Morar and Secretary, Department of Family and Community Services
[2002] AATA 944
•18 October 2002
DECISION AND REASONS FOR DECISION [2002] AATA 944
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2002/476
GENERAL ADMINISTRATIVE DIVISION )
Re NARELLE MORAR
Applicant
And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Mr I R Way, Member
Date18 October 2002
PlaceBrisbane
Decision The Tribunal affirms the decision under review.
..................(Sgnd).................
Mr I R Way
Member
CATCHWORDS
SOCIAL SECURITY – family tax benefit – overpayment – whether debt has been properly raised – whether debt should be waived due to special circumstances
A New Tax System (Family Assistance) Act 1999 ss 71, 95, 97, 101
A New Tax System (Family Assistance) (Administration) Act 1999 ss 3, 21, 58, Sch 1, Sch 3
Family Assistance Tolerance (Transaction) Determination 2001
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Beadle v Director-General of Social Security (1985) 7 ALD 670
REASONS FOR DECISION
18 October 2002 Mr I R Way, Member
This is an application by Narelle Morar for review of a decision of the Social Security Appeals Tribunal (SSAT), dated 29 April 2002, which affirmed a decision made by Centrelink on 18 January 2002 to raise a debt of $3,483.78 and recover $2,483.78 of this debt from the applicant.
The Tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (T1 to T23), and the following documentary evidence tendered at the hearing:
· Statement of Applicant with attached medical
certificate received on 11 September 2002 Exhibit A1
Centrelink overpayment general information
screen dated 30 September 2002 Exhibit R1
Ms Helen Wallis-Dunn, Advocacy and Administrative Law Team Brisbane, appeared for the respondent. The applicant was self represented and gave oral evidence. Oral evidence was also given by Mrs Joy White, the applicant's mother.
Background FactsThe background facts in this matter are not in dispute and the Tribunal finds:
The applicant is married and has four children aged 7, 12 and twins aged 19. One of the twins no longer lives at home but the other children do.
The applicant is currently unemployed. Her husband, Mr Morar, is employed in the concrete industry and has a weekly, after tax, take home pay of approximately $550.
For the period 1 July 2000 to 30 June 2001 (the relevant period), the applicant received Family Tax Benefit based on the estimates of combined income she provided to Centrelink.
The estimates of combined income provided by the applicant for the relevant period were:
$29,000 (1 July 2000)
$31,600 (8 February 2001)
$33,700 (27 March 2001)
$43,000 (23 April 2001).The applicant's actual combined income for the relevant period was $39,336.
Based on the estimates provided by the applicant, the applicant was paid a Family Tax Benefit of $8,911.37 during the relevant period.
Based on the applicant's actual income the Family Assistance Office of Centrelink calculated that the applicant had received a total excess payment of Family Tax Benefit of $3,483.78.
Centrelink, pursuant to the provisions of the Family Assistance Tolerance (Transaction) Determination 2001 made by the Minister for Family and Community Services, waived $1,000 of the excess payment and on 18 January 2002 requested the applicant repay the balance of the $2,483.78.
The applicant did not work for the first seven months of the relevant period. She commenced temporary work on 29 January 2001 and this work became permanent in mid April 2001. She ceased work in May 2002 because of work related adjustment disorder with anxiety and depressed mood, and, at the date of the hearing, was still on sick leave because of this condition.
Issues
The issues in this matter are:
(a)whether in the financial year ended 30 June 2001 the applicant received $3,483.78 more than she was entitled to in Family Tax Benefit; and
(b)if so whether the applicant should be required to repay $2,483.78.
Legislative Framework
The relevant legislative provisions with respect to this matter are contained in:
(a)A New Tax System (Family Assistance) Act 1999; and
(b)A New Tax System (Family Assistance) (Administration) Act 1999.
