Knapp; Secretary, Department of Social Services and (Social services second review)
[2018] AATA 1839
•20 June 2018
Knapp; Secretary, Department of Social Services and (Social services second review) [2018] AATA 1839 (20 June 2018)
Division:GENERAL DIVISION
File Number: 2017/3668
Re:Secretary, Department of Social Services
APPLICANT
AndDaniella Knapp
RESPONDENT
DECISION
Tribunal:Senior Member B Illingworth
Date:20 June 2018
Place:Adelaide
The decision of the Social Services and Child Support Division of the Administrative Appeals Tribunal dated 26 May 2017 is set aside and in substitution it is decided that:
(a)The Respondent did not make an effective claim for FTB for the 2014/2015 financial year; and accordingly
(b)The Respondent is not entitled to FTB top up and supplements for the 2014/2015 financial year.
....................[Sgd]....................................................
Senior Member B Illingworth
CATCHWORDS
SOCIAL SECURITY – Late lodgement of claim for family tax benefits – Single mother coping with son’s addiction to illicit drugs – Whether special circumstances prevented timely lodgement of the tax return – Decision under review set aside and substituted.
LEGISLATION
A New Tax System (Family Assistance) (Administration) Act 1999, s 32C
CASES
Beadle and Director‑General of Social Security [1984] AATA 176; (1984) 6 ALD 1
Dranichnikov v Centrelink [2003] FCAFC 133
Riddell v Secretary, Department of Social Security [1993] FCA 261; (1993) 42 FCR 443
Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones [2012] FCA 639; (2012) 89 ATR 267
Angelakos and Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Burgess and Secretary, Department of Social Services (Social services second review) [2017] AATA 525
Secretary, Department of Social Services and Galvin (Social services second review) [2017] AATA 1218Gammaldi and Secretary, Department of Social Services (Social services second review) [2016] AATA 1028
REASONS FOR DECISION
Senior Member B Illingworth
20 June 2018
The Secretary, Department of Social Services (the Applicant) has applied to this Tribunal to review a decision of the Social Services and Child Support Division of the Administrative Appeals Tribunal (AAT1) dated 26 May 2017 (incorrectly dated 26 May 2016) to set aside a decision made by a Centrelink Authorised Review Officer (ARO) not to pay family tax benefits (FTB) to Ms Knapp (the Respondent) for the 2014/2015 financial year.
The AAT1 decided to set aside the decision under review on the basis that special circumstances prevented the Respondent from lodging her tax return by the due date of 30 June 2016, and granted an extension of time for the Respondent to lodge her tax return.
The questions for this Tribunal are:
(i)whether special circumstances existed; and
(ii)if the answer to (i) is yes, whether those special circumstances prevented the Respondent from lodging her 2014/2015 income tax return, which enlivened the discretion to extend the time to lodge the 2014/2015 income tax return and thereby entitle the Respondent to receive FTB.
It is not in dispute that the Respondent lodged her 2014/2015 income tax return on 20 July 2016, which was 20 days post the due date for lodgement.
THE LEGISLATION
The legislative provisions governing payment of FTB are contained in the A New Tax System (Family Assistance) (Administration) Act 1999 (the Act).
There is no dispute that the Respondent satisfied the legislative requirements to receive FTB, subject to satisfying s 32C of the Act.
Section 32C of the Act provides as follows:
32C Relevant reconciliation time—first individual must lodge tax return
(1) This section applies to the first individual for a same‑rate benefit period if:
(a)the first individual is or was required to lodge an income tax return for the relevant income year; and
(b)clause 38L of Schedule 1 to the Family Assistance Act did not apply to the first individual at any time during the same‑rate benefit period.
(2)Disregard paragraph (1)(b) if the first individual was a member of a couple at any time during the same‑rate benefit period.
(3)The relevant reconciliation time is 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, so long as the first individual’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 (if any) as the Secretary allows, 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.
(4)The further period under paragraph (3)(b) must end no later than the end of the second income year after the relevant income year.
BACKGROUND
The Respondent was a single mother caring for three children. She had previously been in receipt of FTB.
The Respondent had received at least two letters from Centrelink advising her of her obligation to lodge her income tax return within 12 months of the end of the relevant financial year. The first letter was dated 8 May 2014,[1] and the second dated 24 March 2016.[2] The second letter was headed “Family Tax Benefit – Important Action Required by 30 June 2016” and detailed the Respondent’s obligation to lodge her 2014/2015 income tax return by 30 June 2016. The letter also detailed the consequence should she fail to lodge her return by that date.
