Haines and Secretary, Department of Family and Community Services
[2003] AATA 754
•6 August 2003
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2003] AATA 754
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2003/11
GENERAL ADMINISTRATIVE DECISION DIVISION ) Re GARY HAINES Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND ADMINISTRATIVE SERVICES
Respondent
DECISION
Tribunal MS N BELL, MEMBER Date6 August 2003
PlaceSydney
Decision The Tribunal affirms the decision under review.
[Sgd] Ms N Bell, Member
CATCHWORDS
SOCIAL SECURITY ‑ family tax benefit ‑ child care benefit ‑ estimated income greater than actual income ‑ overpayment ‑ whether administrative error - debt to Commonwealth – whether “special circumstances” existed – decision affirmed.
A New Tax System (Family Assistance) (Administration) Act 1999, sections 20, 105, 71, 31A, 97, 101
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
REASONS FOR DECISION
6 August 2003 Ms N Bell, Member 1. This is an application by Mr Gary Haines (“the Applicant”) for review of the decision of the Social Security Appeals Tribunal (“the SSAT”) dated 2 December 2002 (T2) to raise and recover debts of overpayments of family tax benefit of $2,234.34 and $1,647.92 of child care benefit. The SSAT had affirmed the decision of a Centrelink delegate of the Secretary of the Department of Family and Community Services (“the Respondent”) dated 21 August 2002 (T10).
2. At the hearing the Applicant gave oral evidence and appeared on his own behalf. Mr John Kenny, advocate, appeared on behalf of the Respondent. The Tribunal had before it the following documentary evidence:
Exhibit
Description
Date
TD1, T1 – T25,
pages 1 - 78
Documents prepared pursuant to section 37 of the Administrative Appeals Tribunal Act 1975
Exhibit A1
Document headed “More Choice for Families” published by the Family Assistance Office
February 2003
Exhibit R1
Respondent’s Statement of Facts and Contentions
15 June 2003
3. After the conclusion of the hearing, the parties provided written submissions to the Tribunal.
Background
4. The Applicant was receiving family tax benefit and child care benefit during the 2001/2002 tax year. The following facts are not in dispute:
· On 11 July 2001 the Applicant estimated his income for the 2001/2002 year as $30,000 and his partner’s income as nil;
· On 21 December 2001 the Applicant estimated his income for the 2001/2002 year as $30,000 and his partner’s income as $21,000;
· On 10 January 2002 the Applicant estimated his income for the 2001/2002 year as $48,000 and his partner’s income as $10,000;
· The Applicant’s actual taxable income for the 2001/2002 year was $48,355 and his partner’s actual taxable income for that year was $11,543. There was also a $1,782 net rental property loss, giving a total of $61,680;
· The Respondent recovered the family tax benefit debt by a direct deduction from the Applicant’s tax refund.
5. The Applicant did not dispute the Respondent’s calculation of the amount of the overpayments made to him.
Issues and Legislation
6. The Applicant’s concern was that Centrelink, when it received his estimates, did not adjust his level of payments to take into account the moneys already received by him prior to his new estimate in order to avoid any overpayment being made. He also expressed concern about the direct deduction of the overpayment from his tax return without notice to him.
7. Section 20 of the A New Tax System (Family Assistance ) (Administration) Act 1999 (“the Administration Act”) provides, in relation to the use of estimates of income:
“Determination of rate may be based on estimate
20.(1) If:
(a)an individual’s rate of family tax benefit is required to be calculated for the purpose of making a determination under this Division; and
(b)information about the amount of adjusted taxable income needed for the calculation of the rate is not available (for example, because the taxable income of the individual or another individual cannot be known until after the end of the relevant income year); and
(c)the individual or, if the individual has died, another individual making a claim for family tax benefit by single payment/in substitution because of the death of that individual, gives the Secretary an estimate of the amount needed; and
(d) the Secretary considers the estimate to be reasonable;
the Secretary may determine the individual’s rate of family tax benefit on the basis of the estimate.”
