Mott and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2008] AATA 1010

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 1010

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/0749

GENERAL ADMINISTRATIVE DIVISION		)
Re		KERRIE MOTT

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal M J Carstairs, Senior Member

Date7 November 2008

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

....................[sgd]..........................

SENIOR MEMBER

CATCHWORDS

SOCIAL SECURITY – family tax benefit – overpayment – debt raised – whether debt raised ought to be waived – consideration of special circumstances – decision under review affirmed

A New Tax System (Family Assistance)(Administration) Act 1999 (Cth), ss 10, 97, 101
A New Tax System (Family Assistance) Act 1999 (Cth), ss 25, 59

Re Ivovic and Director-General of Social Services [1981] AATA 57
Director-General of Social Security v Hales (1983) 78 FLR 373

REASONS FOR DECISION

7 November 2008 M J Carstairs, Senior Member      

1.      Kerrie Mott separated from the father of her two children in 2005 and was then receiving 100% of the family tax benefit for the children.  Two years later the father claimed that he had care of the children for some of the time.  Centrelink decided that the father had shared care of the children for 12% of the time in 2005/2006 and 22% in 2006/2007. Accordingly, he was paid an equivalent share of the family tax benefit.

2.      The legislation allows for sharing of family tax benefit, where the level of shared care exceeds 10%[1], and also allows for a 2 year “window” for the making of backdated claims[2].  However, the inevitable consequence, where, as here, someone else already has been paid 100% of the family tax benefit, is that ultimately the ledger must be balanced.  Total payments for any particular financial year must not exceed 100%.  Since Ms Mott had been paid 100%, an adjustment needed to be made to reflect the actual level of her care, which she estimated as 88% in 2005/2006 and 78% in 2006/2007.  This adjustment – and the consequent debt raised against her – was required by A New Tax System (Family Assistance) Act 1999, even though Centrelink acknowledged that Ms Mott was not at fault, in the sense of deliberately withholding information. 

[1]        A New Tax System (Family Assistance Act) 1999, ss 25, 59.

[2]        A New Tax System (Family Assistance Act) 1999, s10(2)(b).

3.      It was not part of Ms Mott’s case that the children’s father was not entitled to claim the level of care that he did.  Indeed, and as noted, Ms Mott provided Centrelink with the estimates that underpin the re-calculations that had to be made.  Nor did Ms Mott seriously challenge the calculation of the debt amounts, although that aspect of the matter was canvassed at the hearing.  Suffice to say that Ms Mott now is prepared to accept that Centrelink probably calculated the debt amount correctly, although she acknowledges that she cannot understand fully the finer details of the calculation process. 

4.      I was satisfied that the two debts here have arisen as a result of Ms Mott in fact having less than 100% care of the children, and I am satisfied, having looked at the overpayment calculations, that Centrelink correctly calculated the debts.  I would observe in that respect that the document prepared by the authorised review officer[3] provided a comprehensive and detailed outline of the calculation process, and I accept the contents of that document. 

[3]        Folio 109-121; T24.

5.      The nub of the issue comes down to this:  having always been honest in her dealings with Centrelink, and believing that she had made it plain in discussions with Centrelink that the children’s father was involved in their care, Mott believes it is unfair to demand now, from her, repayment of a debt of this size.  It totals some $4175.  The totals at present are:

§  $256.47 – remaining for the 2005/2006 financial year; and

§  $2672.61 – for the 2006/2007 financial year[4].

[4]        Exhibit R1.

6.      Ms Mott has reduced the debt by repaying $60 per fortnight.  At times Centrelink has relieved her of repayments for short periods, when the burden became too much.  As I understand it[5], Ms Mott offered to pay Centrelink a lump sum of roughly half the original total.  She maintains that she is unable to repay the whole amount without her family suffering hardship.

[5]        Exhibit A1.

ISSUES

7.      Thus identified the central issue is whether the debts ought to be waived in whole or in part.  The A New Tax System Family Assistance (Administration) Act 1999 (the Act), which provides for grounds of waiver, includes two relevant provisions.

8.      One, in s 97 of the Act, allows waiver if the debt arose by reason solely of administrative error on the Commonwealth’s part; but, only if recovery would result in “severe” financial hardship.

9.      With reference to that provision, I would note that this ground was not pressed at the hearing, and indeed could not be, as I interpret what happened here.  Ms Mott did not provide Centrelink with the information about the shared care arrangements specifically with reference to the family tax benefit claims she was making.  Furthermore, in light of the income she has from employment, Ms Mott cannot establish grounds of “severe” financial hardship, even though I accept that she experiences continual difficulties making ends meet.

10.     The other waiver provision, having more direct relevance on the facts here, is to be found at s 101 of the Act.  This provision allows for waiver if there are “special circumstances”, which are circumstances, other than solely financial hardship, that make it desirable to waive the debt, wholly or partly.

11.     It is necessary to look at Ms Mott’s circumstances in order to consider this issue further. 

ARE THERE SPECIAL CIRCUMSTANCES?

