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

[2018] AATA 4428

Lloyd and Secretary, Department of Social Services (Social services second review) [2018] AATA 4428 (19 November 2018)

Division:GENERAL DIVISION

File Number:           2017/2163

Re:Trudi Lloyd

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Senior Member P J Clauson

Date:19 November 2018

Place:Brisbane

The Tribunal affirms the decision under review.

........................[Sgd]................................................

Senior Member P J Clauson

CATCHWORDS

SOCIAL SECURITY – recovery of debt – overpayment of family tax benefit – overpayment of schoolkids bonus – whether debt to be written off – whether debt to be waived – Applicant consented to paying back debt in full – decision under review affirmed

LEGISLATION

A New Tax System (Family Assistance) Act 1999

A New Tax System (Family Assistance) Administration Act 1999

CASES

Re Lumsden and Secretary, Department of Social Security (1986) 10 ALN N225

Re Reynolds and Secretary, Department of Social Security (1986) 10 ALN N155

Stubbs and Secretary, Department of Family and Community Services [2003] AATA 729

REASONS FOR DECISION

Senior Member P J Clauson

19 November 2018

INTRODUCTION

1. Ms Trudi Lloyd (“the Applicant”), received Family Tax Benefits (“FTB”) and the School Kids Bonus (“SKB”) from 1 July 2013[1] until 31 January 2016.

   [1] Exhibit 2, Respondent’s Statement of Facts, Issues and Contentions dated 16 January 2018, para 3

2. On 1 August 2016, after the Applicant’s FTB and SKB entitlements had been reassessed following the reassessment of her percentage of care of her daughter, the Department of Human Services (‘Centrelink’) decided to raise various debts against the Applicant.[2] On 3 August 2016, an Authorised Review Officer (‘ARO’) affirmed the care percentage and debt decisions.

   [2] Exhibit 2, Respondent’s Statement of Facts, Issues and Contentions dated 16 January 2018.

3. The Applicant sought review of those decisions from the Social Services & Child Support Division (“SSCSD”) of this Tribunal, who affirmed both decisions on 22 February 2017.[3]

   [3] Exhibit 1, T Documents, T2 at page 8, Decision of the SSCSD dated 22 February 2017.

4. On 12 April 2017, the Applicant applied to the General Division of this Tribunal for a review of the SSCSD’s decision. Only the decision relating to the recovery of the debt is before the Tribunal.[4] A Hearing was held for this Application on 14 March 2018, and the Applicant appeared before the Tribunal in person.

   [4] Exhibit 2, Respondent’s Statement of Facts, Issues and Contentions dated 16 January 2018, para 11.

   BACKGROUND

5. From 1 July 2013, the Applicant was recorded as having 100% care of her daughter, and she was paid FBT and SKB accordingly. In September 2015, the Applicant’s ex-husband contacted Centrelink to advise that he and the Applicant each had 50% care of the child from 16 January 2012. The Applicant’s ex-husband contacted Centrelink again in November 2015, to claim that he and the Applicant each had 50% care of the child from    1 July 2013.

6. Centrelink rejected his claims, and the Applicant continued to be paid FTB and SKB on the basis that she had 100% care of her daughter.[5]

   [5] Exhibit 2, Respondent’s Statement of Facts, Issues and Contentions dated 16 January 2018, para 4; Exhibit 1, T Documents, T21 at page 108, Centrelink Records.

7. In June 2016, the Applicant’s ex-husband appealed the care decisions relating to the child for the 2013-14 and 2014-15 financial years. Following this, on 6 July 2016 he claimed that he had 100% care of the child from January 2016. After an ARO sought further evidence from both parties regarding the care arrangements, Centrelink determined that the Applicant was only entitled to payments predicated on the basis that she had 50% care of the child from 1 July 2013, and 0% from 16 January 2016.[6]

   [6] Exhibit 1, T Documents, T7, pages 53-54, Debt Information dated 1 August 2016.

8. Consequently, Centrelink raised the following debts:[7]

   ·$2,538.21 FTB for the 2013-14 financial year;

   ·$410 SKB for test days 1 January 2014 and 30 June 2014;

   ·$2,876.46 FTB for the 2014-15 financial year;

   ·$421 SKB for test days 1 January 2015 and 30 June 2015;

   ·$1,728.60 FTB for the 2015-16 financial year; and

   ·$214 SKB for test days 31 January 2016.

