Nguyen; Secretary Department of Social Services and (Social services second review) - [2023] AATA 3422

Nguyen; Secretary Department of Social Services and (Social services second review) [2023] AATA 3422 (24 October 2023)
Division:GENERAL DIVISION
File Number(s): 2022/6796
Re:Secretary Department of Social Services
APPLICANT

AndThe Hoan Cong Dung Nguyen
RESPONDENT

DECISION
Tribunal:Mr A. Maryniak KC, Member
Date:24 October 2023
Place:Melbourne

The decision under review is affirmed.
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Mr A. Maryniak KC, Member
Catchwords
SOCIAL SECURITY – Family Tax Benefit top-up – whether applicant eligible to be paid FTB top-up – whether applicant lodged tax return in time – whether special circumstances prevented applicant from lodging tax return – reviewable decision affirmed.
Legislation
A New Tax System (Family Assistance) (Administration) Act 1999 (Cth)
Cases
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Angus Fire Armour Australia Pty Ltd v Collector of Customs (NSW) (1988)19 FCR 477
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Department of Social Services and Elrington [2016] AATA 169
Groth v Secretary Department of Social Security [1995] FCA 1708
Hong Ye v Minister for Immigration and Multicultural Affairs [1998] FCA 341
Nicholson and Secretary, Department of Social Services [2016] AATA 630
Onody and Secretary Department of Social Services [2018] AATA 4990
Riddell v Secretary of the Department of Social Security [1993] FCA 261
Secondary Materials
Family Assistance Guide (Cth) Version 1.248, 20 September 2023
REASONS FOR DECISION
Mr A. Maryniak KC, Member

The Applicant seeks review of a decision of the Tribunal dated 15 July 2022 which set aside the decision of Services Australia (the Agency) to not pay the Respondent Family Tax Benefit (FTB) top-up for the 2019-20 year, substituting a decision that the Respondent was entitled to FTB top-up, finding she had lodged her and her partner’s tax returns for the year 2019-20 (the Tax Returns) with the Australian Tax Office (ATO) by 30 June 2021.
The Tribunal is to determine whether the Respondent and her partner lodged their tax returns for the 2019-20 year by 30 June 2021, pursuant to sections 32C and 32D of the