These Acts provide as follows:
(a)A New Tax System (Family Assistance) (Administration) Act 1999 ("the Administration Act"):
"71 Debts arising under this Act
(1) No entitlement to amount – debt generally owed by person
Subject to subsection (2), if:(a)an amount has been paid to a person by way of family assistance in respect of a period or event; and
(b)the person was not entitled to the family assistance in respect of that period or event;
the amount so paid is a debt due to the Commonwealth by the person.
…
(5) Overpayment
If:(a)an amount (the received amount) has been paid to a person by way of family assistance; and
(b)the received amount is greater than the amount (the correct amount) of family assistance that should have been paid to the person under the family assistance law;
the difference between the received amount and the correct amount is a debt due to the Commonwealth by the person.
…
95 Secretary may write off debt
(1)Subject to subsection (2), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.
(2)The Secretary may decide to write off a debt under subsection (1) if, and only if:
(a)the debt is irrecoverable at law; or
(b)the debtor has no capacity to repay the debt; or
(c)the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d)the debt cannot be recovered by deductions under this Act or the Social Security Act 1991 and it is not cost effective for the Commonwealth to take action to recover the debt.
…
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 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.
…
101 Waiver in special circumstances
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i)making a false statement or a false representation; or
(ii)failing or omitting to comply with a provision of the family assistance law; and
(b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c)it is more appropriate to waive than to write off the debt or part of the debt.
102Secretary may waive debts of a particular class
(1)The Secretary may, on behalf of the Commonwealth, decide to waive the Commonwealth's right to recover debts, or parts of debts, arising under or as a result of this Act that are included in a class of debts specified by the Minister by determination in writing.
(1A) A determination by the Minister under subsection (1):
(a)may specify conditions to be met before the Secretary exercises the power to waive debts, or parts of debts, in the specified class; and
(b)may specify limits on the amounts to be waived in relation to debts in the specified class.
The Secretary must exercise the power to waive in accordance with any conditions or limits specified in the Minister's determination.
(2) A decision under subsection (1) takes effect:
(a)if no day is specified in the decision-on the day on which the decision is made; or
(b)if a day is specified in the decision-on the day so specified (whether that day is before, after or on the day on which the decision is made).
(3)A determination under subsection (1) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901."
(b) A New Tax System (Family Assistance) Act 1999 ("the Act"):
"3 Definitions
Family tax benefit means the benefit for which a person is eligible under Division 1 of Part 3.
…21When an individual is eligible for family tax benefit in normal
circumstances
(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 is an Australian resident; and
(c)the individual's rate of family tax benefit, worked out under Division 1 of Part 4, is greater than nil.
…
Part 4 – Rate of family assistance
Division 1 – Family tax benefit58 Rate of family tax benefit
Annual rate of family tax benefit for individuals(1)Subject to sections 60 to 63, an individual's annual rate of family tax benefit is to be calculated in accordance with the Rate Calculator in Schedule 1.
…
Schedule 1—Family Tax Benefit Rate Calculator
Part 1—Overall rate calculation process(1) To work out an individual's annual rate of family tax benefit, add:
(a)the individual's Part A rate calculated under Part 2 (clauses 3 to 24) or Part 3 (clauses 25 to 28); and
(b)the individual's Part B rate calculated under Part 4 (clauses 29 to 33).
Use Schedule 3 to work out the individual's adjusted taxable income. Use clause 2 to work out the individual's higher income free area.
…
Schedule 3—Adjusted taxable income1Adjusted taxable income relevant to family tax benefit and childcare benefit
An individual's adjusted taxable income is relevant to the rate of family tax benefit and childcare benefit.
2 Adjusted taxable income
For the purposes of this Act, an individual's adjusted taxable income for a particular income year is the sum of the following amounts (income components):
(a) the individual's taxable income for that year; …"
Applicant's Evidence and Submissions
In applying for review of the SSAT decision the applicant stated:
"I believe this decision is wrong as I have stated on many occasions and I would like to again appeal this decision.
