Goodyear and Secretary, Department of Education (Social services second review)

[2024] AATA 1171

Goodyear and Secretary, Department of Education (Social services second review) [2024] AATA 1171 (9 May 2024)

Division:GENERAL DIVISION

File Number(s):      2023/5602

Re:Kiani Goodyear

APPLICANT

AndSecretary, Department of Education

RESPONDENT

DECISION

Tribunal:Member Ranson

Date:9 May 2024

Place:Brisbane

The decision under review is set aside.

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

Member Ranson

Catchwords

Child Care Subsidy – entitlement to child care subsidy – whether applicant made a valid application – where applicant failed to lodge income tax return during relevant tax year – requirements under Secretary’s Rules not met – date of effect of decision – decision under review set aside and substituted

Legislation

A New Tax System (Family Assistance) Act 1999 (Cth)
A New Tax System (Family Assistance) (Administration) Act 1999 (Cth)
Child Care Subsidy Secretary’s Rules 2017 (Cth)

REASONS FOR DECISION

Member Ranson

9 May 2024

1. Ms Goodyear has had a difficult life. Nonetheless she has done well in caring and providing for her children in very difficult circumstances where she does not receive any child support from the father of her children. Like many parents she relies on childcare to allow her to seek and retain employment, which she did in January 2023 for her daughter who was then age two. Ms Goodyear applied for a Child Care Subsidy (CSS) to help cover the costs of that childcare.

2. CCS is paid by the Australian Government through Centrelink. Like all social security benefits, it carries with it various obligations of the recipient. For CCS, that includes the obligation to lodge a tax return each year or advise the Australian Taxation Office no return is required. Either way that must be done by the end of the next financial year and by January 2023, Ms Goodyear had not lodged her 2020/21 tax return.

3. There is provision in the relevant legislation to extend by one year the time to lodge the return or advise none is required. That requires special circumstances to exist and for those special circumstances to have prevented the recipient of the CCS from complying with their lodgement requirement. It is a two-step process.

4. Centrelink processed Ms Goodyear’s application and found she was entitled to CCS from the application date in January 2023 with a nil rate because of the tax return issue. She sought internal review of that decision and, when unsuccessful, a further review to the Social Services and Child Support Division of the Tribunal. All agreed the nil rate applied until she lodged her 2020/21 tax return. She now seeks a second review in the General Division of the Tribunal.

5. The issue is whether Ms Goodyear lodged a valid CCS application in January 2023 given she had not lodged her 2020/21 tax return at that time. If not, she cannot be paid CCS from that date and the special circumstances provisions relating to whether she was prevented her from dealing with her taxation obligations by 30 June 2022 do not apply.

6. For the following reasons, the decision under review is set aside and substituted with a decision that the application for CCS made in January 2023 was not valid because Ms Goodyear’s taxation obligations had not been met at that time. That being the case, the question of special circumstances does not arise.

   CONSIDERATION OF CLAIMS AND EVIDENCE

   What happened?

7. Ms Goodyear applied for CCS on 30 January 2023, at which time she had not lodged her 2020/21 taxation return, which for CCS purposes was due by the time of an application for CCS and definitely no later than 30 June 2022.[1] If special circumstances had prevented her from lodging or notifying the Australian Taxation Office by then, Centrelink could have considered granting her another year to lodge, that is, until 30 June 2023.

   [1] Unless Ms Goodyear was lodging through a registered tax agent her 2020/21 taxation return was likely due to the ATO by 31 October 2021.

8. Centrelink processed her application, even though she had not by then lodged her 2020/21 tax return, and found she was entitled to CCS from the application date in January 2023 with a nil rate because of the tax return issue. When she was advised of this, Ms Goodyear immediately dealt with the issue by lodging her 2020/21 income tax return, and she was then granted a subsidy of 85%. As a result, the balance of the debt she had incurred to the childcare provider was approximately $4,000. The Secretary now says that application was not valid because of the non-lodgement of her 2020/21 tax return at the time of application.

