Henry and Secretary, Department of Social Services (Social services second review) - [2019] AATA 5453

Henry and Secretary, Department of Social Services (Social services second review) [2019] AATA 5453 (11 December 2019)
Division:GENERAL DIVISION
File Number(s): 2019/1790
Re:Gail Henry
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Member M East
Date:11 December 2019
Place:Perth

The Tribunal affirms the decision under review.
.....................[sgd]...................................................
Member M East
CATCHWORDS
SOCIAL SECURITY – Family Tax Benefit (FTB) – lodgement of tax return not within time – special circumstances – entitlement to FTB top-up – decision affirmed
LEGISLATION
A New Tax System (Family Assistance) Act 1999 (Cth) – Sch 1 cls 3, 25
A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) – ss 32A, 32B, 32C, 32D(1)(c)(ii)
CASES
Angelakos v Secretary, Department of Employment and Workplace Relations (2007)
100 ALD 9
Davy v Secretary, Department of Employment and Workplace Relations (2007)
94 ALD 693
Fedigan and Secretary, Department of Social Services (Social Services second review) [2016] AATA 211
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Hollis; Secretary, Department of Social Services and (Social services second review) [2015] AATA 941
Scott v Secretary, Department of Social Security [2000] 65 ALD 79
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Shanhun; Secretary, Department of Social Services (Social services second review) [2016] AATA 675
Singleton and Secretary, Department of Social Services (Social services second review) [2019] AATA 766
REASONS FOR DECISION
Member M East
11 December 2019

The Applicant, Ms Henry, received fortnightly Family Tax Benefit (FTB) payments from the Department of Human Services (the Department) based on the estimated family income provided for the 2015/2016 financial year.
On 21 March 2017 (T5, p 134), the Applicant was notified that to be entitled to receive her full FTB entitlement, she and her partner needed to lodge a 2015-2016 tax return or advise the Department that they were not required to do so. The letter stated that the Applicant may be entitled to a top-up payment if they were underpaid FTB, and/or a FTB supplement. The letter also detailed the consequences of not lodging a tax return or advising the Department they were not required to do so.
On 14 July 2017, the Department wrote to the Applicant advising that her partner had not lodged a tax return for the 2015/2016 financial year. This resulted in her FTB for 2016/2016 being cancelled and a request for the Newborn Upfront Payment to be repaid (T6, p 138, T7, p 141, T8, p 143) The letter further stated:
When your partner has done this we will balance your Family Tax Benefit for the 2015/2016 financial year and we will write to you again to advise you of the outcome.
If your partner does not take this action by 31 October 2017, you will have to repay $10,359.80 which is all the Family Tax Benefit you received for the 2015/2016 financial year.
On 12 September 2017 the Australian Tax Office (ATO) advised the Department that the Applicant’s partner had lodged his tax return for the 2015/2016 financial year on
11 September 2017.
On 26 June 2018, the Applicant was advised that the Department had undertaken a reconciliation which had resulted in the Applicant receiving less FTB than she was entitled to for the 2015-2016 financial year. However, the Department said it was unable to pay her the full FTB entitlement because her partner did not confirm their income for the
2015-2016 financial year by 30 June 2017. The Department requested the Applicant to advise them of any special circumstances. The Department said this review was based on ‘actual family income provided by the Australian Taxation Office’ (T14, p 159). This was a review of the original determination, dated 18 October 2015, to pay FTB by instalment, pursuant to s 16 of A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (the AdministrationAct). The review was conducted pursuant to
s 105 of the Administration Act.
On 12 July 2018, the Applicant requested a review by an Authorised Review Officer (ARO). On 31 October 2018 the ARO affirmed the original decision because
Mr Saunders, the Applicant’s partner, had not lodged his tax return until
11 September 2017, which was after 30 June 2017, and the Applicant had not demonstrated that this late lodgement was caused by special circumstances (T19, p 176).
The Applicant sought a review by the Social Services and Child Support Division of the Tribunal (AAT 1). The matter was heard and decided on 28 February 2019, and having heard evidence from the Applicant and her partner, the AAT1 affirmed the original decision (T2, p 5).
The Applicant has sought a review by the General Division of the Tribunal, and the hearing took place on 18 September 2019. The Applicant and her partner, Mr Saunders were self-represented. The Respondent was represented by Ms Hinwood from the Department. The Tribunal heard oral evidence from the Applicant and Mr Saunders.
The Tribunal admitted the following documents into evidence at the hearing:
·     statement by the Applicant and Mr Saunders, received by the Tribunal on
4 July 2019 (Exhibit A1);
·     further statement provided to the Tribunal by the Applicant and Mr Saunders at the hearing on 18 September 2019 (Exhibit A2);
·     Secretary’s Statement of Facts, Issues and Contentions (SFIC), dated
2 August 2019 (Exhibit R1);
·     section 37 documents (T Documents) (T1-T22, pp 1-242) received by the Tribunal on 22 August 2019 (Exhibit R2); and
·     supplementary T Documents (ST1-ST2, pp 1-20) received by the Tribunal on
22 August 2019 (Exhibit R3).
FACTS
A person’s eligibility for FTB payments is determined pursuant to Part 3 of A New Tax System (Family Assistance) Act 1999 (Cth) (the Act) and by the application of
Schedule 1 of the Act.
Section 32A of the Administration Act requires the Secretary of the Department of Social Services (the Secretary) to disregard the amounts of the FTB supplements when making or varying a determination until the claimant has, in the words of the statute “satisfied the FTB reconciliation conditions” which apply in the relevant period.
Section 32B of the Administration Act states a person satisfies the FTB reconciliation conditions at whichever “relevant reconciliation time” (set out in ss 32C to 32Q) is the latest.
A person can be paid their FTB by fortnightly instalments based on an estimate of what their and their partner’s annual income is likely to be.
If a person is paid by fortnightly instalments, the Department undertakes a reconciliation at the end of the financial year once the actual income is notified by way of tax return. If an income estimate is higher than the actual income, a person may be entitled to supplementary payments of FTB. However, if the tax returns of the recipient and their partner are not provided within the requisite time frame (in this case, 30 June 2017),
then the person is not entitled to any top-up payment to which they may have otherwise been entitled.
Sections 32C and 32D of the Administration Act apply where a person is a member of a couple and are required to lodge income tax returns. Briefly summarised, the Applicant and her partner are required to lodge their income tax returns for the relevant income year (the 2015/2016 financial year) before the end of the next financial year that is,
30 June 2017. Section 32D(1)(c)(ii) provides that such further period may be allowed by the Secretary if the Secretary is satisfied there are special circumstances that prevented the partner from lodging the return before the end of that first income year.
It is not in dispute and the Tribunal makes a finding that the Applicant’s partner,