   [7] Exhibit 2, Respondent’s Statement of Facts, Issues and Contentions dated 16 January 2018, para 7.

9. Accordingly, the debts totalled $7,738.27, consisting of a $6,693.27 FTB overpayment between 1 July 2013 to 31 January 2016, and a $1,045 SKB overpayment from 1 January 2014 to 1 January 2016.[8] Since the debt has been raised, the Applicant has been paying back these sums. These repayments are facilitated by way of withholdings in the sum of $128.40 per fortnight of the Applicant’s Carer’s Payment and Carer’s Allowance.[9]  As at the date of the Hearing, the Applicant had repaid $4,275.70 of the Debt, with only $3,462.57 still outstanding.[10]  

   [8] Respondent’s Statement of Facts, Issues and Contentions dated 16 January 2018, paras 1-2.

   [9] Exhibit 2, Respondent’s Statement of Facts, Issues and Contentions dated 16 January 2018, Attachment E.

   [10] Exhibit 3, Applicant’s Current Debt Total and Outstanding Balance.

   THE LEGISLATIVE FRAMEWORK

10. Section 21 of the A New Tax System (Family Assistance) Act 1999 (‘Family Assistance Act’) outlines an individual’s eligibility for FTB. In normal circumstances, where a person has an FTB child and is an Australian resident or special category visa holder, and their rate of FTB under the Act is greater than nil, that person will be eligible for FTB.[11]

    [11] Family Assistance Act, s 21.

11. Where a child is an FTB child for more than one person, the Secretary is required to determine each individual’s percentage of care for that child during a period.[12] Where the Secretary determines that an individual’s percentage of care was less than 35% during a care period, the child is deemed not to be an FTB child of that individual, for any part of that period.[13]

    [12] Family Assistance Act, s 22.

    [13] Family Assistance Act, s 25.

12. Where a child is an FTB child for more than one person who are not members of the same couple, each individual’s shared care percentage is calculated according to section 59(2) of the Family Assistance Act. The rate of FTB for the individual is then calculated in accordance with the rate calculator in Schedule 1 of the Family Assistance Act.[14]

    [14] Family Assistance Act, Sch 1, Cl 11.

13. At the relevant time, if a determination was made by the Secretary that an individual was eligible for FTB, pursuant to section 35UA of the Family Assistance Act, that individual was eligible to receive SKB on a bonus test day if their rate of FTB would be greater than nil, taking into account one or more FTB children who were SKB children.[15]

    [15] Family Assistance Act, s 35UA (which has since been repealed).

14. Section 71(2) of the A New Tax System (Family Assistance Administration) Act 1999 (‘Administration Act’) provides that if an amount of FTB or SKB has been paid to an individual, and that amount was greater than the amount that should have been paid, the difference between the amount received and the amount that should have been received is a debt due to the Commonwealth by the individual.  

15. There is an expectation that Commonwealth monies paid to people who are not entitled to receive that money will be recovered,[16] however, recovery of the debt can be prevented in certain circumstances under social security law.

    [16] Director-General of Social Services v Hales (1983) 47 ALR 281 at [32]

16. Under section 95 of the Administration Act, the Secretary may write off a debt for a stated period in the following circumstances:

    ·The debt is irrecoverable at law;

    ·The debtor has no capacity to repay the debt;

    ·The debtor’s whereabouts are unknown; or

    ·It is not cost effective for the Commonwealth to recover the debt.

17. Sections 97 to 102 of the Administration Act outline circumstances in which the Secretary may decide to waive the Commonwealth’s right to recover the whole or part of a debt, which include, relevantly:

    ·A debt arising from sole administrative error; or

    ·Special circumstances exist, other than financial hardship alone, which make it desirable to waive recovery of the debt.