   What does the law say?

9. The Secretary’s Statement of Facts, Issues and Contentions dated 18 January 2024 identifies the relevant law as the A New Tax System (Family Assistance) (Administration) Act 1999 and the Child Care Subsidy Secretary’s Rules 2017.

10. Section 67BE of the Administration Act says a CCS claim made by an individual is effective if it is made in a form and manner approved by the Secretary and contains the information, and is accompanied by the documents required by, the Secretary. This includes details of a bank account, maintained by the individual alone or jointly with someone else, into which amounts of CCS can be paid plus the tax file number of each claimant.

11. Importantly, the Administration Act also provides that any other requirements in the Secretary’s rules must be met and no other provision in the Admin Act prevents the claim being effective.[2] These are discussed below.

    [2] Section 67BE, A New Tax System (Family Assistance) (Administration) Act 1999 (Cth).

12. Rule 5 of the Secretary’s Rules says all the following requirements must be satisfied in relation to a claim made by an individual who has previously received an amount of CCS during an income year which ended before the claim (a test income year):

    (a)for all the test income years, the individual, and any partner of the individual during any of the test income years, has lodged their income tax return with the Commissioner of Taxation or is not required to lodge an income tax return, and

    (b)The claimant does not have a debt due to the Commonwealth which has not been fully repaid or written off or waived by the Secretary or is being repaid by instalments under an agreed arrangement.

13. In summary, there can only be a valid claim for CCS if the claimant lodges the appropriate form with all necessary attachments, and (emphasis added) lodgement of their tax returns is up to date. The issue of the required time frame is not enlivened in Rule 5, which requires for all test years the claimant has lodged their income tax returns.

    What did Centrelink do?

14. Ms Goodyear’s CCS application of 30 January 2023 was processed notwithstanding she had not by then lodged her 2020/21 tax return. In processing the CCS application, it was noted the 2020/21 tax return had not been lodged so a subsidy rate of nil was assigned.

15. When she was advised by a Centrelink representative the rate assigned to her application was nil and the reason for that, Ms Goodyear immediately lodged the return. She said at the hearing she went to the adjoining carpark straight away and attended to the lodgement of her 2020/21 tax return using her phone. She said she knew what to do and had forgotten to do so, or it slipped her mind, given all the issues in her life in the years leading up to January 2023.

16. However, as noted above, Rule 5 is clear in that it requires all tax returns to be lodged for all test years before a CCS application can be regarded as valid. That means Ms Goodyear had to have lodged her 2020/21 tax return by 30 January 2023, being the date of lodgement of the CCS application, for her application to be valid.

17. The issue of special circumstances preventing lodgement does not arise under Rule 5. Special circumstances preventing lodgement of a tax return, the so-called two-step process, is only relevant for the purpose of income reconciliation.

18. The Tribunal finds the CCS application by Ms Goodyear became valid on 23 March 2023 being the day she lodged her 2020/21 tax return.

    What does Ms Goodyear say?

19. Ms Goodyear is a mother of very limited means. She explained at the hearing she has limited education and two young children and herself to care for on her own with no one to provide support to her, financially or otherwise. She explained at the hearing she had moved several times in the lead up to January 2023 for a variety of legitimate reasons. She received assistance from a friend at a time when she was flooded out of the accommodation she had at the time. In turn, she had to move on from that location for safety reasons.[3]

    [3] Undated submission from Ms Julie Whitaker.

20. In her e-mail dated 1 August 2023 addressed to the Brisbane Registry of the Tribunal, Ms Goodyear said:

    I would like to please have a second review for this matter.

    My lawer [lawyer] guiding me through this situation is applying for documentation to overlook.

21. There is nothing before the Tribunal to indicate the nature of the documentation she was referring to save for the items discussed below.

