Gordon and Secretary, Department of Family and Community Services

[2004] AATA 634

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 634

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2003/274  

GENERAL ADMINISTRATIVE DIVISION		)
Re		IAN GORDON

Applicant

And

SECRETARY, DEPARTMENT

OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Ms J Cowdroy, Member

Date22 June 2004

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

...................[Sgd].....................

J Cowdroy
  Member

CATCHWORDS

SOCIAL SECURITY – benefits and entitlements - overpayment of family tax benefit – applicant provided revised estimates of income during the relevant year - decrease in rate of benefit as a result of revised estimates has effect from the date on which revised estimate given – not retrospective – no administrative error – no special circumstances - affirmed

A New Tax System (Family Assistance) Act 1999
A New Tax System (Family Assistance) (Administration) Act 1999 ss 31A(2), 71(2), 97, 101

Social Security Act 1991 s 1237AAD

Beadle v Director General of Social Security (1985) 7 ALD 670
Secretary, Department of Social Security v Hales [1998] FCA 219

REASONS FOR DECISION

22 June 2004  Ms J Cowdroy, Member

1.      This decision relates to a review of a decision of the Social Security Appeals Tribunal (“the SSAT”), dated 19 March 2003, to raise and recover a debt of family tax benefit in the sum of $2,122.16 for the period 1 July 2001 to 30 June 2002.

Hearing

2.      The matter was heard in Bundaberg on 3 November 2003.  Mr Gordon appeared in person and made submissions. Mr T Ffrench appeared for the respondent.  At the conclusion of the hearing, the matter was adjourned to enable both parties to provide written submissions, which were received in due course.  Also included in the applicant’s submissions was a video recording of a Centrelink advertisement, “Support the System that Supports You”.

3. The T-documents were entered into evidence pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, as well as a document headed “Your Guide to Family Assistance”, which was marked Exhibit 2.  The matter was decided on the basis of the exhibit material, the applicant’s oral evidence, the submissions of the parties, and the relevant case law and legislation.

Background

4.      The applicant was in receipt of family tax benefit (FTB) by instalments during the 2001/02 financial year.

5.      Mr Gordon contacted Centrelink on 5 October 2001 and provided an income estimate for his partner and himself.  He estimated his own income as $30,000.00 per annum and his partner’s income as $0.00 [T4/18].

6.      Mr Gordon contacted Centrelink again on 17 January 2002 and provided another income estimate.  He stated his income for the 2001/2002 financial year would be $35,000.00 and that his partner’s income would be $2,000.00 [T4/18].

7.      The applicant contacted Centrelink on 21 April 2002 and revised his income details again.  He estimated his income for the 2001/02 financial year at $40,000.00 and Mrs Gordon’s income as $4,000.00 [T4/18].

8.      Mr Gordon provided a revised estimate of income to Centrelink on 30 May 2002 stating that he would earn $38,000.00 and that his partner would earn $6,000.00 [T4/18].

9.      In the 2001/02 income year, Mr Gordon and his partner received income of $37,468.00 and $7,286.00 respectively [T25/80].

10.     Following the end of the financial year, a reconciliation process took place in which Mr Gordon’s FTB entitlement was recalculated.  This resulted in Mr Gordon being informed that he had received an overpayment of FTB [T26/81].

The Issue

11.     The issue to be decided is whether there is a debt of FTB, and if so, whether it should be recovered.

Legislative Framework

12.     The A New Tax System (Family Assistance) Act 1999 (“the FA Act”) and the A New Tax System (Family Assistance) (Administration) Act 1999 (“the FAA Act”) is of relevance to the decisions to raise and recover the debts of FTB.

13. Mr Gordon was paid FTB by instalment and section 25 of the FAA Act sets out the obligations of a claimant who has become entitled to be paid FTB by instalment. If:

“… after a claimant becomes entitled to be paid family tax benefit by instalment:

(a) anything happens that causes the claimant to cease to be eligible for family tax benefit on the days for which the claimant will become entitled to be paid the benefit under the determination concerned, or to become eligible for a daily rate of family tax benefit that is less than that specified in the determination; or

(b)the claimant becomes aware that anything is likely to happen that will have that effect;

the claimant must, in the manner set out in written notice given to the claimant under section 25A, as soon as practicable after the claimant becomes aware that the thing has happened or is likely to happen, notify the Secretary that it has happened or is likely to happen.”

