Irvine; Secretary, Department of Social Services and (Social services second review)
[2016] AATA 306
•13 May 2016
Irvine; Secretary, Department of Social Services and (Social services second review) [2016] AATA 306 (13 May 2016)
Division
GENERAL DIVISION
File Number(s)
2015/3638
Re
Secretary, Department of Social Services
APPLICANT
And
Ian Irvine
RESPONDENT
DECISION
Tribunal Deputy President Dr P McDermott RFD
Date 13 May 2016 Place Brisbane I set aside the decision of the Social Security Appeals Tribunal of 8 June 2015. I substitute a decision affirming the decision made by a delegate of the Secretary on 15 September 2014 and affirmed by an Authorised Officer on 21 February 2015 that the respondent is not entitled to the full FTB entitlement (also referred to as FTB top up), including the FTB supplement.
........................................................................
Deputy President Dr P McDermott RFD
Catchwords
FAMILY TAX BENEFIT - late lodgement of taxation return – failure of respondent’s accountants to lodge income tax return – whether special circumstances – decision under review set aside and substituted
Legislation
A New Tax System (Family Assistance) Act 1999 (Cth) ss 21, 26
A New Tax System (Family Assistance) Administration Act 1999 (Cth) s 32B
Family Assistance and Other Legislation Amendment Act 2013 (Cth)
Tax Agent Services Act 2009 (Cth) s 30.10
Cases
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Beadle v Director-General of Security (1984) 6 ALD 1Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60
Secondary Materials
Sir Anthony Mason, ‘Administrative Review: The Experience of the First Twelve Years’ (1989) 18 Federal Law Review 122, 127
The Honourable Justice Duncan Kerr, ‘Challenges Facing Administrative Tribunals – The Complexity of Legislative Schemes and Shrinking Space for Preferable Decision-Making’ (Speech delivered at the Council of Australasian Tribunals, 18 November 2013)
REASONS FOR DECISION
Deputy President Dr P McDermott RFD
13 May 2016
INTRODUCTION
In the 2012-2013 income year, Mr Ian Irvine (“the respondent”) received instalment payments of Family Tax Benefit (“FTB”) which were based on estimates of income that he provided. The respondent was a member of a couple. Both members were required to lodge an income tax return for the 2012-2013 income year.
The respondent and his partner were required to lodge their income tax returns by 30 June 2014 to obtain the FTB supplement and top-up for the 2012-2013 income year. There is an exception to this requirement if special circumstances prevented him and his partner from lodging their returns before the end of that first income year. On 10 July 2014 the respondent and his partner both lodged their income tax returns for the 2012-2013 income year. I have to determine whether there are special circumstances which prevented them lodging their income tax returns before 30 June 2014.
BACKGROUND
On 10 February 2014 Centrelink sent the respondent a letter which contained the following information:[1]
From 2012-13 financial year onwards, you now have one year instead of two years to:
- submit a lump sum claim for Family Tax Benefit, and/or Child Care Benefit
- confirm your income for Family Tax Benefit – this means that you and your partner (if you have one) need to lodge your tax return/s with the Australian Taxation Office, or tell us that you do not need to lodge a tax return…
If you have not already claimed family assistance payments for the 2012-2013 financial year, and you intend to do so, you will need to submit a claim and confirm your income by 30 June 2014.
[1] Exhibit A: T-Documents. T9: Letter dated 10 February 2014.
On 18 March 2014 Centrelink sent the respondent a letter which contained the following information:[2]
[2] Exhibit A: T-Documents. T10: Letter dated 18 March 2014.
… You now only have one year instead of two years to lodge a tax return in order to receive your full Family Tax Benefit entitlements. … To make sure you receive your full Family Tax Benefit entitlement, you and your partner need to lodge a 2012-2013 tax return, or tell us if you and/or your partner are not required to lodge a tax return, by 30 June 2014. There are benefits to lodging your 2012-2013 tax return or telling us if you are not required to lodge a tax return before 30 June 2014. These include:
- Top up payment – if you were underpaid Family Tax Benefit, you may receive any payment owing as a lump sum.
- Family Tax supplements – depending on your circumstances, you may be entitled to an additional lump sum Family Tax Benefit supplement after the end of the financial year.
…
If you and your partner have not lodged a tax return or you have not advised us that you and your partner are not required to lodge tax return/s by 30 June 2014:
- you will not be eligible for any further Family Tax Benefit, including Family Tax Benefit supplements, for the 2012-2013 financial year
- you will have to pay back all of the Family Tax Benefit you received for the 2012-2013 financial year, and
- you will no longer be able to receive Family Tax Benefit payments fortnightly.
What you and your partner need to do
1. Lodge your 2012-2013 return/s with the Australian Taxation Office before 30 June 2014. The Australian Taxation Office will then advise us of your income. Please note that supplying details to your accountant or tax agent does not mean that your tax returns have been lodged with the Australian Taxation Office.
OR
2. Tell us that you and/or your partner are not required to lodge a tax return for 2012-13. You need to tell us and confirm your income before 30 June 2014.