22. In an earlier e-mail dated 28 June 2023, Ms Goodyear said:

    I would like to attach this document to my hearing tomorrow [a reference to the AAT1 hearing on 29 June 2023], this is my new confirmation of residence as I have been terminated from work as day care is not available to [daughter – redacted] untill [until] this matter is paid to the day care. My current address [redacted] is a house I have been renting through my work place so is no longer available to me and my children.

23. Also on 28 June 2023, the Centre manager of the childcare centre sent an e-mail to Ms Goodyear and said:

    I am going to have to suspend care for [daughter’s name] as from Wednesday due to ongoing CCS Issues.

    My debit [debt] manager has said that we can’t hold off any longer and that the dept [debt] needs to be repaid weather [whether] there is ccs or not.

    When ccs comes through any amount in credit will be paid to you. If you are paid by Centrelink, please reimburse the Centre as the dept in now over $3200.

24. By then, a debt collection agency had written to Ms Goodyear and demanded payment of $4,011.46 being the balance of a debt due to the childcare centre. The letter offers to discuss payment options if Ms Goodyear was unable to pay the full amount at that time. The history of the debt is set out in detail in the T Documents.[4]

    [4] T Documents, T 10.

25. Evidence before the Tribunal indicates Ms Goodyear had been the victim of an online banking scam which her bank was dealing with, and she had contacted an organisation called ‘Act for kids’ seeking assistance under the intensive Family Support program.

26. The Tribunal is cognisant of and sympathetic to the plight of Ms Goodyear and applauds her tenacity in caring for her children and herself in often very adverse circumstances. However, that sympathy does not circumvent Rule 5, the application of which has been discussed in detail above.

27. The fact is, and the Tribunal so finds, the 2020/21 tax return of Ms Goodyear was not lodged until 23 March 2023 and so her application for CCS was incapable of being valid until that date.

    Date of effect

28. The operation of the law is such that Ms Goodyear’s application for CCS on 30 January 2023 was not effective until she lodged her 2020/21 tax return on 23 March 2023. This is because of the operation of section 67BE of the Administration Act which specifies all information requirements must be met for CCS to be paid for any given week. Those information requirements include lodging relevant tax returns to enable each year’s income reconciliation to occur. That could not occur for the 2020/21 year as she had not lodged her tax return for that year until 23 March 2023.

    Special circumstances and the two-step test

29. The Secretary says her circumstances were not ‘special’ as that word is meant in the legislation and even if they were, they did not prevent her from lodging by 30 June 2022. The Tribunal has already found the CCS application became valid on 23 March 2023 when she lodged her 2020/21 tax return. Accordingly, there is no requirement to consider whether special circumstances prevented lodgement of the tax return as that is only relevant to the annual income reconciliation.

    CONCLUSION

30. This decision does nothing to assist Ms Goodyear to repay the debt she owes to the childcare centre. It cannot, which is very unfortunate for her because without a job she cannot repay the debt. Without childcare she cannot secure employment and she cannot secure childcare until the debt is paid.

31. Ms Goodyear said at the hearing she knew straight away on 23 March 2023 she had neglected to lodge her 2020/21 tax return and immediately did so. That does not give rise to special circumstances even if those applied in this case, which they do not.

32. The Tribunal is very sympathetic to her plight however, there is nothing it can do to remedy the situation for her. The law operates as it does.

33. The Tribunal notes, as in the Decision of the Social Services and Child Support Division of the Tribunal, there may be other avenues for resolution or redress available to Ms Goodyear such as an act of grace payment,[5] but such matters cannot be determined by this Tribunal.

    [5] >

    For the reasons above, the Tribunal sets aside the decision under review and finds the claim for CCS made on 30 January 2023 was not effective until 23 March 2023. The Secretary is instructed to recalculate the rate of CCS as and from 23 March 2023.

I certify that the preceding 34 (thirty-four) paragraphs are a true copy of the reasons for the decision herein of Member Ranson

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Associate
Dated: 9 May 2024

Date of hearing:	29 February 2024
Applicant:	Self-represented By video
Solicitors for the Respondent:	Mr Riley Calaby Services Australia