Julie Ridden and Secretary, Department of Social Services
[2014] AATA 599
[2014] AATA 599
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2014/1791
Re
Julie Ridden
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Senior Member CR Walsh
Date 25 August 2014 Place Perth The Tribunal affirms the decision under review.
....(Sgd) C R Walsh....................
Senior Member CR Walsh
CATCHWORDS
Family tax benefit – arrears of family tax benefit – applicant’s husband failed to lodge income tax returns on time – variation of instalment and past period entitlement determination where income tax return not lodged – no discretion to pay applicant arrears of family tax benefit – proof of letters having been sent by Commonwealth agencies – decision under review affirmed
LEGISLATION
Acts Interpretation Act 1901 – s 28A – s 29
A New Tax System (Family Assistance) Act 1999 – s 16 – s 21 – s 22 – s 58(1) – Schedule 1
A New Tax System (Family Assistance) (Administration) Act 1999 – s 20 – s 20(1)(b) – s 28(1) – s 28(2) – s 28(3)
Evidence Act 1995 – s 163
Taxation Administration Act 1953 – Division 286 of Schedule 1
CASES
Re Brian Lawlor Automotive Pty Ltd and Collector of Customs (NSW) (1978) 1 ALD 167
Re Pamplin and Secretary, Department of Family and Community Services [2003] AATA 1248
Re Secretary, Department of Family and Community Services and Craufurd [2004] AATA 553
Re Tsantis and Secretary, Department of Family and Community Services [2003] AATA 835
SECONDARY MATERIALS
Family Assistance Guide – 6.4.3.30 Outcomes of Non-lodger Process
REASONS FOR DECISION
Senior Member CR Walsh
25 August 2014
INTRODUCTION
At issue in this application is whether Mrs Ridden can be paid arrears of Family Tax Benefit (FTB), including supplementary payments (totalling $4,579.17), for the income tax years ended 30 June 2008, 30 June 2010 and 30 June 2011.[1] Broadly, Mr Ridden’s failure to lodge his income tax returns for 2008, 2010 and 2011 income years on time resulted in the application of s 28 of A New Tax System (Family Assistance) (Administration) Act 1999 (Administration Act) with the consequence that Mrs Ridden did not receive all of the FTB payments, to which she was entitled, in those income years.
[1] More specifically, this application concerns whether Mrs Ridden can be paid arrears of FBT, including supplementary payments, totalling $1,672.62 for the 2008 year, $964.75 for the 2010 year and $1,941.80 for the 2011 year.
BACKGROUND
Mrs Ridden and her husband, Mr Ridden, have six children, born between 1982 and 1997.
In 2003, Mrs Ridden appointed Mr Ridden as her enduring power of attorney.
During the income years ended 30 June 2008, 30 June 2010 and 30 June 2011, Mrs Ridden was eligible for FTB payments in respect of her son Jonathon (born on 6 March 1997).
During the period from 1 July 2007 to 27 May 2008, Mrs Ridden was eligible for FTB payments in respect of her daughters Tamara and Danielle (both born on 28 May 1992).
On 26 May 2009, the Department of Social Services (Department) wrote to Mrs Ridden regarding her FTB entitlements for the income year ended 30 June 2008 (26 May 2009 Letter).
The 26 May 2009 Letter stated that Mrs Ridden and/or her partner must lodge an income tax return for the 2008 year with the Australian Taxation Office (ATO) by 30 June 2009 or contact the Department to advise it that Mr Ridden and/or her partner are not required to lodge an income tax return for the 2008 year. Significantly, the 26 May 2009 Letter stated:
If you have not lodged your tax return or responded to this letter by 30 June 2009 you will have to pay back all of the Family Tax Benefit you received for the 2007/2008 financial year. If you have not responded to this letter by 30 June 2010 you will not be eligible for any further Family Tax Benefit including supplement payments for the 2007/2008 financial year.