A New Tax System (Family Assistance) (Administration) Act 1999
(Cth) (the Act) and, if not, whether there were any special circumstances that prevented the Respondent and her partner from lodging their tax returns before 30 June 2021, pursuant to sections 32C(3)(b) and 32D(1)(c) (ii) of the Act.
The background facts are not in issue and are sufficiently summarised in paragraphs 3 to 19 of the Applicant’s Statement of Issues, Facts and Contentions dated June 2023.[1]
[1] ASFIC.
The Tribunal has considered the T- and Supplementary T-Documents lodged in this matter together with the testimonies of the Respondent, the Respondent and her partner’s accountant/tax agent, Mr Cong Pham, and Mr Carl Christopher Bennett, a business Analyst with the ATO. The Tribunal has also considered the written and oral submissions of the parties, including written submissions lodged after the hearing concluded, the last of which was received on 12 September 2023.
At the outset the Applicant’s solicitor confirmed with the Tribunal that the credit of Mr Pham was not in issue. On that basis the Tribunal was content to receive Mr Pham’s testimony by telephone.
LEGISLATIVE FRAMEWORK
The applicable legislative provisions are within the Act, relevantly:
(a)Section 28(3)
If:
(a) after the Secretary varies the determination under subsection (2) or (6), an assessment is made under the Income Tax Assessment Act 1936 for the cancellation income year for everyone (the taxpayers involved)
(i) who was required to lodge an income tax return as mentioned in subparagraph (1)(b)(iii); and
(ii) in respect of whom an assessment had not been made before the determination was varied; and
(b) the Secretary is satisfied that the claimant was eligible for an amount (the recalculated amount) of family tax benefit for the cancellation days; and
(ba) subsection (4) (which is about when the claimant and the claimant’s partner separate after the determination is varied) does not apply;
the Secretary must again vary the determination so that it has the effect that, for the cancellation days, the claimant is entitled to be paid:
(c) if each of the taxpayers involved lodged an income tax return with the Commissioner of Taxation:
(i) before the end of the income year after the cancellation income year; or
(ii) within such further period as the taxpayer is allowed under Subdivision D of Division 1 of this Part;
the recalculated amount; or
(d) in any other case—the lesser of:
(i) the recalculated amount; and
(ii) the amount that the claimant was entitled to be paid before the variation under subsection (2) was made.
(b)Section 32B
For the purposes of this Act, the first individual satisfies the FTB reconciliation conditions for a same‑rate benefit period:
(a) if only one of sections 32C to 32Q applies to the first individual for the same‑rate benefit period—at the relevant reconciliation time; or
(b) if 2 or more of sections 32C to 32Q apply to the first individual for the same‑rate benefit period—at whichever of the relevant reconciliation times is the latest.
(c)Section 32C(3) and (4)
(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.
(d)Section 32D
(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.
Policy within the Family Assistance Guide in Instruction 6.4.3 provides:[2]
[2] Family Assistance Guide, Version 1.248, 20 September 2023.
Introduction
This section discusses the requirement for individuals who receive FTB to lodge an income tax return, or to advise Centrelink if they (and/or their partner) are not required to lodge. It also outlines the processes that Centrelink may undertake if the individuals (and/or their partners) fail to lodge an income tax return.
There is no explicit requirement under FA law for individuals to lodge a tax return. The Commissioner of Taxation has the authority to determine if an individual is required to do so. This requirement is imposed under tax law for certain individuals who are covered by 2 annual legislative instruments created by the Commissioner of Taxation each financial year. These instruments are:
·Notice of Requirement to Lodge a Return for the Income Year Ended 30 June (relevant year), and
·Notice of Requirement for Parents with a Child Support Assessment to Lodge a Return for the Income Year Ended 30 June (relevant year).
Act reference: Income Tax Assessment Act 1936 section 161 Annual returns
Lodge an income tax return within 12 months of entitlement
An individual claiming FTB (and/or their partner), is required to lodge an income tax return or inform Centrelink if it is determined that they are not required to lodge, within 12 months following the income year (1.1.I.75) in which they received a payment.
Where an individual (and/or their partner) lodges an income tax return or informs Centrelink they are not required to lodge, the individual's payments for the income year are reconciled.
Policy reference: FA Guide 6.4.1 Overview of reconciliation
Advise not required to lodge an income tax return within 12 months of entitlement
An individual who receives FTB (and/or their partner) is required to notify Centrelink they are not required to lodge an income tax return, if they are not required to do so, within 12 months from the end of the relevant income year.
