Ishak and Secretary, Department of Family and Community Services

[2003] AATA 1288

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 1288

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2002/1683

GENERAL ADMINISTRATIVE DIVISION		)
Re		SONYA ISHAK

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Michael Sassella, Senior Member

Date17 December 2003

PlaceSydney

Decision The decision under review is varied to the extent that Family Tax Benefit and Child Care Benefit debts totalling $5,245.08 (that is $3,872.54 in respect of Family Tax Benefit and $1,372.54 in respect of Child Care Benefit) are recoverable from Mrs Ishak.

(sgd) M J Sassella

Senior Member

CATCHWORDS

SOCIAL SECURITY - Family Tax Benefit – Child Care Benefit – benefits overpaid – debt due to Commonwealth exists – debt caused by sole administrative error within Centrelink – erroneous income estimate recorded by Centrelink - overpaid benefit received in good faith – recovery would not cause severe financial hardship – debt not waived

A New Tax System (Family Assistance) Act 1999 Division 4 of Part 4, Schedule 1, Schedule 2, Schedule 3

A New Tax System (Family Assistance) (Administration) Act 1999 s 20, s 71(2), s 71C, s 82, s 95, s 96, s 97 and s 101

Social Security Act 1991 s 1236 and s 1237A

Beadle v Director-General of Social Security (1985) 7 ALD 670

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Re Bestle and Secretary, Department of Family and Community Services [1999] AATA 867

Re Carney and Secretary, Department of Family and Community Services [2000] AATA 406

Re L and Secretary, Department of Social Security (1995) 38 ALD 176

Re Perks and Secretary, Department of Family and Community Services [2000] AATA 671

Re Perry and Secretary, Department of Family and Community Services

Re Secretary, Department of Family and Community Services and Williams [2000] AATA 23

Re Vitalone and Secretary, Department of Social Security (1995) 38 ALD 169

REASONS FOR DECISION

17 December 2003 Michael Sassella, Senior Member           

RESULT

Although Mr and Mrs Ishak gave all necessary information about Mr Ishak’s income to Centrelink, that agency erroneously operated on the basis of an estimate of nil for Mr Ishak’s income in the relevant year.  As a result Mrs Ishak received the benefit of overpayments of Family Tax Benefit and Child Care Benefit.  These overpayments were in total a debt due to the Commonwealth.  Although such a debt can be waived where the debt results, as here, from Centrelink’s administrative error and the money is received in good faith, as it was here, waiver is not possible where recovery of the debt would not cause severe financial hardship.  The Ishaks have sufficient funds in the bank to repay the debt without suffering severe financial hardship.  Waiver is not possible.

BACKGROUND

1.      Sonya Ishak (“the applicant”) was paid Family Tax Benefit (“FTB”) in the year 1 July 2001 to 30 June 2002.  Centrelink, the agency administering social security benefits on behalf of the Secretary, Department of Family and Community Services (“the respondent”), wrote to Mrs Ishak on 2 August 2002 seeking to recover a debt of $3,872.54 because Mrs Ishak had allegedly underestimated her husband’s income for the 2001-2002 financial year.

2.      The Social Security Appeals Tribunal (“SSAT”) had reduced the quantum of the debt by $932.58 on 11 October 2002.  Both the applicant and the respondent are dissatisfied with the SSAT’s decision.  Mrs Ishak seeks to have the debt waived so that nothing is repayable.  The Secretary seeks to recover all of the sum originally assessed.  Mrs Ishak appealed to the Administrative Appeals Tribunal (“the tribunal”).

ISSUES

3.      The issues arising are:

(a)Is there a FTB debt?

(b)If the answer to (a) is yes, what is the correct quantum of the debt?

(c)If the answer to (a) is yes, can the debt be waived because of administrative error by Centrelink and Mrs Ishak’s receipt of the FTB money in good faith?

FINDINGS ON MATERIAL QUESTIONS OF FACT WITH REFERENCE TO THE EVIDENCE AND OTHER MATERIAL IN SUPPORT OF THOSE FINDINGS

(A) Is there a FTB debt?

4.      FTB is paid according to provisions in the A New Tax System (Family Assistance) Act 1999 (“the FAA”)[1]. Schedule 1 of the FAA provides a rate calculator for FTB. The Schedule clarifies the following:

(a)FTB is paid at an “annual rate”.