[1] Exhibit A1, T-documents, T10/64-66.
[2] Ibid T10/67‑69.
To her credit, the Respondent acknowledged that she received both letters. However, she said that she received a large number of letters from Centrelink and to some extent these two letters were each just another letter. She acknowledged that she did not give them the attention she should have. She said that she thought her tax returns had to be lodged by the October, approximately 16 months after the end of the relevant financial year and that was the date she had in her mind.
As for the second letter, the Respondent acknowledged that she read it, saw reference to the date, but that end date of 30 June 2016 did not take on the level of importance that it should have. She had other important family issues impacting on her life at the time, which were her priority. The Respondent said that nonetheless she lodged the income tax return 20 days late.
I accept the Respondent’s evidence. She was honest, candid and willing to admit her oversight, which was to her credit.
The Respondent gave evidence about those factors which were impacting upon her life and in particular in 2015 and 2016. She was distressed when recounting certain events, but gave clear and concise evidence.
The Respondent had two children from her first marriage. That marriage ended in divorce and her former husband did not see or contribute to the children. He was involved in illicit drugs.
The Respondent met her second husband when her youngest child was approximately 2½ years of age. Her second husband was a father figure to her two children from her first marriage.
The Respondent had a third child to her second husband, however that marriage also ended. She continues to receive support from her second husband with respect to her third child.
In 2014, the Respondent’s second child, a son, was having trouble at school. By 2015 his behaviour began to deteriorate. He became involved with an unsatisfactory group of youths and in 2016 he changed schools. Unfortunately his behaviour worsened.
The Respondent’s son on occasion failed to return home and in February 2016 he failed to arrive at his elder brother’s birthday party. He had a poor attendance record at school, his former friends refused to associate with him and parents of former school friends would ring the Respondent to express concern for her son and offer assistance.
The Respondent’s son had previously excelled at sport and, in particular, soccer. He represented the State. However his interest in sport waned and he also gave that up.
The Respondent discovered that her son was using drugs, initially marijuana. He apparently had rekindled his relationship with his biological father who introduced him to more insidious drugs. Her son became violent and the Respondent described him in the first half of 2016 as “off the rails”.
The Respondent acknowledged that her financial affairs were not complicated. Her employment as a school teacher was her only source of income. In cross‑examination she acknowledged receiving the letter of March 2016, which gave notice of when to file her tax return. She said in evidence that she had said to herself “yeah, I’ve got to do that”, but forgot about it and lodged the income tax return 20 days late.
The Respondent admitted that she received her group certificate in about July 2015 for the relevant financial year, but at that time, lodging her tax return was not a priority. As each month passed she said she did not have the time nor the finances to get it done.
The Respondent said, very candidly, that she did not want to “sugar coat” her life: “my head was not thinking about tax, my head was thinking about saving my son”. The Respondent was also concerned about the impact these events were having on her other children and, in particular, her daughter who was approximately 5½ years of age.
The Respondent said these events impacted upon her health. She became depressed and saw a medical practitioner, but declined to take any medication for her depression. She said her work suffered and she was spoken to about her absenteeism and performance. She received counselling at work. She struggled financially, which delayed her engaging someone to do her income tax return.
The Respondent tendered letters from her son’s soccer coach[3] and a school coordinator,[4] both of whom spoke of those personal issues involving her son and the impact upon the Respondent’s health and her job performance.
[3] Exhibit R2, Letter of Raffaele Frisina dated 20 April 2018.
[4] Exhibit R1, Undated Letter of Jameel Jezierski.
I accept the Respondent’s evidence. She was an honest and credible witness.
The prevalence of drugs in our community is sadly all too common. Drugs are insidious and the consequences for those who take them and also their families are potentially devastating. For parents dealing with a child’s drug addiction it can be easily understood that the issue will become a priority and often be overwhelming. Addressing the problem is likely to take time. I accept that this was a difficult time for the Respondent.
It is necessary to consider these factors and whether the two‑tier test is satisfied, namely:
(i)Whether there are special circumstances that existed at the relevant time; and if so
(ii)Whether those special circumstances prevented the Respondent from filing her income tax return by 30 June 2016.
THE MEANING OF SPECIAL CIRCUMSTANCES
The term “special circumstances” is not defined in the Act. However, it is a term that has been considered extensively by the Federal Court and this Tribunal. Those decisions provide guidance in interpreting the term, but each matter will turn on its own facts.