Where an individual (and/or their partner) informs Centrelink they are not required to lodge, the individual must provide a declaration of their (and/or their partner's) ATI for the relevant income year which Centrelink determines to be reasonable in order for their payments to be reconciled.
Non-lodger debt is raised if income tax return is not lodged or Centrelink are not advised of not required to lodge
If an individual (and/or their partner) fails to lodge an income tax return or fails to inform Centrelink that they (and/or their partner) are not required to lodge an income tax return by the end of the lodgement year (1.1.L.30), a non-lodger debt will be raised. The debt will comprise any FTB they received in the year for which they have not lodged an income tax return or advised they are not required to lodge.
In addition, where a non-lodger debt is raised that includes a day that SBP was paid (under the FTB Part A eligibility test), the SBP amount paid will also be raised as a debt.
Note: Other FA payments, such as SBP (where paid under the income test), are not raised as a debt as they have no tax lodgement requirements.
Note: Where NBS and/or NBU are included in a non-lodger debt or an SBP debt is raised due to an FTB non-lodger decision, the individual's entitlement to NBS, NBU and/or SBP for that child is not reassessed until the non-lodger status is resolved.
Act reference: FA(Admin)Act section 28AA Effect of section 28 on NBU of FTB
Non-lodger process
A non-lodger decision may be made at any time following the end of the lodgement year. Following a decision, a variation of entitlement is issued to the individual by Centrelink. A grace period is provided for a period of 75 days beginning on the day of the variation of an individual's FTB entitlement for a relevant income year in order for the individual to resolve their non-lodger status. The grace period may be a longer period if the Secretary determines that there are special circumstances to vary the length of the grace period. FTB payments based on income estimates may continue to be paid during the grace period but would cease if there are still outstanding income tax returns, or Centrelink has not been informed that the individual (and/or their partner) is not required to lodge, and there are still outstanding non-lodger debts by the end of this period.
Policy reference: FA Guide 6.4.3.40 Prohibition of FTB based on an estimate
Lodgement of tax return after the lodgement period - instalment recipients
If an individual who receives FTB by instalment (and/or their partner), fails to lodge an income tax return or inform Centrelink they are not required to lodge within 12 months following the relevant income year, then they are no longer eligible to receive any top-up payments including the FTB Part A and FTB Part B supplements.
Where an individual (and/or their partner) lodges an income tax return after the lodgement year, they will only be entitled to the lesser of:
·the amount of FA the individual was entitled to during the relevant income year, or
·the amount of FA the individual was entitled to based on actual ATI.
Explanation: This means that the individual will not be entitled to receive any top-up payment or FTB supplements if they lodge income tax return/s after the lodgement year.
An individual who has chosen to defer some of their FTB entitlement for the relevant year and lodges a tax return, or informs Centrelink they are not required to lodge after the end of the lodgement year, can only be paid for the relevant income year the lesser of their legislative entitlement based on ATI or the amount they would have received had the choice not been made to defer some or all of their FTB.
The 12 month lodgement timeframe may be extended if special circumstances exist, which prevent the individual from meeting their income confirmation obligations. An extension can be granted up to the end of the year following the lodgement year.
Lodgement of tax returns after the lodgement period - lump sum claimants
An individual (and/or their partner), is required to lodge an income tax return or inform Centrelink if it is determined that they are not required to lodge, within 12 months following the entitlement year (this is the same requirement that applies to instalment recipients). If this timeframe is not met, the claim is considered not effective. For further information about determining FTB past period claims, see 4.2.3.10.
The 12 month lodgement timeframe may be extended if special circumstances exist, which prevent the individual from meeting their income confirmation obligations. An extension can be granted up to the end of the income year following the lodgement year.
Note: Lodgements of tax returns are the responsibility of the individual, including those who lodge via a tax agent. Providing financial statements to a tax agent or accountant prior to 30 June of the relevant lodgement year does not constitute lodgement of tax returns for FTB purposes. Extensions to the lodgement period may be granted if there are special circumstances, which prevent the individual from meeting their income confirmation obligations. A tax lodgement deferral granted by the ATO does not automatically guarantee that a special circumstances extension will be granted. Special circumstances are circumstances that are unusual, uncommon or exceptional. Failure by an accountant or tax agent to lodge a tax return within the lodgement period (e.g. forgetting to lodge in time or delay due to high workloads) will not ordinarily constitute special circumstances.