14. Section 71(2) of the FAA Act provides:

“If:

(a)an amount (the received amount) has been paid to a person by way of assistance; and

(b)the received amount is greater than the amount (the correct amount) of assistance that should have been paid to the person under the family assistance law;

the difference between the received amount and the correct amount is a debt due to the Commonwealth by the person.”

15. Section 97 of the FAA Act applies when debts arise from an error and provides as follows:

“(1) The Secretary must waive the right to recover the proportion (the administrative error proportion) of a debt that is attributable solely to an administrative error made by the Commonwealth if subsection (2) or (3) applies to that proportion of the debt.

(2) The Secretary must waive the administrative error proportion of a debt if:

(a)the debtor received in good faith the payment or payments that gave rise to the administrative error proportion of the debt; and

(b)   the person would suffer severe financial hardship if it were not waived.”

16. In relation to the date from which a revised estimate can be given effect by the Secretary, section 31A(2) of the FAA Act provides:

“A variation of a determination under subsection (1) has effect:

(a)if it results in an increase in the claimant’s rate of family tax benefit:

(i)    unless subparagraph (ii) applies – from the day on which the revised estimate was provided to the Secretary; or

(ii)   if the first day of the income year to which the revised estimate relates occurs after the day identified in subparagraph (i) – from that first day; and

(b)if it results in a decrease (including a decrease to nil) in the claimant’s rate of family tax benefit:

(i)    unless subparagraph (ii) or (iii) applies – from the day on which the revised estimate was provided to the Secretary; or

(ii)   if the first day of the income year to which the revised estimate relates occurs after the day identified in subparagraph (I) and subparagraph (ii) does not apply – from that first day; or

(iii)  if the day after the end of the last instalment period before the variation takes place occurs after the days identified in subparagraphs (I) and (ii) – from the day first-mentioned in this subparagraph.”

17. Section 101 of the FAA Act provides for waiver in special circumstances:

“The Secretary may waiver the right to recover all or part of a debt if the Secretary is satisfied that:

(a)the debt did not result wholly or partly from the debtor or another person knowingly:

(i)    making a false statement or a false representation; or

(ii)   failing or omitting to comply with a provision of the family assistance law; and

(b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and

(c)it is more appropriate to waive than to write off the debt or part of the debt.”

Evidence

18. The applicant agreed he had been paid an amount of FTB to which he was not entitled. His grievance related to Centrelink’s failure to make adjustments to his family tax payments during the financial year, in order to avoid a large debt at the end of the financial year. He contended that by fulfilling his obligations under section 25 of the FAA Act he had an expectation that Centrelink would calculate his entitlements and to make retrospective adjustments to his payments if needed to ensure no overpayment occurred.

19.     He referred the Tribunal to the document which forms Exhibit 2.  Page 9 of the document headed “Your Guide to Family Assistance” concerns FTB.  It sets out the payment choices for recipients of this benefit.  He referred to that part of the document that states:  “Every time your details change, we will check to see whether you have already been overpaid and adjust your rate if necessary.  You can make this choice by itself or with any of the other choices”.

20.     Mr Gordon submitted that the application of this principle meant that when he informed Centrelink of a change in income, his future payments should reflect that change, without an overpayment occurring. 

21.     Mr Gordon pointed out that although payments of FTB reduced after he advised of a change in income, a considerable overpayment occurred over the financial year. He considered that, in retrospect, the provision of revised estimates had been irrelevant to Centrelink’s consideration of his appropriate entitlements.  If he had been aware that he was likely to have an overpayment, he would have requested cancellation of FTB.  He pointed to the Centrelink television advertisement which implied that if a change of circumstances was advised, then an overpayment would be avoided.  

