Humphreys; Secretary, Department of Family and Community Services

[2003] AATA 527

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 527

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2002/1339

GENERAL ADMINISTRATIVE  DIVISION		)
Re		SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Applicant

And BRONWYN HUMPHREYS

Respondent

DECISION

Tribunal Ms N. Bell, Member

Date5 June 2003 

PlaceSydney

Decision The decision under review is set aside and in substitution therefor the Tribunal determines that a debt of $1320.76 should be recovered from the Respondent.

[sgd] Ms N. Bell, Member

CATCHWORDS

SOCIAL SECURITY – family tax benefit – adjusted taxable income exceeded cut out amount during the year – whether entitled to family tax benefit – incursion of debt – debt recovery – debt waived – decision set aside.

Social Security Act 1991

A New Tax System (Family Assistance) Act 1999 ss. 21,22, 22(1)(a) 22A(1), 31

A New Tax System (Family Assistance) (Administration) Act 1999 ss 31,95, 97, 101, 102, 105

Secretary, Department of Family and Community Services v Tough [2002] AATA 1212

REASONS FOR DECISION

5 June 2003 Ms N. Bell, Member           

1. This is an application by the Secretary to the Department of Family and Community Services (the Applicant) for review of a decision made by the Social Security Appeals Tribunal (SSAT) on 9 August 2002. The SSAT decided to set aside the decision made by the applicant to reject Ms Bronwyn Humphreys’ (the Respondent) claim that she had not incurred a debt to the Commonwealth in accordance with section 22A of the A New Tax System (Family Assistance) Act 1999 (Cth) (the FA Act).

2.      At the hearing, the Applicant was represented by Ms A. Garcia from Centrelink. The Respondent was self-represented. The Tribunal had before it the following  documentary evidence.

Exhibit	Description	Date
TD1	T-Documents: T1-T33 pp 1-139 lodged pursuant to s.37 of the Administrative Appeals Tribunal Act 1975
A1	Applicant’s Statement of Facts and Contentions	7 March 2003
R1	Respondent’s Statement of Facts and Contentions	1 April 2003
R2	Form issued by the Family Assistance Office” “Information for families with children aged 16 to 24”	1 April 2003

3.      There are two issues for the Tribunal to decide: first, whether Mrs Humphreys has incurred a debt to the Commonwealth and, if so, whether that debt, or any part of it, should not be recovered.

BACKGROUND

4.      The following facts are not in dispute.

5.      The Respondent is employed and has an estimated income of $52,182 per annum. She is a sole parent. Two of her children, Lincoln and Rebecca, reside with her at her home. Both of these children are full-time students and receive youth allowance.

6.      Lincoln, born on 17 March 1983, was the Respondent’s only family tax benefit (FTB) child between 1 July 2000 and 27 April 2001. During this time, Lincoln was employed by Woolworths, Greenhills, as a casual checkout operator. During the 1999-2000 financial year, Lincoln earned  $4557.00. The Respondent did not believe he would earn more than that during 2000-2001, however, with Lincoln’s assistance, she monitored his income during the 2000-2001 year.

7.      In April 2001, the Respondent notified Centrelink that Lincoln’s adjusted taxable income (ATI) was expected to pass the income limit of $7663.

8. On 27 April 2001, Centrelink placed a stop on further payments to the Respondent and raised a debt for payments made from 1 July 2000 to 27 April 2001. This debt amounted to $2,320.76. Pursuant to section 102 of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (the FA Admin Act) Centrelink waived $1,000.00 of this debt leaving a balance of $1,320.76.

9.      In February 2002, Centrelink advised the Respondent that payment of the $1,320.76 was due. Upon request of the Respondent, the original decision to raise the debt was reviewed. On 8 March 2002, Centrelink advised the Respondent in writing that the debt would not be waived (T21).

10.     The Respondent requested a further review of the decision and it was reviewed by an Authorised Review Officer on 4 June 2002 and affirmed (T29).

11.     The Respondent applied to the SSAT for review of this decision on 7 June 2002 (T30). On 9 August 2002, the SSAT set aside the decision by the Applicant and found that no debt had been incurred. The Applicant applied to this Tribunal on 12 September 2002.  The Respondent argued that any payments made prior to her son’s ATI passing the income limit of $7,663 should not be included in the calculation of any overpayment.

LEGISLATION

12. Section 21 of the FA Act sets out the circumstances in which an individual is eligible for family tax benefits. It provides:

When an individual is eligible for family tax benefit in normal circumstances

(1) An individual is eligible for family tax benefit if:

(a) the individual has at least 1 FTB child (see section 22 and later provisions); and

(b) the individual:

(i) is an Australian resident; or

(ia) is a special category visa holder residing in Australia; or

(ii) satisfies subsection (1A); and

(c) the individual's rate of family tax benefit, worked out under Division 1 of Part 4, is greater than nil.

