Karamanlidis and Secretary, Department of Social Services (Social services second review)

[2016] AATA 817

Karamanlidis and Secretary, Department of Social Services (Social services second review) [2016] AATA 817 (18 October 2016)

Division	GENERAL DIVISION
File Number	2016/1458
Re	Konstantinos Karamanlidis
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Senior Member R W Dunne
Date	18 October 2016
Place	Adelaide

The decision of the Social Services & Child Support Division of the Administrative Appeals Tribunal made on 11 February 2016 is set aside.

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Senior Member R W Dunne

CATCHWORDS

SOCIAL SECURITY – Family Tax Benefit – top-up payments – late lodgement of tax return – whether special circumstances prevented applicant from lodging tax return within time – whether appropriate to grant an extension of time for lodgement of the tax return – decision under review set aside.

LEGISLATION

A New Tax System (Family Assistance) (Administration) Act 1999 (Cth), s 32C

CASES

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

Re Hooker and Secretary, Department of Social Services [2015] AATA 732

Re Secretary, Department of Social Services and Hollis [2015] AATA 941

REASONS FOR DECISION

Senior Member R W Dunne

18 October 2016

INTRODUCTION

1. The applicant in this matter is Konstantinos Karamanlidis.  The issue to be decided is whether Mr Karamanlidis is entitled to family tax benefit (“FTB”) top-up supplementary payments for the 2103/2014 financial year. 

2. When the respondent (“Centrelink”) decided to not pay the applicant any FTB top-up supplementary payments for the 2013/2014 financial year, he requested an internal review of the decision.  When an authorised review officer affirmed the decision the applicant applied for an independent review by the Social Services & Child Support Division of the Administrative Appeals Tribunal (“AAT 1”).  In that review, AAT 1 affirmed the respondent’s decision, and the applicant has applied to this Tribunal for further review.

3. At the hearing before me, the respondent was represented by Ms Lee-Anne Odgers (from the Department of Human Services) and Mr Karamanlidis represented himself, with assistance from his sister, Ms Eleni Hollister.  I admitted into evidence the T-documents[1] and the Supplementary T-documents[2] lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (Cth), together with the following exhibits:

   ·a copy of the witness statement of Eleni Hollister dated 26 May 2016,[3] and

   ·a copy of the witness statement of Aidan Brettner dated 23 September 2016.[4]

   [1] Exhibit R1.

   [2] Exhibit R2.

   [3] Exhibit A1.

   [4] Exhibit R3.

   ISSUE BEFORE THE TRIBUNAL

4. The issue before me is whether the applicant is entitled to FTB top-up supplementary payments for the 2013/2014 financial year and, in particular, whether there were “special circumstances” that prevented him from lodging his tax return before 30 June 2015.

   LEGISLATION

5. The legislation that is presently relevant is found within what is often referred to as the family assistance law, in particular, the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (“Act”). Subdivision A of Division 1 of Part 3 of the Act deals with the making of FTB claims. Subdivision D relates to FTB reconciliation conditions. Section 32C refers to the relevant reconciliation time which requires an individual to lodge an income tax return for the relevant financial year. The relevant reconciliation time is the time when an assessment is made under the Income Tax Assessment Act 1936 for the relevant income year, so long as the individual’s taxation 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 (if any) as the Secretary allows, if the Secretary is satisfied that there are special circumstances that prevented the individual from lodging the return before the end of that first income year.

   The further period under paragraph (b) above must end no later than the end of the second income year after the relevant income year.

6. To reiterate, in the applicant’s case “the first income year after the relevant income year” is 30 June 2015, and “such further period” is the period after 30 June 2015 ending no later than 30 June 2016.

   MATERIAL FACTS

7. The applicant is un-partnered (divorced) and has one child aged nine years for whom he has received fortnightly payments of FTB during the 2013/2014 financial year, based on an income estimate.  He is self-employed in a small business and his sister, Eleni Hollister, who has accounting qualifications, assists him in gathering and collating information for provision to his accountants who prepare his taxation returns.

