Gargiulo and Secretary, Department of Families, Community Services and Indigenous Affairs

[2007] AATA 1843

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1843

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No  2007/1249

GENERAL  ADMINISTRATIVE  DIVISION		)
Re		CAROLYN GARGIULO

Applicant

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

Respondent

DECISION

Tribunal Mr John Handley, Senior Member

Date8 October 2007

PlaceMelbourne

Decision The decision under review is affirmed.

(Sgd) John Handley
Senior Member

  

SOCIAL SECURITY – Family Tax Benefit – applicant declared an amount she understood was capitalised maintenance – rate of FTB calculated by regard to that amount – later learnt the amount was not capitalised maintenance – declaration by applicant should have been obvious to Centrelink officer that it was an error – applicant received less than proper entitlement for four years – no special circumstances (under legislation applicable) – arrears entitlement limited – decision affirmed – recommendation made

A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) s 109E, s 109E (1) (f), s 109E (2), s 109A, s 109A ‑ E

A New Tax System (Family Assistance) Act 1999 (Cth) s 3 (1), s 19 (2)

REASONS FOR DECISION

8 October 2007   Mr John Handley, Senior Member

1.      The applicant is the mother of two children for whom Family Tax Benefit (FTB) was claimed in January 2000.  In August 1997 Consent Orders were made by the Family Court of Australia (Family Court) with respect to the settlement of matrimonial property.  Being mindful of her entitlement under those Orders, the applicant made a disclosure in the FTB application which was not found until October 2006 to have been incorrect.  The consequence has been that FTB was not paid at the rate that it should have been paid for a number of years and loss has been suffered.  This is a very unfortunate application and has brought to light a number of issues which I think are deserving of consideration and will be referred to later in these reasons.

2.      The Orders of the Family Court (relevantly) entitled the applicant to a payment of $25,000 from her former husband payable as monthly instalments of $2083.33.  Additionally her former husband indemnified her against a mortgage liability in the sum of $50,000.  When the claim for FTB was made, one of the questions asked was whether capitalised maintenance had been received for yourself or your children.  Beside that question in the body of the FTB claim form is a note which reads:

Capitalised maintenance is maintenance that is not a regular or period payment, and is worth more than $1500.  It may be provided as a lump sum payment (i.e. a cash amount), a property transfer or a property settlement (e.g. your home, a car, a business etc.).  Only include amounts that have been specified as being provided as maintenance for yourself or your children.

3.      The applicant declared the sum of $75,000 as capitalised maintenance.  The type of capitalised maintenance was declared by her as property / lump sum.  The applicant said that the sum of $75,000 was understood by her to be the combined benefit of the $25,000 payable by monthly instalments and the $50,000 being the mortgage liability assumed under the Order by her former husband.

4.      The applicant said that she did not know what was meant by the expression capitalised maintenance and zoned in on the words property settlement that appear within the note printed on the claim form.  She said that she did not believe that declaring that sum would affect the rate of FTB.  FTB was paid at an amount that she did not query because she did not know what her entitlement would be.  She did not know any other persons who received FTB and was not able to make comparisons. 

5.      In August 2000 she married again and by reason of the combined income with her husband the rate of FTB being paid was reduced and which she expected would be reduced because of the benefit of the combined income.  She said that she had no reason to query the amounts being paid to her and expected that she would receive her proper entitlement.  When her husband died in August 2001, the rate of FTB was increased because of the consequential reduction in income.

6.      In 2006 she became entitled to a Family Tax Supplement (FTS).  When that benefit was not paid, she made enquiries of Centrelink and learnt, for the first time since January 2000, that the rate of FTB that she had received from time to time had been calculated by regard to the amount declared as capitalised maintenance.  She was then also advised that that sum need not have been declared because it was not regarded by Centrelink as being a capitalised maintenance payment.  She was also advised that there was a limitation on the payment of arrears.

7.      The applicant acknowledged that she regularly received recipient notices between January 2000 and October 2006.  She acknowledged that those notices recorded her income from time to time which she did not query because the amount recorded was accurate.  Each recipient notice refers to the calculation of the rate of FTB payable by regard to affecting maintenance.  That phrase was understood by the applicant to mean the maintenance that she was receiving through the Child Support Agency (CSA) and which had been paid to that Agency by the father of the children.  Again she did not query the calculations made by Centrelink because she understood that her rate of FTB would have regard to the maintenance received from the CSA.

8. The applicant acknowledges that she was in error in declaring the sum of $75,000 as referred to earlier. She also acknowledges that she did not query the rate of FTB that had been paid to her until 31 October 2006 when she enquired as to the absent payment of the FTS. Centrelink then made a decision pursuant to s 109E of A New Tax System (Family Assistance) (Administration) Act 1999 (the Act) and by regard to s 109E (1) (f) of the Act, decided that the date of effect of the review decision (which caused payment to be made to her at the appropriate rate without regard to the sum of $75,000) commenced on the first day of the income year previous to the income year of 2006 / 2007.

