Hughes and Secretary, Department of Social Services (Social services second review)

[2018] AATA 2154

Hughes and Secretary, Department of Social Services (Social services second review) [2018] AATA 2154 (11 July 2018)

Division:GENERAL DIVISION

File Number(s):      2017/7253

Re:Sarah Hughes

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Mark Hyman, Member

Date:11 July 2018

Place:Canberra

The decision under review is affirmed.

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Mark Hyman, Member

Catchwords

FAMILY ASSISTANCE – family tax benefit – portability – where applicant gave birth overseas – child an FTB child at birth – application of portability period – date from which period reckoned – applicant not eligible until return to Australia – decision under review affirmed

Legislation

A New Tax System (Family Assistance) Act 1999, ss 21, 22, 24

Administrative Appeals Tribunal Act 1975, ss 37, 38AA

Social Services Legislation Amendment (Family Measures) Act 2016, s 3, Schedule 1

Cases

Rahim and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 946

Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Evtushenko [2011] AATA 596

Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Rydel [2012] AATA 143

Secondary Materials

Guide to Family Assistance Law

REASONS FOR DECISION

Mark Hyman, Member

11 July 2018

1. This decision is about from which date Ms Sarah Hughes, the applicant, is eligible to be paid family tax benefit (FTB) in respect of her son Joseph. Joseph was born on 19 October 2014 while Ms Hughes was overseas in Malawi. Ms Hughes claimed FTB in respect of Joseph on 19 December 2016, two days after returning to Australia. The Department of Human Services – Centrelink (the Department) decided on 28 April that FTB could be paid to Ms Hughes in respect of Joseph only from 17 December 2016, the date of her return to Australia. That decision was affirmed on review by an authorised review officer of the Department on 28 August 2017 and at first review by this tribunal on 6 December 2017. On 7 December 2017 Ms Hughes applied to this tribunal for further review.

2. The tribunal held a hearing on 19 June 2018. Ms Hughes attended and gave evidence. The Secretary, Department of Social Services (the respondent in this matter) was represented by Ms Sally Moore, an advocate from the Department.

3. The documents before the tribunal comprised the documents submitted under section 37 of the Administrative Appeals Tribunal Act 1975 (the AAT Act) and additional documents described as supplementary documents also submitted under section 37 but perhaps more accurately described as documents submitted under section 38AA of the AAT Act (the “T-documents” and supplementary T-documents respectively), a chronology prepared by the Secretary (Exhibit R1) and a statement made by Ms Hughes (Exhibit A1).

   ISSUES

4. The only issue before the tribunal is whether Ms Hughes is eligible to receive family tax benefit in respect of her son Joseph from a date earlier than 17 December 2016.

   LEGISLATION

5. The legislation governing this matter is the A New Tax System (Family Assistance) Act 1999 (the Act). The relevant provisions of the Act as set out below are those current at October 2014.

6. Section 21 of the Act provides that, relevantly, an individual is eligible for FTB if that person has at least one FTB child, is an Australian resident and the rate of FTB is greater than nil, unless another provision of that part of the Act provides otherwise. Section 22 explains that a child is an FTB child of an individual where, relevantly, the child is under 16 years of age, in the adult’s care, is an Australian resident, and the adult individual has legal responsibility for the child.

7. Section 24 of the Act provides for limited portability of FTB when a person is absent from Australia, that is, it allows FTB to be paid to a person for limited periods and under certain circumstances while overseas. In the present matter, this is the critical section of the Act, and subsections 24(1), (4) and (5) are of particular relevance. Subsection 24(1) reads as follows:

   (1)  If:

   (a)  any of the following applies:

   (i)  an FTB child leaves Australia;

   (ii)  a child born outside Australia is an FTB child at birth;

   …  and

   (b)  the child continues to be absent from Australia for more than 56 weeks;

   during that absence from Australia, the child is neither an FTB child, … at any time after the period of 56 weeks beginning on the first day of the child’s absence from Australia.

8. Subsections 24(2) and (3) deal with the application of subsection 24(1) where an FTB child makes a brief return to Australia.

9. Subsection 24(4) reads as follows:

   (4) If an individual leaves Australia, the maximum period for which the individual can be eligible for family tax benefit during that absence from Australia is the period of 56 weeks beginning on the first day of that absence.

10. Subsections 24(5) and (6) deal with portability under subsection (4) where a person makes a brief return to Australia. Subsection 24(5) reads as follows:

    (5) If:

    (a)  an individual who has been absent from Australia for more than 6 weeks, but less than 56 weeks, returns to Australia; and

    (b)  the individual leaves Australia again less than 6 weeks later;

    the individual is taken not to have returned to Australia for the purposes of subsection (4).

