Gale; Secretary, Department of Family and Community Services

Case •

[2000] AATA 193

•

10 March 2000

DECISION AND REASONS FOR DECISION [2000] AATA 193

ADMINISTRATIVE APPEALS TRIBUNAL)
  Nº V99/647
general  administrative  DIVISION)                   
  SECRETARY TO THE DEPARTMENT OF FAMILY AND COMMUNITY SERVICES           

Applicant

ROSLYN GALE       

Respondent

DECISION

Tribunal:       Deputy President G.L. McDonald

Date:10 March 2000

Place:Melbourne

Decision:      The decision under review is set aside, and the matter is remitted to the applicant with a direction that the debt of $1180.80 is recoverable against the respondent.         

(sgd) G.L. McDonald
  Deputy President
SOCIAL SECURITY — termination of base year for calculation of entitlement to family payment — whether debt should be waived

Social Security Act 1991 ss.6, 838, 860, 872, 873, 873A, 876, 880, 886, 1069-H3, 1069-H6,

1069-H15, 1969-H18, 1283(3), 1237AAD

Acts Interpretation Act 1901 s.29
Stuart and Secretary, Department of Social Security (AAT 12626, 17 February 1998)

REASONS FOR DECISION

10 March 2000  Deputy President G.L. McDonald

  1. The applicant is applying pursuant to s.1283 of the Social Security Act 1991 ("the Act") for the review of a decision of the Social Security Appeals Tribunal ("SSAT") dated 6 May 1999. In that decision the SSAT set aside a decision of the applicant that Mrs Gale owed a debt of $1180.80 to the Commonwealth as the result of overpayment of a family payment for the period 10 October 1996 to 22 May 1997, and substituted a new decision that a debt of $272.40 was owing arising from overpayment limited to the period 7 November 1996 to 19 December 1996.

  2. At the hearing Mr M. McInnis and Mr P. Corbett, both of counsel, represented the applicant and Mrs Gale respectively.   Generally the facts were not in dispute.   However, Mrs Gale gave oral evidence.   Mrs P. D'Cunha gave oral evidence on behalf of the applicant as to its processes of sending notices to social security recipients.   At the conclusion of the hearing it was agreed that the parties would make and exchange written submissions, which were duly received by the Tribunal and taken into account in reaching its conclusion.  

  3. The Tribunal is satisfied as to the following facts. Mrs Gale is married, and has three children. During the period 10 October 1996 to 22 May 1997 she received family payment. Initially, it was paid at the rate of $68.10 per fortnight for the period 10 October 1996 to 19 December 1996 and subsequently, from 2 January 1997 to 22 May 1997 at the rate of $70.20 per fortnight. On 26 May 1997 the applicant cancelled payment of the family payment to Mrs Gale (s.880 of the Act), and sought repayment of the amount paid in the above periods (totalling $1180.80). Mrs Gale's entitlement to family payment is to be made having regard to the combined income of her and her husband.

  4. Ordinarily entitlement to family payment is determined from a base year calculation by reference to the previous taxation year, i.e. for the period 1 July to 30 June in the following year.   Thus, for the 1996 calendar year, the base year is the 1994/1995 taxation year; for the 1997 calendar year, the base year is the 1995/1996 taxation year.   Thus, for the period 10 October 1996 to 31 December 1996, the base year is Mrs Gale and her husband's combined income for the 1994/1995 taxation year.   The figure for that year was $38,795 (T12, p.43).   For the 1997 calendar year, the base year for calculation was the 1995/1996 taxation year when they advised their combined income was $42,033 (T12).  

  5. In a form document ("Changes to your Income and Assets"), lodged with the Lilydale office of the applicant on 26 May 1997, Mrs Gale advised that her husband had "started or recommenced" work in October 1996 and that their combined income for the 1996/1997 taxation year was estimated to be $73,000 (T7).   In fact, his date of commencement of work was 28 October 1996 (T19).  

  6. The Tribunal is satisfied from the evidence of Ms D´Cunha that the applicant sent two letters by post, one dated 8 December 1995 (T4), the other 8 November 1996 (T5). Pursuant to s.29 of the Acts Interpretation Act 1901 the letters posted are deemed to be received by the respondent in the ordinary course of postage. Each letter required Mrs Gale, under ss.872, 873 and 873A of the Act, to notify the Department within 14 days if she or her partner started or recommenced work (T4, p.18; T5, p.21).

  7. The Tribunal is to apply the provisions of the Act extant at the time the events occurred. Section 838 of the Act sets out the qualifications for receipt of family payment, which include, inter alia, that:

    838          (1)     A person is qualified for family payment if:

    (a)the person has at least one FP child; and

    (b)the person is an inhabitant of Australia; and

    (c)the person's income for the relevant family payment period does not exceed the person's income ceiling; and

    (d)the value of the person's assets does not exceed $376,750.

