Howard; Secretary, Department of Family and Community Services an D

[2003] AATA 256

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 256

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No   N2002/1351

GENERAL ADMINISTRATIVE  DIVISION		)
Re		Secretary, Department of Family and Community Services

Applicant

And Mary-Louise Howard

Respondent

DECISION

Tribunal Mr RP Handley, Deputy President

Date19 March 2003

PlaceSydney

Decision The Tribunal varies the decision under review so that recovery of $458.40 of the balance of the debt, after application of the $1,000 tolerance waiver, is waived.  Thus, the amount to be recovered in total is $562.23.

...............................................

RP Handley
  Deputy President 

CATCHWORDS

SOCIAL SECURITY – Debt of Family Tax Benefit – tolerance waiver – whether there should have been a waiver of the debt for special circumstances other than financial hardship alone – examination of the special circumstances – examination of whether the Respondent was penalised twice – underpayment by the Department - decision under review varied as to the amount to be recovered from the Respondent.

A New Tax System (Family Assistance) Act 1999

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

Family Assistance Estimate Tolerance (Transition) Determination 2001

Beadle v Director-General of Social Security (1985) 60 ALR 225

Beadle vDirector-General of Social Security (1984) 6 ALD 1

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

REASONS FOR DECISION

19 March 2003 Mr RP Handley, Deputy President          

1.      This is an application by the Secretary of the Department of Family and Community Services (“the Applicant”) for a review of a decision of the Social Security Appeals Tribunal (“SSAT”) made on 5 August 2002 to set aside a decision of a delegate of the Applicant and substitute a new decision that recovery of $764 from the balance of the debt of $1,020.63 be waived, leaving the balance of $256.63 to be recovered.

2. At the hearing, which was held in Wallsend, the Applicant was represented by Hannelore Schuster, Advocate, of Centrelink and the Respondent represented herself. Evidence before the Tribunal comprised the documents produced pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (“the T Documents”) together with the documents tendered by the Respondent. Miss Howard gave oral evidence at the hearing.

Background

3.      

The Respondent, Miss Howard, was born on 4 August 1969 and is aged 33. 

She has two children:  Rebecca, who was born on 27 May 1990 and is aged 12 and Chantelle who was born on 26 January 1993 and is aged 10.  Miss Howard applied for and was granted Family Payment for Chantelle at the additional rate from the date of her birth.

4.      On 11 May 1993, the Child Support Agency (“CSA”) assessed the rate of maintenance payable to Miss Howard by the child’s father, Michael Barry at  $12,554 per annum (T19).  Miss Howard had elected to collect maintenance from Mr Barry privately as a result of an agreement between them at the time of Chantelle’s birth.  Between 26 January 1993 and 10 May 1993, Miss Howard received Family Payment at the additional rate as no payment of maintenance was recorded on her Department of Social Security records.

5.      Between 1 July 1993 and 30 June 1994, the CSA assessed maintenance due to Miss Howard for Chantelle to be $12,996 per annum.  Miss Howard chose to collect maintenance privately until 30 August 1993.  On 30 August 1993, Miss Howard applied for the CSA to collect maintenance.

6.      On 27 July 1993, the payment of Family Payment to Miss Howard was reduced to the basic rate because of the effect of maintenance (T8 p40).  By letter dated 8 October 1993 (T8 p38), Miss Howard was notified that she was again paid the basic rate because of the affecting maintenance.

7.      On 14 October 1993, the payment of Family Payment to Miss Howard was increased to the additional rate due to her election for the CSA to collect maintenance on her behalf.  Miss Howard continued to receive the additional rate between 23 December 1993 and 30 June 2000.

8.      On 23 June 2000, Centrelink advised Miss Howard that she would receive a Family Tax Benefit (“FTB”), with payments to commence on 1 July 2000.  This was as a result of a new family assistance scheme introduced by the Government that took effect on 1 July 2000.

9.      On 20 December 2000, Miss Howard received a payment of arrears of maintenance in the sum of $2,249.35.  On 21 February 2001, she received a further payment of arrears in the sum of $3,482.98.  Thus, together with a further payment of $90 maintenance, she received a total of $5,822.33 in the 2000/2001 financial year.

10.     On 10 January 2002, Centrelink calculated a FTB debt against Ms Howard in the sum of $2,020.63 (T23) which was notified to her by letter dated 25 January 2002 in which she was also notified of the reduction of the debt by the Government’s $1,000 tolerance waiver for FTB debts in the financial year ending 2000/2001.  On 21 February 2002, Miss Howard sought a review of the decision to raise the debt, which was confirmed by the original decision-maker on 26 March 2002 (T10). This decision was also affirmed by an Authorised Review Officer on 10 April 2002.