8. In relation to reviewing decisions about rates of payment, section 105(1) of the Administration Act provides:
“Secretary may review certain decisions on own initiative
105.(1) If:
(a)a decision (the original decision) is a decision that, under section 104, the Secretary may review under this section; and
(b)the Secretary is satisfied that there is sufficient reason to review the decision;
the Secretary may review the decision.”
9. Section 71(2) of the Administration Act provides, in relation to overpayments:
“71.(2) 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.”
10. In relation to the date from which a revised estimate can be given effect by the Secretary, section 31A (2) and (3) of the Administration Act provides:
“Variation of instalment entitlement determination to reflect revised adjusted taxable income estimates
31A.(1) If:
(a)a determination is in force on a particular day under which a claimant is entitled to be paid family tax benefit by instalment; and
(b)that determination includes a determination of the claimant’s rate of family tax benefit worked out on the basis of an estimate of the claimant’s adjusted taxable income in a particular income year; and
(c)the claimant, at any time before or during that income year, provides the Secretary with a revised estimate of that amount that is attributable to the occurrence of an event other than an event to which paragraph 31(1B)(c) or (d) applies; and
(d) the Secretary considers the revised estimate to be reasonable; and
(e)if the claimant’s rate of family tax benefit were calculated using the revised estimate—a new rate of family tax benefit would be required;
the Secretary must vary the determination so that the claimant’s rate of family tax benefit is determined on the basis of that revised estimate.
31A.(2) 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 (iii) 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.”
11. Section 97 of the Administration Act provides:
“Waiver of debt arising from error
97.(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.
97.(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.
97.(3) The Secretary must waive the administrative error proportion of a debt if:
(a)the payment or payments were made in respect of the debtor’s eligibility for family assistance for a period or event (the eligibility period or event) that occurs in an income year; and
(b) the debt is raised after the end of:
(i)the debtor’s next income year after the one in which the eligibility period or event occurs; or
(ii)the period of 13 weeks starting on the day on which the payment that gave rise to the debt was made;
whichever ends last; and
(c)the debtor received in good faith the payment or payments that gave rise to the administrative error proportion of the debt.
97.(4) For the purposes of this section, the administrative error proportion of the debt may be 100% of the debt.”
12. Section 101 of the Administration Act provides:
“Waiver in special circumstances
101. The Secretary may waive 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.”
Applicant’s Evidence and Submissions
13. In addition to raising his concern that Centrelink, when it received the Applicant’s estimates, did not adjust his level of payments to take into account the moneys already received by him prior to his new estimate, the Applicant also drew to the Tribunal’s attention to Centrelink’s current year pamphlet entitled “More Choice for Families”.. That pamphlet provides advice about how people can avoid incurring overpayments from underestimating their income. The Applicant submitted that this shows that Centrelink acknowledges that its previous arrangements were faulty and exposed people to the risk of overpayment.
14. The Applicant said that he had intended to apply his tax return moneys to home repairs and had to cancel those plans when his tax return was applied to the repayment of his debt without prior consultation.
15. In a written submission to the Tribunal, the Applicant also drew attention to a computer printout of his letter to Centrelink dated 12 December 2001 in which he provided a further estimate of his income of $40,000.00 per year. He noted that that estimate had not been recorded or acted on by Centrelink.
16. In addition, the Applicant repeated his submission that Centrelink’s failure to adjust his remaining payments, by taking into account the level of payments he had received so far, and thus avoid an overpayment, constituted an administrative error and justifies waiver of recovery of the overpayments. He also submitted that, when his tax return was applied to the repayment of the debt, he suffered financial hardship.
Respondent’s Submission
17. In addition to the matters raised in the Respondent’s Statement of Facts and Contentions (Exhibit R1), Mr Kenny, on behalf of the Respondent, noted, by reference to document T16, that the vast bulk of the overpayment made to the Applicant was made before he provided his first revised estimate. In this way, he submitted, even if Centrelink had adjusted his payments after the first revised estimate to take into account the level of payments already made and had ceased payments altogether, the Applicant would still have had a substantial overpayment. He also noted that documents T7 – T9 record telephone conversations between the Applicant and Centrelink officers which show that the level of the Applicant’s estimates were raised with him by Centrelink officers on three occasions.