11. Subsections 24(7), (8) and (9) allow the Secretary to extend the 56-week period of continued eligibility in any of an enumerated list of circumstances where those circumstances have prevented the person’s return to Australia. Subsection 24(10) allows an extension where the person is serving overseas with the Defence Force or Australian Federal Police.

    THE FACTS

12. The facts of this matter are not in dispute. Ms Hughes has two children, Alexandra and Joseph. Leaving aside earlier absences that do not affect the calculation of her portability period, Ms Hughes travelled to Malawi in 2013, leaving Australia on 9 July (T28). She returned to Australia on 31 March 2014, and remained in Australia for 28 days, leaving again for Malawi on 28 April 2014 (T15). Alexandra was born on 8 August 2014, in Malawi. Ms Hughes remained in Malawi and gave birth to Joseph on 19 October 2015 (T15). Ms Hughes remained in Malawi until her return to Australia, with Alexandra and Joseph, on 17 December 2016 (T15).

    THE ARGUMENTS OF THE PARTIES

13. Ms Hughes argued that subsections 24(1) and 24(4) deal with different situations. As subsection 24(1) refers specifically to children born outside Australia, it is that subsection that applies to Joseph. He was an FTB child at birth, and therefore, applying the subsection, should receive FTB for a period of 56 weeks after his birth (Ms Hughes’s written submission at Ex A1 simply argued for payment of FTB from 19 October 2015, but her oral argument at hearing appeared to accept that she would be able to receive FTB only for 56 weeks after that date, i.e. until 14 November 2016).

14. The Secretary argued that Ms Hughes’s absence from Australia from July 2013 must be taken into account in determining her portability. As she was absent for less than 56 weeks and then returned to Australia for less than six weeks, subsection 24(5) has the effect that her absence counts towards the 56 weeks allowed by subsection 24(4). Accordingly, the 56-week absence allowed by subsection 24(4) before portability was exhausted on 4 August 2014, 56 weeks after her initial departure on 9 July 2013. FTB could only be paid once Ms Hughes made a return to Australia, i.e. from 17 December 2016.

    CONSIDERATION

15. This matter turns on the application of section 24 of the Act. In its first internal review the Department decided that Ms Hughes was not entitled to FTB for Joseph because she was not a resident at his birth. The Department later decided that that was an error, and that Ms Hughes had remained an Australian resident. It was common ground in the present proceedings that throughout the period covered by this decision Ms Hughes remained a resident. It was also common ground that Joseph was an FTB child at birth. The only issue is the application of the portability provisions in section 24 to Ms Hughes’s circumstances.

16. The structure and purpose of the parts of section 24 of the Act are clear. Subsections (1)-(3) deal with the status of the child; if the child is absent for more than the prescribed period – 56 weeks – he or she is deemed no longer to be an FTB child, with the result that the person who has care of the child would no longer be eligible for FTB; subsections (2) and (3) then provide that if the child returns to Australia, a visit of less than six weeks is regarded as not having taken place, i.e. the child must stay at least six weeks if the portability period during which the child is an FTB child is to be restarted. Otherwise the return to Australia is treated as not having occurred. Subsections (4)-(6) relate to the person who has the child in care – the “individual”. That intent is plain, because it is the individual who is eligible for FTB in subsection 24(4) and the basic eligibility section for FTB, section 21, makes an individual eligible for FTB in respect of an FTB child. Thus subsection 24(4) limits the portability of the individual to 56 weeks, and subsections (5) and (6) then provide that return visits to Australia of less than six weeks are regarded as not having occurred – that is, once again the return to Australia must last longer than six weeks if the portability count is to be restarted. Subsections (7) to (10) allow the 56-week period to be extended in particular circumstances.

17. It is therefore not appropriate to consider whether it is subsection (1) or subsection (4) that applies in a given case: the former will apply to the child and determine the child’s status (whether an FTB child or not) and the latter to the adult and determine the adult’s eligibility for FTB. It is clear that in a particular case, one might apply but not the other, e.g. an adult might leave one child overseas while returning to Australia for more than six weeks with another child; in that case the adult’s portability period would restart, and the child who returned to Australia would once again be an FTB child for the full portability period, but that would not be so for the child who stayed overseas.