11.     On 29 May 2002, Miss Howard sought a review of the decision by the Social Security Appeals Tribunal (“SSAT”) which, on 5 August 2002 set aside the decision under review and waived recovery of $764 of the debt leaving a balance of $256.63 to be recovered.  On 16 September 2002, the Applicant lodged an application for review of the SSAT decision by the Tribunal.

Relevant Legislation

12.     The legislation enacted to introduce and administer the FTB is the A New Tax System (Family Assistance) Act 1999 (“the FA Act”) and A New Tax System (Family Assistance) (Administration) Act 1999 (“the FA Admin Act”). The FTB is calculated using Schedule 1 of the FA Act and includes the total payment due under FTB Part A and FTB Part B. The amount paid is affected by taxable income and maintenance income.

13. Schedule 1, Part 2, Division 5 of the FA Act provides that maintenance income reduces the amount payable under FTB Part A by 50 cents for every one dollar of maintenance received. Clause 20A of Division 5 in Schedule 1 of the FA Act provides that maintenance arrears are assessed in the financial year in which they were received, even though they may relate to a previous year.

14. Section 71(2) of the FA Admin Act provides a debt is due and payable to the Commonwealth when:

Overpayment

(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.

15. Section 102 of the FA Admin Act and the Family Assistance Tolerance (Transition) Determination 2001 provides for a tolerance waiver as follows:

(1) The Secretary may, on behalf of the Commonwealth, decide to waive the Commonwealth's right to recover debts, or parts of debts, arising under or as a result of this Act that are included in a class of debts specified by the Minister by determination in writing.

16. Section 101 of the FA Admin Act provides for a waiver in the case of special circumstances as follows:

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.

Mary-Louise Howard’s Evidence

17.     Miss Howard said that her daughter Chantelle was born on 26 January 1993.  Miss Howard and the child’s father, Michael Barry, agreed that he would pay her maintenance for Chantelle of $60 per week cash.  He would pay this every week when he came to visit.   At the time, Miss Howard was receiving Sole Parent Pension.  Miss Howard said that when she asked Mr Barry every week for the maintenance, he always said he did not have the money to pay her.  She put up with this for a while but, ultimately, on 30 August 1993 she went to the CSA and elected that they should collect maintenance for her.

18.     The CSA had assessed Mr Barry’s income for the period at $77,585 per annum (T19) and the maintenance payable as $12,554 per annum.  On 27 July 1993, the Department wrote to Miss Howard (T8) informing her that she would not be receiving Additional Family Payment because of the amount of maintenance she received.  Miss Howard went into the Department’s Cardiff office to question this and informed the Department that she had not received any maintenance from Mr Barry.  Thereafter, and especially after she asked the CSA to take on collection of maintenance from Mr Barry, she followed up with the Department about fortnightly until they restored her Additional Family Payment in October 1993.

19.     Miss Howard said she knew Mr Barry’s income was not anywhere near $77,585 per annum because he had not completed an income tax return for the 1992/1993 financial year.  She said he did not complete an income tax return until forced to do so by the Australian Taxation Office (“ATO”) in the later part of 2000 when he submitted returns dating from the 1992/1993 financial year.

20.     As a result of Mr Barry’s completing the tax returns, Miss Howard received arrears of maintenance:  $2,249.35 on 20 December 2000 and $3,482.98 on 21 February 2001.  Miss Howard believed these arrears covered the period from the time of Chantelle’s birth.  Mr Barry still owes her over $8,000 in arrears of maintenance.  She said he has not completed another tax return since those submitted in late 2000.

21.     About February 2003, Miss Howard asked Centrelink to provide her with an Income Statement setting out the rates and types of payments received.  Centrelink responded by letter dated 26 February 2003 (R1) which revealed that the maintenance income used in the assessment of her FTB is $1,904 per annum.

22.     Miss Howard said that Centrelink had withheld $40 per fortnight from her Parenting Payment Single benefit from 7 March 2002 to 5 September 2002 when withholdings were stayed.  A total of $560 was recovered in that period leaving an outstanding debt, according to the Respondent, of $460.63.

23.     Miss Howard’s only other income apart from her Parenting Payment Single and FTB is the $120 gross a week she earns from eight hours work.  She is not receiving any maintenance from Mr Barry.  She pays approximately $70 per week in rent and otherwise has all the usual bills associated with running a household with two children.  She is paying $40 per week for additional tutoring for Chantelle who got behind with her schoolwork as a result of a kidney infection that required hospitalisation.  Miss Howard regards this tutoring as essential.  She has a $6,000 credit card debt but no other outstanding debts other than a car loan in respect of which she makes a payment of $70 per week.  Her children attend a Catholic school for which school fees are payable but the school will waive the fees because she is a sole parent if she is unable to pay them.

