Ibrahim; Secretary, Department of Family and Community Services a Nd

[2004] AATA 12

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 12

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2003/660

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

Applicant

And MOUNA IBRAHIM

Respondent

DECISION

Tribunal M.A. Griffin

Date9 January 2004

PlaceSydney

Decision The decision under review is set aside and in substitution therefor the Tribunal decides that the decision of the Authorised Review Officer dated 24 October 2002 is the correct decision.

[Sgd] M.A.Griffin

Member 

CATCHWORDS

SOCIAL SECURITY - family tax benefit – actual income greater than estimated income - overpayment - debt to Commonwealth – waiver – decision set aside

A New Tax System (Family Assistance) Act 1999 ss. 3(1)58, Schedules 1&3

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

Dranichnikov v Centrelink [2003] FCAFC 133

REASONS FOR DECISION

9 January 2004 M.A. Griffin            

1.      This is an application by the Secretary, Department of Family and Community Services (“the Department”) for review of a decision of the Social Security Appeals Tribunal (“SSAT”) dated 19 March 2003.  The SSAT set aside a decision of an authorised review officer of Centrelink and substituted a new decision that:

·the Commonwealth’s right to recover a debt in the amount of $3190.10 is waived with effect from the date of the original decision; and

·the matter be sent back to the Chief Executive Officer of Centrelink for reconsideration in accordance with directions that a decision to raise and recover a debt in the amount of $817.90 be properly reviewed. 

2. At the hearing of this matter on 20 November 2003, the Department was represented by Ms Hanne Schuster, a Centrelink advocate. Mrs Mouna Ibrahim (“the Respondent”) did not attend the hearing. Her husband, Mr Lofti Ibrahim, represented her. The Tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, and an exhibit marked A1 for the Department.

BACKGROUND

3.      During the financial year 2001/2002, Mrs Ibrahim was in receipt of family tax benefit (“FTB”) which is payable in accordance with the terms of the A New Tax System (Family Assistance) Act 1999 (“the FA Act”) and the A New Tax System (Family Assistance) (Administration) Act 1999 (“the FAA Act”). The FTB was calculated, pursuant to section 58 and schedule 1 of the FA Act, on the basis of an estimated combined income of Mr and Mrs Ibrahim for the 2001/2002 financial year of $26,040.00. In fact, Mr Ibrahim drew an amount of $25,000.00 from his superannuation fund during the year, which increased his taxable income to $40,489.00 for the financial year. As a result, on 13 September 2002, a delegate of Centrelink determined that Mrs Ibrahim had been overpaid an amount of $3,190.10 and that this was a debt due by her to the Commonwealth (T5). On 30 September 2002, the debt was reassessed and determined to be in the amount of $4,007.48 (Exhibit A1, Attachment A). An Authorised Review Officer (“ARO”) affirmed that decision on 24 October 2002 (T15).

ISSUES

4.      The issues in this matter are whether or not Mrs Ibrahim was overpaid an amount of FTB; whether any such amount is a debt due by her to the Commonwealth; and whether any such debt is to be recovered under the family assistance legislation.

EVIDENCE

5.      Mr and Mrs Ibrahim have seven children. Three of the children attend school, two are employed, one as an apprentice and two are unemployed. Mrs Ibrahim has not worked since having an operation on her leg in 1998. Mr Ibrahim said he has not worked since being retired medically unfit in 1999 with a back injury, for which he receives fortnightly workers compensation benefits. Mr and Mrs Ibrahim own their own home.  Mr Ibrahim said the house needed renovation and it was for this purpose that he drew $25,000.00 from his superannuation fund on 3 March 2002. The funds were used to put in a new kitchen, a new bathroom and new flooring. Mr Ibrahim said three of his children suffer from asthma and the old carpets were a major source of irritation for their asthma. He produced a doctor’s certificate (R1) from the family’s GP stating that the children’s “condition has improved with less episodes of exacerbation since tiling of the house (instead of carpet)”.

6.      Mr Ibrahim said he spent at least $30,000.00 on the renovations. He said the extra money over and above the $25,000.00 from his superannuation came from family savings. In a telephone submission after the hearing, Mr Ibrahim claimed this additional money was in fact $6,000.00 given to his wife by their children.

