Nankivell and Secretary, Department of Families, Community Services and Indigenous Affairs

[2006] AATA 564

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 564

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No T2005/156

GENERAL ADMINISTRATIVE  DIVISION		)
Re		ANGELIQUE JANE NANKIVELL

Applicant

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

Respondent

DECISION

Tribunal Associate Professor B W Davis AM (Part-time Member)

Date27 June 2006

PlaceHobart

Decision The decision under review is affirmed.

[Sgd B W Davis]

Part-Time Member

CATCHWORDS

Social Security - Family Tax Benefit (FTB) - estimated income - annual reconciliation - income tax return - date of lodgement - Australian Tax Office (ATO) - Social Security Appeals Tribunal (SSAT) - decision affirmed.

Family Assistance (Administration) Act 1999 - s28

Taxation Administration Act 1953 - s388

Re Tsantis and Secretary, Department of Family and Community Services (2003) AATA 835

Re Baronessa and Secretary, Department of Family and Community Services (2003) AATA 176

REASONS FOR DECISION

27 June 2006 Associate Professor B W Davis AM (Part-time Member)   

Decision Under Review

1.      The decision under review is a decision made by a Centrelink officer on 26 July 2005 to not pay arrears (otherwise referred to as “top-up”) of Family Tax Benefit (FTB) to the applicant Angelique Jane Nankivell, in respect of the 2002-2003 year.

Issue

2.      Was the decision not to pay “top-up” for the year 2002 – 2003 correct?

Legislation

3.      The relevant legislation is the:

Family Assistance (Administration) Act 1999 – s28;  and the

Taxation Administration Act 1953 – s388

Standard of Proof

4.      The standard of proof is on the balance of probabilities and to the reasonable satisfaction of the Tribunal.

Background

5.      The applicant Mrs Angelique Jane Nanivell was paid Family Tax Benefit (FTB) by instalments during the year 2002 – 2003, based upon income estimates of $25,000 for Mrs Nankivell and $25,000 for Mr Nankivell.

6.      On 9 November 2004 a reconciliation of Mrs Nankivell’s FTB was conducted.   As neither she or her husband had lodged + Income Tax Returns (ITR’s) at that stage it was determined under sub-sections 28(1) and 28(2) of the Family Assistance (Administration) Act 1999 that Mrs Nankivell was not entitled to FTB for the 2003 – 2004 year.

7.      A debt was raised for the amount of $2,124.30, which was the full amount of FTB that Mrs Nankivell had received during the 2002-2003 year.   The applicant commenced repaying this debt via regular withholdings from her FTB on 17 February 2004.

8.      The Nankivell’s income tax returns were prepared by their tax agent on 24 June 2005, but it was not until 18 July 2005 that the Australian Tax office (ATO) advised Centrelink electronically that an income return had been lodged for the 2002-2003 year.   The assessed income for that year was $10,460 for Mrs Nankivell and $10,869 for Mr Nankivell.

9.      This resulted in a further FTB reconciliation, where it was determined that although the actual income was less than the estimated income for the 2002-2003 year, a “top-up” could not be paid because the taxation return was not lodged with the ATO by the required date 30 June 2005.   (Sub-section 28(3) of the Family Assistance (Administration) Act 1999).

10.     On 26 July 2005 an adjustment was made that zeroed the debt of $2,124/30 and resulted in a refund of $902.06 to Mrs Nankivell, which represented the repayments she had made towards the debt.

11.     The tax agent confirmed by letter to Centrelink on 5 August 2005 that the income tax returns were prepared in June 2005 but not lodged with the Australian Taxation Office (ATO) until after 30 June 2005, due to a partner in the firm being on leave and unavailable to sign the papers.

12.     The applicant believes she should be paid “top-up” for the year 2002-2003 on grounds she made every endeavour to meet ATO requirements, but was let down by others.   She considers there is a moral obligation on the Commonwealth to pay an amount equivalent to FTB entitlements, because the structure of the legislation has created an unintended and inequitable result.

13.     It should also be noted that Mrs Nankivell appealed to the Social Security Appeals Tribunal (SSAT) on 17 August 2005, but at a hearing conducted in Hobart on 17 October 2005 the Tribunal decided to affirm the decision under review, being required to do so by law, even if they regarded circumstances surrounding the delayed lodgement of taxation documents as regrettable.

14.     The applicant sought de novo review by the Administrative Appeals Tribunal (AAT) on 1 November 2005.

The AAT Hearing

15.     The AAT hearing was conducted in Hobart on 16 June 2006.   The applicant appeared as witness and was represented by Ms Georgina Munday of the Hobart Community Legal Service.   The respondent was represented by Mr Brian Sparkes.