Submissions

Applicant

24.     Ms Schuster, for the Applicant, acknowledged that from 30 August 1993 the fact that the CSA was collecting maintenance for Miss Howard should have been taken into account in assessing the Additional Family Payment payable.  As a result, Miss Howard received an underpayment of $152.80 per fortnight for three fortnights between 30 August 1993 and 14 October 1993, a total of $458.40.  Prior to 30 August 1993, any arrears of maintenance were Miss Howard’s responsibility since she had stated that she was collecting maintenance by private arrangement.

25.     Ms Schuster questioned whether Miss Howard had sought a review of the Department’s not paying her Additional Family Payments – to which Miss Howard responded that she had done so on receiving the Department’s letter of 27 July 1993 (T8 p40).

26.     Ms Schuster submitted that there are no special circumstances to justify waiving all or part of the debt, particularly in light of the fact that the Government’s $1,000 tolerance waiver has already been applied in reducing the debt from $2,020.63 to $1,020.63.  Ms Schuster submitted that it was inappropriate to waive a proportion of the debt attributable to an underpayment of Additional Family Payment in 1993.  She said that otherwise there are no other circumstances, which could be considered special in Miss Howard’s case.

Respondent

27.     Miss Howard submitted that she should not have to repay the debt especially in the light of the fact that the maintenance she received in 2000/2001 is attributable to Mr Barry’s non-payment of maintenance since 1993.  Miss Howard acknowledged that the application of the FTB Scheme requires that any maintenance received during the financial year is considered to be income which is assessable for that year.

Consideration of the Law and Findings

28.     As noted, Miss Howard did not dispute that the $5,822.33 in maintenance she received in 2000/2001 was correctly assessed as income for the purposes of the FTB Scheme and that a debt of $2,020.63 accrued to her as a result.  At issue is the recovery of the $1,020.63 after the reduction of the debt by the Government's $1,000 tolerance waiver..  Miss Howard submitted that the whole of the remaining debt should be waived.  Ms Schuster, for the Respondent, submitted that there were no special circumstances which justified waiver of the debt.

29.     The Tribunal finds, as Ms Schuster acknowledged, that Miss Howard received an underpayment of Additional Family Payment over three fortnights in the period 30 August 1993 to 14 October 1993 totalling $458.40.  When, on receipt of the Department’s letter of 27 July 1993 (T8 p40), Miss Howard discovered that her eligibility for Additional Family Payment was being assessed on the basis of her receiving maintenance income of $12,996 (confirmed in the CSA assessments for 1993 (T19 p69-70)), she went into the Department’s Cardiff office to question this.  From this time and especially after 30 August 1993 when she asked the CSA to take on collection of the maintenance, she followed up the amount of her Family Payments with the Department on a regular basis until her Additional Family Payment was restored on 14 October 1993.   In the Tribunal’s view, Miss Howard did everything she could reasonably be expected to do in order to rectify her payments and the Respondent has been unable to produce any evidence to the contrary.

30.     The Tribunal considers that $458.40 of the debt should be waived on the basis that there would otherwise be “double dipping” by the Respondent.  These circumstances are, in the Tribunal’s view, special pursuant to the interpretation of the phrase “special circumstances” in a line of decisions of the Tribunal and the Federal Court.  The Tribunal has described “special circumstances” as “unusual, uncommon or exceptional” – “they must have a particular quality of unusualness that permits them to be described as special”:  Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3, endorsed by the Full Federal Court in Beadle and Director-General of Social Security (1985) 60 ALR 225. In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545, Kiefel J, after referring to the Federal Court’s decision in Beadle (supra 1985), observed that special circumstances:

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.

31.     In the Tribunal’s view, it would be unjust not to adjust Miss Howard’s debt to take account of the underpayment in circumstances where the underpayment occurred, seemingly, because of departmental error, when Miss Howard had protested that the Department’s calculations were incorrect.

32. With regard to the Government’s $1,000 tolerance waiver for FTB debts, this was applied to all FTB debts in the financial year ending 30 June 2001. In the Tribunal’s view, there should be no discrimination in how this $1,000 waiver should be applied and it should not be taken into account in considering exercise of the power to waive under s 101 of the FA Admin Act.

33.     In conclusion, the Tribunal varies the decision under review so that recovery of $458.40 of the balance of the debt, after application of the $1,000 tolerance waiver, is waived.  Thus, the amount to be recovered in total is $562.23.

I certify that the preceding 33 paragraphs are a true copy of the reasons for the decision herein of Mr RP Handley, Deputy President

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

Date/s of Hearing  5 March 2003
Date of Decision  19 March 2003
Representative for the Applicant               Ms H Schuster, Advocate, Centrelink
Representative for the Respondent          Self Represented