On 5 April 2011, the Department wrote to Mrs Ridden regarding her FTB entitlements for the income year ended 30 June 2010 (5 April 2011 Letter).
The 5 April 2011 Letter was in substantially similar terms to the 26 May 2009 Letter. It required Mrs Ridden and/or her partner to lodge income tax returns for the 2010 year by 30 June 2011 or advise the Department that Mrs Ridden and/or her partner were not required to lodge income tax returns for the 2010 year. The 5 April 2011 Letter also stated that is Mrs Ridden did not respond to the letter by 30 June 2012, she would not be eligible for any further FTB payments, including supplementary payments, for the 2010 year.
On 16 April 2012, the Department wrote to Mrs Ridden regarding her FTB entitlements for the income year ended 30 June 2011 (16 April 2012 Letter).
The 16 April 2012 Letter was in substantially similar terms to the 26 May 2009 Letter and the 5 April 2011 Letter. It required Mr Ridden and/or her partner to lodge income tax returns for the 2011 year by 30 June 2012 or advise the Department that Mrs Ridden and/or her partner were not required to lodge income tax returns for the 2011 year. The 16 April 2012 Letter further stated that is Mrs Ridden did not respond to the letter by 30 June 2013, she would not be eligible for any further FTB payments, including supplementary payments, for the 2011 year.
Mrs Ridden did not respond to the 26 May 2009 Letter, the 5 April 2011 Letter or the 16 April 2012 Letter within the specified time.
On 23 July 2013, Mr Ridden lodged income tax returns for the income years ended 30 June 2008, 30 June 2010 and 30 June 2011.
On 22 January 2014, the Department was advised that Mrs Ridden’s income for the income years ended 30 June 2008 and 30 June 2010 was “nil”.
On 23 January 2014, an officer of the Department made the following decisions in relation to Mrs Ridden’s FTB entitlements for the income years ended 30 June 2008 and 30 June 2010:
·For the income year ended 30 June 2008, Mrs Ridden was entitled to payments of FTB totalling $15,282.30, she had already received $13,609.68 in FTB payments and she had a “0.00” balance of FTB owing to her; and
·For the income year ended 30 June 2010, Mrs Ridden was entitled to payments of FTB totalling $3,733.95, she had already received $2,769.20 and she had a “0.00” balance of FTB owing to her (23 January 2014 Decision).
That is, once Mr Ridden’s income tax returns for the 2008 and 2010 years were lodged with the ATO and the Department was advised that Mrs Ridden had an income of “nil” in the 2008 and 2010 years, and was therefore not required to lodge a tax return for those years, the Department conducted a reconciliation of the FTB to which Mrs Ridden was entitled for the 2008 and 2010 years. Whilst this reconciliation process showed that Mrs Ridden was entitled to a greater amount than that which she received in the 2008 and 2010 years, the Department decided not to pay Mrs Ridden any arrears of FTB for those years in accordance with s 28 of the Administration Act.
The Department raised a “non-lodger” debt against Mrs Ridden of $13,609.68 for the income year ended 30 June 2008 and of $2,769.20 for the income year ended 30 June 2010, due to Mr Ridden’s late lodgement of his income tax returns for those years. However, these debts were subsequently “zeroed” by the Department, following its receipt of the relevant income information from Mr and Mrs Ridden.
On 31 January 2014, the Department was advised that Mrs Ridden’s income for the income year ended 30 June 2011 was “nil”.
On 31 January 2014, an officer of the Department decided that, for the income year ended 30 June 2011, Mrs Ridden was entitled to payments of FTB totalling $3,814.25, she had not yet received any FTB payments, she would be paid FTB totalling $1,872.45 and an adjustment of -$1,941.80 in FTB payments would be made (31 January 2014 Decision).
On 31 January 2014, Mr Ridden requested an internal review of the 23 January 2014 Decision by Centrelink on Mrs Ridden’s behalf.
