Maalouf; Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and
[2008] AATA 18
•9 January 2008
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 18
ADMINISTRATIVE APPEALS TRIBUNAL )
) N 2007/4100
GENERAL ADMINISTRATIVE DIVISION ) Re SECRETARY, DEPARTMENT
OF FAMILIES, HOUSING, COMMUNITY SERVICES
AND INDIGENOUS AFFAIRS
Applicant
And
SAMIRA MAALOUF
Respondent
DECISION
Tribunal Ms N Isenberg, Senior Member Date9 January 2008
PlaceSydney
Decision The decision under review is affirmed.
.................[SGD]..................
Ms N Isenberg
Senior Member
CATCHWORDS
SOCIAL SECURITY – family tax benefit – recovery of overpayment – waiver of debt – sole administrative error – whether overpayment received in good faith
LEGISLATION
A New Tax System (Family Assistance) (Administration) Act 1999 – ss 71, 95, 97
A New Tax System (Family Assistance) Act 1999 – s 58(1)
Privacy Act 1988
CASE LAW
Sekhon v Secretary, Department of Family and Community Services (2003) 76 ALD 105
Jordan v Secretary, Department of Family and Community Services (2004) 86 ALD 256Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 152 ALR 127
Haggerty v Department of Education Training and Youth Affairs (2000) 31 AAR 529
REASONS FOR DECISION
9 January 2008 Ms N Isenberg, Senior Member DECISION UNDER REVIEW
1. On 19 July 2007 the Social Security Appeals Tribunal (“SSAT”) set aside Centrelink’s original decision, dated 18 November 2006, and waived Ms Maalouf’s Family Tax Benefit (“FTB”) debt of $4,131.74 for the 2004-2005 financial year under section 97 of A New Tax System (Family Assistance) (Administration) Act 1999 (“the Act”). On 27 August 2007 the Secretary applied to this Tribunal for a further review.
BACKGROUND
2. Ms Maalouf was paid the FTB for her two children on a fortnightly basis from 1 July 2004. On 15 March 2005 she contacted the Family Assistance Office (“FAO”) and requested the FTB to be paid at a zero rate, as she was unable to estimate her income for the 2004-2005 financial year. Her intention in making such a request was that, once her taxable income was known at the end of the financial year, she would be paid the appropriate FTB – thereby avoiding the incurring any debt due to overpayment.
3. Ms Maalouf contends, that during the same phone call, she told the FAO that 20 February 2005 was the date of her marriage.
4. On 16 March 2005 the FAO sent a notice to Ms Maalouf advising her of the available choices for payment of FTB. The notice confirmed her choice to be paid FTB at a zero rate and that estimated income for the 2004-2005 financial year was $39,800.
5. There was subsequent correspondence and contacts, between Ms Maalouf with the FAO, although no notation was made of her change in marital status.
6. In August 2005 a top up payment of $4,499 was made.
7. On 6 October 2006 the FAO recorded that Ms Maalouf advised she had been married since 20 February 2005. As a result she was asked to provide the FAO with her husband’s details.
8. Ms Maalouf’s entitlement to FTB was recalculated based on her being a member of a couple since 20 February 2005. Ms Maalouf’s actual combined taxable income for 2004-2005 was $106,074.49, rather than $39,800 that the FAO had used as its basis for calculations.
9. On 18 November 2006 a decision was made to raise and recover an FTB debt of $4131.74 for the 2004-2005 income year. This decision was affirmed on review. The SSAT however set aside the decision and decided to waive the debt for the 2004-2005 income year under section 97 of the Act. On 27 August 2007 the Secretary applied to this Tribunal for a further review.
ISSUE BEFORE THIS TRIBUNAL
10. Whether Ms Maalouf has a recoverable FTB debt of $4131.74 for the 2004-2005 income year, and if so, should it be recovered under the Act?
LEGISLATION
11. Section 97 of the Act is relevant to this matter:
97 Waiver of debt arising from error
(1) The Secretary must waive the right to recover the proportion (the administrative error proportion) of a debt that is attributable solely to an administrative error made by the Commonwealth if subsection (2) or (3) applies to that proportion of the debt.
(2) The Secretary must waive the administrative error proportion of a debt if:
(a) the debtor received in good faith the payment or payments that gave rise to the administrative error proportion of the debt; and
(b) the person would suffer severe financial hardship if it were not waived.
