Fisher and Secretary, Department of Education, Employment and Workplace Relations
[2008] AATA 410
•20 May 2008
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 410
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2007/4469
GENERAL ADMINISTRATIVE DIVISION ) Re JULIE-ANNE FISHER Applicant
And
SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT and WORKPLACE RELATIONS
Respondent
DECISION
Tribunal RG Kenny, Member Date 20 May 2008
Place Brisbane
Decision The Tribunal affirms the decision under review.
.................[Sgd].............................
Member
CATCHWORDS
SOCIAL SECURITY – Pensions, Benefits and Allowances – parenting payment – assets in excess of level at which parenting payment payable – rate calculations based on incorrect income levels – overpayment of parenting payment – debt due to the Commonwealth – debt not attributable solely to Commonwealth error – no special circumstances to enable debt to be waived – decision under review affirmed.
Social Security Act 1991 (Cth) ss 11, 500Q, 1064-G, 1121, 1223, 1237, 1237A, 1237AAD
Social Security (Administration) Act 1999 (Cth) s 68
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
REASONS FOR DECISION
20 May 2008 RG Kenny, Member
Application
1. Julie-Anne Fisher received income support payments in the form of parenting payment under the Social Security Act1991 (the Act) and family tax benefit under the New Tax System (Family Assistance) Act 1999 (the FA Act). On 5 April 2007, a Centrelink officer determined that parenting payment was not payable to Ms Fisher because of the level of her assets. On 23 May 2007, a further decision was made that she had been overpaid in respect of parenting payment in the period from 2 July 2003 until 27 June 2006 (the overpayment period) and a debt of $16,598.21 was raised. The decisions were affirmed by authorised review officers on 11 May 2007 and 4 July 2007, respectively. The Social Security Appeals Tribunal then reviewed the decisions and affirmed them on 14 August 2007.
Issues and Contentions for Determination
2. Parenting payment is not payable where the recipient’s assets exceed a certain level and, when it is payable, it is calculated in accordance with the combined fortnightly income of a recipient and his/her partner[1]. In the decision to cancel Ms Fisher’s parenting payment, it was determined that the asset limit was $229,000 and that her assets totalled $244,903. Accordingly, the cancellation decision was made. Ms Fisher disputes the asset valuation, in particular, because of the manner Centrelink took account of a loan taken out by herself and her partner, Neil Hick. Mr Black submitted that the decision correctly assessed assets as including the loan.
[1][1] Sections 1064-G1-4 of the Act
3. For the overpayment decision, Mr Black submitted that Ms Fisher had not correctly advised Centrelink of her income which entitled her to only $11,009.22 rather the $27,607.43 which she was paid. He also submitted that the resultant debt of $16,598.21 should not be waived because it had not arisen solely because of error by the Commonwealth in that Ms Fisher did not inform Centrelink of her fortnightly variations in income and because there were no special circumstances which would justify waiving the debt. Ms Fisher contended that she had given information about her income and that of Mr Hick each year by providing copies of her taxation returns and that, as a result of having that information, Centrelink should have made appropriate adjustments to the level of her parenting payment so as to avoid the overpayment.
4. One issue for the Tribunal’s determination is whether Ms Fisher’s assets exceeded the relevant threshold so as to preclude making the parenting payment. A second issue is whether she was overpaid parenting payment which constitutes a debt owed by her to the Commonwealth and, if so, whether any such debt should be waived.
Evidence
5. Until May 2003, Ms Fisher was paid parenting payment at the single rate. Thereafter, this changed to the partnered rate. In addition, she was in receipt of the family tax benefit. She engaged in employment on a casual basis from time to time and her partner, Mr Hick owned a photography business which operated at a loss.
6. When she advised Centrelink that she was partnered, Ms Fisher provided information concerning their respective incomes for the financial year ending June 2002. Her declared income was $7,152 and that of Mr Hick was $32,968. She also provided a profit/loss statement for Mr Hick’s business for April 2003. This showed a loss of $2518. Centrelink used this information to calculate Ms Fisher’s new rate of parenting payment.
7. Copies of letters, sent to Ms Fisher on 8 May 2003 and 10 December 2004, were in evidence. Ms Fisher agreed that she received these letters. They advised her of the basis upon which her parenting payment was calculated. The first of those letters nominated a combined asset level of $135,100, Mr Hick’s annual income and her fortnightly income of nil and other annual income of $14.82. The second of them nominated a combined asset level of $135,100, Mr Hick’s annual income and her fortnightly income of nil and other annual income of $17.94. The letters included a requirement that Ms Fisher was to advise Centrelink, within 14 days, about events or circumstances affecting her payment. The first letter included: if she or Mr Hick received income from self employment or a business; her total personal income exceeded $62 per fortnight; Mr Hick’s total personal income exceeded $594 per fortnight; income from self employment or a business increased; or their combined assets went over $206,500. The second letter was in the same terms but nominated Mr Hick’s income level at $594 per fortnight and the asset level as $217,500.
