Garg and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2010] AATA 588

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 588

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2010/1899

GENERAL ADMINISTRATIVE DIVISION		)
Re		SEEMA GARG

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Ms N Isenberg, Senior Member

Date9 August 2010

PlaceSydney

Decision The decision under review is affirmed.

..................[SGD]............................

Ms N Isenberg

Senior Member

CATCHWORDS

SOCIAL SECURITY – Family Tax Benefit – Failure to lodge income tax returns – loss of entitlement to FTB – subsequent lodgement of returns – recalculated amount – decision under review affirmed

A New Tax System (Family Assistance) (Administration) Act 1999, s 28

Social Security (Administration) Act 1999, s 237

Acts Interpretation Act 1901, ss 28A, 29

Re Tsantis and Secretary to the Department of Family and Community Services [2003] AAT      835

REASONS FOR DECISION

9 August 2010 Ms N Isenberg, Senior Member

Decision Under Review

1.      The decision of the Social Security Appeals Tribunal dated 14 April 2010, that affirmed prior decisions of the Family Assistance Office (FAO) made on 11 February 2010 and 3 November 2009, that Mrs Garg could not be paid the supplementary amount of family tax benefit (FTB) of $8,190.66 for the 2006/2007 financial year.

Background

2.      Mrs Seema Garg has been paid FTB since 2 January 1997.  Mrs Garg advised the FAO that her combined income estimate for the financial year 2006/2007 was $93,717.  She elected not to receive fortnightly payments of FTB, preferring instead to have her entitlement calculated at the end of the relevant financial year, so as to avoid incurring a debt.

3.      It was not until 29 October 2009 that Mrs Garg and her husband lodged tax returns for the that financial year.  Mrs Garg’s tax return indicated that their income was $32,408, instead of $93,717 as she had previously estimated. 

4.      A reconciliation of Ms Garg's entitlement to FTB was undertaken which calculated that she was entitled to $12,115.98 in FTB for the 2006/2007 financial year.  However, because of late lodgment of the tax returns, she was only paid $3,925.38 and an amount of $8,190.60 was withheld from payment.  That decision was affirmed on internal review and by the Social Security Appeals Tribunal.  Mrs Garg now seeks review by this Tribunal.

legislation

5.      The relevant legislation is found in the A New Tax System (Family Assistance) (Administration) Act 1999 (the Act), in particular s 28. In general terms, ss 28(1) and (2) of the Act provide that if a FTB recipient fails to lodge an income tax return for two years the person is taken not to have been entitled to FTB for that two year period. However, s 28(3)(d) provides that where the tax returns are subsequently lodged, and provided the Secretary is satisfied that the person was eligible for a recalculated amount of FTB for the cancellation days, then a further determination of eligibility is made. The effect of the further determination is that the person is entitled to be paid only the lesser of their entitlement, based on the adjusted taxable income and the amount the person would have received had they not chosen to defer payment of FTB.

Issue

6.      Was Mrs Garg paid the correct amount of FTB for the 2006/2007 financial year?

Consideration

7.      There was no dispute that Mrs Garg was entitled to receive FTB during the relevant financial year.  Neither was there any dispute that Mrs Garg did not lodge a tax return in respect of the relevant financial year until 29 October 2009.  Had her tax returns been lodged on time, she would have been entitled to an amount of $12,115.98, that is, an additional $8,190.60.

8.      Mr and Mrs Garg told me that during 2006 they had started their own business and were unsure how it would work out.  To avoid having a Centrelink debt for FTB, they decided to over-estimate their expected income and they elected to receive their entitlements at the end of the FTB year.  Unfortunately, their business did not go as well as expected, and ultimately their income was less than they had hoped for.  In addition the business distracted them from filing their tax returns.  They had previously engaged a tax agent but he was himself having problems and did not follow up with them about lodgment.

9.      Mr and Mrs Garg said that the first they knew of any problem about their 2006/2007 FTB payments was in a letter from the FAO dated 22 August 2009.  They focused on the part of the letter that said that the FTB would be stopped from January 2010 if tax returns were not provided.  They “panicked” and lodged that return and the return for 2007/2008 on 29 October 2009.   

10.     Mr and Mrs Garg said they had no recollection of receiving a letter from the FAO on 8 April 2008, informing Mrs Garg that she should lodge tax returns prior to 30 June 2008.  The letter also contained information about the consequences of failure to lodge the tax returns: possible repayment of FTB, and that she would not be eligible for further FTB.  Similarly, they had no recollection of letters dated 15 April 2006 and 14 April 2007 in respect of previous financial years, notwithstanding that Mr Garg described himself as meticulous in his record keeping.  They did not deny that they received the earlier letters at the address where they have lived since 2002 but, as Mr Garg said, because they went on to lodge the earlier returns on time and there was no dispute about the payment of FTB, the information did not “carry forward” to the 2006/2007 year. 

11. The solicitor for the respondent submitted that the letter of 8 April 2008 was deemed delivery of the letter: s 237 Social Security (Administration) Act 1999. I do not think that provision applies as the letter was not a ‘decision’: s 237(4). Sections 28A and 29 of the Acts Interpretation Act 1901, however, provide that a document may be sent by pre‑paid post to the address of the place of residence of the person last known to the person serving the document, and the letter is deemed to have been delivered in the ordinary course of post.

12.     Even if that did not apply, I have difficulty in accepting that all three letters – those of 15 April 2006, 14 April 2007 and 8 April 2008 about the necessity to lodge tax returns – went astray.  Further, I could locate no requirement that such a notice be issued.   

13.     I was referred by the solicitor for the respondent to Re Tsantis and Secretary to the Department of Family and Community Services [2003] AAT 835, where the Tribunal considered a similar factual situation, except in that case the relevant taxation return was received by the ATO, only one day late. Nonetheless, the Tribunal confirmed the lack of discretion in s 28 of the Act.

14. Section 28 is clear in its terms. There is no discretion: late lodgment of tax returns has an unavoidable impact on the entitlement of a person to have their FTB topped up where they elect to be paid at the end of each financial year and their income is less than had been estimated.

15. Mr and Mrs Garg had submitted that all they were after was the FTB they were entitled to: they had spent money caring for their children (which of course they did not begrudge) and were now being penalised because, had they made a more conservative estimate of their income and elected to receive payment fortnightly, they would not have missed out on about $8,000, to which they would otherwise have been entitled. The solicitor for the respondent acknowledged this anomaly. While I have some sympathy for Mr and Mrs Garg’s position, s 28(3)(d) of the Act permits me no discretion at all in calculating a claimant's entitlement to payment in the present circumstances.

Decision

16.     The decision under review is affirmed.

I certify that the 16 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg, Senior Member.

Signed: .....................[SGD]......................................................
  Associate

Date/s of Hearing  28 July 2010
Date of Decision  9 August 2010
Solicitor for the respondent      Mr M Nicoletti