7.      Mr Ibrahim said that when he drew the superannuation funds he did not know it would affect his income for the year. He said the superannuation fund advised him he could take the money without having to pay tax. He said his taxation return for the year was prepared by his accountant and that his declared taxable income was $40,489.00.

8.      I asked Mr Ibrahim about his family’s current personal and financial circumstances. He said that they have no debts but they live from day to day on his wife’s family allowance for two of the children and his compensation payments. He said one daughter receives youth allowance. Mr Ibrahim told the Tribunal that the family maintains four cars and they own their home outright and do not have a mortgage. He said he still has about $200,000.00 in his superannuation fund. In the post-hearing telephone submission Mr Ibrahim claimed his weekly income is $460.

9.      Ms Schuster for the Department said the debt reassessment on 30 September 2002 was conducted after it became known that Adam-Lofti had turned 16 and become eligible for youth allowance on 4 November 2001. Mr Ibrahim accepted that a youth allowance application form had been submitted to Centrelink by the family. As a consequence, Mrs Ibrahim had been entitled to FTB for five children only until 3 November 2001 but she had been paid FTB for five children for the entire financial year.  In addition, Adam-Lofti had been paid the youth allowance since 4 November 2001. Mr Ibrahim said his son was entitled to be paid the money. Ms Schuster showed Mr Ibrahim a series of notices from Centrelink to his wife (T25, T27 T29) requiring her to notify Centrelink of changes in her children’s circumstances such as receipt of a social security benefit or pension. Ms Schuster put it to Mr Ibrahim that his wife had not notified Centrelink about the youth allowance payment to Adam-Lofti. Mr Ibrahim maintained his response that his son was entitled to the payment, that Centrelink knew about it because they paid it to Adam-Lofti and that this was not a debt to his wife.

CONSIDERATION OF ISSUES

10. In accordance with sub-section 58(1), schedule 1 and schedule 3 of the FA Act, Mrs Ibrahim’s FTB had to be calculated in accordance with her and her husband’s taxable income during the financial year 2001/2002. The definition of “taxable income” for these purposes is the same as that in the Income Tax Assessment Act 1936: see subsection 3(1) of the FA Act. I am satisfied that this requires the lump sum of $25,000.00, paid out of the superannuation fund, to be included as taxable income. I am also satisfied that, when this amount was added to the income from other sources, it resulted in an adjusted taxable income for Mrs Ibrahim and her husband in the amount of $40,489.00. Despite the taxation advice Mr Ibrahim was given by the superannuation fund, it is clear that Mr Ibrahim’s accountant considered the payment was taxable income as he included it in the tax return for that year.

11. I find that Mrs Ibrahim received an amount of $15,954.81 by way of FTB during the 2001/2002 financial year based on an estimated income of $26,040.55. I find that Mrs Ibrahim was paid FTB for her son Adam-Lofti from 4 November 2001 while he was in receipt of youth allowance. On the basis of the actual income for that year and Adam-Lofti’s changed circumstances from 4 November 2001, Mrs Ibrahim was entitled to receive only $11,947.33. Therefore, there was an overpayment of $4,007.48. In accordance with sub-section 71(2) of the FAA Act, this constitutes a debt owed by Mrs Ibrahim to the Commonwealth.

12. The legislation contains provisions for waiver of a debt in certain circumstances. Section 97 of the FAA Act enables a debt to be waived if it was attributable solely to an administrative error made by the Commonwealth. In this case, I am satisfied that no such error was made by Centrelink, which relied, at all material times, on the information about income provided by Mrs Ibrahim. I do not accept Mr Ibrahim’s submission that Centrelink is solely at fault because it was made aware of Adam’s changed circumstances through the submission of the youth allowance claim form. I am not satisfied this constructive knowledge amounts to actual notification as required by the several notices sent to Mrs Ibrahim. I accept that Mr Ibrahim was advised he would not have to pay income tax on the superannuation funds, but I am not satisfied that this constitutes an error by the Commonwealth.