8. Another letter was sent by Centrelink on 13 January 2004 explaining the operation of the income test under the Act. It indicated the extent to which income would reduce the level of parenting payment made to a recipient.
9. Ms Fisher understood that she had to advise Centrelink of income earned by her throughout the year only if she engaged in employment. She worked for the Chronicle newspaper in January 2004, which was during the overpayment period, and earned $760. She advised Centrelink of this amount. Apart from that, she said that, each year after receiving confirmation of the assessment of taxation for herself and Mr Hick, she advised Centrelink of their annual income details. She did this towards the end of calendar years 2003, 2004, 2005 and 2006, respectively, for each recently completed financial year. These were retained by Centrelink and then returned to her subsequently. She understood that, by providing that information, she was complying with her notification obligations for parenting payment.
10. Ms Fisher said that she had been employed during 2002 and had advised Centrelink of her fortnightly income at that time. She agreed that the parenting payment had fluctuated in accordance with the reporting of those income changes. Ms Fisher was referred to a schedule of her parenting payments for 2003 and 2004 which revealed a consistent fortnightly rate in excess of $340 except for the fortnight referable to the period of her employment with the Chronicle. This revealed a payment of $171.79. Ms Fisher said that she would probably have noticed that reduction in her parenting payment.
11. Ms Fisher and Mr Hick own their residence at Greta Street. Also, they purchased an investment property in Pulgul Street in April 2006. Ms Fisher did not advise Centrelink of this until taxation documents were lodged with Centrelink towards the end of 2006. They paid $265,000 for the Pulgul Street property and borrowed the entire amount in order to make the purchase. They sold it in 2007 for $295,000. The mortgage for the investment property was secured over the Greta Street property and the Pulgul Street property. On 30 March 2007, Ms Fisher estimated the value of the property at $280,000 and the value of the contents at $20,000. At that time, she stated that the mortgage amount was $222,402.
12. Mr Hick paid $178,000 for his business which is currently under contract for sale at $75,000. Ms Fisher has an outstanding credit card debt of $52,000. Their current income comprises family tax benefit although Ms Fisher has recently commenced a business involving direct selling from her home.
13. For family tax benefit purposes, Ms Fisher provided estimates of her combined taxable income for herself and Mr Hick 1 July 2005 for the 2005/6 financial year in the amounts of $15,000 and $22,305, which included a net rental property loss of $2,305, respectively. She did so, on 1 July 2006, for the following financial year in the amounts of $20,975, including a net rental property loss of $5,000, and $28,308, including net rental property loss of $5,000, respectively.
14. A data matching review by Centrelink revealed discrepancies between income information provided by Ms Fisher to Centrelink and the Australian Tax Office (ATO) records for the 2004/5 financial year. Centrelink records indicated annual earnings of $9,609.42 and $0 for herself and her partner, respectively. ATO records indicated earnings of $14,792 and $14,492, respectively.
15. In evidence were Mr Hick’s taxation returns for the financial years ending June 2003, 2004 and 2005. In 2003 and 2004, he experienced a loss. In 2005, he had a taxable income of $14,492. The 2005 document declares that Ms Fisher had a taxable income of $13,639 for the year. In 2006, Mr Hick again experienced a loss.
16. Ms Fisher agreed that, in October 2003, she provided Centrelink with an estimate of the income for the 2003/2004 financial year of $13,800 and that of the Mr Hick as $14,110. She was aware that these would be used the calculation of both family tax benefit and parenting payment.
Consideration
Valuation of assets
17. In accordance with s 500Q(1) the Act, parenting payment is not payable to a person if the value of her assets exceeds the assets value limit, as provided for in s 1064-G3 of the Act, at the relevant time. It is not disputed and I am satisfied that, in Ms Fisher’s case, this was $229,000. What constitutes an asset is set out in s 11 of the Act. The Greta Street property is not included but I am satisfied that the assets listed in the table below were appropriately taken into account by Centrelink. Those assets and the values ascribed to them by Centrelink were:
item $ value Pulgul Street property 39,970 Mr Hick’s business 169,495 Combined financial assets 1,438 Combined other assets 34,000 total 244,903
18. Ms Fisher does not dispute the last two of those amounts. However, she disputes the way in which the loan was taken into account when assessing the first two amounts.
