Martin and Secretary, Department of Family and Community Services

[2003] AATA 1007

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 1007

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2003/498

GENERAL ADMINISTRATIVE DIVISION		)
Re		LYNETTE MARTIN

Applicant

And

SECRETARY, DEPARTMENT

OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr RG Kenny, Member

Date7 October 2003 

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

....................(Sgd).....................

RG Kenny
  Member

CATCHWORDS

SOCIAL SECURITY – family tax benefit – entitlement – recovery of overpayments – waiver of debt – special circumstances

A New Tax System (Family Assistance) Act 1999 ss 21, 22, 22A

A New Tax System (Family Assistance) (Administration) Act 1999 ss 71, 95, 96, 97, 101, 102, 105

Beadle v Director-General of Social Security (1985) 7 ALD 670
Re Beadle and Director-General of Social Security (1984) 1AAR 362
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Re Offner and Secretary, Department of Family and Community Services [2002] AATA 911
Re Secretary, Department of Family and Community Services and Tough [2002] AATA 1212

REASONS FOR DECISION

7 October 2003  Mr RG Kenny, Member      

Background

1.      During the 2001/2002 financial year, Lynette Martin (the applicant) was paid family tax benefit in relation to her daughter, Kate Martin, who was born on 2 June 1982.  The benefit was paid in accordance with A New Tax System (Family Assistance) Act 1999 (the FA Act). In that year, Kate was in full-time study until April 2002 when she began to undertake part-time and then full-time employment.

2.      On 23 November 2002, a Centrelink officer, on behalf of the Secretary, Department of Family and Community Services (the respondent) determined that the applicant had been overpaid an amount of $1,177.80 by way of family tax benefit payments and that this amount was a debt due by her to the Commonwealth.

3.      On 3 February 2003, an Authorised Review Officer affirmed that decision and, on 20 May 2003, it was again affirmed by the Social Security Appeals Tribunal (the SSAT). On 19 June 2003, the applicant sought review of that decision by the Administrative Appeals Tribunal (the Tribunal).

4.      At the hearing, the applicant attended and was represented by her husband, John Martin.  Mr James Howard, Advocate from the Service Recovery Team, appeared for the respondent.

5.      In evidence were the following:

Exhibit 1The documents prepared in accordance with section 37 of the Administrative Appeals Tribunal Act 1975 (the “T” Documents (T1 to T34));

Exhibit 2A Brochure from the Family Assistance Office on Family Tax Benefit/Child Care Benefit; and

Exhibit 3A memorandum, dated 4 February 2003, from Authorised Review Officer, FAO to Manager FAO Customer Segment Team regarding wording of customer advices.

Issues and Legislation

6. A person is eligible for Family Tax Benefit in accordance with the terms of section 21 of the FA Act which reads:

“(1) An individual is eligible for family tax benefit if:

(a) the individual has at least 1 FTB child (see section 22 and later provisions); and

(b) the individual:

(i)    is an Australian resident; or

(ia)  is a special category visa holder residing in Australia; or

(ii)   satisfies subsection (1A); and

(c) the individual's rate of family tax benefit, worked out under DIVISION 1 of PART - 4 , is greater than nil.

(1A) An individual satisfies this subsection if the individual is the holder of a visa determined by the Minister for the purposes of subparagraph 729(2)(f)(v) of the Social Security Act 1991 , and either of the following applies:

(a) the individual is in Australia; or

(b) the individual:

(i)    is temporarily absent from Australia for a period not exceeding 26 weeks; and

(ii)   the absence is an allowable absence in relation to special benefit within the meaning of PART - 4 .2 of that Act.

(2) However, the individual is not eligible for family tax benefit if another provision of this Subdivision so provides.”

7.      The term FTB Child is defined in section 22 of the FA Act and, in so far as relevant in this case, sub-section 22(2) of the Act reads:

“(2) The individual is an FTB child of the adult if:

(a)the individual is aged under 18; and

(b)the adult is legally responsible (whether alone or jointly with someone else) for the day-to-day care, welfare and development of the individual; and

(c) the individual is in the adult's care; and

(d) the individual is an Australian resident, is a special category visa holder residing in Australia or is living with the adult.”