(b)There is a FTB Part A rate and a FTB Part B rate.  FTB Part A is in principle payable to any person with a dependent child under 21 or a student child aged 21 to 24.  An income test applies.  In principle FTB Part B is payable in addition to FTB Part A to a family with one main income and with at least one child aged under 16 or a student child aged under 18 who does not receive Youth Allowance.  Thus the one family can attract payment of both Part A and Part B.

(c)A person’s income for FTB purposes is his or her “adjusted taxable income” which is ascertained from Schedule 3 of the FAA. A person’s adjusted taxable income is his or her taxable income plus a fringe benefits total (based on the person’s reportable fringe benefits under taxation legislation), plus certain foreign income which has escaped the tax system, plus net rental property loss, plus the person’s tax free pension or benefit for the year, less the person’s deductible child maintenance.

(d)The person’s income for FTB purposes includes that person’s partner’s adjusted taxable income if the person is a member of a couple, as Mrs Ishak is.

(e)The person’s “higher income free area” is identified.  This determines the rules to be applied in calculating the person’s rate of FTB.  The amount per year is $82,052 as of 20 September 2003.  It is increased by $3,285 for each FTB child the person has over and above one FTB child.  Method 1 for calculating FTB Part A is applied where the person’s adjusted taxable income is below the higher income free area.  Method 1 was applied in Mrs Ishak’s case.

(f)The way the rate calculator for FTB Part A works is that the person’s maximum rate of FTB Part A is identified. This is the total of the maximum rates payable for each child. A child attracts a maximum rate, expressed as an annual rate in the FAA, according to age.. As at 20 September 2003, for example, a child aged under 13 years attracts an annual rate of $3,401.80 and a child aged 18-24 years attracts $1,470.95 a year. There is a “base rate” also which applies to each child. This was $1,095.00 a year for a child under 18 years and $1,470.95 for a child aged 18-24 years. This maximum rate is then affected by the person’s adjusted taxable income. If taxable income is $31,755 or less (as at 20 September 2003) the maximum rate is payable. Above $31,755 the person loses 30 cents in the dollar until the person is paid only at the base rate. The person then receives the base rate until adjusted taxable income reaches the higher income free area. Above that level FTB Part A is reduced by 30 cents in each dollar until a nil rate is reached.

(g)FTB Part B is simpler to calculate.  The maximum rate for a person is $2,920 a year, as of 20 September 2003, where the youngest child is under five years.  Where the youngest child is aged five to 15 (or 16-18 but a student child) the maximum rate is $2.036.70 a year.  The income test applies to the “secondary earner”, ie usually the member of a couple who is in employment.  The secondary earner can earn, as of 20 September 2003, up to $1,825 a year before FTB Part B is affected.  Above that figure the annual FTB Part B rate is reduced by 30 cents in each dollar. 

[1] can be received fortnightly or at the end of the financial year.  Mrs Ishak was paid fortnightly in the relevant year.  The A New Tax System (Family Assistance) (Administration) Act 1999 (“the FA Admin Act”)[2] deals with the processes for determining whether a claimant qualifies for FTB and, if so, at what rate. Payment in a particular financial year, in Mrs Ishak’s case in this application in 2001-2002, is at a rate based on the claimant’s situation in that year. The claimant’s number of children and their ages and the income of the claimant and her partner are two of a number of relevant considerations. Centrelink has to make a determination based on Mrs Ishak’s estimate of her taxable income. Section 20 of the FA Admin Act permits the respondent to utilise an estimate in assessing a person’s rate of FTB for the year. Section 20(1)(d) requires that the Secretary must consider the estimate to be reasonable.

[2] Mrs Ishak’s case Centrelink paid FTB to Mrs Ishak as follows.  From 1 July 2001 she was paid according to an estimate of the income of herself and her husband totalling $74,060.  This translated to a FTB Part A rate of $74.76 on 2 July 2001, $78.36 on 16 July 2001, and then $78.96 every fortnight until 31 December 2001.  On 31 December 2001 and every fortnight from then until 17 June 2002 she was paid $351.40, being FTB Part A paid at $245.84 a fortnight and FTA Part B paid at $105.56 a fortnight.

