Gammaldi and Secretary, Department of Social Services (Social services second review)
[2016] AATA 1028
•15 December 2016
Gammaldi and Secretary, Department of Social Services (Social services second review) [2016] AATA 1028 (15 December 2016)
Division
GENERAL DIVISION
File Number
2015/2855
Re
Nancy Gammaldi
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Regina Perton, Member
Date 15 December 2016 Place Melbourne The Tribunal affirms the decision under review.
[sgd]........................................................................
Regina Perton, Member
SOCIAL SECURITY – Family Tax Benefit – top up payment – late lodgement of tax return – whether special circumstances prevented applicant’s partner from lodging tax return within time – whether appropriate to grant an extension of time for lodgement of the tax return – decision affirmed
Legislation
A New Tax System (Family Assistance) Act 1999 Clause 3 of Schedule 3
A New Tax System (Family Assistance) (Administration) Act 1999 ss 7(1), 20, 32C, 32J,
Cases
Ryde v Secretary, Department of Family and Community Services [2005] FCA 866
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
REASONS FOR DECISION
Regina Perton, Member
15 December 2016
Nancy Gammaldi received family tax benefits (FTB) from the 2007/2008 financial year. With three dependent children, she missed out on FTB of almost $4,000 for the 2012/2013 financial year because her husband’s tax return was lodged some five months later than was required by family assistance legislation.
The relevant legislation setting out entitlement to FTB is contained in A New Tax System (Family Assistance) Act 1999 (the Act) and A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act).
A recipient is required to estimate her/his income and that of their partner at the start of a financial year and their FTB entitlement is calculated according to that estimate. If they earn more than the estimate, they must repay the amount which was overpaid. If they underestimate, they are entitled to a top up amount. The Administration Act states that they must lodge their tax returns by 30 June of the following financial year to be paid the top up amount.
Mr and Mrs Gammaldi faced great personal concerns during the 2012/2013 financial year. Their third child was born in July 2012 and faced a potential myriad of health difficulties. Mrs Gammaldi also faced serious health issues in that financial year and during the following financial year. Her husband, who runs a small business, was faced with many difficulties, including concern for, and care of, his wife and children during the financial year 2013/2014. He earned less than was estimated at the start of the 2012/2013 financial year, and in order to automatically qualify for his wife’s FTB payment to be topped up he was required to lodge his tax return by 30 June 2014. He lodged the tax return over four months later on 17 November 2014.
There is a limited discretion to extend the 12 months for lodgement of the tax returns after the expiry of a particular financial year where there have been special circumstances that prevented lodgement of the tax returns by the prescribed date.
On 25 November 2014, Centrelink, the service provider which administers FTB for the Department of Social Services, determined that Mrs Gammaldi was not entitled to a top up of her FTB entitlements because the 2012/2013 tax returns had not been lodged by 30 June 2014. A week earlier, Centrelink had undertaken a reconciliation of what Mrs Gammaldi had been paid during the financial year and determined that she was entitled to both the amount she had received and the difference between that amount and what she was entitled to, which was $3,901.88.
Centrelink sent notice to Mrs Gammaldi on 25 November 2014 advising her that she was not entitled to the top-up payment and rejected her request for an extension of time to lodge tax returns for the 2012/2013 financial year. Centrelink determined that special circumstances were not applicable.
On 26 November 2014 Mrs Gammaldi sought review of the FTB decision by an authorised review officer (ARO) of Centrelink. On 3 March 2015 the ARO affirmed the original decision.
On 5 March 2015 Mrs Gammaldi lodged an application with the then Social Security Appeals Tribunal (SSAT) for a review of the ARO's decision. On 12 May 2015 a hearing was conducted at the SSAT where Mrs Gammaldi gave evidence. On 15 May 2015 the SSAT posted its decision to Mrs Gammaldi advising that it had decided to affirm the earlier decisions.
Mrs Gammaldi then applied to this Tribunal on 11 June 2015.
LEGISLATION
Section 7(1) of the Administration Act sets out the manner in which a person may claim for FTB:
(1)An individual or approved care organisation (a claimant) may make a claim:
(a)for payment of family tax benefit by instalment; or
(b)for payment of family tax benefit for a past period; or
(c)...
There are several parts of the Act and the Administration Act that set out how FTB is calculated that are not in dispute in this matter.
Clause 3 of Schedule 3 to the Act states that if a person is a member of a couple then the person’s adjusted taxable income includes the adjusted taxable income of her/his partner.
Section 20 of the Administration Act provides that a rate may be determined based on an estimate where information about the amount of adjusted taxable income cannot be known until after the end of the relevant income year.