Mr Saunders, did not lodge his tax return by 30 June 2017. The question therefore becomes whether the reconciliation time can be extended to 11 September 2017 if the Secretary is satisfied that there are special circumstances which prevented Mr Saunders from lodging his 2015/2016 tax return before 30 June 2017.
Were there special circumstances which prevented lodgement?
The parties have correctly identified that the issue in dispute is whether there are special circumstances which prevented the Applicant’s partner from lodging his tax return.
The term ‘special circumstances’ is not defined in the relevant legislation. Furthermore, as correctly noted by the Respondent in their SFIC, the special circumstances

must
‘prevent’ the action (Emphasis added).
As noted by Deputy President Humphries in Hollis; Secretary, Department of Social Services and (Social services second review) [2015] AATA 941 at [31]-[32], the Tribunal needs to be satisfied of two things, firstly, that special circumstances existed and secondly, that these circumstances prevented the claimant from making a claim within time. In this case, were there special circumstances which prevented Mr Saunders from lodging his income tax return in time?
The phrase ‘special circumstances’ was referred to by Besanko J in Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9 at [33], where His Honour stated it must be regarded as:
something that distinguishes the case from the ordinary or usual case. It may not be easy to postulate the ordinary or usual case other than in quite general terms and, in doing so, close attention must be given to the particular statutory context:
The courts have cautioned against a decision maker adopting an overly narrow view of what may constitute special circumstances within the meaning of legislation.
The word ‘prevented’ has been given its ordinary meaning. In Shanhun; Secretary, Department of Social Services (Social services second review) [2016] AATA 675 at [38], Member Morris states:
in the absence of a statutory definition, the Tribunal must look at the ordinary, everyday meaning of the word “prevent”. The Oxford English Dictionary definition of “prevent” is: “stop [someone] from doing something”. The Macquarie Dictionary defines “prevent” as: “to keep from occurring; to hinder (a person, etc.) from doing something”.
The Applicant and Mr Saunders have provided statements in support of their application (Exhibits A1 and A2).
Mr Saunders has stated the following in his submission (Exhibit A1):
When asked to speculate on the matter of ‘had I of known how important it was to get my tax return in’ I stated that I believed it was impossible for me to get the tax return done any sooner due to the circumstances that surrounded me at the time, namely the separation from my x-wife [sic], family court proceedings, not being able to work and financial hardship, whilst trying to establish a family and new relationship. I was under a huge amount of financial pressure.
The Applicant and Mr Saunders claim that he had never personally lodged his own tax return. Mr Saunders said his prior partner had always handled that for him. He said he was in constant contact with the ATO and could not notify the Department that a return was not required because they did not know. He claims the Department was always fully informed of their situation. He further said that his tax was only sorted out once
(Exhibit A1):
…it landed on Robs desk at the tax office.
He called Mr Saunders and after a conversation with him worked out a solution, a solution that only he had the power to put in place.
Without this help Mr Saunders tax returns would still not be sorted out. Given that this was dependent on Rob and his decision it was not possible to do it any sooner.
In his oral evidence, Mr Saunders said he contacted the ATO once or twice per year.
The parties also gave evidence that they had contact with the Department three to five times per year during 2015/2016 year and six to twelve calls per year during 2016/2017.
Mr Saunders, in his oral evidence, stated that he separated from his ex-wife around late 2012/early 2013. They had a property development business together but the business had finished by 2013 and all tax liabilities for the business were completed by June 2013. Mr Saunders was also claiming FTB for his three children from that marriage, and said he was in contact with the Department constantly about his entitlements.
Mr Saunders stated that he had never completed a tax return in his life and had relied on his ex-wife for this. He had not lodged his tax returns from 2012 and did not understand that he could lodge his 2015/2016 tax return before lodging one for 2012/2013.