On 10 July 2014 the respondent and his partner lodged their income tax returns for the 2012-2013 income year with the Australian Taxation Office (“ATO”) through their tax agent.
On 15 September 2014 Centrelink advised the respondent that he was not entitled to the full FTB entitlement, including the FTB supplement. On 19 September 2014 the decision was referred to an Authorised Review Officer (“ARO”) who affirmed the decision on 21 February 2015. On 8 June 2015 the decision was set aside by the SSAT.
LEGISLATIVE FRAMEWORK
The respondent satisfied the eligibility requirements for the payment of FTB under s 21 of the A New Tax System (Family Assistance) Act 1999 (Cth) (“the Act”). Section 26 of the Act provides that only one member of a couple may be eligible for the payment of FTB.
The Secretary will determine which member of a couple is eligible by regard to which member has primary care of the FTB child and whether the members of the couple have made a written agreement nominating one of them as the person who can make a claim in respect of the child.
The respondent was paid instalments of FTB during the 2012-2013 income year. Section 32B of the A New Tax System (Family Assistance) Administration Act 1999 (Cth) (“the Administration Act”) enables there to be reconciliation of entitlement to FTB for the year once the actual income of a couple in that year had been determined. Under s 32B of the Administration Act, reconciliation may be made where the respondent (as the first individual) satisfies s 32C of that Act.
The former s 32C of the Administration Act applies in this case where an individual is a member of a couple and required to lodge an income tax return. This provision was amended by the Family Assistance and Other Legislation Amendment Act 2013 (Cth) and came into force on 28 June 2013.
At the end of the 2012-2013 income year, s 32C of the Administration Act then provided:
(1) This section applies to the first individual for a same-rate benefit period if:
(a) the first individual was a member of a couple throughout the same-rate benefit period; and
(b) the first individual or the other member of the couple is or was required to lodge an income tax return for the relevant income year; and
(c) the first individual continues to be a member of the couple until the end of the latest of the following:
(i) the first income year after the relevant income year;
(ii) such further period (if any) as the Secretary allows for the first individual to lodge the return, if the Secretary is satisfied that there are special circumstances that prevented the first individual from lodging the return before the end of that first income year;
(iii) such further period (if any) as the Secretary allows for the other member of the couple to lodge the return, if the Secretary is satisfied that there are special circumstances that prevented the other member from lodging the return before the end of that first income year.
(2) If only one member of the couple was required to lodge an income tax return for the relevant income year, the relevant reconciliation time is the time when an assessment is made under the Income Tax Assessment Act 1936 of the member’s taxable income for the relevant income year, so long as the member’s income tax return for the relevant income year was lodged before the end of:
(a) the first income year after the relevant income year; or
(b) such further period as the Secretary allows for that member under subparagraph (1)(c)(ii) or (iii), as the case requires.
(3) If:
(a) both members of the couple were required to lodge an income tax return for the relevant income year; and
(b) each member of the couple lodged an income tax return for the relevant income year before the end of:
(i) the first income year after the relevant income year; or
(ii) such further period as the Secretary allows for that member under subparagraph (1)(c)(ii) or (iii), as the case requires;
the relevant reconciliation time is whichever is the later of the following:
(c) the time when an assessment is made under the Income Tax Assessment Act 1936 of the first individual’s taxable income for the relevant income year;
(d) the time when an assessment is made under the Income Tax Assessment Act 1936 of the other member’s taxable income for the relevant income year.
(4) The further period under subparagraph (1)(c)(ii) or (iii) must end no later than the end of the second income year after the relevant income year.
A subsequent replacement provision of s 32C of the Administration Act did not amend the relevant reconciliation time for the first individual who was a member of a couple.
Item 56(2) of Schedule 2B of the Family Assistance and Other Legislation Amendment Act 2013 (Cth) (“the amending Act”) clarifies that the amendments made to s 32C apply in relation to a relevant income year referred to in subsection 32A(1) of the Administration Act, that is, the 2012-13 income year or a later income year. The amended form of s 32C that is reproduced above therefore applies to the 2012-2013 income.
To obtain the FTB supplement and top up for the 2012-2013 income year, the respondent was required by s 32C(1)(c)(ii) and (iii) of the Administration Act to lodge his income tax return before the first income year after the relevant income year. This effectively meant that the return had to be lodged by 30 June 2014. However, there is an exception to this requirement if special circumstances prevented him from lodging his return before the end of that first income year.
CONSIDERATION
The respondent and his partner both lodged their income tax returns after 30 June 2014. I have to determine whether there were special circumstances that prevented them from lodging their income tax return before the end of the first income year after the 2012-2013 income year. If there are special circumstances then the reconciliation conditions in s 32C(1)(c)(ii) and (iii) of the Administration Act will be satisfied.
In Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 at [33], Besanko J explained what is required for there to be special circumstances:
I also note that the authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances. The danger is that the test will be overstated if the word ‘exceptional’ is emphasised. It was not the intention of Parliament to confine the exercise of the discretion to an exceptional case. There is less risk of overstatement if the words ‘unusual’ or ‘uncommon’ are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case. It may not be easy to postulate the ordinary or usual case other than in quite general terms and, in doing so, close attention must be given to the particular statutory context.