I have been told on many occasions by centrelink staff and the appeal board that I never once did anything wrong, I phoned when my situation changed because I knew that now that I was working I was not entitled to full family payments anymore. So I want to know if I did the right thing and informed centrelink all along my financial situation why I owe money back for a period of time when I thought I was entitled to it, I was not told when I phoned when I was employed in January that I would have to payback money already received that financial year and not once was I told that you needed a crystal ball to predict what your situation was going to be for the year ahead, no one can possibly know this information unless they are already in stable work. I am currently off work because of stress that I am under and all this is doing is putting another person out of work and it will cost the government a lot more to support my family this coming financial year and the future than what they want me to pay back for a period of time when I was not working.
Financially I am better off not working but I would like to continue to work but this decision has made that impossible for me financially as you will see when you read the attached decision.
There are a lot of people out there in a similar situation that I am in and it is not fair to any one, if I had frauded the government and gave a false income I could understand but not once did I do this. I have heard many times now that this is the way it is done now you have to know what you are going to be doing for the following year, well this is also not fair. I am appealing this decision again on the grounds that I have not once given a false income amount the amount I gave February after starting casual work on the 29th of January was the amount I was going to be earning from that point until the end of the financial year and not once when I phoned and updated this information was I told that what I had been getting for the first 7 months would have to be paid back, if one person had told me this I would not have accepted full time employment in the first place so if anyone is wrong it is centrelink, had I been informed I would not now be in this situation and my family would be financially better off than they are right now."In her oral evidence the applicant reinforced her principle contention that she had done nothing wrong and that she had not been correctly informed by Centrelink (when she reported commencing work early in 2001) that she would have to pay back the benefit paid to her for the first seven months of the financial year. She said it was her right to have been properly informed by Centrelink and had she been so informed she would not have continued back at work, being better off with health care and full family benefits.
In answer to questions about special circumstances that might be considered with respect to waiving her debt, the applicant told the Tribunal that she was having considerable financial difficulty and could only meet expenses by extending the limit on her credit card. It was her evidence that her two sons had to defer their university studies because of lack of funds and she blamed herself for this. The Tribunal notes the assets, liabilities, income and expenditure as set out by the applicant in Exhibit A1.
Further, with respect to special circumstances, the applicant said that the work related stress condition she was suffering was exacerbated by the worry of having to repay the overpayment to Centrelink and whilst she was hopeful of going back to work, she was not sure when this might happen, and her doctor was of the opinion that she was not ready to do so at present. She said she was seeing a psychiatrist regularly, had an over active thyroid made worse because of stress, had a memory span of a two year old, could not drive, could not afford to do anything and had no social life, such as ballroom dancing which she used to enjoy, and she was concerned she would end up in a mental institution.
Mrs Joy White, the applicant's mother told the Tribunal that the applicant was living with her and that at present she was not accepting any rent. She expressed the opinion that the applicant had been suffering badly from stress since May of this year because of work and that this had got worse to the point that the applicant found everything stressful particularly her financial difficulties and the difficulties in progressing her compensation claim and claim for review of Centrelink's decision to demand repayment of Family Tax Benefit. Mrs White clearly demonstrated to the Tribunal that she herself was also suffering stress as a result of her daughter's situation.
Respondent's SubmissionsMs Wallace-Dunn, for the respondent, stated that there was no doubt that Mrs Morar did the right thing in notifying Centrelink of her estimates of income and as such there was no question as to the applicant defrauding the Commonwealth. However, she submitted that in the particular circumstances of this case there was no crystal ball that would allow a final annual taxable income to be determined prior to the end of the financial year and the legislation called for entitlements to be finally determined, based on the actual annual taxable income of the applicant. Applying the relevant legislation it was submitted that Mrs Morar's excess payment less waiver pursuant to Family Assistance Tolerance (Transition) Determination 2001, namely $2,483.78, is a debt due to the Commonwealth.