There are various provisions in the Administration Act about the method of reconciliation of the estimate at the start of the financial year and the actual amount of taxable income earned. In this matter, the following provisions were relevant for the 2012/2013 financial year for a person who was a member of a couple:
32C Relevant reconciliation time—member of a couple, income tax return lodged within 2 years
(1)This section applies to the first individual for a same -rate benefit period if:
(a)the first individual was a member of a couple throughout the same -rate benefit period; and
(b)the first individual or the other member of the couple is or was required to lodge an income tax return for the relevant income year; and
(c)the first individual continues to be a member of the couple until the end of the latest of the following:
(i) the first income year after the relevant income year;
(ii) such further period (if any) as the Secretary allows for the first individual to lodge the return, if the Secretary is satisfied that there are special circumstances that prevented the first individual from lodging the return before the end of that first income year;
(iii) such further period (if any) as the Secretary allows for the other member of the couple to lodge the 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.
(2)If 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.
(3)If:
(a)both members of the couple were required to lodge an income tax return for the relevant income year; and
(b)each member of the couple lodged an income tax return for the relevant income year before the end of:
(i) the first income year after the relevant income year; or
(ii) such further period as the Secretary allows for that member under subparagraph (1)(c)(ii) or (iii), as the case requires;
the relevant reconciliation time is whichever is the later of the following:
(c)the time when an assessment is made under the Income Tax Assessment Act 1936 of the first individual’s taxable income for the relevant income year;
(d)the time when an assessment is made under the Income Tax Assessment Act 1936 of the other member’s taxable income for the relevant income year.
(4)The further period under subparagraph (1)(c)(ii) or (iii) must end no later than the end of the second income year after the relevant income year.
…
32JRelevant reconciliation time—individual not required to lodge an income tax return
(1)This section applies to the first individual for a same‑rate benefit period if:
(a)the first individual; or
(b)any other individual (other than an FTB child, or regular care child, of the first individual) whose adjusted taxable income is relevant in working out the first individual’s entitlement to, or rate of, family tax benefit for the same‑rate benefit period;
is not required to lodge an income tax return for the relevant income year.
(2)The relevant reconciliation time is whichever is the earlier of the following times:
(a)the time after the end of the relevant income year when the first individual notifies the Secretary of the amount of the first individual’s adjusted taxable income for the relevant income year;
(b)the time after the end of the relevant income year when the Secretary becomes satisfied that the first individual’s adjusted taxable income for the relevant income year can be worked out without receiving a notification from the first individual.
DID MRS GAMMALDI QUALIFY FOR ADDITIONAL FTB FOR 2012/2013?
There is no dispute that Mr Gammaldi did not lodge his tax return until 17 November 2014, some four and a half months after 30 June 2014. As has been pointed out in many cases before the Tribunal, the legislation prior to the 2012/2013 financial year had allowed two years after the end of the relevant financial year to lodge the tax return and still qualify.
Mrs Gammaldi has stated that she notified Centrelink that she did not need to lodge a tax return although there is no Centrelink record to confirm her assertion. The Tribunal accepts that she did so on an unknown date. However, as her husband was required to lodge his tax return, whether or when Mrs Gammaldi did so does not impact on the outcome of this application.
Mrs Gammaldi has presented evidence concerning the family’s circumstances during the 2012/2013 financial year and also during 2013/2014 which she believes could amount to special circumstances that led to Mr Gammaldi’s tax return being lodged later than the date specified in the legislation.
The term special circumstances is not defined in the Act or the Administration Act. The meaning of the term has been considered in many Federal Court and Tribunal cases. In Ryde v Secretary, Department of Family and Community Services [2005] FCA 866 Branson J stated (at paragraph 26) that the circumstances of a particular case must give rise to hardship or unfairness sufficient to justify departure from the general rule. In Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 Besanko J stated, in respect of special circumstances (at paragraph 33):
… I also note that the authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances… It was not the intention of Parliament to confine the exercise of the discretion to an exceptional case…there must be something that distinguishes the case from the ordinary or usual case ….
Mr Gammaldi provided a statutory declaration dated 5 June 2016:
I am a partner in a small business that employs 7 FTE employees. All operational responsibilities fall to myself and this is my sole income. In July 2013 my wife contracted a mystery infection saw her become gravely ill & hospitalised twice. During that time my business partner was overseas. I had to take time off work to look after my young family & support my wife. The treatment process was long and painful and further elongated due to inaccurate initial diagnosis & treatment. To compound this, I had to continue to manage & operate a business that was going through a transitional period with a shift in customer bases and a greater risk exposure.
I was trying to support my wife, help look after our children (including a 1 year old) and keep my business operating. There were many days absent over the 6 months and I fell further & further behind in my responsibilities and bookkeeping at work. It was impossible to focus on work issues while my wife was so unwell. As her health improved I had to focus my efforts on my business. For these reasons my focus was directed from my personal tax return and it was not lodged on time.
