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

[2023] AATA 2990

McGrath and ­­­Secretary, Department of Social Services (Social services second review) [2023] AATA 2990 (19 September 2023)

Division:GENERAL DIVISION

File Number(s):      2023/2703

Re:Nicole McGrath

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Senior Member A Poljak

Date:19 September 2023

Place:Sydney

The decision under review is affirmed.

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Senior Member A Poljak

Catchwords

SOCIAL SECURITY – family tax benefit – claim for lump sum payment for past period – late lodgement of claim – late lodgement of taxation returns – whether an extension of time should be granted – whether special circumstances prevented lodgement by due date - decision affirmed

Legislation

A New Tax System (Family Assistance) (Administration) Act 1999 (Cth)

Cases

Secondary Materials

REASONS FOR DECISION

Senior Member A Poljak

19 September 2023

1. During the 2018/2019 financial year, Nicole McGrath, the applicant, was in receipt of Family Tax Benefit (FTB) payments.

2. From early May 2018, the applicant received numerous notices from Services Australia (the Agency) advising her that in order to receive her full FTB entitlement, she and her partner were required to lodge their 2017/2018 Income Tax Return(s) (ITR(s)) or to advise if she and her partner were not required to lodge their ITRs. On 16 March 2021, the applicant contacted the Agency to advise that she was still in the process of getting her partner’s ITR from 2018. The applicant had been granted an ATO exemption from lodging an ITR on 3 December 2019.

3. The applicant’s partner lodged his ITR for the 2018/2019 financial year with the ATO on 19 November 2021.

4. On 22 November 2021, the Agency reconciled the applicant’s FTB entitlements for the 2018/2019 financial year and found that she was entitled to receive FTB top-up payments of $1,960.05, however, this amount was not payable because her partner had not confirmed his income for the 2018/2019 financial year by 30 June 2020. A notice of the decision was issued to the applicant. The applicant requested a review of this decision and cited special circumstances.

5. On 8 December 2022, an Authorised Review Officer (ARO) of the Agency affirmed the Agency’s earlier decision which decided not to pay the applicant FTB top up payment for the 2018/2019 financial year.

6. On 19 December 2022, the Applicant appealed this decision to the Social Services and Child Support Services Division (SSCSD) of the Tribunal. On 12 April 2023, the SSCSD affirmed the decision made by the ARO. It accepted that the applicant’s circumstances were extremely uncommon. However, the applicant’s partner lodged his ITR after 30 June 2021 and therefore, there was no discretion that could be applied in favour of the applicant to pay FTB top-up payment for the 2018/2019 financial year. This is the decision under review in these proceedings.

   Issues

7. The issue for determination in these proceedings is whether an extension of time can be granted to allow lodgement of the applicant’s partner’s ITR after the cut-off of 30 June 2021.

   Consideration

8. In order for the applicant to receive the full FTB entitlement based on her actual combined Adjusted Taxable Income, the applicant and her partner were required to satisfy sections 32C and 32D of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (the FA Administration Act) respectively. They relevantly state:

   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.

   32D Relevant reconciliation time—no separation of couple and partner must lodge tax return

   (1) This section applies to the first individual for a same-rate benefit period if:
   
   

   (a) the first individual was a member of a couple throughout that period; and
   
   
   (b) the other member of the couple (the partner) is or was required to lodge an income tax return for the relevant income year; and
   
   
   (c) the first individual continues to be a member of the couple until the end of:

   (i) the first income year after the relevant income year; or
   (ii) such further period (if any) as the Secretary allows, if the Secretary is satisfied that there are special circumstances that prevented the partner from lodging the return before the end of that first income year.
   
   

   (2) The relevant reconciliation time is the time when an assessment is made under the Income Tax Assessment Act 1936 of the partner’s taxable income for the relevant income year, so long as the partner’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 under subparagraph (1)(c)(ii).
   
   

   (3) The further period under subparagraph (1)(c)(ii) must end no later than the end of the second income year after the relevant income year. [Emphasis added]

9. Paragraphs 32C(3)(b) and 32D(1)(c) of the FA Administration Act have application where there are special circumstances that “prevented” the applicant and her partner from lodging their ITRs by the deadline. Both subsections 32C(4) and 32D(3) of the FA Administration Act make it clear that an extension granted due to special circumstances must end no later than the end of the second income year after the relevant income year, in this case, by 30 June 2021.

10. The applicant has stated that there were special circumstances that prevented the lodgement of her partner’s 2018/2019 ITR on time. They included the impact of COVID-19 on running their small business, medical health issues affecting family members, the death of the applicant’s father, caring responsibilities for a disabled child, unexpected bushfires in which the applicant’s husband was heavily involved as a volunteer firefighter, and floods affecting their lives. At hearing, the applicant explained that the circumstances are still ongoing, particularly those related to the floods, which made it difficult to reconcile paperwork associated with their business and taxes. She also explained the ongoing pressures and difficulties of looking after her disabled son.

11. It is accepted that there were special circumstances that prevented the applicant’s partner from lodging his ITR by 30 June 2020, or at the latest, by 30 June 2021.

12. The applicant’s partner lodged his ITR for the 2018/2019 financial year with the ATO on 19 November 2021. In accordance with subsections 32D(3) of the FA Administration Act, no further extension can be granted to the applicant for the filing of her partner’s ITR after 30 June 2021.

13. Unfortunately, the law does not allow an exception to be made in the applicant’s case to pay FTB top up payments for the 2018/2019 financial year.

    Decision

14. The decision under review is affirmed.

15.      

16.      

17.      

18.     I certify that the preceding 14 (fourteen) paragraphs are a true copy of the reasons for the decision herein of Senior Member A Poljak

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Associate

Dated: 19 September 2023

Date of hearing:	15 September 2023
Applicant:	Self-represented
Solicitor for the Respondent:	Mr G Lozynsky, Services Australia