Heilmann and Secretary, Department of Family and Community Services - [2002] AATA 643

DECISION AND ORAL REASONS FOR DECISION [2002] AATA 643

ADMINISTRATIVE APPEALS TRIBUNAL )

) No S2002/10

GENERAL ADMINISTRATIVE DIVISION       )
           Re      LORRAINE HEILMANN
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Senior Member WJF Purcell

Date18 July 2002
PlaceAdelaide

Decision      The Tribunal varies the decision under review to the extent that the overpayment of Family Tax Benefit to be recovered by the Commonwealth be reduced to $240.
  (Signed)
  WJF PURCELL
  (Senior Member)
CATCHWORDS
SOCIAL SECURITY – pensions, benefits and allowances – Parenting Payment – Family Tax Benefit – whether the debt was attributable solely to administrative error – whether the applicant received payments in good faith – whether recovery of the debt would cause applicant severe financial hardship – whether there are special circumstances – should all or part of the debt be waived?
A New Tax System (Family Assistance) (Administration) Act 1999 sections 97, 101

ORAL REASONS FOR DECISION

18 July 2002 Senior Member WJF Purcell

This is an application for review of a decision of the Social Security Appeals Tribunal (SSAT) of 17 December 2001, which affirmed the decision of an Authorised Review Officer of 10 October 2001, to raise and recover an overpayment of Family Tax Benefit for the period 1 November 2000 to 7 August 2001, in the amount of $2,155.92.
The evidence before the Tribunal comprised the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the T Documents), together with exhibits tendered by the parties. The applicant appeared on her own behalf, gave oral evidence, and called her friend, Mrs Luciani as a witness. Ms Odgers represented the respondent (the Department).
The applicant works as a part-time cleaner, and was in receipt of income adjusted Parenting Payment, and Family Tax Benefit, in respect of her son, Ashley. On 7 September 2000 she contacted the Department to advise that Ashley would turn 16 on 1 November 2000. On 12 September 2000, the Department forwarded a form entitled Review of Family Tax Benefit for a child turning 16, which she completed and lodged on 15 September 2000, declaring that Ashley would be claiming Youth Allowance when he turned 16. He subsequently claimed Youth Allowance, which was paid, with effect, from 1 November 2000.
The applicant was advised by letter dated 19 October 2000 that her Parenting Payment would be cancelled with effect from 31 October 2000, due to her child no longer being considered a dependent, and also that her Family Tax Benefit would be reduced to the base rate because she was no longer in receipt of an income support payment, namely Parenting Payment. The letter stated also, that the Department might be able to pay more Family Tax Benefit if the applicant provided a new estimate of her income. The letter stated further that the Family Tax Benefit Part A payment was $37.38, that the Family Tax Benefit Part B payment was $69.58, and that the applicant must advise the Department if her son received a Social Security pension or benefit.
Although the applicant was no longer entitled to receive Family Tax Benefit, due to Ashley no longer being considered a dependent, the Department continued to pay the benefit until 7 August 2001. On 13 August 2001, the Department advised the applicant it could not pay Family Tax Benefit for Ashley, who was no longer in her care. On 25 September 2001, a debt of $2,155.92 was raised, representing Family Tax Benefit paid in the period 1 November 2000 to 7 August 2001. This decision was affirmed by an Authorised Review Officer on 10 October 2001 and by the SSAT on 17 December 2001. The applicant has applied to this Tribunal for a review of the decision and requests that the debt be waived in accordance with the legislation. Section 97 of the Act provides:
"(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.
(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.
(4)For the purposes of this section, the administrative error proportion of the debt may be 100% of the debt."
Section 101 of the Act provides:
"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".
The applicant submits that she supplied sufficient information about her son's claim for Youth Allowance by her initial telephone advice to Centrelink, by her subsequent telephone advices and by advising on the Review of Family Tax Benefit for a child turning 16 form to alert the Department of her son's claim, and the Department itself erred in its incorrect indexing of that claim by recording a new Customer Record Number, which prevented internal cross-indexing and detection of the payment. The applicant contends further that she received the payments in good faith, and having believed she fulfilled her notification obligations by her initial contact with the Department, she was never alerted to the possibility of an overpayment by any advice, written or otherwise, provided by the Department nor by any other means.
The applicant contends also that recovery of the debt would cause her severe financial hardship, as the overpayment arose solely as a result of the Department's administrative error, and she received the money in good faith. She submits that the discretion under section 97 of the Act should be exercised in her favour.