    ISSUES

18. In coming to a decision in this matter, I must have regard to the following:

    (a)Was the Applicant overpaid FTB totaling $6,693.27 from 1 July 2013 until 31 January 2016, and SKB totaling $1,045 from 1 January 2014 to 1 January 2016; and, if so

    (b)Are the amounts legally recoverable debts; and if so

    (c)Should all or part of the debts be written off; or

    (d)Should all or part of the debts be waived?

    CONSIDERATION

    Was the Applicant overpaid FTB and SKB?

19. As set out above, the Applicant received FTB and SKB entitlements on the basis of retaining 100% of the care of her daughter. As a consequence of Centrelink being notified that the Applicant only had 50% care of her daughter during the relevant period, debts totalling $6,693.27 for FTB and $1,045 for SKB were raised against the Applicant, as set out in paragraph 8 above. As this application relates only to the debts, and not the shared care percentage, there is no suggestion that the debts were calculated incorrectly, and I am satisfied that the Applicant was accordingly overpaid a sum of $7,738.27. 

    Is the debt legally recoverable at law?

20. As the Applicant was overpaid FTB and SKB, that amount is a debt recoverable by the Commonwealth.[17]

    [17] Family Assistance Act, s 71(2).

    Should all or part of the debt be written off or waived?

21. Relevantly to the Applicant, section 95 of the Family Assistance Act allows the debt to be written off if the person has no capacity to repay the debt, such as in the case of severe financial hardship.

22. The term ‘severe financial hardship’ is not defined in the Family Assistance Act or Administration Act, however this Tribunal has previously considered the term to require “a need for the particular case of a person to include financial suffering of a severe or extreme nature,”[18] or “a person whose income is materially less than the current maximum pension.”[19] Generally, as the Applicant is making repayments toward the debt at a rate of $128.40 per fortnight, and has been since December 2016, she will be taken to have capacity to repay the debt. There are no other grounds on which the debt could be written off.

    [18] Stubbs and Secretary, Department of Family and Community Services [2003] AATA 729 at [20].

    [19] Re Reynolds and Secretary, Department of Social Security (1986) 10 ALN N155; Re Lumsden and Secretary, Department of Social Security (1986) 10 ALN N225.

23. Relevantly, sections 97 to 102 of the Administration Act provide circumstances where the debt could be waived in whole or in part.

24. There is no evidence that the debt was caused by sole administrative error.

25. At Hearing, the Applicant was given an opportunity to outline her case to the Tribunal and give evidence as to the existence of special circumstances, and I have set out what transpired to the extent that she referred to the debt:[20]

    APPLICANT: Now the expectation is that I should have the faith and trust in the abilities and the standards of the tribunal. I will get to the actual meeting of the Centrelink. I attended the farcical meeting to discuss a revised offer from Centrelink. “If you do not wish to do the hearing for financial difficulty we will waive approximately $2000.” I said “I would rather live in the car another year.” Here we are at the AAT expecting me to be what? Say what and do what?

    Pardon me if I do not trust anyone in this room. Because I have been shunted from one public servant to another and I have been treated like nothing. I have no formal education. I ran a caravan park for 12 years and I brought up three kids. I will happily pay the debt.

    TRIBUNAL: Thank you, Mrs Lloyd. I take it that your last comment was that you are indicating to me that you are quite happy to pay the remainder of the debt. Is that what I understand that comment to mean?

    APPLICANT: I live in a car I do not own. I will pay the debt.

    [20] Transcript, Pages 7-8.

26. Under oath, the Applicant stated to the Tribunal that she would prefer to repay the full debt. She confirmed that she would prefer to repay the debt in full, rather than accepting an offer from the Secretary, which would waive approximately one third of the debt on the grounds that she not proceed with this matter. While the Tribunal appreciates that the Applicant was in a difficult financial situation, but in the absence of any relevant evidence, I find that there are no special circumstances that exist in this case, to warrant the debt being waived.

27. I find therefore, that the debt should not be written off, or waived. 

    DECISION

28. The decision under review is affirmed.     

I certify that the preceding 28 (twenty-eight) paragraphs are a true copy of the reasons for the decision herein of Senior Member P J Clauson

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Associate

Dated: 19 November 2018

Date of hearing:	14 March 2018
Applicant:	In person
Advocate for the Respondent:	Michelle Brazier
Solicitors for the Respondent:	Department of Human Services