8. The FA Act also provides exceptions to the operation of section 22 and, in so far as is relevant, the provision reads:

“22A Exceptions to the operation of section 22

(1) Despite section 22, an individual cannot be an FTB child of another individual (an adult) in the cases set out in this table:

When the individual is not an FTB child of the adult at a particular time
If the individual is aged:	then the individual cannot be an FTB child of the adult if:
1	5 or more and less than 16	(a) the individual is not undertaking full-time study and the individual has adjusted taxable income, for the income year in which the particular time occurs, that equals or exceeds the cut-out amount (see subsection (2)); or (b) the adult is the individual's partner.
2	16 or more	(a) the individual has adjusted taxable income, for the income year in which the particular time occurs, that equals or exceeds the cut-out amount (see subsection (2)); or (b) the adult is the individual's partner; or (c) the individual, or someone on behalf of the individual, is, at the particular time, receiving payments under a prescribed educational scheme.
3	any age	the individual, or someone on behalf of the individual, is, at the particular time, receiving: (a) a social security pension; or (b) a social security benefit; or (c) payments under a program included in the programs known as Labour Market Programs.

Definition

(2) In subsection (1):

cut-out amount means the sum of:

(a)   the amount specified in column 2 of item 2 of the table in clause 30 of SCHEDULE - 1 divided by 0.3; and

(b)   the amount specified in clause 33 of that SCHEDULE.”

9.      It is not disputed that the cut-out amount calculated in accordance with those provisions was $8,079 in this case.

10. The respondent’s case is that, during the financial year from 1 July 2001 until 30 June 2002, Kate had an adjustable taxable income which was in excess of the cut-out amount and that, as a result, she was no longer an FTB child at any time during that annual period. This meant that FTB payments which had been made to the applicant from 30 June 2001 until the decision of the respondent in May 2003 were monies to which the applicant was not entitled. In that regard, sub-section 71(1) of the A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act) reads:

“(1) If:

(a) an amount has been paid to a person by way of family tax benefit, maternity allowance or maternity immunisation allowance (the assistance ) in respect of a period or event; and

(b) the person was not entitled to the assistance in respect of that period or event;

the amount so paid is a debt due to the Commonwealth by the person.”

11.     The issues for the Tribunal to determine are whether or not Kate was an FTB child during the relevant period; if not, whether the applicant was overpaid an amount of family tax benefit; and, if so overpaid, whether any such overpayment is a debt due by her to the Commonwealth.

Applicant’s Case

12.     Mr Martin said that he and the applicant had always understood that they needed to advise the respondent in the event that Kate’s income reached $8,079 for the financial year 2001/2002.  He said that this was advised to them in various letters but he also said that, throughout his dealings with the respondent’s officers, there had never been any indication that, in the event that the threshold of $8,079 was reached or exceeded, there would be a need to repay monies provided by way of family tax benefits to the applicant for any period prior to the achievement of that threshold amount.  He said that the first time he was made aware of this was in May 2003 when he received the decision. 

13.     Mr Martin said that Kate had studied full-time until early 2002 and then sought employment in the child care industry.  She obtained casual work and, in April, the applicant contacted the respondent and advised that Kate would be earning income.  Mr Martin said that the advice from Centrelink officers was that they should wait until the threshold was reached. He said that a further call was made on 1 May 2002 when it was realised that the threshold would be reached and that the decision was made shortly after to raise the overpayment.  He also said that there had been earlier contact with Centrelink officers in November 2001 where he had requested information concerning the arrangements for eligibility and, again, there had been no indication that there would need to be a repayment of monies received prior to the threshold level of income being achieved.

14.     Mr Martin referred to letters that had been sent out to the applicant about the need to notify Centrelink concerning income levels and, again, he said that there was no indication therein that monies previously paid would need to be repaid as a debt.  He referred to a brochure from the Family Assistance Office on family tax benefit/child care benefit (Exhibit 2) and submitted that this was the document published for the 2002/2003 financial year and in which it was made clear that there would be an obligation to repay monies received if the income threshold was achieved at any stage. He also referred to the memorandum dated 4 February 2003 (Exhibit 3) which he said had been forwarded to him and which indicated that there was an acceptance by Centrelink staff that there had been problems with the quality of advice given in the previous financial year when the applicant’s debt was raised.

15.     Mr Martin said that the applicant and he accepted that, if it were appropriate for the whole year of payments to be recovered, the amount of $1,177.80 had been correctly calculated and represented the overpayment which was a debt due by the applicant to the Commonwealth.  However, it was his submission that the means adopted by Centrelink to portray the legislative provisions to the applicant and to the public generally would need to be considered as an administrative error on the part of the Commonwealth and that, if it were not an error, it meant that there was a poor standard of decision-making amongst the respondent’s staff. He submitted that there were special circumstances which would justify the waiver of the debt in this case and submitted that the manner in which the Commonwealth had dealt with the matter made it unjust in the sense required for special circumstances to exist.