There is no issue in this case that, apart from s.838(1)(c), Mr and Mrs Gale qualified to receive family payment.

  1. Section 872 of the Act provided as follows:

    872          (1)     The Secretary may give a recipient of family payment a notice that requires the recipient to inform the Department if:

    (a)a specified event or change of circumstances occurs; or

    (b)the recipient becomes aware that a specified event or change of circumstances is likely to occur.

    872          (2)     An event or change of circumstances is not to be specified in a notice under subsection (1) unless the occurrence of the event or change of circumstances might affect the payment of the family allowance.

    872          (3)     Subject to subsection (3A), a notice under sub-section (1):

    (a)must be in writing; and

    (b)may be given personally or by post; and

    (c)must specify how the recipient is to give the information to the Department; and

    (d)must specify the period within which the recipient is to give the information to the Department; and

    (e)must specify that the notice is a recipient notification notice given under this Act.

    872          (3A)   A notice under subsection (1) is not invalid merely because it fails to comply with paragraph (3)(c) or (e).

    872          (4)     The period specified under paragraph (3)(d) must end at least 14 days after:

    (a)the day on which the event or change of circumstances occurs; or

    (b)the day on which the recipient becomes aware that the event or change of circumstances is likely to occur.

    . . .

  2. Section 876 of the Act provided as follows:

    876  If:

    (a)a recipient is given a notice under section 872; and

    (b)the notice requires the recipient to inform the Department of the occurrence of an event or change in circumstances within a specified period (the notification period); and

    (c)the event or change in circumstances occurs; and

    (d)the recipient does not inform the Department of the occurrence of the event or change in circumstances within the notification period in accordance with the notice; and

    (e)because of the occurrence of the event or the change in circumstances:

    (i)the recipient ceases to be qualified for family payment; or

    (ii)family payment ceases to be payable to the recipient;

    family payment ceases to be payable to the recipient on the day on which the event or change in circumstances occurs.

  3. Section 886 of the Act provided as follows:

    886            If:

    (a)a notifiable event occurs in relation to a person; and

    (b)the person fails to notify the notifiable event in accordance with section 872; and

    (c)Commissioner of Taxation subsequently makes an assessment of the person's taxable income for the tax year in which the notifiable event occurs; and

    (d)the person's income for that year exceeds 110% of:

    (i)the person's income for the tax year that is, when the event occurs, the person's base tax year; and

    (ii)the person's income free area at that time;

    the person's family allowance rate is to be recalculated on the basis that the person's appropriate tax year is the tax year in which the notifiable event occurred.

  4. Section 1069-H6 provided that the Secretary may determine an event which is to be a notifiable event. Section 1069-H18 was as follows:

    1069-H18        If:

    (a)a notifiable event occurs in relation to a person; and

    (b)the person's income for the tax year in which the notifiable event occurs exceeds:

    (i)110% of the person's income for the base tax year; and

    (ii)110% of the person's income free area;

    the appropriate tax year, for the purpose of applying this Module to the person for the remainder of the family payment period, is the tax year in which the notifiable event occurs.

Section 1223(3) provides that, if following a failure to notify a notifiable event under s.886, a person receives more than the correct amount by way of family payment, the difference is a debt due to the Commonwealth. Section 1237AAD provides the circumstances in which a debt or recovery of all or part of a debt may be waived, of which requirement is that there must be "special circumstances" (other than financial hardship alone) that make it desirable to waive the debt.

  1. Section 6 defined "family payment period" as follows:

    "family payment period", in relation to a person who is receiving additional family payment, means:

    (a)in relation to the year in which the person first receives additional family payment — the period that starts on the day on which the person commences to receive family payment and ends on the next 31 December; or

    (b)in relation to any other year — the period that starts on 1 January in that year and ends on 31 December in that year.

The Tribunal is satisfied that Mrs Gale did not, as was required in the letters sent to her on 8 December 1995 and 28 November 1996 respectively, notify the Department within 14 days of her husband recommencing work.  

  1. The issue, which is the main issue in this case, is as to the result which arises from Mrs Gale's failure to comply with the notice, i.e. is the applicant entitled to recalculate Mrs Gale's family payments and, if so, the period for which the recalculation is to be made.  

  2. On behalf of Mrs Gale it was submitted that, while she was content to rely on the decision of the SSAT that a "notifiable event" occurred during the 1996/1997 taxation year which entitled the applicant to recover family payment for the 1996 calendar year, there was, as the SSAT found, no "notifiable event" or "assumed notifiable event". Section 1069-H3 and H15 — because the applicant had not made any "determination" pursuant to the Act, nor notified any determination to Mrs Gale under s.872(1). The respondent contended that it was open to the Tribunal to decide that there was no "notifiable event" given to Mrs Gale in the abovementioned letters as they did not constitute proper notices under s.872 of the Act. If, however, they did constitute a "notifiable event', then the recalculation of family payment should be limited to three payment periods, leaving a debt of $204.30 rather than $272.40 as found by the SSAT.