With respect to waiver it was submitted that there was no administrative error involved nor were there special circumstances which would make it desirable to waive the debt wholly or in part.
Insofar as administrative error is concerned the respondent reinforced the view that in the absence of a "crystal ball", Centrelink did as required and worked off the estimates provided by Mrs Morar. Although there was no record of any telephone conversation between the applicant and Centrelink relating to the call the applicant said she made when she rang Centrelink about returning to work early in 2001, the respondent accepted that a call was made. However it was the respondent's contention that the relevant officer could not have known at that stage that an overpayment would occur and as such the respondent rejected the applicant's submission that she had a right to be told that she would have to repay some of her Family Tax Benefit.
In regard to special circumstances it was submitted that there was nothing in Mrs Morar's case that would come within the meaning of special circumstances. In making this submission, Miss Wallis-Dunn said that the applicant's stress difficulties were not uncommon, unusual or exceptional. Her medical condition arose out of workplace difficulties, she was receiving treatment, her condition had been accepted by Comcare and while at this stage she was not aware of any details about compensation payments, it was more than likely that this payment would bring financial relief and it was more than likely that she would eventually return to work. Further, with respect to the living expenses it was submitted that the applicant's outgoings were not other than common every day expenses and as such her financial circumstances could not be characterised as special.
ConsiderationAt the outset the Tribunal finds the applicant to be a credible witness. There is no doubt that at all material times the applicant has not made any false statements or made any false representations to Centrelink with respect to her claim for Family Tax Benefit. Nor has she knowingly failed to or omitted to comply with any provisions of the relevant Act. The Tribunal notes that the respondent has always willingly accepted this view of the applicant. Turning then to the details of the amounts of Family Tax Benefit payable to the applicant for the financial year 2000/2001. One of Mrs Morar's contentions is that because she did not work for seven months of this year she was entitled to Family Tax Benefit during this period and this payment should not be taken into account when determining any excess payment. The Tribunal cannot accept this contention. The relevant legislation clearly requires Family Tax Benefit entitlements to be calculated and determined on an annual taxable income basis and any periods of unemployment during the year only have relevance in that they effect the total annual taxable income of an applicant. It is this annual figure that is relevant in determining entitlements.
In the matter before the Tribunal there is no question as to the accuracy of the figure of $5,427.59 used by Centrelink to calculate the applicant's entitlement to Family Tax Benefit for the year 2000/2001. Nor is there any question as to the estimate of income provided by the applicant during the course of the year, or her actual annual combined taxable income. On all of the material before it, the Tribunal is satisfied that the respondent has correctly applied the relevant provisions of the Act in arriving at a total excess payment to the applicant of $3,483.78 for the year 2000/2001. The Tribunal is also satisfied that in this case the Family Assistance Estimate Tolerance (Transition) Determination 2001 applies, and the respondent has correctly waived $1,000 of the excess payment pursuant to this Determination.
In summary the applicant has received more Family Tax Benefit than she was entitled to for the year 200/2001, and the excess payment less the waived amount is $2,483.78. Pursuant to section 71 of the Administration Act this excess payment is a recoverable debt due to the Commonwealth by the applicant and the Tribunal so finds.
Having said that, the Tribunal is sympathetic to Mrs Morar's concern that she did nothing wrong and as such should not be penalised by debt recovery. However, the simple fact remains that she received more than she was entitled to and the excess, less waiver, is a debt to the Commonwealth. The Tribunal notes that this unfortunate outcome arises from the application of the provisions of the relevant Acts. However, the Tribunal must apply the law as it stands and there are no remedies available for consideration by the Tribunal outside of the provisions of the Acts.
The remaining issue then, in this matter, is whether or not the applicant's debt can be waived or written off as provided for in the Act.