7.      The change in December 2001 was brought about by Mr Ishak being retrenched from his employment from the close of business on 7 December 2001.  That required a revised estimate of Mrs Ishak’s adjusted taxable income which would then be less than the $74,060 being maintained by Centrelink.  Mr Ishak telephoned the Centrelink call centre on 14 December 2001 and was connected to the centre at Tweed Heads.  He advised a revised estimate: he would earn $17,138 for the year, 2001-2002.  Mrs Ishak would earn $31,740 in the same year.  The combined estimate was $48,878.  On the same day Mr Ishak saw the Centrelink office at Maroubra.  Maroubra recorded a revised estimate of $27,206, partly based on an estimate of nil income for Mr Ishak for the 2001-2002 year.  (This was obviously incorrect as Mr Ishak had worked and been paid between 1 July and 7 December 2001.) 

8.      In a letter to Mrs Ishak on 18 December 2001 Centrelink formally advised her of the ongoing rate of FTB and that FTB Part B was based on an income of $0.00 in the hands of the “secondary earner”.  In that letter Mrs Ishak was asked to notify Centrelink “about changes in your and/or your partner’s income when you know they are going to happen”..  The letter also stated that if Mrs Ishak was receiving FTB Part B (which she was) and she was a member of a couple (which she was) she should tell Centrelink “if the secondary earner’s annual income goes over $1,679.00 or if it is over this amount and it changes”.  This amount was apparently the then equivalent of the current amount of $1,825 mentioned above in [4(g)].  I note that the letter did not ask Mrs Ishak to check the figures being maintained as an estimate and tell Centrelink if they were wrong.  The requirement was only to notify upcoming changes (cf [21] below). 

9.      At the end of the year Centrelink ascertained that Mrs Ishak’s adjusted taxable income in 2001-2002 had been $79,887, ie $30,336 for Mrs Ishak and $49,551 for Mr Ishak.  Centrelink maintained and still does that the erroneous recording of Mr Ishak’s income for the year as nil resulted in Mrs Ishak receiving a total of $5,931.14 when she was entitled to only $2,058.60.  The debt was $3,872.54.  Centrelink intercepted a tax refund of $262.16 leaving $3,610.38 outstanding as at 2 August 2002 when the debt was notified to Mrs Ishak. 

10. Assuming that Centrelink’s calculations of the amount overpaid are accurate, which the SSAT did not accept, there is a debt due to the Commonwealth under s 71(2) of the FA Admin Act in that an amount has been paid to Mrs Ishak by way of family assistance that was greater than the amount of family assistance that should have been paid to her under the FAA. Section 82 of the FA Admin Act identifies that a debt to the Commonwealth “is recoverable” by several means. The importance of this section is that it does not provide a discretion whereby there may be no recovery.

11.     The answer to question (a) is therefore yes.

(B) If the answer to (a) is yes, what is the correct quantum of the debt?

12.     Centrelink at the tribunal hearing submitted that the SSAT had erred in questioning the quantum of the debt as determined by Centrelink.  At the SAAT Mr Ishak had exhibited Mrs Ishak’s bank statements showing that in the alleged period of the accrual of the debt, 14 December 2001 until 30 June 2002, Mrs Ishak had received $78.96 on 17 December 2001 and then 14 payments of $351.40 commencing on 31 December 2001.  This totals $4,998.56 whereas the letter of demand alleged Mrs Ishak had received $5,931.14.  The SSAT accepted that this disclosed a discrepancy of $932.58 and meant that the amount owing should be $2,939.96, not $3,872.54. 

13. In the respondent’s statement of facts and contentions it was contended that the error of both Mr Ishak and the SSAT was to regard the period of the FTB debt as running from 14 December 2001 to 30 June 2002. FTB is paid according to annual rates of benefit and income assessed over a full financial year. The period of the debt was therefore 1 July 2001 to 30 June 2002. The method of calculation was provided in the documents provided pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (“the s 37 documents”) (T20/101) and appear correct to me. What Centrelink did was to compare the global figures showing Mrs Ishak’s total receipts for the year with what she should have received. This is justifiable.

14.     The correct quantum of the debt is therefore $3,872.54.

(C) If the answer to (a) is yes, can the debt be waived because of administrative error by Centrelink and Mrs Ishak’s receipt of the FTB money in good faith?

