Hodgson and Secretary, Department of Family and Community Service S

[2003] AATA 1327

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 1327

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2003/868

GENERAL ADMINISTRATIVE  DIVISION		)
Re		JANINE HODGSON

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr S. Webb, Member

Date22 December 2003

PlaceArmidale

Decision The decision under review is affirmed.

[Sgd] Mr S Webb, Member

CATCHWORDS

SOCIAL SECURITY - family tax benefit - estimates of income - overpayment - debt to the Commonwealth - no administrative error - no special circumstances - decision affirmed

A New Tax System (Family Assistance) Act 1999 ss 58, Schedule 1, Schedule 3

A New Tax System (Family Assistance) (Administration ) Act 1999 ss 16, 20, 31A, 71, 95, 97, 101

Re Beadle and Director-General of Social Security (1984) 6 Ald 1

Groth v Secretary, Department of Social Security (1995) 40 ALD 541 

Secretary, department of Social Security v Hales (1998) 82 FCR 154

REASONS FOR DECISION

22 December 2003 Mr S. Webb, Member        

1.      Janine Hodgson is seeking review of a Centrelink decision to recover a debt of $2,639.44 arising from estimation of her combined income for the purpose of calculating the appropriate rate of Family Tax Benefit (“FTB”).  The matter was considered and subsequently affirmed by the Social Security Appeals Tribunal (T2) on 1 May 2003.  Dissatisfied with that outcome, Ms Hodgson applied for review by this Tribunal (T1).

issue

2.      The issues for determination are:

(a)whether Ms Hodgson has a debt to the Commonwealth in consequence of variations in her estimate of combined income for the 2001-2002 financial year; and if so

(b)whether the debt should be recovered.

legal principles

3.      Ms Hodgson’s claim that the debt should not be recovered arises for consideration under the A New Tax System (Family Assistance) (Administration) Act 1999 (“the Administration Act”).

4.      The rate of FTB is calculated under the A New Tax System (Family Assistance) Act 1999 (“the Assistance Act”) (s.58, Schedule 1 and Schedule 3). The rate of FTB is to be determined (s.16, Administration Act) and may be determined on the basis of an estimate of the claimant’s adjusted taxable income for the relevant income year (s.20, Administration Act). Subsequently, the claimant may provide a revised estimate of adjusted taxable income for that income year so that the rate of FTB may be determined on that basis (s.31A, Administration Act). If the amount thus paid to the claimant exceeds the amount that should have been paid on the basis of his or her actual taxable income for the relevant year, the over payment amount is a debt to the Commonwealth (s.71, Administration Act).

5. There is discretion conferred on the Secretary, and in his shoes this Tribunal, to write off the debt (s.95, Administration Act) or to waive the Commonwealth’s right to recover such a debt. A debt may be waived in certain circumstances involving sole administrative error in the Commonwealth (s.97, Administration Act) or if special circumstances are found to exist (s.101, Administration Act).

evidence

6. Ms Hodgson gave oral evidence and represented herself at the hearing in this matter. Ms S. Mantaring represented the Secretary, Department of Family and Community Services (“the Secretary”). The Tribunal had before it documents prepared pursuant to s.37 of the Administrative Appeals Tribunal Act 1975 and the Secretary’s Statement of Facts and Contentions, which was tendered in evidence.

factual context

7.      The following findings are drawn from the evidence and are not in dispute.

8.      Ms Hodgson is married with three children currently aged 14, 16 and 18.  She provided an estimate of combined income for the 2001-2002 financial year on 1 July 2001.  In this estimate she assessed her income would be $20 and her partner’s income would be $29,854.  FTB was calculated on a combined income of $29, 874.  There is no dispute about the calculation of FTB Part A or FTB Part B and I accept these calculations as correct.