Mr Saunders said he had a lack of understanding of the tax system and had no money to pay someone else to prepare his returns for him. He further said the Department had ‘cross-pollinated’ the documents from his claim with that of the Applicant’s which led to mistakes being made by the Department. Both he and the Applicant said they were in contact with the Department about his children from his previous marriage and the Department should have been aware of their situation and how it would affect this claim.
During cross-examination, the Applicant conceded receiving communication from the Department over the course of several months which provided information regarding the circumstances in which her payments may stop. The Applicant further confirmed that she received a letter dated 21 March 2017 from Centrelink (T5, p134) and said she did contact the Department at that time about Mr Saunders’ tax returns. The phone call log provided to the Tribunal (T22, p 238) does not record a contemporaneous phone call at this time. The Applicant said the phone call may have been recorded against Mr Saunders’ file.
The Tribunal requested and the Respondent agreed to subsequently provide copies of the phone logs from Mr Saunders’ file. These were provided to the Tribunal and the Applicant under cover of email dated 23 September 2019. A review of those phone logs does not record any contact from the Applicant or Mr Saunders on or around that date.
The Applicant and Mr Saunders also contend that even if the Department had told them by letter of the need to provide their tax returns, because they had so many conversations with the Department, it should have been highlighted to them personally.
Justices Beaumont and French in Scott v Secretary, Department of Social Security [2000] 65 ALD 79 at [23] stated:
It is one thing to expect a department (reasonably) to communicate accurately the general range of benefits available; it is another to expect the department to have sufficient knowledge of the personal circumstances of any particular applicant for social security, so as to be in a position to advise the applicant of specific benefits that might be available in his or her personal circumstances.
The Tribunal is satisfied and indeed the Applicant confirmed that she had received all letters sent to her regarding her FTB entitlements. These letters as demonstrated in the
T Documents (Exhibit R3, T5, T6, T8) clearly set out the provisions of the legislation which required lodgement of the relevant tax return within a specified time frame. The efficient administration of social security legislation requires reliance on written communication as a way of notifying claimants of their entitlements and potential issues arising in the payment of those entitlements. The Tribunal does not accept the Applicant’s argument that the Department should have advised them during phone calls of the need to lodge their tax returns and finds the Secretary’s submission correct.
The Tribunal therefore must consider whether there are ‘special circumstances’ which ‘prevented’ Mr Saunders from lodging his tax return by the requisite date.
The Respondent provided to the Tribunal various authorities which have considered the scope of this phrase. The Tribunal acknowledges the Respondent’s representative for her assistance in this regard.
The Applicant and Mr Saunders submit that it was physically impossible for them to lodge Mr Saunders’ tax return for the 2015/2016 tax year because Mr Saunders had had no experience lodging tax returns prior to that as it had always been handled by his
ex-wife, they had been in ‘constant contact’ with the Department about their entitlements, the Department had ‘cross-pollinated’ documents between the Applicant’s file and Mr Saunders’ file relating to entitlements for his three children from his first marriage, and that it was only when ‘Rob’ from the ATO sorted out their tax issues that they were able to lodge their returns. They also said that the tax return was only lodged a few months after the required date.
In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at [3] it was stated by Toohey J, and Members Wilkins I and Billings J that in order to constitute ‘special circumstances’, the circumstances must be:
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.
In the decision of Groth v Secretary, Department of Social Security (1995) 40 ALD 541, Her Honour, Kiefel J (as she then was) stated at [545]:
The phrase “special circumstances”, it has been said, although imprecise is sufficiently understood not to require judicial gloss …it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others,