In Beadle and Director-General of Social Security [1984] AATA 176; (1984) 6 ALD 1 Toohey J said that the adjective “special” “looks to circumstances that are unusual, uncommon, or exceptional”.
In Dranichnikov v Centrelink [2003] FCAFC 133 Hill J, (with whom Kiefel and Hely JJ agreed) at [66] said:
Other cases which have considered analogous words such as “special reasons” has tended to conclude, albeit in different contexts, that what is required will be circumstances which distinguish the case in consideration from the usual case. There will be a requirement that the circumstances are such that takes the case out of the ordinary.[5]
[5] See also Beadle and Director General of Social Security [1984] AATA 176; (1984) 6 ALD 1 [12].
The Full Court in Riddell v Secretary, Department of Social Security [1993] FCA 261; (1993) 42 FCR 443 held at 450:
Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardships, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other.
In Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones [2012] FCA 639; (2012) 89 ATR 267, 274 Jacobson J said at [51] as follows:
The effect of the authorities is that the phrase “special circumstances”, although lacking in precision, is sufficiently understood as including events or things that render the operation of the statue [sic] in a particular case as unfair, unintended or unjust. What is required is something that takes the case out of the ordinary, and unfairness or unintended consequences may show that this exists.
In Angelakos and Secretary, Department of Employment and Workplace Relations [2007] FCA 25, Besanko J said at [33] “[t]here 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”.
THE RESPONDENT’S PERSONAL MATTERS
Did the respondent’s personal matters constitute special circumstances?
The circumstances that the Respondent faced in 2015 and 2016 incite much sympathy. A single parent dealing with a child’s drug addiction and the emotional strain that had on the family and the Respondent over an extended period of time are properly classified as unusual, uncommon or exceptional when viewed against the general community. However, that is only the first tier of the test in considering whether the discretion is enlivened in extending the period of time within which the Respondent may file her income tax return. The next question to be considered is whether those circumstances prevented the Respondent from doing so.
Did the respondent’s personal matters prevent her from lodging her income tax return?
The decision of the AAT1 appears to be silent on whether and if so how the special circumstances prevented the Respondent from filing her income tax return.
The relationship between personal circumstances and the prevention from filing an income tax return was considered at length in Burgess and Secretary, Department of Social Services (Social services second review) [2017] AATA 525. The Tribunal there considered a number of authorities in which the Tribunal stated at [43]-[51]:
The difficulty with assessing the impact on Ms Burgess’ mental health at the relevant time and whether it prevented her from filing her tax returns in time, is that there is no corroborating medical evidence.
Marital issues and busy work and family commitments and the normal vicissitudes of life are not “uncommon”, “out of the ordinary”, or “exceptional” circumstances. They are not, generally, “special circumstances” for the purposes of the Act.
I note the Full Federal Court decision in Secretary, Department of Social Security v O’Connell; Secretary, Department of Social Security v Sevel (1992) 38 FCR 540 where the Court noted that (at p 546):
Given the evident parliamentary intention to protect the interests of dependent children, an interpretation of the Act leading to a loss of allowance by qualified people should be adopted only in the clearest of cases.
However, whilst it is understandable that Ms Burgess was going through a difficult and emotional period between March 2015 and June 2015, having discovered her husband’s infidelity, there is no medical evidence to corroborate that the impact of that occurrence was such that Ms Burgess was not capable of arranging for her tax returns to be completed.
Ms Burgess says she did not seek medical treatment for her mental state at that time because she did not want, and does not agree with taking, medication. However, if she was in such a bad way that her mental state was impacting to such a degree on her ability to think clearly, it is surprising that no treatment or counselling was sought. Further, Ms Burgess acknowledged she was still able to care for her 4 children at that time and was preparing and lodging business activity statements and providing other bookkeeping assistance for her husband’s business.
In Gammaldi and Secretary, Department of Social Services (Social services second review) [2016] AATA 1028 the Tribunal found that even where the Applicant had had a difficult year, with family health issues, business challenges and increased responsibilities which understandably distracted him from lodging his return by 30 June 2014, these events did not constitute uncommon or unusual occurrences and were not “special circumstances”.
I was also referred by the Secretary to the decision of Lineham and Secretary, Department of Social Services [2016] AATA 127 where the Tribunal was not satisfied there were special circumstances, due to the lack of medical evidence to corroborate that the Applicant’s state of mind was such that it prevented him from lodging his tax return on time.
In Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 Brennan J (as President of the AAT) noted (at 643) that consistency with comparable cases and decisions is “[o]ne of the factors to be considered in arriving at the preferable decision”.
On the available evidence, I am unable to find that Ms Burgess’ marital issues and mental state prevented her from lodging her tax returns before the end of 30 June 2015.
(emphasis in original)
In Secretary, Department of Social Services and Galvin (Social services second review) [2017] AATA 1218 the Tribunal said at [39]-[40] and [49]:
The Tribunal is minded to accept that the particular run of circumstances that Mr and Mrs Galvin faced in the 2014/2015 financial year were, cumulatively, uncommon. Juggling the needs of small children in a family is not uncommon or unusual, nor is the care of an elderly parent or grandparent – that is what family members do. And, sadly, the death of a close family member is something that we all have faced, or will face. But when one puts these matters together, and adds to them a sudden injury to another close family member on the other side of the world, it is, to borrow the words used by Senior Member Britten‑Jones in Secretary, Department of Social Services and Willersdorf [2016] AATA 535 (Willersdorf), at [62], something of “a perfect storm”.
However the second part of the legislative test that the Tribunal must also consider is whether that unusual or uncommon combination of events prevented Mrs and Mr Galvin lodging their tax returns. Mrs Galvin said in her evidence that her usual practice was to lodge her returns for a financial year “by August” following the end of the financial year in question. She said she had been doing the books for the farm and her husband’s business for some thirteen years. At that time in 2014 she would have been preoccupied with the serious terminal illness of her mother, but the other cited circumstances that were to come to pass had not yet eventuated. Her grandmother had not taken ill and her father-in-law had not had his fall.
…
The Tribunal’s conclusion is that the requirements in section 32C of the Administration Act are not met. Special circumstances did not apply which prevented the lodgement of the 2013-2014 tax returns of Mr and Mrs Galvin by 30 June 2015.
Further, in Gammaldi and Secretary, Department of Social Services (Social services second review) [2016] AATA 1028 the Tribunal said at [30]:
The Tribunal accepts that the 2013/2014 financial year was a difficult one for the family and for Mr Gammaldi. The Tribunal is, however, not satisfied that the situation and responsibilities faced by Mr Gammaldi prevented him from lodging a tax return by 30 June 2014. It could certainly have been a low priority in his life to think or worry about his tax return and the consequences of late lodgement while his wife and youngest child faced health problems and he himself faced increased family responsibilities and business challenges. However, being distracted from lodging the tax return by the prescribed date due to such events is not, in the Tribunal’s view, an uncommon or unusual occurrence. The Tribunal is therefore not satisfied that the family’s difficulties constitute special circumstances that prevented lodgement by the due date of the tax return.
The circumstances faced by the Respondent in relation to her son’s drug addiction plainly had some impact on her personal circumstances. The letters from her son’s soccer coach and the school coordinator tend to corroborate that fact. However, there is no medical evidence before the Tribunal to corroborate her state of mental health at the relevant time, nor that such mental health prevented her from filing the income tax return. Indeed, on the evidence before me it appears to be very much to the contrary.
On her evidence, when the Respondent received the notice advising her of the due date for the filing of her income tax return, she did not adequately turn her mind to the need to file the return as required. She had not realised that her belief as to the required filing date was wrong as she was concentrating on the issues relating to her son’s drug addiction. There is no evidence before me that the Respondent was prevented from filing her income tax return as a consequence of those personal issues. She simply failed to give it the proper and earnest consideration that was required and as a result was 20 days late in filing her income tax return.
CONCLUSION
I find that there were no special circumstances which prevented the Respondent from lodging her 2014/2015 income tax return on or before 30 June 2016 which would enliven the exercise of the discretion to extend the time for the lodging of the claim.
DECISION
The decision of the Social Services and Child Support Division of the Administrative Appeals Tribunal dated 26 May 2017 is set aside and in substitution it is decided that:
(a)The Respondent did not make an effective claim for FTB for the 2014/2015 financial year; and accordingly
(b)The Respondent is not entitled to FTB top up and supplements for the 2014/2015 financial year.
I certify that the preceding 43 (forty -three) paragraphs are a true copy of the reasons for the decision herein of Senior Member B Illingworth
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Administrative Assistant
Dated: 20 June 2018
Date(s) of hearing: 30 April 2018 Advocate for the Applicant: Mr C Visser Solicitors for the Applicant: Department of Human Services Respondent: In person
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