9.      On 12 November 2001, Ms Hodgson provided a revised estimate of her combined income for the 2001-2002 financial year.  She estimated her revised income would be $10,000 and her partner’s income would be $41,339, providing a combined revised income estimate for that year of $51,339.  The rate of FTB that was payable was recalculated from 11 November 2001 on the basis of Ms Hodgson’s revised income estimate.  In consequence, FTB Part B was not payable and FTB Part A was paid at the base rate for three children.  As the calculation of FTB on the basis of the revised income estimate is not in dispute I have not reviewed those calculations and accept them as correct.

10.     The Australian Taxation Office (“ATO”) advised that Ms Hodgson’s actual adjustable taxable income for the 2001-2002 financial year was $10,324 and her partner’s actual taxable income was $37,696 for that year.  It follows that Ms Hodgson’s actual combined income for the year was $48,020.  The amount of FTB that was payable to Ms Hodgson was calculated on the basis of the actual income figures for that year.  This calculation revealed that an amount of $2,639.44 had been over paid.  Ms Hodgson received $6,002.74 when she was entitled to receive $3,363.30 based on the actual income of herself and her partner.

11.     A debt was raised against Ms Hodgson in the amount of $2,639.44 in December 2002 in relation to which Ms Hodgson has exercised her rights of review.  The debt is being recovered by deduction from her ongoing FTB payments.

summary findings

12.     Ms Hodgson was over paid an amount of $2,639.44 in FTB during the 2001-2002 financial year.  That amount is a debt to the Commonwealth.

13.     There was no error on the part of the Commonwealth in calculating the rate of FTB that was payable based on the combined income estimates provided by Ms Hodgson.  Ms Hodgson and her family are not in severe financial hardship.

14.     The debt cannot be written off and there are no special circumstances that would warrant waiver of the Commonwealth’s right to recover the debt. 

decision

15.     The decision under review is affirmed.

reasons for the decision

16.     Making this decision I have carefully considered all the evidence, the submissions of the parties, the relevant caselaw and legislation.

debt

17.     Ms Hodgson has a debt to the Commonwealth in the amount of $2,639.44. 

18.     I am satisfied and it is not in dispute that Ms Hodgson received FTB in excess of her entitlement during the 2001-2002 financial year.  She received a total amount of $6,002.74 in FTB payments based on estimates of combined yearly income that she provided to Centrelink.  She was entitled to receive a total amount of $3,363.30 based on her actual adjusted taxable income and that of her partner during that year.  The amount of the over payment is a debt to the Commonwealth.

are there grounds to write off or waive the debt?

19. I am satisfied that the debt cannot be written off. There are no grounds for such action pursuant to s.95(2) of the Administration Act.

administrative error

20. I am satisfied that there was no administrative error in the calculation of FTB based on estimates of income provided by Ms Hodgson. It follows that Ms Hodgson’s debt cannot be waived on that basis pursuant to s.97 of the Administration Act.

21.     In Ms Hodgson’s submission Centrelink should have adjusted the rate of her FTB for the relevant year, taking into account the amount paid during the period prior to variation of her income estimate.   Centrelink’s failure to do so was, in her submission, an administrative error sufficient to warrant waiver of the debt.  I do not agree.  I am satisfied that there was no error in the calculation of FTB on the basis of the income estimates provided by Ms Hodgson.  Centrelink’s failure to give retrospective effect to Ms Hodgson’s revised estimate of income does not constitute error on the part of the Commonwealth.  If I were wrong in that conclusion, I would be compelled to conclude that such error was not attributable solely to the Commonwealth.  Ms Hodgson provided the estimates on which the FTB rate calculations were based.  Furthermore, Ms Hodgson conceded that recovery of the debt does not place her in severe financial hardship.