9. Section 109E (2) of the Act provides an opportunity for a person to argue that arrears of payments should be from a date earlier than the date decided (refer above) if there are special circumstances preventing that person from making an application under s 109A for review of the original decision. The applicant acknowledged, and I agree, that there were no special circumstances preventing her from making an application for review of the original decision.

conclusion

10.     The entitlement of an FTB beneficiary to arrears of that benefit are confined to the provisions of s 109A – E of the Act.  In the absence of special circumstances, which I have found do not exist, arrears are only payable (if the review decision is favourable) from the first day of July in the income year prior to the date of the review decision.  Arrears from that date have been paid.  There is no other provision in the Act or in other legislation permitting an entitlement, in the absence of special circumstances, for any greater period of payment for arrears.  I am obliged to therefore affirm the decision under review.

recommendations

11.     Persons who have an entitlement to a Commonwealth benefit should be secure in the knowledge that their applications are properly processed and entitlements are properly and accurately calculated and paid.  The forms completed should be in language easily comprehended and officers processing the forms should ensure that a benefit that is payable is in fact paid at the correct rate.  Where an error is found within the form that is either suspected, or is obvious, in my view the processing officer has a duty to bring that obvious or suspected error to the attention of the applicant for the claimed benefit and have the form corrected.  This will ensure that citizens do receive their correct entitlement and can have confidence in the Agency administering the payment of benefit.

12.     In the present case it has been admitted by the applicant that she did make an error in disclosing the sum of $75,000 which she understood to be capitalised maintenance.  It was not capitalised maintenance and the body of the form in my view clearly demonstrates her misunderstanding or error.  She has recorded that the type of capitalised maintenance is property / lump sum.  Additionally she recorded that the amount of capitalised maintenance was paid to her by an Order or an Agreement of a Court.  Those errors should have been obvious to the processing officer and she should have been invited to amend the form.  The consequences of that disclosure have resulted in the applicant being paid FTB at a rate less than her proper entitlement for more than four years.  The form clearly indicates that the only amount to be specified as a capitalised maintenance payment is an amount provided as maintenance for yourself or your children.  The sum of $75,000 being made up of the two components of $25,000 and $50,000 as referred to earlier were never paid to her as maintenance for herself or for her children.  Both of those sums are referrable to the terms of a Consent Property Order made by the Family Court.  The maintenance that she has received from time to time from her former husband has been and continues to be paid via the CSA on a regular monthly basis.  It has never been capitalised.

13.     Irrespective of the note which appears in the claim form, capitalised maintenance income within the meaning of s 3 (1) of the A New Tax System (Family Assistance) Act 1999 (FA Act) is maintenance income that is not a periodic amount nor a benefit provided on a periodic basis and is an amount which exceeds $1500.00.

14.     Maintenance income is also defined at s 3 (1) of the FA Act and is either:

(a)Child maintenance that is an amount of a payment or the value of a benefit that is received for the maintenance of an FTB child; or

(b)Partner maintenance being the amount of a payment or the value of a benefit that is received for the individual’s own maintenance; or

(c)Direct child maintenance being the amount of a payment or the value of a benefit received by an FTB child for the child’s own maintenance.

In my view, the sum of $75,000 or the components of $25,000 and $50,000 do not fit within the definition of maintenance income.  Those amounts were referrable to the settlement of property, they are not characterised, nor intended to be characterised, as maintenance income and they were not paid for the maintenance of an FTB child or the maintenance of a partner nor were they paid directly to the child.

15.     The note appearing on the capitalised maintenance form is correct to the extent that it directs an applicant to only include the amounts that have been specified as maintenance for that person or for children.  The references to capitalised maintenance being paid as a lump sum payment or a property transfer or a property settlement, perhaps were contemplated as being within the ambit of s 19 (2) of the FA Act.  But such a benefit could not in my view have its origin in a Property Order made by the Family Court when the payment made is not contemplated or described or intended as being for the maintenance of an FTB child or the maintenance of the partner.  That is a payment of a different character and for a different purpose.

16.     Additionally, the recipient notices referred to the rate of FTB that was paid from time to time having been calculated by reference to affecting maintenance.  That is an expression adopted by Centrelink where regard was had to the sum declared as capitalised maintenance.  (It appears that the amount declared as capitalised maintenance was calculated as if it were paid on a pro‑rata basis over a period of time and the pro‑rata payment was used in the calculation of FTB – refer T‑documents at p120).  The applicant understood that the expression affecting maintenance was a reference to the maintenance that she was receiving from her former husband monthly from the CSA.  Centrelink knew of those payments.  The expression affecting maintenance is not defined by the legislation nor was the applicant ever given an explanation of the meaning of that expression.  She relied on Centrelink officers to properly calculate her entitlements and did not query the rate of payment being received because of her belief that her entitlement had been correctly quantified.

17.     The legislation confines the ambit of an arrears entitlement.  It makes no provision for a circumstance where an error, by misunderstanding, has been made by an applicant for a benefit which has not been detected by a processing officer.  The applicant has lost a considerable amount of money and she is in the circumstances deserving of financial compensation for the loss that she has suffered.  I would recommend that by regard to the circumstances as learnt by this application and by the observations recorded above that if an application for compensation is made that it be favourably considered.

I certify that the 17 preceding paragraphs are a true copy of the reasons for the decision herein of:
Mr John Handley, Senior Member

Signed:         Grace Carney, Personal Assistant

Date of Hearing  2 October 2007
Date of Decision  8 October 2007
Solicitor for the Applicant          Self Represented
Departmental Advocate            Mr T Noonan