There is evidence that in March 2014 the respondent and his partner submitted all their tax details with their tax agent, Grow Accounting.[3] The tax agent required that their professional costs be paid before they would prepare the income tax returns.[4] Their income tax returns were prepared and signed by them and returned to the tax agent. The relevant documentation was sent to them on 22 April 2014 by email.
[3] Exhibit A: T-Documents. T2.
[4] Exhibit A: T-Documents. T14.
The Director of Grow Accounting in an undated letter stated:[5]
The returns were completed & ready to lodge 17th April 2014 however where [sic] not lodged until 10th July 2014.
In that letter the Director stated that the income tax returns were not lodged “due to an internal bookkeeping error" without providing any explanation of the nature of that error. There is one aspect of the letter of Grow Accounting that causes me concern. I cannot accept that the income tax returns were ready to lodge on 17 April 2014. This is because there is evidence that the relevant documentation had not been signed before 22 April 2014. The income tax returns could not be lodged before that documentation had been signed. In the circumstances I do not give that letter any weight.
[5] Exhibit A: T-Documents.T16.
The respondent stated that the tax agent did not lodge the income tax returns because of an erroneous belief that their professional costs had not been paid. The respondent had in fact paid the tax agent some costs in March 2014 and the balance after the tax invoice was tendered on 22 April 2014. The respondent had subsequently provided the tax agent with the payment details on two occasions. The tax agent later acknowledged that the professional costs had been paid.
I do not consider that in this case there are special circumstances that prevented the respondent and his partner from lodging their tax returns for the 2012-2013 income year by 30 June 2014. In Beadle v Director-General of Security (1984) 6 ALD 1 it was explained (at 3) that “special circumstances” is by its very nature incapable of precise or exhaustive definition. I do not consider that there is any reason why the failure of the tax agent to lodge the income tax returns on time can fairly be regarded as “special circumstances” when the tax agent has not provided any explanation of why the income tax returns were not lodged on time. It is difficult to find that there are special circumstances when there is no full explanation before the Tribunal.
The respondent may have a means of redress against the tax agent for the loss that he has sustained. Tax agents have a responsibility under the Code of Professional Conduct to provide services competently.[6]
[6] See Tax Agent Services Act 2009 (Cth) s 30.10.
I have earlier mentioned the respondent had been sent two letters on 10 February 2014 and on 18 March 2014 to advise him of the changed reconciliation procedures. The respondent accepted that he was aware of the requirement to lodge his and his partner’s income tax returns by 30 June 2014. The applicant informed the SSAT that it was after the cut-off date that he learned that the income tax return had not been lodged (although before that date he had on two occasions informed the tax agent that he had paid the professional costs).[7]
[7] Exhibit A: T-Documents. T2, p. 6.
In this case the applicant has relied upon an internal Centrelink policy which provides:[8]
Special circumstances are by their very nature incapable of precise or exhaustive definition. ‘Special circumstances’ are generally due to situations that are unusual, uncommon or exceptional and each situation must be assessed on an individual basis.
A special circumstances extension should only be granted in limited situations where the customer and/or their partner, has been prevented from meeting the relevant requirements by the end of the lodgement year. The circumstances must be solely due to circumstances which are unusual or exceptional and are outside of the customer’s control.
[8] Exhibit B: Centrelink Internal Policy Manual.
I do not give any weight to that internal Centrelink policy.[9] In Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 at 70, Bowen CJ and Deane J remarked:[10]
….the Tribunal is not, in the absence of specific statutory provision, entitled to abdicate its function of determining whether the decision made was, on the material before the Tribunal, the correct or preferable one in favour of a function of merely determining whether the decision made conformed with whatever the relevant general government policy might be.
[9] Ibid.
[10] See also, Sir Anthony Mason, ‘Administrative Review: The Experience of the First Twelve Years’ (1989) 18 Federal Law Review 122, 127; the Honourable Justice Duncan Kerr, ‘Challenges Facing Administrative Tribunals – The Complexity of Legislative Schemes and Shrinking Space for Preferable Decision-Making’ (Speech delivered at the Council of Australasian Tribunals, 18 November 2013). Retrieved from:
The internal Centrelink policy does not have any statutory foundation.
I find that the respondent has not satisfied the reconciliation conditions required under s 32C(1)(c)(ii) and (iii) of the Administration Act and is not entitled to the FTB top up and supplement for the 2012-2013 income year.
DECISION
I set aside the decision of the Social Security Appeals Tribunal of 8 June 2015. I substitute a decision affirming the decision made by a delegate of the Secretary on 15 September 2014 and affirmed by an Authorised Officer on 21 February 2015 that the respondent is not entitled to the full FTB entitlement (also referred to as FTB top up), including the FTB supplement.
I certify that the preceding 27 (twenty-seven) paragraphs are a true copy of the reasons for the decision herein of Deputy President Dr P McDermott RFD ........................................................................
Associate
Dated 13 May 2016
Date(s) of hearing 7 March 2016 Solicitors for the Applicant Ms C Campbell, Sparke Helmore Respondent In person
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