18. In his written submission responding to the Applicant’s written submission, Mr Kenny said of the Applicant’s letter of 12 December 2001:
“The non-recording of the increased estimate of $40,000.00 (for Mr Haines, up from $30,000.00) provided in his letter dated 12/12/2001 could have affected one payment only, namely that made on 31 December 2001 – see T16, 38 – before it was overtaken by the correctly recorded estimates given in the letter of 6/1/2002. In any event, the assessor’s decision in December to record the annual rate of Mrs Haines’ earnings ($21,000), as if it were a full year estimate, more than counterbalanced the under-recording of Mr Haines’ increased estimate and was promptly undone by Mr Haines in his letter of 6/1/02 in which he provided an estimate of $10,000 for his wife. There was no net disadvantage to Mr Haines.”
Consideration
19. The Applicant has not disputed the Respondent’s calculation of the amount of the overpayments made to him. The Tribunal sees no reason to disturb that calculation.
20. Section 105 of the Administration Act allows the Respondent to review decisions on his or her own initiative. When the Applicant’s actual taxable income was known, a review was conducted of the decision to pay him at the rate calculated according to the estimates he had provided. A new rate of payment was determined according to the Applicant’s actual taxable income and it was found that he had been overpaid. The effect of section 71(2) of the Administration Act is that the amount by which the Applicant was overpaid is a debt due to the Commonwealth.
21. The question remains as to whether the debt should be recovered. Sections 97 (waiver of debt arising from administrative error) and 101 (waiver in special circumstances) of the Administration Act provide for those circumstances in which recovery of a debt may be waived.
22. The Applicant submitted that the Respondent’s failure to adjust his remaining payments, by taking into account the level of payments he had received so far, and thus avoid an overpayment, constituted administrative error and justifies waiver of recovery of the debt. However, section 31A of the Administration Act provides that if a decrease in the rate of family tax benefit arises from a revised estimate then that decrease has effect from the day on which the revised estimate was provided to the Secretary; it has prospective effect. There is no provision for the kind of retrospective calculation suggested by the Applicant. It follows that, in giving effect to the decrease in the rate of payment following the Applicant’s revised estimate from the date that estimate was given, the Respondent was acting in accordance with the Administration Act and was not in error. Waiver for administrative error is therefore not available on this basis. Nor is it available in respect of the failure of the Respondent to act on the Applicant’s revised estimate dated 12 December 2001. The Tribunal accepts that no net disadvantage to the Applicant arose from this failure which was overtaken by the subsequent revised estimate of 6 January 2002, which was acted on by the Respondent. In any event, in order to qualify for waiver under section 97 of the Administration Act, the debt or the relevant proportion of the debt must be attributable solely to administrative error. It is not clear that any overpayment in the relevant fortnight could be said to be solely the result of the failure to record the revised estimate, given that the estimate provided was an underestimate anyway.
23. As to whether the Applicant’s debt may be waived because special circumstances exist to make such waiver desirable, there is no evidence before the Tribunal of circumstances pertaining to the Applicant that could be described as “special”. The decision of the Tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 is often quoted in relation to the interpretation of "special circumstances". In that decision, the Tribunal said at ALD 3:
"An expression such as `special circumstances' is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special."
24. The Tribunal does not consider that the Applicant’s circumstances are unusual, uncommon or exceptional. Indeed, he was subject to the same legislative scheme, including that which allows for direct recovery from a tax return, as all other recipients of family tax benefit and child care benefit.
25. For the reasons outlined above, the Tribunal considers that recovery of the debt should not be waived.
Decision
26. The Tribunal affirms the decision under review.
I certify that the 26 preceding paragraphs are a true copy of the reasons for the decision herein of MS N BELL, Member
Signed: L Bonouvrie
AssociateDate/s of Hearing 19 June 2003
Date of Decision 6 August 2003
Representative for the Applicant Self-represented
Advocate for the Respondent Mr John Kenny
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