On 6 February 2014, Mr Ridden requested an internal review of the 31 January 2014 Decision by Centrelink.
On 13 February 2014, a Centrelink authorised review officer (ARO) affirmed the 23 January 2014 Decision and the 31 January 2014 Decision (ARO Decision). In affirming the 23 January 2014 Decision and the 31 January Decision, the ARO stated:
After carefully considering [the 23 January 2014 Decision and the 31 January Decision] I have found [they were] correct under Family Assistance Law. There are no provisions within the law that allow arrears of FTB including supplements to be paid where a customer and/or their partner does not lodge their tax returns within the required timeframe. I have no discretion to change the decision regardless of one’s circumstances meaning your review was unsuccessful.
On 20 February 2014, Mrs Ridden applied to the Social Security Appeals Tribunal (SSAT) for a review of the ARO Decision.
On 25 March 2014, the SSAT affirmed the ARO Decision (SSAT Decision). In reaching its decision, the SSAT concluded:
The [SSAT] appreciates Mrs and Mr Ridden’s circumstances were financially challenging during the relevant financial years and they suffered significant business difficulties that contributed to their inability to complete the required income tax returns in a more timely manner, but these matters do not alter the relevant facts and the [SSAT] has no discretion in this matter.
On 3 April 2014, Mr Ridden applied to this Tribunal for a review of the SSAT Decision.
ANALYSIS
It is not in dispute that Mrs Ridden was eligible for FTB in the income years ended 30 June 2008, 30 June 2010 and 30 June 2011 under s 21 of the A New Tax System (Family Assistance) Act 1999 (Family Assistance Act). That is, in the 2008, 2010 and 2011 years Mrs Ridden met the FTB residence requirements (in ss 21 and 22 of the Family Assistance Act) and had at least one “FTB child”, as defined in s 22 of the Family Assistance Act.
Section 16 of the Administration Act allows a person who is eligible for FTB, like Mrs Ridden, to claim FTB by instalment – that is what Mrs Ridden did.
Section 58(1) of the Family Assistance Act provides that an individual’s annual rate of FTB is to be calculated in accordance with the Rate Calculator in Schedule 1 of the Family Assistance Act.
In calculating the FTB payable to a person, the Rate Calculator in Schedule 1 of the Family Assistance Act provides that the “adjusted taxable income” of the person and the person’s partner are to be taken into account.
Section 20 of the Administration Act allows for the rate of FTB to be calculated based on estimated income, an indexed estimated income or indexed actual income in circumstances where information about the amount of “adjusted taxable income” needed for a determination of the person’s rate of FTB is not available “(for example, because the taxable income of the individual or another individual cannot be known until after the end of the relevant income year)”: see s 20(1)(b) of the Administration Act.
Of particular significance to this application is s 28 of the Administration Act, which provides for the variation of instalment and past period entitlement determinations where an FTB claimant or his or her partner have failed to lodge income tax returns for the income year concerned on time. Section 28 of the Administration Act, as it read at the relevant time,[2] provided:
[2] Section 28 of the Administration Act was amended by the Family Assistance and Other Legislation Amendment Act 2013, with effect from 28 June 2013.
Variation of instalment and past period entitlement determinations where income tax return not lodged
(1) This section applies if:
(a)a determination under section 16 or 17 is in force at, or was in force before, a particular time; and
(b)there are one or more days (the cancellation days) before the particular time in respect of which the following conditions are satisfied:
(i) the cancellation days occur in the income year (the cancellation income year) that began 2 years before the beginning of the income year in which the particular time occurs;
(ii) the claimant is entitled to be paid family tax benefit under the determination for the cancellation days;
(iii) the claimant, or the claimant’s partner at the particular time (if he or she was also the claimant’s partner at some time in the cancellation income year), or both, are required to lodge and income tax return for the cancellation income year but have not done so by the particular time;
(iv) by the particular time, an assessment has not been made under the Income Tax Assessment Act 1936 of the taxable income for the cancellation income year of everyone to whom subparagraph (iii) applies.