12.     Ms Mott, in advance of the hearing, provided details of income and the expenditures in the household.  Her wages as an administrative assistant at a mine maintenance company are just under $40,000 gross per year.  In addition, she receives child support payments from her husband, however this is not a large amount and would not go far towards the needs of growing children.  She continues to receive family tax benefit from Centrelink, assessed in accordance with her percentage of care.  Her financial circumstances from week to week are tight, and I accept that she at times is quite stretched to make payments, especially for unanticipated events.  In that regard she has additional costs arising from where she lives in the Northern Territory.

13.     For instance, Ms Mott has a number of outlays that would not be incurred if she lived in a less isolated place.  She has very high petrol costs, travelling daily 140 km to her workplace.  She said that on a number of occasions she has had to replace electrical equipment when motors have burned out after power outages.  She expects that she will have to move elsewhere because the house she rents is on the market.  As well as the removal costs, she expects that she will not be able to obtain an equivalent property at the same rental, and may have to move interstate.

14.     Ms Mott has no family nearby.  When she or the children are unwell she must call upon her family, who live interstate, and at these times Ms Mott pays their airfares.  Her father for instance has travelled from Perth.  Ms Mott suffered serious ill-health about two years ago.  She has expenses relating to a variety of medications which she continues to take to build up her immune system. These and other medical costs were included in her statement of financial circumstances.  Next year Ms Mott faces substantial orthodontic bills for her son.  Her dentist estimated two years ago that these would be likely to be in excess of $4000.  She says that the children’s father does not assist her with these additional kinds of expenditure.

15.     However I do note from the statement of financial circumstances that Ms Mott nevertheless has been able to retain some of the money from the property settlement with her husband, which she holds in trust for the education of the two children. They are in primary school now, attending private schools. Their future education costs will be large, and I accept that she is attempting to make the best provision for their future.  However the existence of these sums indicates that the family unit as a whole is not in straitened circumstances.

16.     Are the circumstances, taken as a whole, sufficiently “special” to justify waiving the debt in whole or in part? 

17.     In that regard it is useful to keep in mind the Tribunal’s words about the exercise of such discretions, as expressed in Re Ivovic and Director-General of Social Services[6]:

The reference to special circumstances…requires, in our view, that there must exist in the circumstances of the case, a factor or factors which justify the making of an exception in whole or in part to the principle of liability which the Act otherwise establishes. In the exercise of the discretion…the decision-maker must have regard to whether, by exercising the discretion in a particular case, he will be achieving or frustrating ends or objects which are conformable with the scope and purpose of the…Act.

[6] [1981] AATA 57 at [45].

18.     A starting point, where what is in issue is recovery of money paid from public expenditure, is that identified in the question: has the person received moneys to which they were not entitled: Director-General of Social Security v Hales[7].  In that case, the Federal Court pointed out that the public has the right to expect that moneys paid from the public purse in error will be recovered from the person who obtained the benefit of it.  To put that into the context in this Act, it is contemplated that family tax benefit payments reflect the actual levels of care, and also that payments be available (to a limited degree) retrospectively.  It is not on point, in that respect, that Ms Mott submits that the father’s retrospective claim was made maliciously.

[7] (1983) 78 FLR 373.

19.     It should be borne in mind that there was clear legislative intention to include provisions in the Act that allow for backdated claims, limited to two years. These provisions may have made circumstances difficult for Ms Mott, but they are designed to improve the flexibility of the family tax benefit payments for children, and to truly reflect levels of care given.  It could not be said that there has been some unfair or unintended outcome in what has occurred in Ms Mott’s case.

20.     The discretion is provided to give relief where strict enforcement of the liability would be “unjust, unreasonable or otherwise inappropriate”: Re Ivovic and Director-General Department of Social Security[8].  I am not satisfied that Ms Mott’s is an appropriate case for the exercise of the discretion. 

[8] [1981] AATA 57 at [45].

21.     The matters Ms Mott relies upon, apart from her financial circumstances do not have the quality of unusualness that would warrant treating her case differently from others.  I appreciate that she considers that the real burden of the children’s upbringing falls on her.  This is a common complaint for the parent who has the residence of the children.

22.     However all these matters in some way or other touch upon issues of financial hardship.  I am mindful that the legislation requires “special circumstances” to be other than financial hardship.  I do not disregard Ms Mott’s past serious health issues, but her health is not such a critical issue now and would not justify an exercise of the discretion.  I understand the difficulties Ms Mott faces, living where she does, and incurring special and unusual costs.  I would simply observe that she is in employment, as well as receiving support for the children.  Although her budget is tight, her financial circumstances are not as strained as many who receive only Centrelink payments and yet must repay incurred debts.  An appropriate recovery regime is in place, through fortnightly repayments, and should continue, in my view, subject to the necessary flexibility when Ms Mott faces special or unusual demands on her budget. 

DECISION

23.     The Tribunal affirms the decision under review.

I certify that the 23 preceding paragraphs are a true copy of the reasons for the decision herein of M J Carstairs, Senior Member

Signed:.....................[sgd]..........................................................
  Joan Torbey, Associate

Date of Hearing  30 October 2008
Date of Decision  7 November 2008          
The Applicant was self-represented  
Advocate for the Respondent  Mr R Hamilton, Centrelink