to take it out of the usual or ordinary case …It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.
As noted by Member Emert in Fedigan and Secretary, Department of Social Services (Social Services second review) [2016] AATA 211 at [31]-[32]:
Although Miss Fedigan considers the decision to be unfair, the requirements of the Act apply equally to her and all other recipients of FTB. Indeed,

a decision to favour Miss Fedigan could be considered unfair to all others whose benefits have been withheld in accordance with the provisions of the Act. I also see no fairness in other taxpayers bearing the burden of the failure, for whatever reason, of the accountant not lodging the tax returns in time.
Time limitations within the provisions of the legislation are clearly a measure to effectively manage the general administration of the social security system.

Over-ruling those time limits without compelling reasons could be considered as unfair to the management of the system.
The Tribunal has reviewed the authorities provided to it and the factual circumstances in which those matters arose. The Tribunal is aware that each case claiming the existence of a ‘special circumstance’ must depend on the individual circumstances and its own merits. Therefore, whilst guided by other decisions, the Tribunal has formed its own conclusion on the facts presented in this matter.
The effect of the decisions is that for circumstances to be considered as ‘special’ they must, in their context, be unusual, uncommon or out of the ordinary and that nothing unfair, unintended or unjust had occurred as a result.
The Tribunal is satisfied, based on the documentary evidence provided together with the oral evidence, that the Applicant was given correspondence that explained the requirement for she and her partner to lodge the tax return by 30 June 2017, and the consequences of failing to do so. The fact that the Applicant and Mr Saunders did not appreciate the importance of providing the relevant documents does not amount to a special circumstance which prevented the lodgement of Mr Saunders’ tax return for the 2015/2016 financial year by 30 June 2017 as required.
Furthermore, the Tribunal does not accept that the Applicant’s and Mr Saunders’ inability to lodge a tax return by the due date amounts to a ‘special circumstance’. Mr Saunders gave evidence that it was physically impossible for him to do so because he had never done one before and they did not have the financial means to employ somebody. He also said his ex-wife was withholding information and documents from him. Whilst sympathetic to the parties’ claims of being confused by the taxation system, that alone, is insufficient to amount to a special circumstance.