Importantly, s 28(2) of the Administration Act states that if s 28(1) applies, the Secretary “must vary the determination so that it has the effect that the claimant is not, and never was, entitled to family tax benefit for the cancellation days.” Because of the use of the word “must” in s 28(2) of the Administration Act, the Secretary’s obligation under this subsection is, self-evidently, mandatory.
Section 28(3) of the Administration Act addresses the consequences of income tax returns subsequently being lodged by the FTB claimant or his or her partner, as follows:
Consequence where income tax returns are later lodged
(3) If:
(c)after the Secretary varied the determination under subsection (2) or (6), an assessment is made under the Income Tax Assessment Act 1936 for the cancellation income year for everyone (the taxpayers involved):
(i) who was required to lodge and income tax return as mentioned in subparagraph (1)(b)(iii); and
(ii) in respect of whom an assessment had not been made before the determination was varied; and
(d)the Secretary is satisfied that the claimant was eligible for an amount (the recalculated amount) of family tax benefit for the cancellation days; and
(ba)subsection (4) (which is about when the claimant and the claimant’s partner separate after the determination is varied) does not apply;
the Secretary must again vary the determination so that it has the effect that, for the cancellation days, the claimant is entitled to be paid:
(e)if income tax returns for the cancellation year for the taxpayers involved were lodged with the Commissioner of Taxation during the income year that began 2 years after the beginning of the cancellation income year – the recalculated amount; or
(f)in any other case – the lesser of:
(i) the recalculated amount; and
(ii) the amount the claimant was entitled to be paid before the variation under subsection (2) was made. [Emphasis added]
2008 and 2010 years
When Mr Ridden failed to lodge his income tax returns for the year ended 30 June 2008 by 30 June 2010 (i.e. within two years of the end of the 2008 income year) the Secretary was required by s 28(2) of the Administration Act[3] to vary the FTB determinations then in place in relation to Mrs Ridden with the consequence that Mrs Ridden was no longer entitled to any FTB for the income years ended 30 June 2008 and 30 June 2010.
[3] Refer to paragraph 32 above.
When Mr Ridden subsequently lodged his income tax returns for the 2008 and 2010 years on 23 July 2013 (i.e. after the two year lodgement period had expired), the Department recalculated the amount of FTB that Mrs Ridden would have been entitled to, based on the income self-assessed in Mr Ridden’s income tax returns for the 2008 and 2010 years. The Department did this recalculation in accordance with s 28(3) of the Administration Act.
Pursuant to s 28(3) of the Administration Act, the Department decided that Mrs Ridden was entitled to the lesser amount of the recalculated amount or the amount Mrs Ridden was entitled to be paid based on the estimate. For the 2008 and 2010 income years, the lesser amount was the amount based on the estimate. Consequently, the Department decided that Mrs Ridden was entitled to retain the amount of FTB she had been paid, based on the estimate (being $13,609.68 for the 2008 year and $2,769.20 for the 2010 year), but was not entitled to any “top up” payments of FTB for the 2008 and 2010 years.
2011 year
In relation to the 2011 income year, Mrs Ridden was regarded by the Department as being in receipt of FTB instalments pursuant to s 16 of the Administration Act. However, the Department decided that Mrs Ridden was prohibited from receiving the full amount of FTB to which she was entitled for the 2011 year (being $3,814.25) pursuant to s 28(2) of the Administration Act.[4] For Mrs Ridden to be paid the full amount of FTB to which she was entitled for the 2011 year, Mr Ridden would have needed to have lodged his income tax return for the 2011 year by 30 June 2013 (i.e. within two years of the end of the 2011 income year). Instead, Mr Ridden did not lodge his income tax return for the 2011 year until 23 July 2013.