16.     The applicant was affirmed as witness and stressed that she and her husband had been assured by Prescott Business Services on 24 June 2005 that their taxation returns for year 2002 – 2003 were completed and would be electronically transmitted to the ATO the same day.    They had been expecting to receive over $4,000 as “top- up payment” of FBT and made plans accordingly.   They were stunned to receive advice the returns had not been lodged until 18 July 2005 with the requisite signatures and they were no longer eligible for the FTB top-up payment.   They had stressed to their accountants the need for their taxation returns to be lodged prior to 30 June 2005.

17.     Mrs Nankivell claimed she and her husband had made every attempt to meet their obligations to Centrelink and therefore considered FTB arrears should be paid.   She was asked whether she had pursued compensation from the tax agent for failure to perform, but said this would be a costly process in law and it was unlikely they would receive much in the end.

18.     Counsel for the respondent said the matter was regrettable, but the law was specific and there was no escaping the ATO requirement to lodge their taxation returns by 30 June 2005.    They had been granted two years to submit returns for 2002-2003, but had failed to meet that deadline at the last minute.   There was no administrative failure or error by Centrelink, thus compensation was not available.   Mrs Nankivell should pursue her tax agent for failure to pursue its duty.

19.     In concluding comment by counsel for the applicant, it was claimed the outcome was unfair and involved circumstances beyond Mrs Nankivell’s control.    There was a moral obligation on the Commonwealth to pay and equivalent amount to FTB arrears, because the structure of the legislation had created an unintended and inequitable result.

Analysis

20.     The relevant law in this case is found in s28 of the Family Assistance (Administration) Act 1999 which is quite specific about variations of instalments  and any past period entitlement, where income tax returns have not been lodged.    Section 28 provides that if a person has received FTB instalments in a given year and they or their partner have not lodged tax returns for that year, or have not done so within two years of the relevant income year then FTB is not payable at all.   Prima facie, on the evidence available, Mrs Nankivell fits this category.

21.     Section 28 goes on to say however that if the required ITR’s are subsequently lodged, FTB is payable after all.    However the amount is capped to a maximum of the FTB already received by instalments.   Mrs Nankivell received instalments in the 2002-2003 year, thus the last date she could lodge income tax returns to be eligible for a “top-up” was 30 June 2005.    The respondent argues that ITR’s were not lodged until after that date i.e. on 18 July 2005.

22.     This raises the issue of what “lodgement” entails.    The Taxation Administration Act 1953 at s388-75(2) requires that where a paper return is given to the Commissioner (for taxation) by an agent, then the return must contain the agent’s declaration and signature.    Similar provisions exist in s388-75 of the Act for telephone and electronic lodgement.

23.     The Tribunal notes that the Secretary of DFCS and IA  sought further advice from the ATO as to when an income taxation return is deemed to have been “lodged”:

“An income tax return is not validly lodged until it contains all the information required by the Commissioner.    If an attempt to lodge a return fails because the tax agent has not completed a mandatory field, then the receipt of other information is not a valid lodgement.   The onus is on the tax agent to ensure that the details are correctly recorded.”

24.     This point is conceded by the applicant in her Statement of Facts and Contentions, where it is stated it was the act of omission by the accountant who caused the failure to meet legal requirements.   Unfortunately there does not appear to be any legal remedy under the Family Assistance Law providing discretion to step outside the boundaries of s28 (see for instance Re Tsantis and Secretary, Department of Family and Community Services (2003) AATA 835 and Re Baronessa and Secretary, Department of Family and Community Services (2003) AATA 176).

25.     The applicant’s statement goes on to suggest there is a moral obligation on the Commonwealth to make a payment equivalent to the “top-up”.     The Tribunal does not accept this argument, as there is no evidence of detriment caused by defective administration or inequitable treatment in law.    In the original 1999 legislation the time limit in s28 was 12 months; in 2004 it was extended a further 12 months to two years.    If the parliament had intended more generous period to submit ITR’s, then the legislation would have reflected it.    The end of the extension period is very definite and relies upon recipients of FTB instalments arranging their taxation affairs to ensure lodgement of income tax returns in sufficient time.   It is not the Commonwealth’s responsibility to correct any errors of Mrs Nankivell’s tax agent; perhaps the appropriate course of action is for Mrs Nankivell to seek reparation from him.

26.     Having conducted this de novo review of all available evidence and relevant statutory and policy provisions, the Tribunal has decided that the decision under review made by a Centrelink officer on 28 July 2005, subsequently affirmed by the Social Security Appeals Tribunal on 18 October 2005 should be affirmed.    This means that the decision not to pay “top-up” of FTB for the year 2002-2003 was correct and lawfully applied.

I certify that the 26 preceding paragraphs are a true copy of the reasons for the decision herein of Associate Professor B W Davis AM (Part-time Member)

Signed:  K L Miller (Administrative Assistant)

Date/s of Hearing  16 June 2006
Date of Decision  27 June 2006
Counsel for the Applicant         Ms Georgina Munday
Solicitor for the Applicant          Hobart Community Legal Service
Counsel for the Respondent     Mr Brian Sparkes
Solicitor for the Respondent     Legal Services, Centrelink