15. In [10] above I suggested that the Secretary has no option other than to recover a debt due to the Commonwealth. This proposition falls away when one moves on from s 82 of the FA Admin Act and considers Division 4 of Part 4 of the same Act. Section 95 of the FA Admin Act contemplates the possible write off of a debt due to the Commonwealth. In s 95(2) any of a number of criteria may be sufficient for write off to occur. None of them applies in Mrs Ishak’s case because the debt is not irrecoverable at law, Mrs Ishak does not lack capacity to repay the debt, Mrs Ishak’s whereabouts are not unknown and it cannot be said that it would not be cost effective to recover the debt.

16. Section 96 contemplates the possible waiver of the Commonwealth’s right to recover the debt but only in certain circumstances set out in succeeding sections of the FA Admin Act. Of these ss 97 (because of Centrelink error) and 101 (because of the presence of special circumstances) were invoked for Mrs Ishak. Mr Ishak made a strong case that Centrelink had committed an administrative error. The error was said to occur as follows.

17.     On 14 December 2001 Mr Ishak went to the Maroubra Centrelink office.  As noted in [7] Mr Ishak contacted the Centrelink call centre on 14 December 2001.  In oral evidence he told the tribunal that he had phoned Centrelink immediately when he became redundant.  He phoned several times and received different answers each time to his questions about the effect on Mrs Ishak’s FTB rate.  He therefore decided to visit the Maroubra Centrelink office.  On 14 December 2001 he gave the call centre a revised income estimate of $48,878.  This was made up of an estimate of $31,740 for Mrs Ishak and $17,138 for Mr Ishak.  Mr Ishak said that he told Centrelink that his income from 1 July to 7 December 2001 had totalled $17,000 odd.  The figure estimating Mrs Ishak’s earnings for the financial year was described as a genuine attempt at estimating her earnings from 1 July 2001 to 30 June 2002.  He did not mention a redundancy pay out of over $61,000 at that time because he did not see it as wages or income. 

18.     When he saw the Maroubra Centrelink staff later on 14 December 2001 he provided them with the redundancy payment calculations, a copy of his statement of service as an employee of William Brooks & Company (1988 to 2001), a Centrelink employment separation certificate signed by the appropriate officer in the employer company and his final pay slip.  This material clearly indicated that Mr Ishak had earned a significant amount of money in FTB terms between 1 July and 7 December 2001.  When the Centrelink officer recorded his income estimate as nil, Mr Ishak told the tribunal while on oath, he had thought it referred to his ongoing income only. 

19.     The Centrelink advocate representing the Secretary suggested to Mr Ishak that he had not shown Centrelink his final pay slip and that he had deliberately tried to conceal his income from Centrelink.  She advised the tribunal that there is no record of in Centrelink of the documents Mr Ishak provided as they are “batch stored”[3].  Mr Ishak denied that he had tried to mislead Centrelink. 

[3] This is understood to mean that the documents are not retained on the Centrelink client’s paper file.  Rather, they are stored with documents linked to other clients in an apparently indiscriminate but essentially chronological order.  A registration number should appear on both the document and the client file making retrieval possible.  However, retrieval is usually presented to the tribunal as a matter of great difficulty.

20.     I found the advocate’s approach puzzling and unnecessarily insulting to Mr Ishak.  As will be seen below at [27], [33] and [36] the Secretary’s case for recovering this debt is quite strong regardless of any potential dishonesty on Mr or Mrs Ishak’s part.  Secondly, the accusation appeared misconceived given that records available to both Centrelink and the tribunal show that Mr Ishak had already provided Centrelink with full details of his wages income position, albeit omitting the redundancy figures because of a misunderstanding.  I found Mr Ishak a most credible advocate for his wife and witness for both himself and his wife.  A clearly intelligent man, he appeared to have done his best to understand how the FTB rules operate and how to deal with Centrelink.  He dealt calmly with the accusation directed to him and responded by indicating how baseless it was.

