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

[2016] AATA 581

Fox and Secretary, Department of Social Services (Social services second review) [2016] AATA 581 (8 August 2016)

Division	GENERAL DIVISION
File Number	2015/3527
Re	Hannah Fox
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Egon Fice, Senior Member
Date	8 August 2016
Place	Melbourne

The Tribunal affirms the decision under review.

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

Egon Fice, Senior Member

SOCIAL SECURITY – lodgement of income tax return – family tax benefit – allowable statutory period – special circumstances – decision under review affirmed

Legislation

A New Tax System (Family Assistance) (Administration) Act 1999 s13, s14A,s16, s17, s28
IncomeTax Assessment Act 1936
Family Assistance and Other Legislation Amendment Act 2013 (No. 70, 2013)

Cases

Angelakos and Secretary Department of Employment and Workplace Relations [2007] FCA 25

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

REASONS FOR DECISION

Egon Fice, Senior Member

8 August 2016

1. In a letter dated 17 February 2015 an Authorised Review Officer (ARO) from the Department of Human Services (via Centrelink) informed Ms Fox that a decision made by Centrelink on 15 July 2014 not to pay her the Family Tax Benefit (FTB) arrears and supplements for the 2013 income year was correct.  Ms Fox claimed she should have been granted an extension of time in which to lodge her income tax return which is required in circumstances where the recipient of the FTB is required to reconcile their income by the end of the first income year after the income year in question.

2. The ARO determined that Ms Fox had failed to demonstrate special circumstances giving rise to support for an extension of time for the lodgement of her FTB claim.  The ARO determined that the decision not to pay her FTB arrears, including the supplements for the 2013 income year, was correct.

3. Ms Fox then sought review of the ARO decision by the former Social Security Appeals Tribunal (SSAT).  Since the amalgamation of the SSAT and this Tribunal on 1 July 2015, decisions by the former SSAT are described as decisions made by AAT 1.

4. On 9 June 2015 AAT 1 affirmed the ARO decision.  Ms Fox then sought review of the AAT 1 decision by this Tribunal, lodging her application on 14 July 2015.

5. There was no issue about the fact that Ms Fox had lodged her 2013 income tax return on 1 July 2014.  That is, it was one day late.  The only issue before me is whether the provision for extension of time for lodgement of her income tax return was enlivened due to special circumstances.

   PAYMENT OF THE FAMILY TAX BENEFIT

6. In order to be paid the FTB, a claimant must make an effective claim. That is provided for in s 13 of the A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act). It states:

   (1)If an effective claim is made, the Secretary must determine the claim in accordance with this Subdivision.  If a claim is not effective, it is taken not to have been made.

7. Where a claim has been made for the payment of the FTB by instalment, if the Secretary is satisfied that the claimant is eligible for FTB, the Secretary must determine that the claimant is entitled to be paid FTB for each day on which the determination is in force (s 16 of the Administration Act). Similarly, if the claim is one for payment of FTB for a past period and the Secretary is satisfied that the claimant was eligible for the FTB for either whole or a part of the period, the Secretary must determine that the claimant is entitled to be paid FTB for the past period (s 17 of the Administration Act).

8. At the end of each financial year, the Secretary conducts a reconciliation of the correct amount of family tax benefit, including Part A and Part B supplements payable to the claimant. The variation of instalment and past period entitlements is dealt with at s 28 of the Administration Act. Section 28(1) relevantly provides:

   (1)This section applies if:

   (a)a determination under section 16 or 17 is in force at, or was in force before, a particular time; and

   (b)there are one or more days (the cancellation days) before the particular time in respect of which the following conditions are satisfied:

   (i)     …

   (ii)    …

   (iii)    The claimant, or the claimant’s partner at the particular time (if he or she was also the claimant’s partner at some time in the cancellation income year), or both, are required to lodge an income tax return for the cancellation income year but have not done so by the particular time;

   (iv)   by the particular time, an assessment has not been made under the Income Tax Assessment Act 1936 of the taxable income for the cancellation income year of everyone to whom subparagraph (iii) applies.

9. The consequence of s 28(1) being applicable is that the Secretary must vary the determination so that it has the effect that the claimant is not, and never was, entitled to the FTB for the cancellation days (s 28(2)).