(3) The Secretary must waive the administrative error proportion of a debt if:
(a) the payment or payments were made in respect of the debtor’s eligibility for family assistance for a period or event (the eligibility period or event) that occurs in an income year; and
(b) the debt is raised after the end of:
(i) the debtor’s next income year after the one in which the eligibility period or event occurs; or
(ii) the period of 13 weeks starting on the day on which the payment that gave rise to the debt was made;
whichever ends last; and
(c) the debtor received in good faith the payment or payments that gave rise to the administrative error proportion of the debt.
(4) For the purposes of this section, the administrative error proportion of the debt may be 100% of the debt.
CONSIDERATION OF THE EVIDENCE
12. In coming to the correct and preferable decision, I took into account all the evidence, submissions, case law and relevant legislation.
Is there a recoverable ftb debt of $4131.74 for the 2004-2005 income year?
13. Subsection 58(1) of the A New Tax System (Family Assistance) Act 1999 provides that the annual rate of FTB is to be calculated in accordance with the Rate Calculator in Schedule 1. Essentially, the rate of FTB is affected by the combined income of an Applicant. Ms Maalouf’s husband’s income had not been taken into account because, the Secretary contended, the FAO was unaware that she had married.
14. Subsection 71(1) of the Act provides that where a person has received more FTB than that to which he or she is entitled, there is a debt to the Commonwealth. It was not in dispute an overpayment of $4,131.74 for the income year 2004-2005 had occurred and that this constitutes a debt under subsection 71(2) of the Act.
Should the debt be recovered under the act?
Can the debt be written off?
15. Under section 95 of the Act the debt may be written off in very limited circumstances, none of which apply in the present matter.
Can the debt be waived?
16. A debt due to the Commonwealth can be waived under section 97 of the Act.
17. Section 97 allows the debt (or portion of the debt) arising from administrative error to be waived, if it is solely attributable to the Commonwealth’s administrative error (in this case the FAO). Furthermore Subsection 97(3) requires that the debtor received the payment in good faith. (The advocate for the Applicant conceded, and I accept, that the other requirements of section 97(3) regarding the timing of the raising of the debt had been met.)
Did the debt arise solely because of administrative error?
18. The Secretary contended that the debt should not be waived, under subsection 97(3) of the Act, because it was not solely caused from an administrative error.
19. Ms Maalouf gave evidence that throughout 2004 it was her practice to phone the FAO fortnightly to advise of her income, as it varied during this period since she worked casually and part time. On 15 March 2005 Ms Maalouf phoned the FAO to ask that her FTB payments cease, as she was unaware of her husband’s earnings and thus was unable to estimate combined income. Ms Maalouf said she did not want to incur a debt and furthermore if she was owed anything it would be reconciled at the end of the financial year through the Australian Tax Office (ATO). She had previously incurred a debt in 2002 and was wary of doing so again. Consistent with this Ms Maalouf had, prior to March 2005, overestimated her income by about 25 percent in order to receive a lesser entitlement on a fortnightly basis.
20. She said she expected the FAO would probably send a form, to fill in about her change of details, but that did not occur. Ms Maalouf could not understand why, instead, letters of her estimated income arrived, one dated 16 March 2005, when she had asked the FAO to stop payments and indeed was receiving nothing, in accordance with her request. Ms Maalouf had noted that the letter referred to the FAO contacting the ATO at the end of the financial year. She believed she would claim ‘through the ATO’ at the end of the financial year, so could not understand why the FAO was writing to her at all. In this regard Ms Maalouf invited my attention to a (computer-generated version) of another letter – of 2 June 2005 – which specifically refers to the data-matching exercise between the FAO and the ATO.
21. She said that if the ATO had contacted her she would have responded immediately; as she believed her entitlement to FTB was then a matter for the ATO.
22. Ms Maalouf referred me to the MOU between Centrelink and the ATO provided by the advocate for the Secretary. In the Schedule it records:
The ATO will forward ATO Data regarding claims from potential FAO customers (including personal information, name, address, income details, dependant child details etc) to Centrelink…The ATO will advise Centrelink of income details (including taxable income, net rental property loss and fringe benefits) in relation to FAO customers (and their partners)…
23. The advocate for the Applicant provided information that access to ATO data by Centrelink is limited by the taxation laws as well as the Privacy Act 1988. I accept this to be the case, but the material provided to Ms Maalouf suggested that there would be a much greater flow of information between the two agencies such as to allow the reconciliation of her entitlement to FTB to take place. She was entitled to rely on that information.