21.     Centrelink’s advocate also queried why Mr and Mrs Ishak had not responded to the letter dated 18 December 2001 described above in [8] by informing Centrelink that Mr Ishak’s income for 2001, recorded in that letter as $0.00, was already above the quoted figure of $1,679.00.  While this may excite some curiosity it should be noted that that letter referred to the income of the “secondary earner”..  I am not convinced that an ordinary FTB recipient would necessarily understand who or what a secondary earner is.  While the phrase is used in the legislation and has a legal meaning it is really necessary for Centrelink to explain that meaning in its correspondence or paraphrase it with a term more meaningful to a lay reader.  There is also the legal situation.  It was established in 1995 in Re Vitalone and Secretary, Department of Social Security 38 ALD 169 by the then President of the tribunal, Mathews J, that these letters imposing obligations are to be read strictly. In that case Mathews J said that the notices in Vitalone (above) required recipients to inform the department if two events had occurred, ie their details had changed and the change had led to their income exceeding a specified level.  In that case the applicants’ income was “already well above the specified level.  There was no question of any change in their circumstances leading to a crossing of the threshold.”  The same situation applied in Mrs Ishak’s case.  Mr Ishak’s income had already crossed the threshold.  Moreover Mr Ishak had previously given Centrelink information indicating that to be the case.  The actual event requiring the Ishaks to notify Centrelink had never eventuated.

22.     In several documents put to Mr Ishak his income was described as nil.  He explained that he thought this referred to his then current income position, which was nil income each week, rather than to his total income for 2001-2002. 

23.     There was certain evidence regarding the Ishaks’ financial position.  They live (and have lived for seven or eight years) rent free in a flat owned by Mr Ishak’s father, paying the rates, body corporate fees and other outgoings.  Mrs Ishak’s current income at the time of the tribunal hearing was $29,675.00 a year.  They were receiving at that time $332.96 a fortnight in FTB, but no Child Care Benefit (“CCB”).  They had then current savings of $16,000 (Mr Ishak) and $17,448.96 (Mrs Ishak).  In her oral evidence Mrs Ishak thought the savings balance was in the high $20,000 region.

Waiver arising from error

24. If Mrs Ishak’s debt is to be waived under s 97 of the FA Admin Act all of the following facts have to be found:

·     The debt must be attributed solely to an administrative error by the Commonwealth.

·     Mrs Ishak must have received in good faith the payments constituting the debt.

·     Mrs Ishak must be seen to suffer “severe financial hardship” if the debt is not waived.

administrative error

25. I find that Centrelink was responsible for administrative error in its handling of Mrs Ishak’s FTB entitlement on 14 December 2001. I am satisfied on the balance of probabilities that Mr Ishak did provide to Maroubra Centrelink the documents detailing his separation from his former employer including the redundancy calculation sheet. I find that Centrelink had possession of all the information it required in order to make a correct calculation of that part of the estimated income attributable to Mr Ishak. Indeed, it had access to the precise figures relating to Mr Ishak’s income in that year. I note that the Secretary has an obligation under s 20(1)(d) of the FA Admin Act to consider whether an estimate is reasonable before acting on it. Had Centrelink engaged correctly in that consideration it would have identified that Mr Ishak had received taxable income for nearly six months of the year. I find that the debt arose solely from Centrelink’s administrative error. For the reasons set out above in [21] I find that Mr and Mrs Ishak were not in breach of any legal obligation affecting notification of Mr Ishak’s income for 2001-2002. Indeed, the Ishaks had notified that income.

good faith

26.     I find that Mrs Ishak received the FTB payments in question in good faith.  I am satisfied on the balance of probabilities that there was nothing in the administration of Mrs Ishak’s FTB entitlement to put her on notice that she was not entitled to receive FTB at the rate paid to her.  The Ishaks did not understand that Centrelink had made an error in assessing his income as of 14 December 2001 as nil.  His income in that period actually was nil.  The Ishaks did not know that Centrelink should be citing as his income for FTB purposes the income he had received up to 7 December 2001. 

severe financial hardship

27.     I find that Mr and Mrs Ishak would not be exposed to severe financial hardship if required to repay this debt.  I make this finding reluctantly because this is a case of error on Centrelink’s part that would, if it related to a payment under the Social Security Act 1991 (“the SSA”)[4], have resulted in waiver in equivalent circumstances. The equivalent provision in s 1237A of the SSA requires waiver in circumstances of administrative error regardless of any considerations of resulting financial hardship if the debt is repaid.