10. If the Secretary varies the determination under subsection (2), an assessment is made under the IncomeTax Assessment Act 1936 for the cancellation income year for the tax payers involved who were required to lodge an income tax return. Where the Secretary is satisfied that the claimant was eligible for an amount of FTB for the cancellation days, the Secretary must again vary the determination so that it has the effect that, for the cancellation days, the claimant is entitled to be paid if each taxpayer involved has lodged an income tax return with the Commissioner of Taxation before the end of the income year after the cancellation income year (s 28(3)(c) of the Administration Act).

11. Effectively, for a claimant to receive their full entitlement to the FTB, including Part A and Part B supplements, they must lodge their income tax return with the ATO within the 12 month period following the year to which the claim relates. That is because a failure to do so results in the claim taken not to have been made. This is spelled out in s 14A of the Administration Act, which relevantly provides:

    (1)If, in relation to a claim for payment of family tax benefit made by an individual:

    (a)the claim is for payment of that benefit for a past period; and

    (b)the past period falls in an income year (the past period income year) which is one of the 2 income years before the one in which the claim is made; and

    (c)one or more of subsections (2) to (3A) apply;

    then the claim is taken never to have been made.

    (2)This subsection applies if:

    (a)the claimant is required to lodge an income tax return for the past period income year; and

    (b)the claimant has not lodged the return before the end of:

    (i)     the first income year after the past period 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 lodging the return before the end of that first income year.

    …

    A similar requirement for the claimant’s partner is set out in s 14A(3) although, in the circumstances of this case, it is irrelevant as Ms Fox’s partner has complied.

12. Given the above legislative provisions, it should be plain that because Ms Fox lodged her income tax return with the ATO on 1 July 2014 in respect of the 2013 claim year, in the absence of special circumstances, her claim must be deemed not to have been made.

    SPECIAL CIRCUMSTANCES

13. The expression special circumstances is not defined in the Administration Act. However, the Federal Court has in many cases set out what, in its opinion, the expression means. It provides sound guide for the Tribunal to make decisions which are consistent for all claimants.

14. The Federal Court of Australia (Kiefel J) explained the expression in Groth v Secretary, Department of Social Security (1995) 40 ALD 541 in the following way, at 545:

    The phrase “special circumstances”, it has been said, although imprecise is sufficiently understood not to require judicial gloss: Beadle’s case (at ALR 229; ALD 674), and for present purposes 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.

15. Besanko J, in Angelakos and Secretary Department of Employment and Workplace Relations [2007] FCA 25, after referring to a number of cases in different contexts, said at [33]:

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

16. Late lodgement of income tax returns, particularly for the 2013 income, year has caused significant distress to claimants.  That is because the Family Assistance and Other Legislation Amendment Act 2013 (No. 70, 2013) came into effect on 28 June 2014, some two days before the end of that financial year.  Significantly, it altered the time within which income tax returns had to be lodged with the ATO from two years to one year.  However, that change was notified to the recipients of the FTB in advance of the amending Act coming into effect.

17. Ms Fox was sent a letter dated 18 March 2014 which stated:

    You now only have one year instead of two years to lodge a tax return, or to tell us if you and/or your partner are not required to lodge a tax return in order to receive your full Family Tax Benefit entitlements.…

    If you and your partner do not take action by 30 June 2014 

    If you and your partner have not lodged a tax return or you have not advised us that you and your partner are not required to lodge a tax return/s by 30 June 2014: you will not be eligible for any further Family Tax Benefit, including the Family Tax Benefit supplements, for the 2012-2013 financial year and you will have to pay back all of the Family Tax Benefit you received for the 2012 – 2013 financial year, and you will no longer be able to receive Family Tax Benefit payments fortnightly.

18. On 27 May 2014 Ms Fox was sent an SMS to her recorded mobile telephone number which stated:

    Reminder – lodge your and/or your partner’s 2012-13 tax return/s or tell Centrelink if exempt from lodging by 30 June 2014 to receive your full family assistance entitlements.

