr Preston’s late lodgement of his tax return are not special circumstances. There are no other circumstances claimed as special and that prevented Mr Preston from lodging his tax return for the 2012/2013 FY by 30 June 2014.
As a result I am not able to exercise the discretion contained in paragraph 32C(1)(c)(iii) of the Act. Without the exercise of the discretion Miss Fedigan is not entitled to receive an increased reconciled amount of FTB for the 2012/2013 FY based upon her actual combined adjusted taxable income.
DECISION
I affirm the decision under review.
I certify that the preceding 41 (forty-one) paragraphs are a true copy of the reasons for the decision herein of Mr C Ermert, Member
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Associate
Dated
Date(s) of hearing 11 March 2016 Applicant In person Advocate for the Respondent Mr Tim Noonan, solicitor
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