19. The loan for the Pulgul Street property was secured with a mortgage over both it and the Greta Street property. On 18 April 2007, the Australian Valuation Office completed valuations on each of the properties. The Greta Street property and the Pulgul Street property were valued at $310,000 and $290,000, respectively. These valuations were not in dispute. Provision is made in s 1121 of the Act for apportionment of a loan where it is secured against both types of asset. The amount apportioned to the Pulgul Street property by Centrelink was $250,030. This yielded an asset value of $39,970 for the Pulgul Street property and I am satisfied that this is in accordance with the application of the formula in s 1121(4) of the Act. Centrelink also declined to offset the loan against the valuation of Mr Hick’s business, taken from his 2006 taxation documents, because it was for the purposes of purchasing the Pulgul Street property rather than for the business. I am satisfied this was the appropriate manner of dealing with the loan.
20. I am satisfied that the value of Ms Fisher assets was $244,903 and that this exceeded the level at which parenting payment was payable to her.
Overpayment of parenting payment
21. Ms Fisher does not dispute that she was paid $27,607.43 in parenting payments in the overpayment period or that she was entitled, on the basis of her and Mr Hick’s income during that period, to $11,009.22. I am satisfied that those calculations have been properly made by Centrelink and that she was overpaid in the amount of $16,598.21. In accordance with s 1223(1) of the Act, where a person obtains the benefit of a social security payment, which includes parenting payment, and where the person was not entitled, for any reason, to obtain that benefit, the amount of the payment is a debt due to the Commonwealth. I am satisfied that this provision of the Act is met and that the overpayment of $16,598.21constitutes a debt owed by Ms Fisher to the Commonwealth.
Waiver
22. Section 1237 of the Act lists the circumstances in which a debt may be waived. This includes the waiver of a debt arising from error in accordance with s 1237A of the Act which, in so far as relevant, reads:
“the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt”.
23. Ms Fisher contends that she did all that she understood she had to do in order to meet her notification obligations to Centrelink. In that, she was incorrect. She provided estimates of annual income as required for family tax benefit payments. Her evidence was that she also provided her annual taxation notices. Such documents were in evidence but these were obtained by Centrelink as part of a data matching review it conducted between its records and those of the Australian Tax Office. Even if these had been provided, they would not have given Centrelink the information needed to calculate parenting payments. Unlike family tax benefit, this is based on data relating to fortnightly income details. Payments vary according to changes in that income. The Centrelink letters sent to Ms Fisher on 8 May 2003 and 10 December 2004 were notices, in accordance with s 68 of the Social Security Act (Administration) Act 1999, which advised her of the income figures which were used to calculate her parenting payment and which obliged her to advise Centrelink within 14 days of variations in those income levels. I am satisfied that she received those notices. On one occasion, in January 2004, Ms Fisher did advise Centrelink of her casual employment income and her parenting payment was reduced, accordingly. I am satisfied that she was aware of this reduction in her fortnightly payment. However, no other notification was provided by Ms Fisher to Centrelink about fortnightly income during the overpayment period. This was in breach of her obligations under the Act and contributed materially to the overpayment. Accordingly, even if Centrelink was in possession of annual income details, the overpayment to Ms Fisher was not solely due to error on the part of the Commonwealth and the debt cannot be waived under s 1237A of the Act.
24. I am also satisfied that the debt can not be waived under s 1237AAD of the Act, which applies only where there are special circumstances, other than financial hardship alone, that make it desirable to waive the debt. In Groth v Secretary, Department of Social Security[2], Kiefel J observed that special circumstances:
“would require something to distinguish... [the]… 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”.
[2] (1995) 40 ALD 541 at 545
25. No specific submissions were made by Ms Fisher in relation to this basis for waiver and, although elements of financial difficulty arise in the evidence, there are no other factors which would distinguish Ms Fisher’s situation from the usual or ordinary case such as to constitute special circumstances. I am satisfied that the debt cannot be waived under s 1237AAD of the Act.
Decision
26. The Tribunal affirms the decision under review.
I certify that the preceding 26 paragraphs are a true copy of the reasons for the decision herein of Mr RG Kenny, Member
Signed:…………………[Sgd]…………………………………..
Elizabeth Young, Research AssociateDate/s of Hearing 15 April, 8 May 2008
Date of Decision 20 May 2008
The Applicant was accompanied by Neil Hick, her partnerFor the Respondent: Mr M Black, Departmental advocate
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