Ibrahim and Secretary, Department of Family and Community Services - [2000] AATA 928

DECISION AND REASONS FOR DECISION [2000] AATA 928

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N1999/1854

GENERAL ADMINISTRATIVE DIVISION      )
           Re      MOUNA IBRAHIM
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Dr JD Campbell

Date 25 October 2000
Place Sydney

Decision The decision under review is affirmed.

[Sgd] Dr JD Campbell
Member

CATCHWORDS
SOCIAL SECURITY – family payment – use of estimate – lump sum termination payment – overpayment – debt – special circumstances

Social Security Act 1991, ss 885, 1069, 1223, 1237AAD

REASONS FOR DECISION

Dr J D Campbell, Member.

Mrs Ibrahim ("the Applicant") seeks a review of the decision of the Social Security Appeals Tribunal ("the SSAT") dated 29 May 2000. This decision, made pursuant to section 180(2) of the Social Security (Administration)Act 1999 found that the Applicant had received overpayment of family payment of $3527.10 for the period 28 August 1997 to 30 December 1997 and that this was a debt owed to the Commonwealth by the Applicant. Further the decision found that there was no debt owing for 1998. This decision set aside the decision dated 11 August 1999 of the Centrelink delegate of the Secretary, Department of Family and Community Services ("the Respondent") which had been affirmed by an authorised review officer on 10 September 1999.
A hearing was held before the Tribunal on 30 May 2000 at which the Applicant was represented by her husband, Mr Lofti Ibrahim, who also presented evidence to the Tribunal. The Respondent was represented by Mr Kenny, an advocate from the Administrative Law Section of Centrelink.
The following material was placed in evidence before the Tribunal:

Exhibit No.   Description Date
T1-T29 pp 1 – 71 Documents prepared pursuant to section 37 of the Administrative Appeals TribunalAct 1975
R1      Question Guides for the review of Family Payment and Childcare Assistance for 1996, 1997 and 1998
R2      Respondent's Statement of Facts and Contentions     29 May 2000
R3      The Ibrahim family budget

Issues:

The relevant issues in this matter are:
(a)whether Mrs Ibrahim incurred a debt to the Commonwealth of $3527.10 by way of overpayment of family payment for the period 28 August 1997 to 30 December 1997; and
(b)whether Mrs Ibrahim incurred a debt to the Commonwealth by way of overpayment of family payment for the period 7 January 1998 to 8 October 1998; and
(c)whether there is any basis for non-recovery of the whole or any part of the debts.

Legislation:

The relevant legislation in this matter is the Social Security Act 1991 ("the Act") and in particular sections 885, 891, 1069, 1223 and 1237AAD.
Background evidence:
Mr and Mrs Ibrahim and their seven children, aged 21,20,15,14,13,10 and 5, live in their own house upon which there is no mortgage. Mr Ibrahim stated that he was born in Palestine in 1946 and moved to Lebanon in 1948, where he was educated to year ten. He worked in a factory in Germany for two years prior to coming to Australia in 1972. He married in 1977 and the three eldest children now work and study – one at university, another having left school and the other seeking an apprenticeship. The family has two cars, a 1985 Ford Falcon, and a newly purchased car by the elder child. Both the home and the Falcon are said to be in need of significant repair.
Mr Ibrahim stated that he worked for State Rail for 25 years prior to being medically retired on 25 July 1997, following a work related accident and injury on 6 June 1986 resulting in him being unfit for any duties. He received his final termination pay on 27 August 1997, and he assumed that these payments were more of a gift than income, which he has found to be a mistaken belief. Mr Ibrahim stated that he has not worked since because of his back and leg injury, and that he looks after his wife's affairs.
On 15 October 1996 the Applicant completed a "review of your family payment and childcare assistance form" and lodged it with the Respondent on 17 October 1996, indicating that her husband's taxable income for 1995/96 was $36,437 (T4). An income and assets form was lodged with the Respondent on 23 November 1996 by the Applicant, nominating taxable income for her husband for 1994/95 as $40,344 and a combined estimated taxable income for 1996/97 of $24,405 (T5).
On 23 July 1997 Mr Ibrahim was advised of his workers compensation entitlements associated with his proposed retirement from State Rail, and this included $213.70 for himself, $48.40 per week for his wife and $24.50 per week for each dependent child (T7).
A completed change to income and assets form was lodged by the Applicant with the Respondent on 21 August 1997, stating that Mr Ibrahim had been medically retired on 25 July 1997; that combined taxable income for 1996/97 was $25,250 and that estimated combined taxable income was $22,568. Further the Applicant requested that this estimate be used to calculate family payment (T9).
The Respondent advised the Applicant on 25 August 1997 of her rate of family payment, indicating that such a rate had been calculated using the estimate of combined income of $22,568 and further notifying that she must inform the Respondent if combined income was to exceed $29,117 (T10).
On 26 August 1997 State Rail paid Mr Ibrahim termination pay for long service leave, unused holiday pay and leave loading of $27,414 and an eligible termination payment of $3406 (T11).
On 28 October 1997 the Applicant completed a review of family payment and childcare assistance assessment form in which she confirmed combined taxable income for 1996/97 as $25,250 (T14). On 15 December 1997 the Respondent wrote to the Applicant and again stated that the family payment rate was calculated using the estimate provided for 1997/98 of $22,568 and informing the Applicant that she must inform the Respondent if income was to exceed $29,172.00 for 1997/98 (T15).
On 24 April 1998 a further letter was forwarded by the Respondent to the Applicant stating that her rate of family allowance had been calculated using an estimate of combined taxable income for 1997/98 of $22,568 and telling the Applicant that she must notify the Respondent if combined taxable income for 1997/98 was to exceed $29,172 (T16).
Data matching activity confirmed the Respondent's combined taxable income for 1997/98 was $48,084 (T20). This amount was also confirmed by the Applicant when she completed the review of family payment and childcare assistance form on 8 October 1998 in which she further estimated combined income of $22,790 for 1998/99 (T21).
Submissions:
The Applicant submitted that the source of his difficulties was the receipt of the termination pay and the various elements that went to make up that amount. He held a mistaken belief, as he now knows, that these sums did not constitute income. Mr Ibrahim further contended that there were issues of financial concern as noted in a careful analysis of the annual operating budget, particularly when expenditure on food, clothing, footwear, entertainment, pharmaceuticals and house and car maintenance was included.
The Respondent submitted that an overpayment of family payment had occurred for the period 28 August 1997 to 10 December 1997 and a debt of $3527.10 was owed to the Commonwealth. This overpayment had arisen as a consequence of the Applicant nominating an estimate of income of $22,568, requesting it to be used for calculation of family payment, and despite receiving letters from the Respondent, the Applicant failed to update this estimate when the termination payments were received.
In relation to the overpayments received by the Applicant during calendar year 1998, the Respondent submits that such overpayments are not recoverable as section 1065-H15 does not permit in the circumstances of this matter that the current tax year be retained. As such, family payment for calendar year 1998 must be paid at a rate calculated using base tax year (1996/97) income of $25,250, as there is no basis for the use of an estimate to calculate family payment in 1998 in the absence of a notifiable event.
The Respondent contends that there has been no administrative error demonstrated in the payment of family payment to the Applicant. Further it is submitted that there are no circumstances which would or could be seen to be unusual, uncommon or exceptional and hence waiver of debt for special circumstances is not appropriate.
Considerations and findings:
In preliminary consideration, the Tribunal expresses appreciation for the relative frankness with which the Applicant expressed his understanding as to how the circumstances evolved in this matter. The Tribunal having carefully considered the evidence in this matter, makes the following findings of fact:
(a)the Applicant's combined taxable income for 1994/95 was $40,344;
(b)the Applicant's combined taxable income for 1995/96 was $36,437;
(c)the Applicant's combined taxable income for 1996/97 was $25,250;
(d)the Applicant's estimated combined taxable income for 1997/98 was $22,568;
(e)the Applicant's actual combined taxable income for 1997/98 was $48,084;
(f)the Applicant's income free tax area for 1997/98 was $25,896;
(g)the variation between the 1997/98 estimate of $22,568 and actual income of $48,084 resulted from the Applicant's husband's receipt of his termination pay on 26 August 1997 of $27,414;
(h)the Applicant was instructed to notify the Respondent if combined taxable income for 1997/98 was to exceed $29112 (25 August 1997) and $29172 (28 October 1997);
(i)the Applicant did not notify the Respondent of any increase in income for 1997/98, until notification on 8 October 1998;
(j)the Applicant did request the use of the estimate of $22,568 for 1997/98 to be used for calculation of the rate of family payment.

The Statutory Framework:

The relevant legislation in this matter is as follows:
Recalculation if income exceeds 110% of estimated amount
885.(1) If:
(a)in working out the rate of family allowance payable to a person, regard is had to the person's income for a tax year; and
(b)the income to which regard was had consisted of an amount estimated by the person; and
(c)the person's income for that tax year is more than 110% of the amount of the income on which the determination of the rate of family allowance was based;
the person's rate of family allowance is to be recalculated on the basis of that income.
Change to appropriate tax year at recipient's request
1069-H20. If:
(a)a person requests the Secretary to make a determination under point 1069-H21; and
(b)as a result, the Secretary determines under that point that the appropriate tax year, for the purpose of applying this Module to the person on or after the day on which the request is made, is the tax year in which the person makes the request;
the appropriate tax year, for that purpose, is the tax year in which the person makes the request.
Family payment recipient may ask Secretary to change appropriate tax year
1069-H21. If:
(a)       family allowance:
(i)        is not payable to a person because of this Module; or
(ii)       is payable at a reduced rate because of this Module; and
(b)the person gives the Secretary an estimate of the person's income for a tax year; and
(c)the person requests the Secretary to make a determination under this point; and
(d)the person agrees that the person's rate of family allowance for that tax year is to be recalculated if the person's actual income for that tax year exceeds 110% of the amount estimated by the person;
Base tax year
1069-H14. The base tax year for a day is the tax year that ended on 30 June in the calendar year that came immediately before the calendar year in which the day occurs.
Current tax year to be retained for consecutive calendar years in certain circumstances
1069-H15. If:
(a)       family payment is payable to a person:
(i) on the last family payment payday in one calendar year; and
(ii) on the first family payment payday in the next calendar year; and
(b)the person's family payment rate on the last family payment payday in the earlier of the 2 calendar years is worked out on the basis that the person's appropriate tax year is the tax year in which that payday occurs (the current tax year); and
(c)the person's family payment rate on that day was worked out on that basis because the person had made a request under point 1069-H21; and
(d)the person's income for the current tax year is less than the person's income for the base tax year;
the person's appropriate tax year, as from the beginning of the later calendar year, is the current tax year and not the base tax year unless the income for the base tax year is less than the person's income free area.
1223.(3) Subject to subsection (4), if;
(a)       an amount (the 'received amount') has been paid to a person by way of family allowance; and
(b)       the person's rate of family allowance is recalculated under:
(i)        section 884 (amendment of assessable income); or
(ii)       section 885 (underestimate of income) ; or
(iii)      section 886 (failure to notify notifiable event); or
(iv)      section 886A (overestimate of child maintenance expenditure); and
(c)       the received amount is more than the amount (the 'correct amount') of the family allowance payable to the person;
the difference between the amount and the correct amount is a debt due to the Commonwealth.
Waiver in special circumstances
1237AAD. 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 false representation; or
(ii)failing or omitting to comply with a provision of this Act or the 1947    Act; 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.

In applying the facts to the legislative framework, it is evident that the Applicant did provide an estimate of combined income of $22,568 for year 1997/98 and did request that the estimate be used and was made aware and agreed that if her actual income for the tax year was to exceed the estimate by 110%, her rate of family payment would be recalculated pursuant to section 1069-H21. The appropriate tax year for calculating the rate of family payment for the remainder of calendar year 1997 was 1997/98.
As a consequence of the actual combined income being $48,084 for 1997/98, the estimate was exceeded by 110%. Pursuant to section 885 of the Act, the Applicant's rate of family payment is recalculated on the basis of the actual income, with section 891 determining that the date of effect of the recalculation is the date of the original determination, namely 28 August 1997.
As a consequence the Tribunal finds that the Applicant received an overpayment of family payment of $3527.10 for the period 28 August 1997 to 30 December 1997.
In relation to payments in 1998, section 1065-H15 sets out the circumstances in which the current tax year is to be retained for consecutive tax years. The Tribunal notes that sections 1069-H15(a), (b), (c) and (d) are satisfied in that the Applicant's estimated income for the current tax year 1997/98 $22,568 is less than the combined income for the base tax year 1996/97 ($25,250). With these elements satisfied, the Applicant's appropriate tax year, as from the beginning of 1998 is the current tax year (1997/98) and not the base tax year (1996/97), unless the income for base tax year (1996/97) is less than the Applicant's income free area. The Tribunal having previously determined that the Applicant's combined income for the base tax year 1996/97 was $25,250 and the income free area was $25,896, finds that section 1069-H15 is not satisfied and accordingly the Applicant's rate of family payment for calendar year 1998 should be calculated on the base tax year (1996/97) income of $25,250. Such a determination of rate of family payment should continue, unless a notifiable event occurs. The Tribunal finds that no such event occurred, and as such finds that no overpayment of family payment or debt accrued by the Applicant for the period 1 January 1998 to 8 October 1998.
In summary the Tribunal finds that there has been overpayment of family payment to the Applicant of $3527.10 for the period 28 August 1997 to 30 December 1997, which pursuant to section 1223(3) is a debt due to the Commonwealth.
In final consideration the Tribunal observes that there is no evidence of administrative error in this matter. Further the financial circumstances enumerated by the Respondent on the Applicant's behalf indicate an income and expenditure stream which like so many families with children to educate, demonstrates some budgetary difficulty, but not in the Tribunal's finding to be considered uncommon, unusual or exceptional. The Tribunal finds that there are no special circumstances which would allow the debt to be waived, nor at the time of the hearing was there sufficient financial definition to suggest that the Applicant was in a position to consider that the debt should be written off pursuant to section 1236 of the Act, as the Tribunal considered that the Applicant did possess the capacity to pay and that it was cost effective to recover the debt by way of withholdings from continuing social security entitlements.
Determination:
The Tribunal determines that the decision under review is affirmed.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for the decision herein of Dr J D Campbell
Signed:         .....................................................................................
  Associate
Date/s of Hearing  30 May 2000
Date of Decision  25 October 2000
Representative for the Applicant   Mr Lofti Ibrahim
Advocate for the Respondent       John Kenny