18. The application of section 24 has been considered in earlier decisions by this tribunal. The Secretary took me to Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Evtushenko [2011] AATA 596 (Evtushenko) and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Rydel [2012] AATA 143 (Rydel) in which provisions relating to baby bonus were considered, and the FTB provisions were relevant because to be eligible for baby bonus a person must be eligible for FTB. Ms Hughes referred to an earlier case, Rahim and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 946 (Rahim), which dealt directly with portability of FTB.

19. In Evtushenko Senior Member Brittan of this tribunal reviewed a decision of the then Social Security Appeals Tribunal (SSAT), which had concluded that in circumstances similar to those of Ms Hughes, the applicant’s portability period should commence not from her absence but from the birth of the FTB child. The reasoning was that the portability period could only be calculated from the time the applicant had become eligible for FTB, and that was when the child had been born (Evtushenko, at [13]). SM Brittan disagreed with the SSAT’s reasoning, noting that the wording of section 24(4) makes clear that the portability period begins from the first day of “that absence”, i.e. the period the person is away from Australia. The portability period is about potential rather than actual FTB eligibility; a person enjoys the benefit if events transpire to make the potential actual, e.g. if they have a child during the period or take an FTB child with them. In Rydel Deputy President Nicholson of this tribunal agreed with the reasoning put forward in Evtushenko.

20. In Rahim the tribunal arrived at the same reasoning used by the SSAT in the Evtushenko decision reviewed by SM Brittan, namely that eligibility for FTB “crystallised” on the birth of the child, and that the portability period began from that date: the reasoning is that the exclusion from eligibility requires the eligibility to have commenced before it can operate.

21. The Secretary urged me to have regard to the Guide to Family Assistance Law, but I see no need to do so. The meaning of the legislation is plain on its face.

22. Taking the above authorities into account, it is clear that SM Brittan’s reasoning, which relies closely on a detailed construction of the section, is to be preferred. The drafting in subsection 24(4) makes it apparent that the FTB eligibility is potential rather than actual: “… the maximum period for which the individual can be eligible for family tax benefit during that absence from Australia …” (emphasis added). This makes it clear that eligibility is contingent and that regardless of whether or not it becomes actual, the portability period dates from when the absence starts. The tribunal in Rahim identified a tension between subsections 24(1) and (4). There is no tension because the subsections deal with different issues: subsection (1) with the status of the child and subsection (5) with FTB eligibility of the adult. A similar point was made by SM Brittan in Evtushenko (at [15]).

23. Further, the operation of subsections (4) and (5) together means that Ms Hughes’s absence must be reckoned from her first departure for Malawi on 9 July 2013 (although in the event this has no bearing on her FTB payments as the portability period under subsection 24(4) would have expired before Joseph’s birth even if reckoned from 28 April 2014).

24. The provisions that allow the extension of the 56-week period do not apply to Ms Hughes: she acknowledged at the hearing that none of the enumerated circumstances applied to her.

25. Thus Joseph was an FTB child for 56 weeks after his birth, applying subsection 24(1); but Ms Hughes was not eligible to receive FTB in respect of him because of the operation of subsection 24(4). Section 21 states that a person who is an Australian resident and has an FTB child is eligible for FTB unless another provision of that part of the Act (“this Subdivision”) provides otherwise. Section 24 is part of the same subdivision as section 21 (Subdivision A of Division 1 of Part 3 of the Act), and it has the effect that Ms Hughes was not eligible for FTB until she returned to Australia with Joseph on 17 December 2016.

26. The above analysis covers the operation of the Act as it stood at October 2014, at the time of Joseph’s birth. The Act is frequently amended, however; indeed it was amended eight times in the period covered by this decision, with the last of those amendments covering the period up to the end of December 2016. One of those amendments is relevant to the current matter: the Social Services Legislation Amendment (Family Measures) Act 2016 amended various parts of the Act, including section 24. The main thrust of the amendments to the section was to reduce the 56-week portability period to six weeks, and to repeal subsections 24(2) and 24(5). This might potentially have had an impact on Ms Hughes, but clause 31 of Schedule 1 (applied by section 3 of the amending Act) institutes a savings provision that continues to apply a 56-week portability period to anyone whose portability period began under the unamended Act.

27.     I certify that the preceding 26 (twenty-six) paragraphs are a true copy of the reasons for the decision herein of Mark Hyman, Member.

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Associate

Dated: 11 July 2018

Date(s) of hearing:	19 June 2018
Date final submissions received:	19 June 2018
Applicant:	In person
Solicitors for the Respondent:	Department of Human Services