Furthermore, there is no evidence of the claimed ‘cross pollination’ by the Department of the Applicant’s and Mr Saunders’ files.
The Tribunal does not find that this situation is unusual, uncommon or out of the ordinary.
In considering whether something is unfair, the Tribunal refers to the decision of Deputy President Forgie in Davy v Secretary, Department of Employment and Workplace Relations (2007) 94 ALD 693 at [80] where she said:
…The “special circumstances” are not merely directed to the person’s own circumstances. Rather, they are directed to those that are “special circumstances …that made it desirable to waive”. That necessarily requires a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system …The system of administration of the SS Act …did not lead to any injustice or unfairness on Mr Davy that is not visited, or potentially visited, upon all other recipients of social security payments under the Act. Therefore, I am not satisfied that there are special circumstances that make it desirable to waive the debt under s 1237AAD of the Act.
The Tribunal acknowledges that the Applicant and Mr Saunders regard the decision to be unfair but these requirements apply to all recipients under the Act. If the Tribunal were to find in favour of the Applicant in this matter then that in turn would be unfair to all the other recipients whose benefits have been withheld in accordance with the provisions of the Act.
In considering whether something unintended has occurred, the Tribunal does not accept that the outcome of applying the legislation is not as would be intended. That is, the time for lodging the tax return can only be extended if the Secretary is satisfied that there are special circumstances preventing its lodgement on time. If there are no special circumstances then the intended consequence is that a recipient will not be entitled to a top-up payment.
The Tribunal finds that nothing unintentional occurred in this matter.
The Tribunal further finds that nothing unjust has occurred in this matter. The decision to not extend the time for lodgement of the tax return is in accordance with the provisions of the legislation.
The Tribunal therefore finds that the Applicant’s circumstances are not unusual, uncommon or out of the ordinary within the context of this legislation. Furthermore, nothing unfair, unintended or unjust has occurred as a result of this decision.
The Tribunal has also had regard to the parties’ claim that the Department was under a positive obligation to advise them of the need to lodge their tax return during one of their phone conversations. The Tribunal has addressed this above and notes the social security scheme is dependent for its effective functioning on an administratively workable framework. It is not feasible for government departments to communicate directly and personally with its recipients. Furthermore, if the Applicant and Mr Saunders consider that there has been some mishandling by the Department in the management of their claims, there are alternative avenues for them to explore.
As noted above, there is no evidence before the Tribunal of mishandling of the Applicant’s and Mr Saunders’ files such that documents were ‘cross-pollinated’ between them. In any case, it was conceded between the parties that Mr Saunders did not lodge his tax return on time, so the relevance of this allegation to the issue in dispute is unclear. If the Applicant believes their files have been mishandled, she is able to raise the issue directly with the Department.
The Tribunal is not satisfied that the evidence presented establishes that special circumstances existed which prevented Mr Saunders from lodging his 2015/2016 tax return by the required date of 30 June 2017. Having made this finding, it is not necessary to separately consider whether special circumstances ‘prevented’ the lodgement of the tax return within the requisite time frame. The notion of ‘prevented’ requires that the special circumstances presented as an ‘insurmountable block, hindrance or impediment to the lodgement taking place within the required time frame’ (see Singleton and Secretary, Department of Social Services (Social services second review) [2019] AATA 766 at [42]).
Nevertheless, the Tribunal notes that the circumstances may have made lodging the tax return difficult but did not present as an insurmountable block, hindrance or impediment.
The Tribunal finds that the Applicant’s circumstances are not unusual, uncommon or out of the ordinary within the context of the administration of the Act. Furthermore, nothing unfair, unintended or unjust has occurred as a result of this decision.
Therefore, the Tribunal is not satisfied that the Applicant’s circumstances are ‘special circumstances’ within the terms of the Act.
CONCLUSION
The circumstances surrounding the late lodgement of Mr Saunders’ tax return are not special circumstances.
Therefore the Tribunal is not able to exercise the discretion contained in s 32D(1)(c)(ii) of the Act. Without the exercise of the discretion, the Applicant is not entitled to receive an increased reconciled amount of FTB for the 2015-2016 financial year based upon her actual combined adjusted taxable income.
DECISION
The Tribunal affirms the decision under review.

I certify that the preceding 57 (fifty-seven) paragraphs are a true copy of the reasons for the decision herein of Member M East

.........................[sgd]...............................................
Associate
Dated: 11 December 2019

Date(s) of hearing: 18 September 2019

Applicant: Self-represented

Counsel for the Respondent: Laura Hinwood

Solicitors for the Respondent: Department of Human Services

Date(s) of hearing:	18 September 2019
Applicant:	Self-represented
Counsel for the Respondent:	Laura Hinwood
Solicitors for the Respondent:	Department of Human Services