[4] See also s 32AA and s 32AB of the Administration Act and part 6.4.3.40 of the Family Assistance Guide.
After Mr Ridden lodged his income tax return for the 2011 year on 23 July 2013 (being more than two years after the end of the 2011 income year), the Department decided to recalculate the amount of FTB to which Mrs Ridden was entitled for the 2011 year (i.e. $3,814.25), based on Mr Ridden’s actual income. Applying s 28(3) of the Administration Act, the Department decided to pay Mrs Ridden $1,872.45. This amount represents the amount of FTB that Mrs Ridden would have been paid based on the estimated incomes of Mr and Mrs Ridden as recorded by the Department, and the amount of $1,941.80 was suppressed by the Department.
That is, in accordance with s 28(3) of the Administration Act, the amount of FTB that Mrs Ridden was taken, based on estimates of income, to have been paid during the 2011 year was $1,872.45 (even though she was prohibited from being paid FTB for that year), the amount of FTB to which Mrs Ridden was entitled for the 2011 year, based on adjusted taxable income, was $3,814.25 and Mrs Ridden was paid the lesser amount of $1,872.45 for the 2011 year.
Conclusion
The Tribunal considers the 23 January 2014 Decision, the 31 January 2014 Decision, the ARO Decision and, it follows, the SSAT Decision to be the correct decision. There is no discretion in the Family Assistance Act or the Administration Act to pay Mrs Ridden arrears of FTB, including supplementary payments, for the 2008, 2010 and 2011 years.[5]
[5] See Re Tsantis and Secretary, Department of Family and Community Services [2003] AATA 835 at [5].
When requesting an internal review by Centrelink of the 22 January 2014 Decision and the 31 January 2014 Decision on behalf of Mrs Ridden, Mr Ridden indicated that Mrs Ridden had been unwell and that his “business had collapsed” and it was for these reasons that he had lodged his income tax returns for the 2008, 2010 and 2011 income years late. Mr Ridden argued that the late lodgement of his income tax returns for the 2008, 2010 and 2011 years should be excused and that his wife should be paid the full amounts of FTB to which she was entitled for the 2008, 2010 and 2011 years, but not received. Mr Ridden made similar submissions at the hearing. Whatever Mr Ridden’s reasons for the late lodgement of his income tax returns for the 2008, 2010 and 2011 years, the Tribunal has no discretion under the Family Assistance Act or the Administration Act to grant Mrs Ridden top up payments of FTB for the 2008, 2010 and 2011 years.[6]
[6] See Re Tsantis and Secretary, Department of Family and Community Services [2003] AATA 835 at [5]; Re Pamplin and Secretary, Department of Family and Community Services [2003] AATA 1248 and Re Secretary, Department of Family and Community Services and Craufurd [2004] AATA 553.
Taxpayers who fail to lodge their income tax returns by the due date are liable to penalties under Division 286 of Schedule 1 of the Taxation Administration Act 1953. As a taxpayer and a businessman, Mr Ridden should have known he was required to lodge income tax returns for the 2008, 2010 and 2011 years. It is common knowledge that near the end of each financial year (in June), the Commissioner of Taxation issues a Legislative Instrument calling for the lodging of annual income tax returns and that a person who fails to self-assess their taxable income and lodge a return by the due date stipulated may be liable to prosecution or to the payment of penalties.
26 May 2009 Letter, 5 April 2011 Letter and 16 April 2012 Letter
Mr Ridden told the Tribunal that he did not know, and was at no time informed by Centrelink, that his failure to lodge his income tax returns for the 2008, 2010 and 2011 income years within two years of the end of those respective income years would adversely affect Mrs Ridden’s entitlement to FTB for those years. Mr Ridden said that he would have filed his 2008, 2010 and 2011 returns sooner, had he known he was required to do so or been advised to do so by Centrelink. To reiterate, there is no discretion for the Tribunal to grant Mrs Ridden top up payments of FTB for the 2008, 2010 and 2011 years, no matter what Mr Ridden’s reasons were for the late lodgement of his income tax returns for the 2008, 2010 and 2011 years.