When individual satisfies this subsection

(1A) An individual satisfies this subsection if the individual is the holder of a visa determined by the Minister for the purposes of subparagraph 729(2)(f)(v) of the Social Security Act 1991, and either of the following applies:

(a) the individual is in Australia; or

(b) the individual:

(i) is temporarily absent from Australia for a period not exceeding 26 weeks; and

(ii) the absence is an allowable absence in relation to special benefit within the meaning of Part 4.2 of that Act.

(2)However, the individual is not eligible for family tax benefit if another provision of this Subdivision so provides.

13. In accordance with s 22(1)(a), the Respondent must have at least one family tax benefit child. At the beginning of the 2000-2001 year, Lincoln was 17 years of age. As such he was a family tax benefit child in accordance with section 22(2) of the FA Act which provides :

(2) The individual is an FTB child of the adult if:

(a) the individual is aged under 18; and

(b) the adult is legally responsible (whether alone or jointly with someone else) for the day-to-day care, welfare and development of the individual; and

(c) the individual is in the adult's care; and

(d) the individual is an Australian resident, is a special category visa holder residing in Australia or is living with the adult.

14. Section 22A(1) of the FA Act provides:

Exceptions

22A (1) Despite section 22, an individual cannot be an FTB child of another individual (an adult) in the cases set out in this table:

When the individual is not an FTB child of the adult at a particular time
If the individual is aged:	then the individual cannot be an FTB child of the adult if:
1	5 or more and less than 16	(a) the individual is not undertaking full-time study and the individual has adjusted taxable income, for the income year in which the particular time occurs, that equals or exceeds the cut-out amount (see subsection (2)); or (b) the adult is the individual’s partner.
2	16 or more	(a) the individual has adjusted taxable income, for the income year in which the particular time occurs, that equals or exceeds the cut-out amount (see subsection (2)); or (b) the adult is the individual’s partner; or (c) the individual, or someone on behalf of the individual, is, at the particular time, receiving payments under a prescribed educational scheme.
3	any age	the individual, or someone on behalf of the individual, is, at the particular time, receiving: (a) a social security pension; or (b) a social security benefit; or (c) payments under a program included in the programs known as Labour Market Programs.

15. The Applicant has the power to review decisions under section 105 of the FA Admin Act:

SECTION 105 Secretary may review certain decisions on own initiative

(1) If:

(a) a decision (the original decision) is a decision that, under section 104, the Secretary may review under this section; and

(b) the Secretary is satisfied that there is sufficient reason to review the decision;

the Secretary may review the decision.

Upon review, the Applicant may affirm, vary or set aside the original decision under section 105(4) of the FA Admin Act.

16.     Section 95 sets out the circumstances in which the Applicant may write off a debt owed to the Commonwealth:

Secretary may write off debt

(1) Subject to subsection (2), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.

(2) The Secretary may decide to write off a debt under subsection (1) if, and only if:

(a) the debt is irrecoverable at law; or

(b) the debtor has no capacity to repay the debt; or

(c) the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or

(d) it is not cost effective for the Commonwealth to take action to recover the debt.

17. In addition, sections 97, 101 and 102 of the FA Admin Act make provision for the Secretary to waive the right to recover debts. Section 97 concerns the waiver of debts solely attributable to administrative error:

Waiver of debt arising from error

(1) The Secretary must waive the right to recover the proportion (the administrative error proportion) of a debt that is attributable solely to an administrative error made by the Commonwealth if subsection (2) or (3) applies to that proportion of the debt.

(2) The Secretary must waive the administrative error proportion of a debt if:

(a) the debtor received in good faith the payment or payments that gave rise to the administrative error proportion of the debt; and

(b) the person would suffer severe financial hardship if it were not waived.

18. Section 101 allows for waiver in special circumstances:

Waiver in special circumstances
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.

19. Section 102 allows for the waiver of debts relating to a particular class:

Secretary may waive debts of a particular class

(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.

The latter provision was applied to the Respondent whose debt was reduced by $1,000.

20. The Tribunal notes that section 31 of the FA Admin Act was applied by the SSAT in its decision that Lincoln did not cease to be an FTB child until the time at which his adjusted taxable income equalled or exceeded the limit of $7663.00. Section 31 provides:

Variation of instalment entitlement determination to reflect changes in eligibility

(1) If:

(a) a determination is made under section 16 that a claimant is entitled to be paid family tax benefit by instalment; and

(b) after the determination is made an event occurs; and

(c) when the Secretary becomes aware of the occurrence, the Secretary considers that, if he or she were making the determination immediately after the occurrence, he or she would conclude:

(i) that the claimant was no longer eligible for family tax benefit; or

(ii) that the claimant was still so eligible but that the rate of family tax benefit should be a different rate to the rate previously determined;

the Secretary must, subject to subsection (2):

(d) if subparagraph (c)(i) applies—vary the determination so that the claimant is not entitled to be paid family tax benefit with effect from the date of occurrence; and

(e) if subparagraph (c)(ii) applies—vary the determination so as to establish the different rate with effect from the date of occurrence.