19. In a letter which she sent to AAT 1 dated 31 March 2015, Ms Fox was highly critical of the stringent timeframes applied to the FTB.  However, and with respect to Ms Fox, neither Centrelink nor this Tribunal has anything to do with establishing the strict timeframe for lodging an income tax return for the purposes of reconciling an entitlement to the FTB.  Parliament passed that amending legislation and it came into effect two days before the end of the 2014 financial year.  Furthermore, although not required to do so, Centrelink sent Ms Fox a letter on 18 March 2014 and an SMS on 27 May 2014 alerting her to the fact that the two-year period had altered to one year and that failure to lodge an income tax return within the time stipulated would result in her not receiving the FTB, including supplements.  Despite that, Ms Fox questioned whether there was any evidence that the letter or the SMS was received and opened by her.  Again, with respect, that is not the duty of Centrelink.  In fact, as I pointed out in the course of the hearing, Centrelink does not provide legal advice and it is up to claimants to comply with any statutory provisions regarding social security payments.  Centrelink assists where it can, but that is not a substitute for the claimant’s responsibilities.

20. In a subsequent letter sent by email to the Tribunal on 15 September 2015, Ms Fox referred to a number of other circumstances which she said demonstrated that the delay in lodging her tax return was beyond her control.  She cited the following:

    ·the short delay, in fact, being merely a matter of hours or in fact one day short;

    ·health issues of family and extended family and mental health stressors of the acquisition of a new business resulting in her partner working 12 hour days, six days per week, adjustment to the new lifestyle, a child under 12 months waking four times a night, placement for university, return to work from maternity leave, and working additional hours at RMIT due to workload start of semester;

    ·not receiving written notification which clearly outlining the law indicating that the letters only stated that she may not receive her full payment if her tax return was lodged late; and

    ·not being clearly notified of the rules so as to enable compliance.

21. As I have already indicated above, the length of the delay, however short, does not overcome the legislative provisions. This Tribunal cannot arbitrarily alter the mandatory provisions in the Administration Act.

22. The health issues and the pressures under which Ms Fox said she was under during that period of time were not supported by any objective evidence, either documentary or from witnesses.  In any event, many people experience stressors and pressures in the ordinary day to day circumstances of living.  In Ms Fox’s case, it is not clear how these prevented her from lodging her income tax return on or before 30 June 2014.  In fact, it is difficult for me to understand how the circumstances she has described would prevent her from finding sufficient time in a 12 month period to lodge an income tax return.  The evidence before me leads me to find that the reasons given as establishing she was prevented from lodging the return when required are not compelling.

23. I have already dealt with Centrelink’s role in making determinations as far as FTB’s are concerned.  It is an administrative body which administers the FTB scheme.  It is not a legal body which is able to give legal advice.  In this case, Centrelink did notify Ms Fox on at least two occasions of the need to lodge her income tax return within the 12 month period following the claim period.  Whether Ms Fox read that correspondence which was either in writing or electronic form makes no difference to the conclusion.  It matters not whether she read the information.  Centrelink obviously cannot be responsible for her not reading and complying with information freely given to assist her.  The same statements may be made about Centrelink’s duty to provide her with the rules for eligibility to receive the FTB and supplements.  Centrelink does not have such duty nor could it be expected to be responsible for providing information which is essentially legal.  It provides administrative assistance as best as it can.  In this case, Centrelink has done so.

24. For the reasons I have set out above, I find that Ms Fox has not raised special circumstances which prevented her from lodging an income tax return on or before 30 June 2014.

    CONCLUSION

25. It cannot be disputed that in this case Ms Fox lodged her income tax return on 1 July 2014, that is, one day after the allowable statutory period for lodging that return.  Therefore, the only basis upon which Ms Fox can succeed in her claim is to demonstrate that special circumstances prevented her from doing so.  The evidence before me does not establish, on the balance of probabilities, that Ms Fox was prevented from lodging her income tax return on or before 30 June 2014.

26. Accordingly, I find that the decision made by AAT 1 on 9 June 2015 was the correct decision.  I affirm that decision. 

27.      

28.      

29.     I certify that the preceding 26 (twenty-six) paragraphs are a true copy of the reasons for the decision herein of Egon Fice, Senior Member

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Associate

Dated   8 August 2016

Date of hearing

2 May 2016

Advocate for the Applicant

Eric Maillard

Representative for the Applicant

Shadforth Business Advisory Services

Advocate for the Respondent

Solicitors for the Respondent

Mark Hester

Department of Human Services