22.     It follows that the debt cannot be waived on the basis of administrative error.  Nonetheless, the Secretary acknowledged that for people in Ms Hodgson’s circumstances, during the period in question, a debt could arise because income estimate variation, and consequent FTB rate variation, only applied from the date the revised estimate was received.  That information was not given retrospective application to the preceding portion of the relevant income year.  Consequently, over payments may have occurred that would not be identified until the amount of FTB paid on estimated income and the amount of FTB payable on actual income were reconciled at the end of each year.  The Secretary also acknowledged that Centrelink procedures have subsequently been amended in order to minimise the incidence of debts arising in similar circumstances.  However, while such a change in procedures is welcome, it does not assist Ms Hodgson.

special circumstances

23.     Ms Hodgson conceded that no special circumstances existed to warrant waiver of the debt.  I agree with that conclusion.  Ms Hodgson gave evidence that she and her family are in good health and she and her husband are in employment.  Nevertheless, I considered whether there was any circumstance arising from the calculation of FTB or the raising of an over payment debt that could constitute special circumstances in this case.  For special circumstances to arise there must be something unusual, uncommon or exceptional in the circumstances of the case (see Re Beadle and Director-General of Social Security (1984) 6 Ald 1 at 3), or something unfair, unintended or unjust in the application of the relevant legislation (see Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545).

24.     I am satisfied that there is nothing arising from the calculation of Ms Hodgson’s rate of FTB on the estimates of income she provided that constitutes special circumstances for present purposes.  Ms Hodgson submitted that special circumstances should be found in relation to the delay in the raising of the debt and the unfairness of the over payment, especially as she was not informed that such an overpayment could occur, even when, in her submission, that was inevitable and obvious.  I do not agree.  I accept that it is not the intention of the legislation to over pay persons claiming FTB on the basis of their estimated income during any relevant period.  I also accept that the complexity of the rate calculation for FTB is such that a lay person who is not familiar with that process would have difficulty working out the correct rate of payment. 

25.     Nonetheless, I am not persuaded that an over payment arising in such circumstances is unusual, uncommon or exceptional.  Many are those who are found to have FTB over payment debts in consequence of their provision of estimates of income during a period.  Nor am I satisfied that such circumstances are unintended, unfair or unjust. 

26.     The Assistance and Administration Acts contemplate a person claiming periodic payments of FTB on the basis of estimated income rather than solely in arrears on the basis of actual income.  Estimation by definition is imprecise.  It is to be expected that such imprecision may affect the accuracy of amounts paid from the public purse to an FTB claimant during the period in which his or her income has been estimated.  It follows that any inaccuracy and the extent of over or under payment of FTB cannot be ascertained until such time as the actual amount of income has been quantified.  In the case of FTB, that is when actual income records from the ATO are reconciled with the estimated income provided by claimants for the preceding year. 

27.     In Ms Hodgson’s case, she was informed in December 2002 that she had been overpaid FTB during the 2001-2002 financial year and that a debt had been raised in consequence.  In the circumstances, I am not of the opinion that the raising of such a debt within a six month period constitutes error or ‘special circumstances’.  It follows that there are no grounds for waiving the Commonwealth’s right to recover the debt for which Ms Hodgson is liable.

conclusion

28.     Ms Hodgson received an amount of FTB from the public purse to which she was not entitled.  While there was no error on her part, the tax payer is entitled to expect that the over payment will be recovered as a debt unless the circumstances are such that the debt should be waived (see  Secretary, department of Social Security v Hales (1998) 82 FCR 154 at 155). No such circumstances exist in this case. In Ms Hodgson’s submission the amount of the over payment should have been recovered, in effect, by deduction from the periodic FTB she was paid in the period 12 November 2001 to 30 June 2002, that is after her provision of a revised income estimate. In fact, that amount is now being recovered by deduction from her FTB payments.

29.     I am satisfied on the balance of probabilities that Ms Hodgson’s FTB over payment debt is not attributable solely to any administrative error of the Commonwealth and conclude, on the evidence before me, that the debt has been correctly raised and cannot be waived in the circumstances.

I certify that the 29 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S Webb, Member

Signed:         A. Krilis
  Associate

Date of Hearing  4 December 2003
Date of Decision  22 December 2003
Representative for the Applicant               Self represented
Representative for the respondent           Ms S. Mantaring