22. He had calculated that $1,431.38 of the debt constituted overpayments which occurred notwithstanding the provision of revised estimates, and that the balance of the debt ($698.78) was attributable to the fact that the total income for the year exceeded the estimates given. He contended that the $1,431.38 should be waived under section 97 of the Act on the basis it was attributable to administrative error.

23.     Prior to a stay being granted, the debt was being repaid at the rate of $20 per week. He considered that Centrelink had a “moral and legal right to ensure” that persons in his situation do not receive a large overpayment.

24.     In respect to his personal circumstances, the applicant works as a teacher for the Education Department in Bundaberg and earns $41,000 per annum. His wife is not employed. He has a HECS debt and a $700 tax bill, as well as the usual household expenses. A statement of income and expenditure appears at T1-4, which has changed marginally since that time, but remains substantially correct.  He also pays child support of $217 per fortnight.  He described the household financial circumstances as “borderline”.

Findings and Conclusion

25. The applicant does not dispute the respondent’s calculation of the overpayment and I am satisfied that it has been appropriately made. When the applicant’s household income was known and was reconciled against the payments he had received, it was found that he had been overpaid. According to section 71(2) of the FAA Act, that amount by which he has been overpaid is a debt due to the Commonwealth.

26.     The applicant maintains that part of the overpayment was caused by the respondent’s failure to adjust his payments once he had notified of a change in income.  He pointed to the information in the FTB document that indicates that Centrelink will check to see if a recipient of benefit has been overpaid and adjust the rate.  

27. The Tribunal accepts it was the applicant’s understanding that this would occur retrospectively, and it is certainly arguable that the document in question could lead a person to believe that this was the case. It is also the case that the television advertisement advises that if a recipient of social security benefit does not advise of a change of circumstances, then repayment of an overpayment is a likely consequence. By inference, it could be taken to mean that if such advice was given, no overpayment would result. However, section 31A of the FAA Act directs that if a decrease in the rate of FTB arises from a revised estimate, then that decrease has effect from the day on which the revised estimate was provided. In other words, it has prospective effect only, and no retrospective effect.

28. That being the case, the respondent’s actions in adjusting the entitlement from the date of notification does not constitute administrative error. Section 97 of the FAA Act therefore has no application in this case.

29. In respect to the waiver provisions of Section 101 in the FAA Act, the Tribunal had regard to the principles outlined in Beadle v Director General of Social Security(1985) 7 ALD 670, which described special circumstances as circumstances which are “unusual, uncommon or exceptional”. In Secretary, Department of Social Security v Hales[1998] FCA 219, French J discussed Beadle’s case and the application of section 1237AAD of the Social Security Act 1991, which is couched in similar terms to section 101 of the FAA Act. French J stated:

“The evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt.  It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words. It may be that there will be few cases in which the Secretary will be satisfied that there are special circumstances in the absence of financial hardship. It may be that there are few cases in which having found special circumstances to exist, the Secretary would exercise the discretion to waive in the absence of financial hardship. But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose.”

30.     The Tribunal accepts that the applicant’s financial circumstances are straitened, however the section specifically excludes waiver on the basis of financial hardship alone.  In respect to his other circumstances, notwithstanding that he diligently reported changes in income in an effort to avoid overpayment, he has a considerable debt. The applicant is understandably upset at his predicament.  However, in that respect, his situation is no different than other recipients of FTB who have also incurred debts.  The Tribunal notes that a new policy scheme was implemented in November 2002 in order to avoid overpayments.

31.     For the reasons set out above, the Tribunal finds that there are no grounds on which the recovery of the debt should be waived.  Therefore, the Tribunal affirms the decision under review.

I certify that the 31 preceding paragraphs are a true copy of the reasons for the decision herein of Ms J Cowdroy, Member.  

Signed:         Sarah Oliver
  Associate

Date of Hearing  3 November 2003 (at Bundaberg)
Date of Decision  22 June 2004

The Applicant appeared in person
For the Respondent                  Mr T Ffrench, Departmental Advocate