In addition the applicant submits that in relation to section 101 of the Act, the Department's administrative error could be regarded as a "special circumstance" given that her notification of a likelihood of an event occurring in the review form, and by telephone, would normally be sufficient notification to prevent further erroneous payment, but for the Department's error. The Department's overpayment action has caused her significant depression, stress and anger, and affected her health adversely.
The Department argues that the applicant was incorrectly paid Family Tax Benefit. Family Tax Benefit is not payable in respect of a child who receives a Social Security benefit, including Youth Allowance. As to section 97 of the Act, the Department contends the debt is not attributable solely to administrative error. On the form that the applicant completed in relation to Ashley's intention to claim Youth Allowance, separate questions were asked about whether he received or intended claiming Youth Allowance. There was a distinct difference between the two questions, as a person intending to claim a payment will not necessarily receive it. Therefore, on the form she signed a statement agreeing that she understood that she must notify the Department if her son started receiving Youth Allowance, and in all letters sent to her she was advised of the requirement to notify if her son received a pension or benefit. Although there was an initial administrative error, the applicant also failed to satisfy her notification obligations, contributing to its existence.
The Department submits, finally, that even if the Tribunal finds that the applicant's inaction did not contribute to the accrual of the debt, the right to recover the debt cannot be waived on this basis, as she did not receive the payments in good faith. The information given to her indicated that Family Tax Benefit was not payable to her if her child received Youth Allowance. She "knew or had reason to know" that she was not entitled to receive Family Tax Benefit, and therefore did not receive the payments in good faith.
The applicant gave evidence as to the circumstances in which she completed the appropriate forms, and read the accompanying information, and correspondence. I accept her as a witness of truth. Mrs Luciani gave evidence of her observations of the effect that these proceedings have had upon the applicant. I accept her as a witness of truth.
The Department's letter of 19 October 2000 advised that, as a result, her Parenting Payment had been cancelled, and her Family Tax Benefit Part A had been reduced to the base rate. It did not advise that the Family Tax Benefit had been cancelled; and I accept the applicant's evidence that because the Department was clearly aware that her son was in receipt of Youth Allowance, she believed that the Department's regular payments into her bank account were in accordance with the Department's appropriate calculations. She had not had any problems when her elder son turned 16; she provided similar advice. I am satisfied on the evidence that the applicant received the payments in good faith.
I accept Mrs Luciani's evidence that since the debt was raised, the applicant has been in a distressed state, and unable to remove the spectre of the debt from her mind. She is, on the evidence, in straightened financial circumstances, irrespective of this debt to the Commonwealth, and with this additional debt of more than $2,000, she will suffer severe financial hardship, in my view.
It is clear on the evidence that the overpayment arose from administrative error. The applicant would not be in the distressing situation she finds herself, if it were not for the Department's error. The correspondence she received from the Department was, at times, inaccurate and contradictory. As the Department submits that the letter she received in October 2000, listed matters of which she was required to inform the Department, including if her child received a Social Security pension or benefit, the body of the letter, however, informed her that her Family Tax Benefit had been reduced to the base rate, because she was no longer in receipt of an income support payment because, in effect, her son was now in receipt of a Social Security benefit. I consider that she made an honest attempt to fulfil her obligations, and there is no assertion by the Department that she has made any misleading or untrue statements.
In my view, the greater portion of the debt that has arisen in these circumstances is attributable solely to an administrative error of the Department. As I have stated earlier in these Reasons, I am satisfied, on the evidence, that the applicant received the payments in good faith. I am satisfied also that she would suffer severe financial hardship if the proportion of the debt attributable to administrative error was not waived.
On the evidence, the Department has recovered the sum of $240, or more than 10% of the debt. I consider the balance of the debt is the portion properly attributable to the administrative error of the Commonwealth, and in accordance with section 97 of the Act, should be waived.
For these reasons, the Tribunal varies the decision under review to the extent that the overpayment of Family Tax Benefit to be recovered by the Commonwealth be reduced to $240.
I certify that the 18 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member WJF Purcell
Signed:         .....................................................................................
  Associate
Date of Hearing  18 July 2002
Date of Decision  18 July 2002
Counsel for the Applicant        In person
Solicitor for the Applicant         -
Counsel for the Respondent    Ms L Odgers
Solicitor for the Respondent    Centrelink