[4] The explanatory memorandum for the Bill that introduced the FA Admin Act did not explain why the severe financial hardship requirement was inserted in s 97 of the FA Admin Act. FTB Part A can be paid to a person with one child and an adjusted taxable income as high as $87,000 or with three children and an adjusted taxable income as high as $126,000. In a social security context these are relatively high income figures. The policy thinking may have been that candidates for waiver of FTB debts may be relatively well off in many cases compared to recipients of the mainstream income support payments paid under the SSA.

29.     The Ishaks provided a list of family expenses which totalled $21,450 a year.  This was a very comprehensive list of items.  The figures quoted for each item were moderate.  As noted in [23] the Ishaks’ current income is just over $29,000.  In addition Mr Ishak advised that he and Mrs Ishak are trying to protect their savings because he is unlikely to find work, having crushed his hand in an industrial accident in 1990.  He advised also that the family is likely to have to pay rent in the future as Mr Ishak’s father wishes to sell or lease out the flat in which they live as it is a commercial asset not making a commercial yield at present. 

30. The tribunal has considered “severe financial hardship” in the context of s 1236 of the SSA which relates to write off of debts arising under that Act. In Re Secretary, Department of Family and Community Services and Williams [2000] AATA 23 the social security recipient owed over $8,000 and had only nil to $10.00 a fortnight left after paying rent, groceries and general expenses for children. It was decided that any recovery from her ongoing benefit would cause her and her children severe financial hardship. There was no general discussion relating to the concepts embodied in severe financial hardship.

31.     In Re Carney and Secretary, Department of Family and Community Services [2000] AATA 406 the tribunal found severe financial hardship where, with the current financial means and obligations of Mrs Carney, recovery of the overpayments (of Family Allowance in an amount over $4,000) would cause “such personal hardship to the family as to be contrary to the beneficial nature of the legislation”.  Member Dr Christie took account of various factors personal to Mrs Carney and her family.  These included that Mrs Carney’s expenditure exceeded her income by over $100 a week and there was little or no prospect of her husband returning to work.  Dr Christie referred to President Mathews comments in Re L and Secretary, Department of Social Security (1995) 38 ALD 176, paragraphs 63-66[5] for the principle he applied that is in italics earlier in this paragraph. 

[5] Reproduced in the version but not in the published volume.

32.     The tribunal in two other cases refused to write off a social security debt.  In neither case did the tribunal add anything new to the principles involving severe financial hardship.  In one case, Re Perks and Secretary, Department of Family and Community Services [2000] AATA 671 the financial situation of the social security recipient had improved such that he should be able to repay the debt. In Re Perry and Secretary, Department of Family and Community Services [2001] AATA 282 the tribunal considered that the social security recipient could reduce some of her expenditure.

33.     Mr and Mrs Ishak are in the relatively unusual position, at least for social security recipients before this tribunal, of having a significant amount of savings.  In addition they have a reasonable regular income.  It is considered that repayment of the debt owed to the respondent would not expose the Ishaks to financial hardship that could be regarded as severe in a social security context.  I take account of Mr Ishak’s submission regarding the likely obligation to pay rent in coming months and his difficulties finding work.  While I have sympathy for Mr and Mrs Ishak I cannot find that these factors combine to create a situation of severe financial hardship.

Special circumstances

34. Section 101 of the FA Admin Act permits the Secretary to waive the Commonwealth’s right to recover all or part of a FTB debt where several criteria are met:

·     The debt must not have arisen wholly or partly from Mrs Ishak or another person making a false statement or false representation.

·     The debt must not have arisen wholly or partly from Mrs Ishak or another person failing or omitting to comply with a provision of family assistance law.

·     There must be special circumstances (other than financial hardship alone) making it desirable to waive.

