Hopkins and Secretary, Department of Family and Community Service S

[2004] AATA 293

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 293

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No S2003/54

GENERAL ADMINISTRATIVE  DIVISION		)
Re		MEGAN HOPKINS

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Senior Member WJF Purcell

Date19 March 2004

PlaceAdelaide

Decision The Tribunal affirms the decision under review. 

(Signed)

WJF PURCELL
  (Senior Member)

CATCHWORDS

SOCIAL SECURITY – pensions, benefits and allowances – Family Tax Benefit – if a ‘top-up’ of FTB can be paid for 200/01 financial year – extension of time from Australian Taxation Office – applicant and partner did not lodge returns by 30 June 2002 – decision affirmed

A New Tax System (Family Assistance) (Administration) Act 1999 s 28

REASONS FOR DECISION

19 March 2004   Senior Member WJF Purcell

1.      This is an application for review of a decision of the Social Security Appeals Tribunal (the SSAT) of 21 January 2003, which affirmed the decision of an Authorised Review Officer of 31 October 2002, to  refuse the applicant’s claim for payment of arrears (top-up) of Family Tax Benefit in respect of the 2000/01 financial year.

2. The evidence before the Tribunal comprised the documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act1975 (the T Documents), together with the exhibits tendered by the respondent (the Department). The applicant’s husband, Mr Hopkins, appeared on her behalf, and gave oral evidence.  Ms Cerone represented the Department.

3.      The applicant received a total of $6,059.00 by way of Family Tax Benefit (FTB) paid by instalments during the 2000/2001 financial year for two children, Holly-Louise, born on 9 June 1996, and Laura, born on 7 August 1999.  On 3 June 2002 the Family Assistance Office sent the applicant a reminder letter advising her that, amongst other things, no top-up of FTB payments could be made if she and her husband failed to lodge their income tax returns for the 2000/2001 tax year by 30 June 2002. 

4.      On 25 June 2002, the applicant and her husband advised the Family Assistance Office that their accountant, Mr Geoff Smith, would not be able to complete their tax returns by 30 June 2002 because he was experiencing severe staff problems.  On the same day, they provided an estimate of their combined income for the 2000/2001 tax year, which had been prepared by their accountant.  The Australian Tax Office (ATO) granted the applicant and her husband an extension of time for the lodgement of their tax returns for the 2000/2001 tax year.

5.      The applicant and her husband lodged their income tax returns for the 2000/2001 tax year on 9 September 2002.  A reconciliation of the applicant’s FTB payments for the 2000/2001 tax year revealed that she would have been entitled to a top-up payment of $2,602.45 if she and her husband had lodged their income tax returns by 30 June 2002.  A decision not to pay a top-up was advised on 17 September 2002.  This decision was affirmed by an Authorised Review Officer on 31 October 2002, and by the SSAT on 21 January 2003.

6.      The applicant and her husband were involved in a small window cleaning business in Broken Hill when they received the letter of 3 June 2002 from the Family Assistance Office telling them that they must lodge their tax returns by 30 June 2002.  They had tried to have their income tax returns completed earlier in the year.  The applicant’s mother, who had worked for their accountant for many years was, in Mr Hopkins’ words, the “backbone” of the family, and the accountant’s firm.  She always prepared their returns.  She became ill in early 2002, and died soon after.  They seriously considered taking their tax materials to another accountant, but their own accountant advised them against this, and reassured them that he had obtained an extension of time from the ATO.

7.      Mr Hopkins said in evidence that the death of the applicant’s mother, plus the resignation of three other staff members working for their accountant, had caused the delays in having their tax returns completed and lodged.  He gave evidence that they read the Department’s letter of 3 June 2002 very carefully.  It reads, in part:

“…

If you and your partner do not lodge a tax return, or let us know why you and your partner are not going to lodge by 30 June 2002, you will be asked to pay back all the Family Tax Benefit you have received for the 2000/2001 financial year.

A ‘top-up’ of Family Tax Benefit for the 2000/2001 financial year cannot be made to you if you and your partner lodge income tax returns after 30 June 2002

How to avoid an overpayment

If you and your partner need to lodge a tax return for the 2000/2001 financial year, then you and your partner must do so before 30 June 2002.

If you and your partner do not need to lodge tax return, you need to advise the Family Assistance Office by 30 June 2002.