…

(1B) The reference in subsection (1) to the occurrence does not include the occurrence of any event:

(a) that causes the claimant to provide a revised estimate of the claimant's adjusted taxable income to the Secretary; or

(b) that causes the Secretary to revise an estimate of the claimant's maintenance income;

unless:

(c) the event also affects the claimant's eligibility for family tax benefit, or the rate of family tax benefit payable to the claimant, for a reason other than the amount of the claimant's adjusted taxable income or maintenance income; or

(d) the event is the claimant's becoming, or ceasing to be, a member of a couple.

SUBMISSIONS

21. Ms Garcia submitted on behalf of the Applicant that the terms of section 22 of the FA Act mean that in a particular year, if a child has received more income than that allowable, the child cannot be an FTB child for the entire income year. She submitted that this application of section 22 ensures that a consistent outcome is achieved for all families regardless of whether the individual claims and is paid FTB by way of instalments or for a past period. As a result, if a claimant is paid FTB in instalments and the child does exceed the cut-out amount during the relevant income year, then the claimant will have been overpaid and a debt will be raised.

22. It was further submitted for the Applicant that section 105 empowered the Applicant to review the decision to grant the payment on its own initiative.

23. Finally, the Applicant submitted that neither the waiver nor the write-off provisions of the FA Admin Act applied to the Respondent.

24.     The Respondent stated that a Centrelink officer had advised her that she was to notify Centrelink when Lincoln was close to earning $7663.00. She stated that at no point was she advised that the consequences of Lincoln earning over the cut-out amount would be that she would be required to re-pay all payments received under the FTB in the relevant year. In support of this statement she referred the Tribunal to a document provided by the Family Assistance Office and titled “Information for families with children aged 16 to 24” (Exhibit R2). This document outlined the application of FTB for the 2000-2001 year. Although the document states that “the dependent child must have an adjusted taxable income of less than $7663 for the current financial year”, there was no mention of Centrelink’s intention to recover payments made prior to this level of income being reached. In comparison she referred to the current year pamphlet (T12) which states:

“If your child’s income for the 2002-2003 financial year will be more than $8,346 then they are not considered a dependant for the entire 2002-2003 financial year and you cannot receive any Family Tax Benefit for that child”.

25.     In the Respondent’s submission, she should not be penalised for the department’s error in preparing it’s own document.  She considered that there are special circumstances justifying the waiver of her debt.  The Tribunal notes, however, that Ms Humphreys acknowledged that she would not suffer severe financial hardship should she have to re-pay the debt.

CONSIDERATION

26.     The Tribunal had regard to the decision of Deputy President Forgie in Secretary, Department of Family and Community Services v Tough ([2002] AATA 1212). The facts of that case were similar in material respects to this application. The Tribunal said of the issue of whether the Respondent should be regarded as ineligible to receive payments for the whole of the relevant financial year:

“36. That brings me back to the two ways in which a determination can be altered and first to s. 31. I have set s. 31 out in full above (see paragraph 22 above).  It applies where a person is entitled to be paid FTB by instalment under a determination made under s. 16 and there then occurs an event which, if the Secretary were then making a determination, would cause him to conclude that the claimant was no longer eligible for FTB.  The date of effect of the determination is the date of the occurrence.

37.                 In Mrs Tough’s case, a determination had been made under s. 16 that she was entitled to be paid by instalment. If s. 31 applies, the event must have occurred after the date of that determination.  The only event that could be said to have occurred after that date and that would lead the Secretary to conclude that Mrs Tough was no longer eligible for FTB has been that her sons’ adjusted taxable income exceeded the cut-out amount.  Each ceased to be an FTB child as a consequence although at different times of the financial year.  If that is the case, the Secretary must vary the determination so that Mrs Tough was not entitled to be paid FTB.  As the date of effect of the varied determination is the date of the event and as the event must have occurred after the varied determination was made, the date of effect must have been the date on which their adjusted taxable income exceeded $7,633.  It is not the date of the beginning of the financial year for at that time, Mrs Tough’s sons adjustable taxable income had not exceeded the cut-out amount.

38. This interpretation of s. 31 is consistent with s. 25 of the FAA Act.  Section 25 requires a claimant to notify the Secretary of anything that causes him or her to cease to be eligible for FTB on the days on which the claimant “… will become entitled to be paid the benefit under the determination concerned …”..  It does not refer to past eligibility but to future eligibility after the “anything happens”.  That is consistent with the “event that occurs” in s. 31 after the determination is made.