8. After the applicant’s divorce, a two-year long custody battle took place in relation to his son, and a four-day trial subsequently occurred in 2010.  The applicant’s parents saved the applicant from bankruptcy and took on a mortgage to save him from losing the ‘roof over his head’ and their ‘grandchild’s head’.  For the first time in his life, the applicant applied for financial assistance by way of FTB to help him with the cost of raising his son.  Ms Hollister continued to be the applicant’s support person and to prepare information required to be given to his accountants in relation to his taxation returns.  Ms Hollister was not paid for the assistance she provided to the applicant and he could not afford to hire a bookkeeper or pay someone else to do the work for him.  In the year in question when the applicant’s 2013/2014 taxation return was lodged, a few weeks after the cut-off date of 30 June 2015, Ms Hollister found that she had to deal with a health issue that involved a lump on her forehead.  The doctor was under the impression that it may be a cyst, but referred her to the RAH for further investigation.  She had subsequent appointments until she went into surgery on 6 March 2015 and on 17 March 2015 it was confirmed to be a benign neural tumour.

9. On 27 March 2015, Centrelink sent the applicant a letter advising that he was required to lodge his 2013/2014 tax return by 30 June 2015.[5]  In part, the letter stated:

   If you have not lodged a tax return or you have not advised us that you are not required to lodge tax return/s by 30 June 2015:

   ·you will not be eligible for any further Family Tax Benefit, including the Family Tax Benefit supplements, for the 2013-2014 financial year

   ·you will have to pay back all the Family Tax Benefit you received for the 2013-2014 financial year, and

   ·you will no longer be able to receive Family Tax Benefit payments fortnightly.

   On the back of the letter it stated:

   If there are special circumstances that prevent you from lodging your tax return, or telling us (sic) you are not required to lodge a tax return, please call us on 136 150 to discuss.

   [5] Exhibit R1, p 60.

10. On 27 May 2015, the applicant called Centrelink and in the conversation he was not told that if his taxation return was not lodged by 30 June 2015 he would not receive his FTB top-ups.  He advised Centrelink that he hoped his sister would finish the business data for his accountant by 1 or 2 June 2015. 

11. The applicant called Centrelink on 29 June 2015 to advise that his taxes ‘weren’t lodged as yet but should be finalised within the next week’.  The lady on the line (whose name he said was Rosanne) told him that the cut-off was 30 June 2015, the next day, and that he would lose his benefits.  The applicant had been under the impression that the contact he made in May 2015 would give him that little bit of extra time that was required.

    EVIDENCE

    Evidence of Ms Hollister

12. The oral evidence of Ms Hollister was consistent with what was contained in her witness statement.  To briefly summarise, she said she became the applicant’s support person on all his personal dealings when the breakdown of his marriage occurred.  Following the breakdown, there was a custody battle for the applicant’s son.  She said that paperwork was not the applicant’s forte and as he had only basic computer skills he relied on her to do the preparatory work for him.  For many years, the applicant had been struggling to improve financially.  There was no regular time when she did the tax work for the applicant and he could not afford to pay someone else to do the bookwork for him.

13. When the applicant called Centrelink in May 2015, he told them he would hopefully have his tax return completed before the due date.  When he made that call he was not told that if his tax return was not lodged by 30 June 2015 he would not receive his FTB top-ups.  Had the applicant been told that this would occur, she would have sought an extension or deferred her studies to free up more time to attend to the applicant’s paperwork and to see his accountant.

    Evidence of Applicant

14. In giving his evidence, the applicant said that he ran an amusement machine business.  Income was derived from the takings from individual machines and also from sales of machines, repairs and party hire.  After his divorce, his ex-wife relocated with his son, more than an hour away, and enrolled him in a school there.  When his son was in the applicant’s care, other activities and going to school was a one-hour drive from the applicant’s home.  In addition to the help he received from his sister, the applicant’s parents saved him from going bankrupt and to avoid him losing his home.

15. He called Centrelink on 27 May 2015 to let them know his sister would finish the business data by 1 or 2 June 2015 to enable a meeting with his accountant to have the taxation return prepared.  He spoke to Mr Aidan Brettner, a Customer Services Officer, at Centrelink.  He was told that a note would be put on the system because he was concerned about delay in the tax office receiving his taxation return.  Because there was a note on the system, he thought he would be given some leeway if he were not able to lodge his taxation return by 30 June 2015.  However, when he called on 29 June 2015, the deadline was made very clear.  The applicant was advised that the date of lodgement with the tax office must be no later than 30 June 2015 and if lodgement was after that date he would not receive any top-ups for the 2013/2014 financial year.  He believed that there were special circumstances that prevented him meeting the 30 June 2015 deadline and they were because of his sister’s unavailability and his belief that he was given leeway to lodge his taxation return after 30 June 2015, because of the note on the system.