·     Waiver must be more appropriate than write off of the debt.

false statement, false representation, failure to comply with law

35.     The tribunal finds the first two criteria satisfied.  There is no evidence to suggest any false statement or representation by Mr or Mrs Ishak.  There is no evidence that either Mr or Mrs Ishak failed to comply with a provision of family assistance law.

special circumstances

36.     The tribunal and the Federal Court have said that, to qualify as special circumstances, the circumstances of a social security recipient must be unusual, uncommon or exceptional, or markedly different from the usual run of cases.  This follows from Re Beadle and Director-General of Social Security (1984) 6 ALD 1, 3 (Toohey J) and Beadle v Director-General of Social Security (1985) 7 ALD 670, 675 (full Federal Court). In the present case there are no factors sufficient to satisfy these requirements. To the extent that it might be argued that Centrelink’s erroneous handling of the Ishaks’ files was a special circumstance it does not qualify as such. This is because that matter was taken into account in the Ishaks’ favour in relation to s 97 of the FA Admin Act which deals explicitly with administrative error. In Re Bestel and Secretary, Department of Family and Community Services [1999] AATA 867 the tribunal held at paragraph 69, where administrative error was present but the payments had not been received in good faith, that to find administrative error a special circumstance would represent a frustration of the intention of Parliament given that there is an express provision in the SSA dealing with sole administrative error by Centrelink and Mr Bestel had been unable to secure a waiver under that provision.

37. There are therefore no grounds for waiver under s 101 of the FA Admin Act.

CHILD CARE BENEFIT

38. The respondent also raised a debt of $1,372.54 in relation to CCB. This was for the same reason as the pursuit of the FTB debt, an underestimate of Mr Ishak’s income. CCB is paid in accordance with Division 4 of Part 4 of the FAA at a rate determined under Schedule 2 of the FAA. There are two types of child care attracting payment. “Approved child care” is provided by a professional child care service approved to pass CCB on to families in the form of a fee reduction. The CCB is paid directly to the child care service on the parent’s behalf. “Registered care” is provided by nannies, relatives or friends and some private pre-schools, kindergartens, occasional care centres and outside school hours care centres registered with the Family Assistance Office. Approved child care attracts CCB subject to an income test. Registered child care attracts payment of CCB without an income test but at a lower maximum weekly rate. The income test for approved child care as at 20 September 2003 works as follows:

·     Income is adjusted taxable income as for FTB.

·     For incomes under $31,755 the maximum rate, $137 a week, is payable.

·     For incomes above $31,755 the minimum rate of $23 a week is payable for one child in care if adjusted taxable income is over $91,035.00.  For two children in care the minimum rate is payable for two children in care if income is over $98,709.08.  For three children in care the minimum rate is payable if income is over $112,136.49.  The income threshold can keep rising if the claimant has more children in care.

· A given taxable income above $31,755 results in a withdrawal of CCB by reducing the hourly subsidy payable by reference to a reduced percentage of the child care fee that will be paid. Clause 10 of Schedule 2 provides the percentages.

39. The CCB debt arose in Mrs Ishak’s case because of Centrelink’s erroneous recording of Mr Ishak’s adjusted taxable income for 2001-2002. The SSAT lacked confidence in Centrelink’s calculation of the CCB debt allegedly owed by Mrs Ishak. The SSAT remitted the CCB debt to Centrelink to allow it to check calculations. At the tribunal hearing there was no challenge to the Centrelink figures. Section 71C of the FA Admin Act makes similar provision to s 71(2) (relating to FTB overpayments) (see [10] for explanation of s 71(2)). The CCB debt is therefore presumptively recoverable (see [10]). The quantum, as already stated, has not been seriously challenged at this level. The CCB debt cannot be waived for the same reasons that prevent waiver of FTB (see [24]-[37]).

CONCLUSION

40.     The FTB and CCB debts have been appropriately raised by Centrelink.  These debts qualify for waiver on the basis of Centrelink’s administrative error and Mrs Ishak’s receipt in good faith, but do not attract waiver in view of the fact that recovery would not cause the Ishaks severe financial hardship.  The debts are therefore recoverable.

DECISION

41.     The decision under review is varied to the extent that Family Tax Benefit and Child Care Benefit debts totalling $5,245.08 (that is $3,872.54 in respect of Family Tax Benefit and $1,372.54 in respect of Child Care Benefit) are recoverable from Mrs Ishak.

I certify that the 41 preceding paragraphs are a true copy of the reasons for the decision herein of Michael Sassella, Senior Member

Signed:         .......................................................................................
  Associate

Date of hearing  25 August 2003
Date of decision  17 December 2003
Advocate for the Applicant       Mr Michele Ishak

Advocate for the Respondent  Ms Cheryl Collis, Centrelink Service Recovery Unit