Mrs Gammaldi provided evidence concerning her medical condition and the concerns and investigations that followed the birth of her third child.
Mrs Gammaldi provided the family’s tax return dates in the five financial years prior to 2012/2013. In each of those years, their tax returns were provided in May or June of the subsequent financial year. The 2012/2013 financial year was the exception where they did not meet their usual standard and lodged after the prescribed date.
Mrs Gammaldi produced a chronology of problems faced by their young baby who was born in late July 2012. There were eye problems which will need treatment until the child is at least seven years old. A paediatrician noted developmental issues that initially appeared to be consistent with cerebral palsy but these concerns were cleared in April 2013. Mrs Gammaldi was rushed to hospital in July 2013 following a sudden swelling in her left arm where she stayed for several days and had treatment. There were two more emergency admissions to hospital in August 2013, with hospital stays and treatment at home by Hospital in the Home. In February and March 2014, there were further hospital admissions and she was referred to a neurologist.
Mrs Gammaldi provided a report dated 21 August 2013 from Dr James Chiu, orthopaedic surgeon, describing the problems she had with her elbow and the treatment she had undertaken and was to undertake. A report from Dr Frank Esposito dated 6 August 2015 stated:
This lady suffered a severe form of cellulitis and bursitis of the left elbow that required two hospital admission and IV antibiotics. She was admitted to the Austin initially on 23rd July 2013 for 5 days. Subsequently, she was admitted to the Epworth Hospital on 31st July 2013 for further IV antibiotics. She required surgical procedures in August 2013 at the Epworth hospital. Fortunately, the infection came under control, otherwise the consequence would have been serious.
Mrs Gammaldi also tabled a report dated 20 August 2013 addressed to her general practitioner from Dr James McMahon, Infectious Diseases Physician, describing the treatment she had during July and August 2013 and would need in the future.
Mrs Gammaldi also provided a copy of a document downloaded from the website of the Department of Social Services on the day after she was advised that the late tax return precluded the receipt of the reconciled additional amount of FTB. The relevant extract stated:
FTB CLAIM PERIOD
From 1 July 2013, the period in which families can claim the FTB or Child Care Benefit (CCB) and/or confirm income for reconciliation purposes has been reduced from two years to one.
For example, families have until 30 June 2015 to
·lodge their lump sum claim for FTB and CCB for the 2013-14 financial year
·lodge their and/or their partner’s if applicable relevant income tax return for the 2012-13 financial year or advise Centrelink that they and/or their partner do not need to lodge a tax return for the 2013-14 financial year
·make sure children that need to meet immunisation requirements within the 2013-14 financial year do so
·make sure children that need to meet the health check requirements within the 2013-14 financial year do so.
The respondent‘s advocate conceded that the screenshot above included incorrect information. That information on the website was subsequently corrected as the reference to the 2012/13 financial year sits within a section and a sentence that clearly concerns the 2013/2014 financial year rather than the previous financial year.
The Department provided a copy of a letter sent to Mrs Gammaldi dated 21 March 2014 which advised Mrs Gammaldi of the need to lodge a tax return by 30 June 2014 to receive the full FTB entitlement:
Dear Mrs Gammaldi
Family Tax Benefit – Important action required by 30 June 2014
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….
To make sure you receive your full Family Tax Benefit entitlement, you and your partner need to lodge a 2012-2013 tax return, or tell us if you and/or your partner are not required to lodge a tax return, by 30 June 2014.
…
Mrs Gammaldi said she could not recall receiving the above letter.
The Tribunal accepts that the 2013/2014 financial year was a difficult one for the family and for Mr Gammaldi. The Tribunal is, however, not satisfied that the situation and responsibilities faced by Mr Gammaldi prevented him from lodging a tax return by 30 June 2014. It could certainly have been a low priority in his life to think or worry about his tax return and the consequences of late lodgement while his wife and youngest child faced health problems and he himself faced increased family responsibilities and business challenges. However, being distracted from lodging the tax return by the prescribed date due to such events is not, in the Tribunal’s view, an uncommon or unusual occurrence. The Tribunal is therefore not satisfied that the family’s difficulties constitute special circumstances that prevented lodgement by the due date of the tax return.
DECISION
The Tribunal affirms the decision under review.
I certify that the preceding 31 (thirty-one) paragraphs are a true copy of the reasons for the decision herein of Regina Perton, Member [sgd]........................................................................
Associate
Dated 15 December 2016
Date of hearing 6 June 2016 Applicant In person Advocate for the Respondent Ms Belinda Lewis
Department of Human Services
Key Legal Topics
Areas of Law
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Administrative Law
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Tax Law
Legal Concepts
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Judicial Review
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Statutory Construction
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Procedural Fairness
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