Mr Ridden claimed that he and his wife never received the 26 May 2009 Letter, the 5 April 2011 Letter and 16 April 2012 Letter in which Centrelink advised Mr Ridden to file his income tax returns for the 2008, 2010 and 2011 income years, respectively, within two years of the end of those income years: refer to paragraphs 7 to 11 above. Mr Ridden said that he and Mrs Ridden have no recollection of ever seeing or receiving these letters from Centrelink and that they may well have been “fabricated” by Centrelink, for all he knew. Mr Ridden also claimed not to have received numerous other letters which were sent to him and Mrs Ridden by Centrelink, concerning Mrs Ridden’s entitlement to FTB in the relevant income years.
The Tribunal does not accept, and finds no evidentiary basis for, Mr Ridden’s submission on this issue. In so doing, the Tribunal notes s 163 of the Evidence Act 1995 which states:
Proof of letters having been sent by Commonwealth agencies
(1) A letter from a Commonwealth agency addressed to a person at a specified address is presumed (unless evidence sufficient to raise doubt about the presumption is adduced) to have been sent by prepaid post to that address on the fifth business day after that date (if any) that, because of its placement on the letter or otherwise, purports to be the date on which the letter was prepared.[7]
[7] See also s 28A and s 29 of the Acts Interpretation Act 1901 and s 224 of the Administration Act.
Treatment by Centrelink
Mr Ridden told the Tribunal that he and his wife received countless threatening telephone calls from a Centrelink debt collector concerning the “non-lodger” debts which were raised against Mrs Ridden (namely $13,609.68 for the 2008 year and $2,769.20 for the 2010 year) as a consequence of Mr Ridden’s late lodgement of his income tax returns for the 2008 and 2010 income years, which debt was subsequently “zeroed” by the Department, following its receipt of the relevant income information from Mr and Mrs Ridden: see paragraph 17 above. Mr Ridden said that these threatening telephone calls, and the other allegations made against him and his wife by Centrelink, resulted in his already sick wife being admitted to hospital for psychiatric treatment. Mr Ridden said that the situation could have been “handled much better” by Centrelink. According to Mr Ridden, although he paid the debt collector $680 towards the “non-lodger” debts raised, he was never repaid this amount by Centrelink (i.e. after the “non-lodger” debt was “zeroed” by the Department). As such, Mr Ridden claims that Centrelink owes him and his wife $680, plus interest (which by now, he said, would be a substantial amount).
The Tribunal is not the appropriate forum for Mr Ridden to pursue these issues. The Tribunal is limited in its jurisdiction to a review of the SSAT Decision, being the decision under review: s 43(1) of the Administrative Appeals Tribunal Act 1975. The Tribunal has no general review power or general decision-making power: Re Brian Lawlor Automotive Pty Ltd and Collector of Customs (NSW) (1978) 1 ALD 167 at 175. A more appropriate avenue for Mr Ridden to pursue his issues with Centrelink is through the Commonwealth Ombudsman.[8]
[8] Further, the Tribunal notes that the Commonwealth has in place two schemes whereby persons adversely affected by the actions of Commonwealth officers may receive compensation, being the Compensation for Detriment caused by Defective Administration scheme (the CDDA scheme) and the act of grace scheme.
DECISION
For the above reasons, the Tribunal affirms the SSAT Decision.
I certify that the preceding forty eight (48) paragraphs are a true copy of the reasons for the decision herein of Senior Member CR Walsh
...(Sgd) T Freeman...................
Associate
Dated 25 August 2014
Date of hearing 21 August 2014 Representative for the Applicant Mr R Ridden Representative for the Respondent Mr P Corbould Solicitors for the Respondent Australian Government Solicitor
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