LODGEMENT OF TAX RETURNS
Put simply, the Respondent submits that the Tax Returns were lodged on time at 4.29am on 29 June 2021, consistent with the lodgement and ‘Accepted’ documentary evidence in T5 pages 24 to 28 and ST1 pages 1 to 4. The Applicant maintains that despite such documentary evidence, the Tax Returns were not recorded as lodged by the ATO until 4.29am on 19 July 2021, as confirmed by Mr Bennett in paragraphs 14 and 15 of his statement at ST3 page 7 and his testimony.
The Respondent stated that she provided the relevant information to Mr Pham for the preparation of the Tax Returns in April 2021.[3] The Tribunal questioned the Respondent about this and accepts her evidence in this regard and generally. Mr Pham testified that he lodged the Tax Returns using the Handi tax software at about 4.29am on 29 June 2021 which is consistent with the documentary evidence relied on by the Respondent as referred to in paragraph 8 above. The Tribunal accepts this evidence, noting that upon lodgement the Tax Returns appeared on Mr Pham’s screen with a Status of ‘Accepted’ rather than ‘Rejected’ which is the agreed alternate status. Mr Pham was cross-examined as to what the reason may be as to the date discrepancy regarding lodgement and he could only suggest that there may have been a glitch in the ATO computer system.[4] However, it was not put to him that his view of the date of lodgement of 29 June 2021 was incorrect.[5]
[3] Transcript p.3, lines 24-39, p. 4, lines 3-6.
[4] Transcript p. 8, lines 18-40.
[5] Transcript p. 8, lines 12-42.
Mr Pham, perhaps unsurprisingly, testified that once he received the ‘Accepted’ confirmation and the lodgement information,[6] there was nothing further for him to do.[7] In his mind the lodgement was ‘Accepted’ and complete, and had not been rejected. The Tribunal is satisfied, based upon the evidence of Mr Pham, that there was nothing further to do, where the relevant Tax Returns had been lodged electronically by Mr Pham and had been ‘Accepted’ on 29 June 2021. In addition, having been informed that Mr Pham’s credit was not in issue, the Tribunal accepts the evidence of Mr Pham.
[6] T5, pp. 26-28
[7] Transcript p. 6, line 47 to p. 7, line 3.
Mr Bennett’s evidence establishes that the ATO’s practitioner lodgement service (PLS) is the online lodgement channel enabling tax agents to lodge tax returns electronically. He fairly agreed that the lodgement information in Mr Pham’s possession via the Handi tax software confirmed lodgement of the Tax Returns at 4.29am on 29 June 2021, hence on time, and their status as ‘Accepted’, and not ‘Rejected’.[8] Further, Mr Bennett was unable to explain the date lodgement discrepancy the subject of this Application.[9]
[8] Transcript pp. 10-11.
[9] Transcript p. 13, lines 28-32 and 37-45.
An issue arises because the evidence from Mr Bennett confirms that those lodged Tax Returns were not “stored and processed” within the ATO’s Integrated Core Processing (ICP) until 4.29.37am and 4.29.45am on 19 July 2021 and therefore not in time.[10] The “ICP represents an exact copy of the actual copy of the actual income tax return figures lodged, in readable and printable format, for use as an ATO record.”[11]
[10] ST3, at [10]-[11], [13]-[15].
[11] ST3, at [11].
The words ‘lodged’ and ‘lodge’ as they appear in sections 32C and 32D of the Act are not defined. The Applicant relied upon consideration of ‘lodge’ by the Full Court in Angus Fire Armour Australia Pty Ltd v Collector of Customs (NSW) (1988)19 FCR 477 at paragraph [24]. The Full Court held, by majority, that an application sent by post had been lodged when it was first received by the Tribunal, notwithstanding that it had been returned to the applicant because it was not accompanied with the prescribed fee:
“Whether the lodging is done by post or by depositing the document at the office, a concept of acceptance is required in a sense similar to that required with respect to the presentation of a document. There must be a physical acceptance of the document by an officer of the Registry.”
Angus Fire was applied by a Full Court in Hong Ye v Minister for Immigration and Multicultural Affairs [1998] FCA 341. The Full Court noted that ‘lodge’ appears to have no special or technical meaning hence it is to be given its ordinary meaning referring to the Oxford English Dictionary meanings and then stated:
“In accordance with these meanings an application to review will be “lodged” when it comes into the possession of a Registry or the staff of a Registry. The means by which possession is obtained does not matter. It could come about when an application is delivered into the hands of the Registry staff or, if the application is posted, when it is received by the Registry. When an application to review is sent by facsimile transmission to a facsimile machine that is located in the Registry the application will be in the possession of the Registry when the transmission is complete.”
(See also Abidin v Minister for Immigration and Multicultural Affairs [2002] FCA 236 at [11] and [12].)