16.     Mr Martin said that he and the applicant were not living in difficult financial circumstances with some $900 a fortnight available to them when their various loan commitments were taken into account.  He also said that the debt had now been repaid to Centrelink and that this had been done through deductions from his salary at the amount of $60 per fortnight.  He said that, during that period, there had been some concerns about their financial position. 

17.     Mr Martin noted that various errors had appeared in documents provided to the Tribunal.  He referred to the document which was included as the copy of the original claim for family tax benefit by the applicant.  This was located at T6/25 of the “T” Documents and was related to a person who was not his daughter.  He also noted that this incorrect name had been included in the respondent’s Statement of Facts and Contentions.  He also pointed out various other errors as to dates in that statement.  Again, he submitted that these constituted errors on the part of the respondent.

Respondent’s Case

18.     Mr Howard submitted that all of the calculations had been made correctly in this case and that, because the threshold of $8,079 had been reached at a point during the financial year, then the legislation operated in a way to require that all payments during the financial year constituted an overpayment which was consequently a debt due by the applicant to the Commonwealth.  He said that this was in the amount of $1,177.80 for the period from 1 July 2001 to 30 June 2002.

19.     Mr Howard further submitted that the non-recovery provisions potentially relevant to the applicant were sections 95, 97 and 101 of the FAA Act.  However, in relation to section 95 of the FAA Act which deals with write-off, he submitted that, as the debt had already been repaid, this was inapplicable.

20.     In relation to waiver of the debt under section 97 because of administrative error by the Commonwealth, he submitted that this requirement was not met because there had been no administrative error on the part of the Commonwealth although he conceded that insufficient information had been provided by the Commonwealth in documentation and in information provided to the applicant. He submitted that the applicant was under an obligation to advise Centrelink if the threshold level was to be reached or exceeded and he also submitted that it was an inevitable outcome of the family tax benefit system that there would be uncertainty as to whether or not these thresholds would be attained because one was dealing with prospective estimates of future income. He submitted that the intended operation of the legislation, with those necessary problems built into dealing with estimates for future income, could not be considered to be an administrative error.

21.     Whilst conceding that there were errors in the Statement of Facts and Contentions and in the preparation of the “T” Documents, Mr Howard submitted that these arose well after the raising of the debt and had nothing to do with the payment period and therefore were not relevant administrative errors.

22.     Mr Howard submitted that, even if it were the case that there had been administrative error on the part of the Commonwealth, it was not the case that the applicant was in financial hardship or, as section 97 required, severe financial hardship as a pre-condition to waiver under that provision.

23.     Mr Howard also referred to the special circumstances waiver provision in section 101 of the FAA Act and said that the applicant’s circumstances, when compared with other recipients of social security payments, could not be considered to be “unusual, uncommon or exceptional” so as to make them “markedly different from the usual run of cases”..  On that basis, he submitted that there were no grounds for waiver on the basis of special circumstances being found. He submitted that the only suggested special circumstance was in respect of financial matters and he noted that the legislation required that the special circumstances be other than severe financial hardship.

Consideration

24. Family tax benefit payments may only be made to the applicant in the event that she has an FTB child. That is provided for in section 21 of the FA Act and, although the circumstances of the applicant and Kate met the requirements of subsection 22(2) of the FA Act, that provision must be read with the circumstances of exception listed in subsection 22A(1) of the FA Act. That provision indicates when a person is not an FTB child of an adult “at a particular time”..  In the case of Kate, who was 19 years of age when the family tax benefit was paid, Category 2 in that provision as set out above is relevant.  It provides that Kate cannot be an FTB child of the applicant if Kate has an adjusted taxable income, for the income year in which the particular time occurs, that equals or exceeds the cut-out amount of $8,079.