With respect to waiver, there are initially two questions to be addressed by the Tribunal. Firstly is the applicant's debt attributable solely to an administrative error. And secondly, are there special circumstances (other than financial hardship alone) that make it desirable to waive the debt. An affirmative answer to either of these questions is necessary for favourable consideration of waiver.
The Tribunal does not accept the applicant's submission that she has suffered from administrative error. There is no evidence of the applicant being given incorrect or ambiguous advice or being misinformed and there is no evidence that Centrelink perpetrated any administrative error in applying the law and determining the amount of the applicant's debt due to the Commonwealth. Given the nature of the process of estimation with final determination based on an actual annual taxable income, the Tribunal is of the view that it is not unreasonable to conclude that it was not within the power of the officer to whom Mrs Morar spoke to give proper advice to the effect that the applicant would have to repay some of her Family Tax Benefit payments.
As such the Tribunal is satisfied that there was no administrative error in this case.
With respect to special circumstances the Tribunal notes that although special circumstances are not defined in the Act, the interpretation and the application of the discretionary provisions of the Act have been dealt with by the Tribunal and the Federal Court in numerous cases.
In Re BeadleandDirector-General of Social Security (1984) 6 ALD 1 it was said:
"An expression such as 'special circumstances' is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular qualify of unusualness that permits them to be described as special."
This decision was generally affirmed on appeal by the Full Court of the Federal Court of Australia in Beadlev Director-General of Social Security (1985) 7 ALD 670, where it was said:
"The phrase 'special circumstances', although lacking precision, is sufficiently understood in our view not to require judicial gloss."
The Tribunal has carefully considered Mrs Morar's financial circumstances. The Tribunal is mindful that both of her sons, aged 19, have deferred university study, are seeking or are in employment and that one has left home. The Tribunal also notes that Mrs Morar's family is living with her mother and that at this stage Mrs Morar's mother is forgoing any rental payments. The Tribunal accepts that Mrs Morar has some financial difficulties, however, the Tribunal is satisfied that these difficulties do not constitute financial hardship within the meaning of the term "special circumstances".
With respect to the applicant's medical condition of adjustment disorder with anxiety and depressed mood, after consideration of all of the material before it and the submissions of both parties, the Tribunal is satisfied that the respondent is correct in contending that the applicant's stress difficulties are not uncommon, unusual or exceptional. The Tribunal is also satisfied that the other matters raised by the applicant, namely an overactive thyroid exacerbated by stress, her difficulties in coping with everyday life and her feeling of ending up in a mental institute are not common, unusual or exceptional. Difficult as the applicant's financial and health circumstances are, they are not special circumstances within the meaning of the term, as outlined above. Furthermore, the Tribunal is of the view that any perceived unfairness arising directly from the application of the provisions of the relevant legislation can not, in the absence of other matters which fall within the meaning of special circumstances, be sufficient to apply the provisions of section 101 of the Administration Act.
It follows from the above findings that the Tribunal is satisfied that the applicant's debt of $2,483.78 due to the Commonwealth cannot be waived pursuant to sections 97 and 101 of the Administration Act.
It remains then to consider write-off. The applicant's debt can be written off if and only if the applicant's circumstances meet one of the criteria of section 95 of the Administration Act (see para 7). In this case none of the provisions of section 95 are met and the Tribunal is satisfied that write-off of the debt is not possible.
For the reasons given above the Tribunal affirms the decision under review.
In doing so the Tribunal is of the view that the circumstances in this matter are such that it would be appropriate for the respondent to carefully consider, in consultation with Mrs Morar what arrangements can and should be made to allow Mrs Morar to repay her debt by periodic instalments.
I certify that the 33 preceding paragraphs are a true copy of the reasons for the decision herein of Mr I R Way, Member
Signed: .....................................................................................
S OliverAssociate
Date of Hearing 30 September 2002
Date of Decision 18 October 2002The Applicant Appeared In Person
Solicitor for the Respondent Ms H Wallis-Dunn, Departmental Advocate
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