    Evidence of Aidan Brettner

16. In giving his evidence, Mr Brettner said that he is a Customer Services Officer with Centrelink.  He is the author of the note on the system recorded on 27 May 2015.  However, he was not the author of the annotation to the note that was made on 29 June 2015.  He also said that he had no specific recollection of the conversation that was detailed in the note.  In Mr Brettner’s witness statement, at paragraph 5, he said:

    “Customers who advise of late lodgment [sic]are advised that they should lodge as soon as possible.  However, depending on the precise details of what the customer says and what they mean by ‘late lodgment’, different responses would be necessary.  For instance customers calling during July, saying they will be lodging late for the immediately prior financial year, and that their return won’t be lodged until say August would be advised not to worry, and that as long as their returns/non lodgments are completed within the current financial year, their reconciliation payments will be calculated and balanced as necessary.  However, customers calling say April or May to advise a ‘late lodgment’ of the return for earlier years (ie after the 30^th of June) would be instead informed they will not receive reconciliation for the prior financial year, as we can only reconcile to the beginning of the previous financial year, and as of the 1^st of July the previous financial year will be what is currently known as the current financial year”.[6] (Emphasis in the original)

    [6] Exhibit R3, [5].

17. In paragraphs 8 to 12 of his witness statement, Mr Brettner also said:

    “I do not believe that the customer discussed with me the possibility that the return would be lodged after the required date of 30 June 2015.  Had he done so, my doc would have been worded differently.  I would have stressed the importance of the return being lodged with the ATO by that date, or he would not be entitled to his reconciliation and any supplements that they may be entitled to.

    It was my understanding that I was unable to grant an extension of time on late lodgment beyond the following financial year.  I would therefore not have said anything that would imply either that an extension had been granted or would be viewed favourably.

    Further, even if I had granted an extension to the permitted lodgment period, I would not have written a document like the one that appears at Appendix A.

    I would not have informed Mr Karamanlidis that it was acceptable for him to lodge his income tax return after the statutory deadline (30 June 2015).

    I did not grant Mr Karamanlidis an extension of time to lodge his income tax return after the statutory deadline (30 June 2015).”[7] (Emphasis in the original)

    [7] Exhibit R3, [8] – [12].

    CONSIDERATION

    Are there special circumstances that prevented the applicant from lodging his taxation return for the 2013/2014 income year before 30 June 2015 and is he entitled to FTB top-up payments for or in respect of that income year?

18. The term “special circumstances” is not defined in the Act, nor is it defined in the Social Security Act 1991.  It is therefore necessary to apply the ordinary meaning of the words used.  Included in the various definitions provided by the Macquarie Dictionary (6^th Edition) are “extraordinary; exceptional”. In my view, these are words that would generally be taken to be synonymous with “special” in the context in which that word is used in the Act.

19. Although it is necessary to be careful not to substitute the words of a statute with other words when interpreting the words used, in Beadle and The Director-General of Social Security[8] the Tribunal said:

    “An expression such as ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition.  The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur.  For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases.  This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.”[9]

    [8] (1984) 6 ALD 1.

    [9] (1984) 6 ALD 1 at page 3.

20. The meaning of “special circumstances” for social security law has been considered by Tribunals and the Federal Court on many occasions.  It is an expression “by its very nature incapable of precise or exhaustive definition”.  Clearly, its meaning will depend on the context in which the circumstances occur.  If the context is different, the meaning of special circumstances will be different. 

21. In Re Hooker and Secretary, Department of Social Services[10], the Tribunal there dealt with a late lodged lump sum claim for family tax benefit that had the same time limits and special circumstances provision as those contained in s 32C of the Act. Senior Member Toohey said:

    “14.In order for the time for making a claim to be extended, the Secretary (and so the Tribunal) must be satisfied, firstly, that circumstances existed that were special and, secondly, that those special circumstances prevented the claimant from making his or her claim within time.

    ...