39. If the Secretary’s decision has been made under s. 31 and if no other provision of the FAA Act were relevant in this case, it would follow that Mrs Tough’s entitlement to FTB could not cease until her sons’ adjusted taxable income reached the cut-out amount of $7,633.  Only amounts paid after those dates       would be amounts to which Mrs Tough would not be entitled and which would be a debt due to the Commonwealth. 

40. There is, however, the second avenue by which the Secretary may alter the decision and that is through a review of the earlier decision. The Secretary may do so pursuant to s. 105. The delegate’s decision of 22 May 2001 (see paragraph 28 above) does not refer to s. 105 and nor does it refer to s. 31. Despite that, I consider that it is a decision made under s. 105.  It has three features: first, it states that Brent’s income level exceeded the “child income limit”; second, it purports to deal with Mrs Tough’s entitlement for the whole of the year; and third, it raises a debt for the whole of that period. A decision with those features is not consistent with a decision under s. 31 for a decision under s. 31 could only have affected the payment of FTB from the date of Brent’s income exceeding the cut-out amount. It could not have affected the amount of FTB paid to Mrs Tough prior to that date. A decision under s. 105, however, could have that effect for it may be substituted for the original decision and so affect FTB paid after the date of effect of the original decision i.e. 1 July, 2001. 

41. In using his power under s. 105 to review a determination that Mrs Tough was entitled to FTB, it is proper for the Secretary to consider her eligibility and to do so in light of facts that had happened up to the date of his decision if those facts affected her eligibility on or after 1 July, 2001.  This approach is consistent with the general principles adopted in relation to review by the Tribunal as set out in, for example, Re Tiknaz and Director-General of Social Services (1981) 4 ALN N44 (Davies J, President, Mr Ballard and Dr Garlick, Members) and there is nothing in the FA Act or the FAA Act that suggests that the review is limited to facts that have occurred by a certain time. It is also consistent with the provisions of the FA Act and the FAA Act in so far as they permit a person to apply for FTB for a past period. The eligibility, and so entitlement, of such a person would also be determined by reference to the known income of the person applying for FTB and of his or her child.

42. In the context of eligibility for FTB, one of the facts that may affect her eligibility is the income of Mrs Tough’s children and, in particular, of Brent. That is so because the effect of s. 22A of the FA Act is that Brent cannot be Mrs Tough’s FTB child at “a particular time” if his adjusted taxable income for “the income year in which the particular time occurs” exceeds the cut-out amount.  When regard is had to the income that Brent earned in the year ending 30 June, 2001, his income exceeded that amount.  That means that, at no particular time in that year, could he be an FTB child of Mrs Tough.  As Brent could not be an FTB child at any time during the financial year, Mrs Tough was not entitled to FTB for any period during the financial year for a determination that she is entitled to FTB could only be made under s. 16 of the FAA Act if she was entitled to it.  Consequently, she was not entitled to be paid FTB from 1 July, 2000 to 11 April, 2001 and the amount she was paid is a debt due to the Commonwealth.”

27.     With respect, the Tribunal agrees with and adopts the reasoning of the Deputy President and concludes that Lincoln’s ATI for the 2000/2001 financial year renders him not an FTB child and that, in turn, the Respondent is not entitled to an FTB payment in respect of him for that year.  It follows that the whole amount paid to the Respondent for the 2000/2001 year is a debt due to the Commonwealth.

28. As to whether recovery of the debt should be waived, the Tribunal considered section 97 of the FA Admin Act, which provides for waiver in the case of administrative error by the Commonwealth. Leaving aside the possible error or omission by Centrelink officers in respect of the advice given to the Respondent, it is a requirement of waiver under section 97 that the debtor would suffer severe financial hardship if the debt were not waived. The Respondent conceded that she would not suffer such hardship.

29. The Tribunal also considered section 101 of the FA Admin Act. The only circumstance of a special nature raised by the Respondent is the advice given to her by a Centrelink officer and the raising of the debt against her. The Tribunal agrees with the submission of the Applicant that the Respondent’s circumstances are not special in this respect given that she was one of many people affected by the Applicant’s administration of the legislation at that time.

30. The Tribunal notes that recovery of $1,000.00 of the debt has already been waived by the Applicant pursuant to section 102 of the Administration Act.

31.     The Tribunal therefore concludes that recovery of the debt should not be waived.

DETERMINATION

The decision under review is set aside and in substitution therefor the Tribunal decides that a debt of $1320.76 should be recovered from the Respondent.

I certify that the 54 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N. Bell, Member

Signed: Georgie Zuzak
             Associate

Date/s of Hearing  1 April 2003
Date of Decision  5 June 2003
Counsel for the Applicant         Ms A Garcia
Counsel for the Respondent     Self - Represented