…”  [T5/16]

As their accountant had obtained an extension of time from the ATO, they understood that they did not need to lodge a tax return before 30 June 2002, and in accordance with the terms of the letter they advised Centrelink accordingly.

8.      After they received the letter of 3 June 2002, the applicant and Mr Hopkins contacted the Family Assistance Office on three or four occasions before 25 June 2002, and discussed the situation in which they found themselves.  On one of these occasions, they asked a Family Assistance Officer if an estimate of their combined income, prepared by their accountant, would suffice.  They were told to bring one in to the office and they did so on 25 June 2002.  The letter reads as follows:

“Re:  Peter & Megan Hopkins

Their 2001 Income Taxation Return has yet to be lodged with the Australian Taxation Office as we have secured an extension of time to lodge their returns.

To assist you in re-determining their eligibility we advise the following estimate for their combined Taxable Income

2001 YEAR

$15682.13

Once again we stress that this is an estimate only.

If you have any queries please contact this office.”

[T8/24]

They again asked if the estimate would suffice, and say that they were given the firm impression that it would.

9.      Mr Hopkins said in evidence that they felt quite sure at that stage that if the estimate did not meet the needs of the Family Assistance Office, they would be advised of this within a very short space of time because of the 30 June deadline.  He said that if they had been advised that the estimate did not meet the Family Assistance Office’s requirements, they would have gone back to their accountant and done everything to ensure that he lodged their tax returns, based on his estimate of their income, by 30 June 2002.  He said also that a family friend, who works with the Department, had calculated that they would receive $2,600.  With a taxable income of only $15,600 for the financial year, and two pre-school children, one of whom was enrolled in a private pre-school, they were anxiously awaiting receipt of the top-up payment.

10. On 17 September 2002 they were advised that no top-up payment could be made because their tax returns had been lodged on 9 September 2002, out of time. The decision was made pursuant to s 28 of the A New Tax System (Family Assistance) (Administration) Act 1999 (the FAA Act), which provides:

“(1)     This section applies if:

(a)a determination under section 16 or 17 is in force at, or was in force before, a particular time; and

(b)there are one or more days (the cancellation days) before the particular time in respect of which the following conditions are satisfied:

(i)the cancellation days occur in the income year (the cancellation income year) that began 2 years before the beginning of the income year in which the particular time occurs;

(ii)the claimant is entitled to be paid family tax benefit under the determination for the cancellation days;

(iii)the claimant, or the claimant’s partner at the particular time (if he or she was also the claimant’s partner at some time in the cancellation income year), or both, are required to lodge an income tax return for the cancellation income year but have not done so by the particular time;

(iv)by the particular time, an assessment has not been made under the Income Tax Assessment Act 1936 of the taxable income for the cancellation income year of everyone to whom subparagraph (iii) applies.

(2)If this section applies, the Secretary must vary the determination so that it has the effect that the claimant is not, and never was, entitled to family tax benefit for the cancellation days.

(3)       If:

(a)after the Secretary varies the determination under subsection (2), an assessment is made under the Income Tax Assessment Act 1936 for the cancellation income year for everyone:

(i)who was required to lodge an income tax return as mentioned in subparagraph (1)(b)(iii); and

(ii)in respect of whom an assessment had not been made before the determination was varied; and

(b)the Secretary is satisfied that the claimant was eligible for an amount of family tax benefit for the cancellation days;

the Secretary must again vary the determination so that it has the effect that, for the cancellation days, the claimant is entitled to be paid the lesser of:

(c)       that amount of family tax benefit; and

(d)the amount that the claimant was entitled to be paid before the variation under subsection (2) was made.”

11.     The applicant maintains that they did not need to lodge a tax return before 30 June 2002 because the ATO had given them an extension of time.  They advised the Department of the extension, and they complied with the requirement of the legislation.  They acted on the assurance from the Departmental officer that the estimate provided by the accountant would be sufficient.