25. The effect of section 22A of the FA Act was referred to in Re Secretary, Department of Family and Community Services and Tough [2002] AATA 1212 at 42 where the Tribunal said:

“In the context of eligibility for FTB, one of the facts that may affect her eligibility is the income of Mrs Tough’s children and, in particular, of Brent. That is so because the effect of s. 22A of the FA Act is that Brent cannot be Mrs Tough’s FTB child at ‘a particular time’ if his adjusted taxable income for ‘the income year in which the particular time occurs’ exceeds the cut-out amount.  When regard is had to the income that Brent earned in the year ending 30 June, 2001, his income exceeded that amount.  That means that, at no particular time in that year, could he be an FTB child of Mrs Tough.  As Brent could not be an FTB child at any time during the financial year, Mrs Tough was not entitled to FTB for any period during the financial year for a determination that she is entitled to FTB could only be made under s. 16 of the FAA Act if she was entitled to it…”

26.     On that basis, at any particular time that is called into question, Kate was not an FTB child of the applicant.  I am satisfied that Kate’s earnings did exceed the cut-out amount and, therefore, that the applicant’s circumstances are embraced by the terms of subsection 71(1) of the FAA Act in that the amount of family tax benefit paid to her during the year were amounts to which she was not entitled:  see Re Offner and Secretary, Department of Family and Community Services [2002] AATA 911. Pursuant to that provision, the amount paid to her during the financial year 2001/2002 in the amount of $1,177.80 is a debt due by her to the Commonwealth.

27.     The non-recovery provisions of the FAA Act with potential relevance in this case are, as submitted by Mr Howard, sections 95, 97 and 101 thereof.  I am satisfied that, as the debt has been repaid, it is not appropriate to write off the debt under section 95 of the FAA Act.

28.     It cannot be disputed that the nature of the advices provided by the respondent to the applicant and persons in her position left those people in a situation where they were not given a full understanding of the way in which the legislation operated.  Without the benefit of the knowledge of the legislation, the explanations provided may well have led a reasonable person to conclude that an overpayment would only arise once the threshold level of income had been attained and for the overpayment to arise prospectively from that time.  Of course, that is not the effect of the legislation and it is the legislation which this Tribunal is bound to apply.

29.     I am satisfied that, though the information provided by the Commonwealth was not sufficient, it does not constitute administrative error on the part of the Commonwealth. I am also satisfied that the making of errors in documentation relating to the proceedings in the Tribunal was not material to the decision and are not special circumstances relating to waiver.  In any event, even if there was administrative error, the mode of operation of section 97 of the FAA Act is that this would not be sufficient, by itself, to justify waiver of the debt.  It would be necessary, in addition, for the applicant to have suffered severe financial hardship if it were not waived.

30.     The evidence in this case is that no such severe financial hardship would arise and, indeed, as noted above, the debt has already been repaid.  I am satisfied that the debt is not able to be waived in accordance with section 97 of the FAA Act.

31.     In relation to waiver in special circumstances under section 101 of the FAA Act, no guidance is given as to the meaning of the term special circumstances but the concept has been the subject of consideration in a range of legislative provisions relating to social security law. In Beadle v Director-General of Social Security (1985) 60 ALR 225, the Federal Court stated that it was not possible to lay down precise limits or precise rules for the meaning of the term as it is applied in the context of the Social Security Act 1991.. The Court indicated that this would depend upon the circumstances of each particular case but commented that, even though the term lacks precision, it was sufficiently understood “not to require judicial gloss" (at 228). There, the Court affirmed the decision of the Tribunal (Re Beadle and Director-General of Social Security(1984) 1 AAR 362) where (at 364) the Tribunal had acknowledged that the term was "incapable of precise or exhaustive definition" and that, to be special, the circumstances must be “unusual, uncommon or exceptional” and must have a “particular quality of unusualness that permits them to be described as special".

32.     In Groth v Secretary, Department of Social Security (1995) 40 ALD 541, Kiefel J, after referring to the Federal Court's decision in Beadle, observed (at 545) that special circumstances:

“…would require something to distinguish… [the]... case from others, to take it out of the usual or ordinary case. … It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.”

33.     The only matters that have been raised in the context of waiver for special circumstances under section 101 of the FAA Act are those relating to the presence of administrative error by the respondent. I am satisfied that the provision does not extend to administrative error by the respondent as being a special circumstance because that is dealt with specifically in section 97 of the FAA Act and I am also satisfied that there are no additional circumstances in this case that make it unusual, uncommon or exceptional so as to satisfy the requirements of the waiver provision under section 101 of the FAA Act.

Decision

34.     The Tribunal affirms the decision under review.

I certify that the 34 preceding paragraphs are a true copy of the reasons for the decision herein of Mr RG Kenny, Member

Signed:         Sarah Oliver
  Associate

Date of Hearing  30 September 2003 (at Toowoomba)
Date of Decision  7 October 2003

The Applicant was represented by her husband, Mr J Martin
For the Respondent                  Mr J Howard, Departmental Advocate