The Handi tax software used by Mr Pham generated two unique Message ID’s for the lodgement transactions of the Tax Returns, ending -854 and -315.[12] Although lodged and ‘Accepted’ on 29 June 2021 according to Mr Pham’s software-generated report,[13] the evidence of Mr Bennett establishes that the Tax Returns curiously (whether by a ‘glitch’ in the ATO’s computer system or otherwise) did not register and get stored and processed by the ATO’s ICP until 19 July 2021.[14]
[12] ST3, at [6]-[16].
[13] T5, pp. 26-28.
[14] ST3, at [14]-[15].
Despite there being insufficient evidence to explain the difference between the two dates, on balance, the Tribunal is satisfied that whilst Mr Pham was, on the evidence, legitimately left with the knowledge that the Tax Returns had been lodged and ‘Accepted’ on 29 June 2021, they did not register as lodged with the ATO until 19 July 2021.
Hence, the Tribunal finds that the Tax Returns were not ‘lodged’ as required by the Act, with the ATO, until 19 July 2021.
SPECIAL CIRCUMSTANCES
The Tribunal is then to determine whether it is satisfied that there were any “special circumstances” that prevented the Respondent from lodging the relevant Tax Returns by 30 June 2021.[15] That expression is not defined in the Act, however it has been held that that for circumstances to constitute “special circumstances” they must be circumstances which are “unusual, uncommon or exceptional” or “markedly different from the usual run of cases”, or “out of the usual or ordinary”, and they include events which would render the strict application of the rule in question unfair or inappropriate.[16]
[15] s 32D.
[16] Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3 per Toohey J; Groth v Secretary Department of Social Security [1995] FCA 1708, at [12] per Kiefel J, cited with approval in Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 at [33] per Besanko J.
The Applicant referred the Tribunal to various decisions which have considered that expression including Onody and Secretary Department of Social Services [2018] AATA 4990, which in turn considered the Full Federal Court observations in Riddell v Secretary of the Department of Social Security [1993] FCA 261:[17]
“Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet a great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator keeping in mind the scope and purpose of the Act, to make a decision one way or another.”
[17] at [23], per Neaves, Burchett and O’Loughlin JJ.
Essentially, the Applicant submitted that the special circumstances must be “special” as in out of the ordinary, capable of producing an injustice and have prevented the relevant lodgement in time.[18]
[18] ASFIC, at [38]-[43].
Whilst the evidence before the Tribunal does support a finding that the Respondent was incurring hardship during the relevant period (having commenced a fish and chip shop business in late 2019 only to be met with the negative impact on that business in 2020 and 2021 from the devastating Covid lockdowns in Victoria, then selling that business at a loss in May 2022)[19] it is the other special circumstances regarding the lodgement of the Tax Returns which the Tribunal considers pertinent.
[19] T5, p. 24; Respondent’s Further Written Submissions, at [6].
The unique facts as to the ‘lodgement’ by Mr Pham clearly distinguish this Application from factual scenarios where an accountant has failed to lodge tax returns on time.[20] Here, the unchallenged evidence of Mr Pham establishes not only that the relevant tax returns were lodged and accepted in his view on 29 June 2021 but also that he was of the opinion that nothing more was to be done. The Tribunal is of the opinion that such facts represent special circumstances which operated to prevent the Respondent from doing anything more to lodge the Tax Returns.
[20] See Secretary, Department of Social Services and Elrington [2016] AATA 169; Nicholson and Secretary, Department of Social Services [2016] AATA 630.
The Applicant did not cross examine Mr Pham regarding his belief that the relevant returns had been lodged on 29 June 2021. It was not put to Mr Pham or the Respondent that these facts pertaining to lodgement were incorrect or challenged by the Applicant. Hence, the Tribunal is satisfied that there was no further action or step which either Mr Pham or the Respondent could have taken to lodge those tax returns after 29 June 2021 and in that sense the Respondent was prevented from lodging the relevant returns on time.
On the evidence, the Tribunal is of the opinion that the Respondent is not responsible for the unexplained ‘glitch’ in the lodgement process which resulted in a significant difference of weeks between the initial lodgement and ‘Accepted’ date of 29 June 2021 and the lodgement date as has been determined by the Tribunal.
The evidence before the Tribunal establishes that the Respondent’s agent, Mr Pham, had done all he could to lodge on 29 June 2021 and he was of the opinion that such returns were lodged with the ATO on that date. The requisite special circumstances are established by the findings of fact in this matter, as to find otherwise would produce an injustice to the Respondent.
Whilst the Tribunal has found that the Tax Returns were not lodged until 19 July 2021, it also finds that the unique and unchallenged circumstances surrounding the ‘lodgement’ by Mr Pham on 29 June 2021, as discussed above, constitute ‘special circumstances’ which satisfy the exercise of the discretion in sections 32C and 32D of the Act.
CONCLUSION
For the reasons discussed above, the decision under review is affirmed.

I certify that the preceding 27 (twenty-seven) paragraphs are a true copy of the reasons for the decision herein of Mr A. Maryniak KC, Member

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Associate
Dated: 24 October 2023

Date of hearing: 22 August 2023

Date final submissions received: 12 September 2023

Advocate for the Applicant: Aarabi Raveendiran

Solicitors for the Applicant: Services Australia

Respondent: Self-represented

Date of hearing:	22 August 2023
Date final submissions received:	12 September 2023
Advocate for the Applicant:	Aarabi Raveendiran
Solicitors for the Applicant:	Services Australia
Respondent:	Self-represented