12. The Department submits that s 28(1) of the FAA Act applies where a person has received FTB and that person and/or their partner is required to lodge a tax return for the 2001 income year, and the person and/or their partner has not lodged a return by 30 June 2002. Section 28(3) of the FAA Act provides that where a person, and/or their partner, subsequently lodge their tax returns (that is, after 30 June 2002) then the person is entitled to the lesser of the amount of FTB they received, or the amount that they were entitled to receive. The effect of s 28(2) of the FAA Act is that the applicant is only entitled to the amount of $6,059.00 of FTB that she received by instalments during the 2000/2001 income year, and she is not entitled to be paid a top-up of FTB for the 2000/2001 income year as she and her husband did not lodge their income tax returns until 9 September 2002, which was after the end of the following income year. There is no discretion provided in the legislation to pay a top-up of FTB to the applicant.

13. Mr Hopkins impressed me as an honest and credible person. He and the applicant are in dire financial circumstances bringing up two young children, on Mr Hopkins’ part-time income as a labourer and a security person. They do not have now the support and advice of the applicant’s mother, who I accept was the “backbone” of the family. They face a bleak future. Mr Hopkins and the applicant made the same impression on the SSAT; but the Departmental decision-maker, the SSAT, and this Tribunal are bound to apply the legislation. The applicant and Mr Hopkins did not lodge their tax returns by 30 June 2002, and in accordance with s 28(3) of the FAA Act, the applicant, although entitled to $2,602.45 more in FTB, can only be paid the lesser of the two amounts, namely the FTB she actually received. The legislation does not provide a discretion to the decision-maker, and hence to this Tribunal, to extend the time to lodge a tax return and thus receive the additional benefit. The application cannot succeed.

14.     The SSAT in the course of its Reasons for Decision, stated that it had a great deal of sympathy for the applicant and Mr Hopkins who have “missed out on a considerable amount of money through no fault of their own” [T2/10].  The SSAT attached to its Reasons for Decision a suggestion that the Department consider making a payment to the applicant pursuant to the Compensation for Detriment caused by Defective Administration Scheme. I was informed by the parties that the Department has considered the recommendation, and rejected the application.

15.     The applicant and Mr Hopkins sought the assistance of their Federal Member of Parliament, Mr Cobb.  The Honourable Minister for Family and Community Services, Senator Patterson, replied to Mr Cobb’s letter on 5 February 2004, in part, as follows:

“…

The Australian Government recognises that in some situations people such as Mr and Mrs Hopkins have been disadvantaged and recently introduced new legislation giving families a further 12 months to receive an FTB top-up and to claim a lump sum payment.  Under existing arrangements, families must lodge their income tax returns within 12 months following the end of the tax year to be eligible for a top-up payment or to claim their lump sum payment.  The Government’s proposed legislation would give families two years after the end of the relevant tax year in which to receive a top-up payment or make a lump sum claim.  This means that families would have until 30 June 2004 to lodge their tax returns for the 2001-02 income year for the purposes of receiving a top-up payment or making a lump sum claim.  The 12 month extension to the time limit would apply to those families who are seeking top-ups or payment for the financial year 2001-02 onwards.

The extension will apply from the 2001-02 onwards as it is not possible to identify all of those FTB customers who missed out on lump sum payments or top-ups to their FTB as a result of lodging their tax returns late for the 2000-01 income year.  This is because the link which is used to align Centrelink and the ATO for reconciling incomes and FTB payments has been broken.

…”  [Exhibit A1]

16.     It is clear from the Minister’s letter that it is intended that the proposed legislation will have some retrospective effect.  The Minister states also, that as it is not possible to identify those, such as the applicant, who missed out on top-ups in the 2000/01 income year, the extension will not apply to them.  The applicant’s circumstances however, relating to the 2000/01 income year are set out in the documentary evidence, and easily ascertainable by the Department.

17.     I would hope, that in the light of the Government’s recognition that some persons such as the applicant and Mr Hopkins, have been disadvantaged through no fault of their own, and its intention to amend the legislation to remedy the situation, the Secretary would give favourable consideration to granting an Act of Grace payment to the applicant.

18.     As stated earlier in these Reasons for Decision, the application cannot succeed.

19.     For these Reasons the Tribunal affirms the decision under review.

I certify that the 19 preceding paragraphs are a true copy of  the reasons for the decision herein of Senior Member WJF Purcell

Signed:         .......................................................................................
  Associate

Date of Hearing  17 March 2004
Date of Decision  19 March 2004
Counsel for the Applicant         Mr P Hopkins (husband)
Solicitor for the Applicant          -
Counsel for the Respondent     Ms S Cerone
Solicitor for the Respondent    Centrelink Service Recovery Team