24. Ms Maalouf was asked about a contact with the FAO on 11 August 2005 when she enquired about her daughter’s eligibility to claim youth allowance. She said she clearly remembered that she had discussed her own income, and also her husband’s income and recalled that the Centrelink officer said he would send the form ‘anyway’. That the Centrelink computer record (T10) did not record this detail, she said, was further evidence that Centrelink/the FAO does not necessarily accurately record every conversation. Ms Maalouf said this was then at least the second time she told Centrelink that she was married.
25. The Secretary’s advocate pointed out that before 15 March 2006 Ms Maalouf had received $300 per fortnight in FTB. That she received nearly $4500, effectively for the period 16 March to 30 June 2005, should have alerted her to an overpayment. Ms Maalouf said she was initially surprised to have received the payment in August 2005. However because her income had been previously overestimated she had expected some top up payment, in addition to $600 lump sum for each child. Ms Maalouf said she had no reason to think this was incorrect, because she believed her entitlement had been reconciled between the FAO and the ATO. She noted that that letter says nothing about the combined income information that the FAO relied on to calculate her payment.
26. The phrase "attributable solely to" has been considered by the Full Federal Court in Sekhon v Secretary, Department of Family and Community Services (2003) 76 ALD 105 at [35] where the relevant test was said to be whether the only cause that objectively can be ascribed to the relevant debt is an administrative error by the FAO.
27. I found Ms Maalouf to be a truthful and credible witness and accept that she informed the FAO that she was married when she telephoned on 15 March 2005. In accepting that she notified the FAO, in the contact of 15 March 2005, there is no explanation for the overpayment other than there was an administrative error.
Good Faith
28. The issue is whether Ms Maalouf knew, or had reason to know, or held a suspicion, or a doubt, that she may not be entitled to the amount of FTB she was receiving, coupled with some objective basis for such suspicion or doubt: Jordan v Secretary, Department of Family and Community Services (2004) 86 ALD 256, Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 152 ALR 127, and Haggerty v Department of Education Training and Youth Affairs (2000) 31 AAR 529.
29. It was the Applicant’s contention that it is questionable Ms Maalouf did not receive the FTB in good faith, because, given her evidence to the SSAT and before me, that she was “surprised” about the top up received for the 2004-2005 income year. Ms Maalouf, did not query this amount with the FAO but I accept her explanation for not doing so (refer to paragraph 25 above).
30. It was also contended on behalf of the Applicant that Ms Maalouf knew, or had reason to know, that she would not be entitled to be paid FTB as a result of combined annual income after her marriage. Again, I accept her explanation at paragraph 25 above.
31. Further, it was contended that good faith cannot have been established as letters sent to her dated 16 March 2005, 2 June 2005, and 11 May 2006 had advised Ms Maalouf exactly what was being assessed as combined family income for her FTB, and thus she had an obligation to read those letters and correct the FAO. In that regard I accept that Ms Maalouf understood she had already notified the FAO of her change of circumstances.
32. In coming to this view I note that on 6 October 2006 Ms Maalouf contacted the FAO to draw attention to the fact that she believed there had been an overpayment. It was noted at that time that she had, at several times, previously told the FAO about her marriage. On 26 October 2006, before the debt was raised, she wrote to the FAO, presumably without prior access to her FAO file, advising that she had informed the office of her marriage in the ‘first or second week of March 2005’. This is consistent with her evidence.
DECISION
33. Therefore I have decided that the debt of $4,131.74 due to the Commonwealth should be waived under section 97(3) of the Act.
34. The Administrative Appeals Tribunal affirms the decision of the SSAT.
I certify that the 34 preceding paragraphs are a true copy of the reasons for the decision herein of
Signed: .. [SGD]...................................
AssociateDate of Hearing 13 November 2007
Date of Decision 9 January 2008
Appearance for the Applicant Self Represented
Solicitor for the Respondent Ms P Sharma
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