13.     In this regard it is significant that in the notice sent to Mrs Ibrahim on 10 April 2002, reference is specifically made to the need to include information about income from sources such as superannuation withdrawals.  The earlier notices and letters sent to Mrs Ibrahim, for example on 27 June 2001, 6 September 2001 and 29 October 2001, did not include that specific reference but, rather, made reference only to the need to provide information about income generally. Nevertheless, those earlier letters advised that her and her husband’s income would be checked with information held by the Australian Taxation Office at the end of each financial year and, therefore, the information sought relates to taxable income even though it does not provide the specific details about superannuation. I am satisfied that this does not constitute any error on the part of the Commonwealth.

14. Under section 101 of the FAA Act, a debt may be waived in special circumstances, other than financial hardship alone. The FAA Act does not provide guidance as to the meaning of the term “special circumstances”. In Dranichnikov v Centrelink [2003] FCAFC 133 at paragraph 65, Hill J, in considering the term “special circumstances”, said:

“65. … The origin of the test apparently adopted by the Secretary appears to be the decision of the first instance Judge in Beadle v Directory-General of Social Security (1985) 60 ALR 225.  That was a decision under previous legislation, the history of which is referred to by French J in Secretary of Department of Social Security v Hales (1998) 82 FCR 154.  The Full Court in Beadle comprising Bowen CJ, Fisher and Lockhart JJ, however, was of the view that it was not possible to lay down precise rules as to what constituted special circumstances under the then s 102(1)(a) of the Social Security Act 1947 (Cth)..  Their Honours point out that the question whether there were special circumstances was one for the decision maker (in that case the Director-General) bearing in mind the purpose for which the power was given.  The reference to the first instance decision from which the words “unusual, uncommon or exceptional” come was not actually affirmed by the Full Court.

66. To some extent the question whether there were special circumstances must depend on how it came about that the error occurred.  Again that is not a matter to which the decision maker apparently averted.  Other cases which have considered analogous words such as “special reasons” has tended to conclude, albeit in different contexts, that what is required will be circumstances which distinguish the case in consideration from the usual case.  There will be a requirement that the circumstances are such that takes the case out of the ordinary: Jess v Scott (1986) 12 FCR 187 and the cases in various contexts in the decision which Lockhart, Shepherd and Burchett JJ discuss.

67. It is possible to read the decision statement as suggesting that the present case was one incapable of falling within the words “special circumstances”..  If that is what was held, it would involve legal error.  However, the real problem with the exercise of discretion under s 101 as with the mandatory provisions of s 97, is that the decision maker appears not to have considered at all what the circumstances were which gave rise to the overpayment.  Whether those circumstances were or were not special will obviously be a matter for the decision maker when the factual circumstances have been ascertained.”

15. Mr and Mrs Ibrahim own their own home, which they have substantially improved recently. They have no mortgage on the home. Their income is small for a large family but they manage to maintain four motor vehicles and have no debts to speak of. It appears the two elder children who are employed and live at home recently gave some $6,000.00 to Mrs Ibrahim for renovations to the home. On the evidence presented, I find that there are no personal or financial circumstances raised by Mr and Mrs Ibrahim that could constitute special circumstances. I do not find anything in the circumstances of the drawing of the superannuation funds, which would distinguish this case from the usual case of overpayment and constitute special circumstances. As a result, Mrs Ibrahim does not satisfy section 101 of the FA Act and the debt may not be waived.

16.      Section 95 of the Act provides for write off of a debt in certain circumstances. A debt is written off if an administrative decision has been made not to seek recovery of the debt at that time. If a debt is written off, the debt still exists and may be recovered later. I have had regard to the words of section 95 and I am satisfied that write off may only occur where the debtor has no capacity to repay the debt. On the evidence before me it is clear that this is not the case, nor are any of the other grounds set out in section 95 made out. Therefore there are no grounds to write off the debt.

17.     For these reasons, the Tribunal finds that the overpayment of FTB totalling $4,007.48 for the relevant period is a debt due to and recoverable by the Commonwealth and that there are no grounds to waive or write off the debt.

DECISION

18.      The decision under review is set aside and in substitution therefore the Tribunal decides that the decision of the Authorised Review Officer dated 24 October 2002 is the correct decision.

I certify that the 18 preceding paragraphs are a true copy of the reasons for the decision herein of M.A. Griffin

Signed:         A. Krilis
  Associate

Date/s of Hearing  20 November 2003
Date of Decision  9 January 2004
Advocate for the Applicant  Ms Hanne Schuster
Representative for the Respondent          Mr Lofti Ibrahim