    19.… In the case of a late claim for FTB, the special circumstances must prevent a person from making a claim on time.  That is a more stringent, two-part test.” [emphasis added]

    [10] [2015] AATA 732.

22. In Re Secretary, Department of Social Services and Hollis,[11] Deputy President Humphries cited the above extract from the Hooker decision with approval.  He said:

    “30.However, Dr Hollis needs to show more than that the circumstances she faced were special. In Hooker and Secretary, Department of Social Services [2015] AATA 732 Senior Member Toohey considered the test in s 10(2) of the Act, which imposes a similar test for late lodgement of a claim for family tax benefit to the test in s 49J(2). She observed (at [19]):

    ‘In the case of a late claim for FTB, the special circumstances must prevent a person from making a claim on time.  That is a more stringent, two-part test.’

    31.Thus, in order for the time for making a claim to be extended, the Secretary (and in turn the Tribunal) must be satisfied of two things: first, that circumstances existed that were special and, secondly, that those special circumstances prevented the claimant from making her claim within time.”

    [11] Re Secretary, Department of Social Services and Hollis [2015] AATA 941.

23. In giving his evidence, the applicant relied on the following circumstances as evidence of “special circumstances”. He referred to the information contained in the letter from Centrelink dated 27 March 2015, together with the information provided to him in the telephone conversation on 27 May 2015, all of which he said was misleading as to the effects of late lodgement of his taxation return. He also relied on his sister’s ill health and subsequent operation and that the decision regarding the late lodgement of his return involved application of a policy that was not consistent with the relevant legislation. Ms Odgers submitted that none of those circumstances, either individually or taken together, were sufficiently “special” to enliven the discretion in paragraph 32C(3)(b) of the Act. She also submitted that there was nothing misleading in the letter dated 27 March 2015 sent by Centrelink to the applicant. Moreover, in relation to Ms Hollister’s operation, she had recovered from surgery by at least May 2015 and there was no evidence that her ill health was a factor in the applicant failing to lodge his taxation return within the specified time. Ms Hollister could have made other arrangements to have the taxation return lodged by 30 June 2015, or alternatively the applicant could have made other arrangements to have his return lodged within the specified time because of his sister’s health problems and her competing obligations. Moreover, as Ms Odgers stated during the course of the hearing, it is not in dispute that the applicant did not lodge his individual tax return for the 2013/2014 income year until 21 July 2015, a date that was after the end of the first income year and after the relevant income year.

24. Having read again the letter dated 27 March 2015 after hearing the applicant’s evidence, noting what was said on the first page and what followed on Centrelink’s instructions to read the back of the letter about the existence of special circumstances, I can see how the applicant thought the letter was misleading.  To him, what did the letter mean?

25. I have considered and reflected on all of the applicant’s oral evidence and the oral evidence of Mr Brettner.  Following the letter the applicant received from Centrelink dated 27 March 2015 and the call he made on 27 May 2015 to Mr Brettner, that a note would be put on the system and for him to let Centrelink know how he is progressing, I am satisfied the applicant’s understanding was that he would be allowed some leeway if he were not able to lodge his taxation return by 30 June 2015.  When the call was made on 27 May 2015, Mr Brettner did not advise the applicant of the fixed deadline of 30 June 2015 or that his circumstances were not considered sufficiently special to justify an extension of time.  Given all that had taken place, it was not unreasonable for the applicant to believe he had been given extra time in which to lodge his taxation return after 30 June 2015.

    CONCLUSION

1. Adopting the two-part test approach taken by the Tribunals in Hooker and Hollis, I am satisfied, firstly, that circumstances existed that were “special” in the applicant’s case and, secondly, that those “special circumstances” prevented the applicant from lodging his 2013/2014 taxation return within time. In my view, the requirements of s 32C(3) and (4) of the Act have been complied with and the applicant is entitled to receive FTB “top-up” supplementary payments for the 2013/2014 financial year.

   DECISION

2. For the reasons outlined above, the decision of AAT 1 made on 11 February 2016 is set aside.

I certify that the preceding 27 (twenty -seven) paragraphs are a true copy of the reasons for the decision herein of Senior Member R W Dunne

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Administrative Assistant

Dated 18 October 2016

Date(s) of hearing	27 September 2016
Applicant	In person
Advocate for the Respondent	Ms L-A Odgers
Solicitors for the Respondent	Dept of Human Services