  3. In paragraph 26 of the submission on behalf of Mrs Gale, it is submitted from the above legislative provisions that:

    Accordingly, for the purposes of applying the Module to the recalculation of the respondent's family payment after any notifiable event the appropriate tax year applicable is the tax year in which the notifiable event occurs but the calculation is only for such period being the remainder of the family payment period (namely to the end of the calendar year in which the recalculation is to be made) (see also section 860). There is no provision for recalculation after the end of the first family payment period following a notifiable event. The legislation does not allow the Secretary to "straddle" a calendar year when recalculating payments pursuant to the Module following a notifiable event.

  4. The letter of 8 December 1995 to the respondent is, inter alia, as follows:

    Under s.872 . . . you must tell us within 14 days if any of these things happen or are likely to happen . . .
    You must tell us if you or your partner:

    start work or recommence work, change jobs or start self-employment or

    . . .    (T4, p.18)

The letter of 28 November 1996 is relevantly in the same terms (T5, p.21).   The respondent claims that the letter is defective for the following reasons:

(a)the period specified in which the recipient is to notify the Department of various events does not end at least 14 days after:

(i)the day on which the event or change of circumstances occurs; or

(ii)the day on which the recipient becomes aware that the event or change of circumstances is likely to occur.

(b)the notice does not specify that it is a recipient notification notice given under the Act (ie.. Pursuant to section 872(3)(e)): and

(c)the letter did not specify that any particular event was a notifiable event for the purpose of section 1069-H6. (respondent's submission para 36, p.10)

And:

The letter is silent and ambiguous as to whether notification is to be given within 14 days of the event happening, alternatively the date of the letter, alternatively receipt of the letter, alternatively the likely happening of the event, alternatively within 14 days of either the date of the letter or the receipt of the letter the recipient is to inform the Department of the likelihood of any of the stated events occurring.   (respondent's submission para 42, p.12)

  1. The fact letters to Mrs Gale do not specify themselves to be "recipient notification notice(s)" is not fatally defective to the applicant's case. If for no other reason than s.872(3A) provides lack of compliance will not lead to invalidity (see also Stuart and Secretary, Department of Social Security (Deputy President Forgie, AAT 12626, 17 February 1998 at paragraph 43). In the view of the Tribunal an ordinary reading of the letters leads to a conclusion that each specifies a particular event, namely whether Mrs Gale or her partner started or recommenced work, or changed jobs, or started self-employment and consequently satisfies s.1069-H6. In the opinion of the Tribunal it is evident from the context of the letters that notification is to be within 14 days of any of the specified events occurring - this is sufficient to satisfy the requirement that the notice "specify the period within which the recipient is to give the information to the Department" (s.872(3)(d)). Accordingly, the Tribunal is satisfied that each of the letters (T4, T5) constitute proper notices of a notifiable event. The Tribunal satisfied that Mrs Gale did not, as was required in the letters sent to her on 8 December 1995 and 28 November 1996 respectively, notify the Department within 14 days of her husband recommencing work.

  2. The issue remaining then is whether, because of s.1069-H18, any period in which the recalculation of family payment can be made is limited to the remainder of the calendar in which the notifiable event occurred (i.e. to the end of the calendar year 1996) or whether the period extends to the next calendar year.

  3. In this case Mr and Mrs Gale's income changed in October 1996. Applying s.886, the taxation year becomes 1 July 1996 to 30 June 1997 against which the payment of family payment must be calculated. Since Mr and Mrs Gale's income increased to $73,000 from $42,033, the family payment stood to be recalculated. Once the re-calculation occurs, that re-calculation should be the basis of the payment of family payment until another notifiable event occurs or if the person becomes disentitled to receive family payment until a fresh application is made following a change of circumstances.

  4. Mrs Gale failed to comply with the provisions of the Act in that she did not notify the Secretary of a notifiable event (s.1237AAD(a)(ii) and no "special circumstances" are demonstrated (s.1237AAD(b)). Accordingly, it is not appropriate to consider waiver of the debt owing.

  5. For the reasons given, the decision under review is set aside, and the matter is remitted to the applicant with a direction that the debt of $1108.80 is recoverable against the respondent.

    I certify that the twenty-one [21] preceding paragraphs are a true copy of the reasons for the decision herein of 
    Deputy President G.L. McDonald
    (sgd)   Judith Birch
              Associate

    Dates of Hearing:  08.10.99, 22.11.99
    Date of Decision:  10.03.2000
    Counsel for the Applicant:           Mr M. McInnis
    Solicitor for the Applicant:           Messrs Blake Dawson Waldron
    Counsel for the Respondent:       Mr P. Corbett
    Solicitor for the Respondent:       Messrs Hall & Wilcox

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