Offner and Secretary, Department of Family and Community Services - [2002] AATA 911

DECISION AND REASONS FOR DECISION [2002] AATA 911

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2002/370

GENERAL ADMINISTRATIVE DIVISION          )
           Re      CHERYLENE OFFNER
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Mr R G Kenny, Member

Date11 October 2002
PlaceBrisbane

Decision      The Tribunal affirms the decision under review.
  ................…(Sgd)..................
  R G Kenny
  Member
CATCHWORDS
SOCIAL SECURITY - family tax benefit – entitlement - recovery of overpayments - waiver of debt – special circumstances

A New Tax System (Family Assistance) Act 1999 ss 21, 22, 22A
A New Tax System (Family Assistance) (Administration) Act 1999 ss 71, 97, 101, 102
Family Assistance Estimate Tolerance (Transition) Determination 2001
Social Security Act 1991 ss 1237AAD

Beadle v Director-General of Social Security (1985) 7 ALD 670
Re Beadle and Director-General of Social Security (1984) 1 AAR 362
Groth v Secretary, Department of Social Security (1995) 40 ALD 541

REASONS FOR DECISION

11 October 2002 Mr R G Kenny, Member

Application

Cherylene Offner (the applicant) was paid family tax benefit in relation to her son Andrew who was born on 20 January 1983. The benefit was paid during 2000 when Andrew was completing his Year 12 in high school and the payments continued until 29 March 2001.
On 28 December 2001, a Centrelink officer, on behalf of the Secretary, Department of Family and Community Services (the respondent) determined that the applicant had been overpaid an amount of $1,864.98 by way of family tax benefit payments and that this amount was a debt due by her to the Commonwealth. On 24 January 2002, an authorised review officer affirmed that the applicant had been overpaid in that amount but reduced the debt to $864.98 on the basis of the waiver of recovery of $1,000. On 11 March 2002, that decision was affirmed by the Social Security Appeals Tribunal. On 29 April 2002, the applicant sought review of that decision by the Administrative Appeals Tribunal (the Tribunal).
At the hearing, the applicant was not represented. Ms H Wallis-Dunn, Advocate from the Advocacy and Administrative Law Team, appeared for the respondent.
In evidence were the T documents (T1 - T13) [exhibit 1] as well as the following:

Exhibit A1: a bundle of documents tabled by the applicant; and
Exhibit R1: a copy of the Family Assistance Estimate Tolerance (Transition) Determination 2001 made by the Minister for Family and Community Services.

Issues and Legislation

A person is eligible for Family Tax Benefit in accordance with the terms of section 21 of A New Tax System (Family Assistance) Act 1999 which reads:
"21 When 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:
(i)is an Australian resident; or
(ia)is a special category visa holder residing in Australia; or
(ii)satisfies subsection (1A); and
(c) the individual's rate of family tax benefit, worked out under DIVISION 1 of PART - 4 , is greater than nil.
When individual satisfies this subsection
(1A)An individual satisfies this subsection if the individual is the holder of a visa determined by the Minister for the purposes of subparagraph 729(2)(f)(v) of the Social Security Act 1991, and either of the following applies:
(a) the individual is in Australia; or
(b) the individual:
(i) is temporarily absent from Australia for a period not exceeding 26 weeks; and
(ii) the absence is an allowable absence in relation to special benefit within the meaning of PART - 4 .2 of that Act.
(2) However, the individual is not eligible for family tax benefit if another provision of this Subdivision so provides."

The term FTB Child is defined in section 22 of the Act and, in so far as relevant in this case, sub-section 22 (2) of the Act reads:
"Individual aged under 18
(2) The individual is an FTB child of the adult if:
(a) the individual is aged under 18; and
(b) the adult is legally responsible (whether alone or jointly with someone else) for the day-to-day care, welfare and development of the individual; and
(c) the individual is in the adult's care; and
(d) the individual is an Australian resident, is a special category visa holder residing in Australia or is living with the adult."
The Act also provides exceptions to the operation of section 22 and, in so far as is relevant, the provision reads:
"22A Exceptions to the operation of section 22
(1) Despite section 22, an individual cannot be an FTB child of another individual (an adult ) in the cases set out in this table:

When the individual is not an FTB child of the adult at a particular time
If the individual is aged: then the individual cannot be an FTB child of the adult if:

5 or more and less than 16 (a) the individual is not undertaking full-time study and the individual has adjusted taxable income, for the income year in which the particular time occurs, that equals or exceeds the cut-out amount (see subsection (2)); or (b) the adult is the individual's partner.
16 or more (a) the individual has adjusted taxable income, for the income year in which the particular time occurs, that equals or exceeds the cut-out amount (see subsection (2)); or (b) the adult is the individual's partner; or (c) the individual, or someone on behalf of the individual, is, at the particular time, receiving payments under a prescribed educational scheme.
any age the individual, or someone on behalf of the individual, is, at the particular time, receiving: (a) a social security pension; or (b) a social security benefit; or (c) payments under a program included in the programs known as Labour Market Programs.

Definition
(2) In subsection (1):
cut-out amount means the sum of:
(a) the amount specified in column 2 of item 2 of the table in clause 30 of SCHEDULE - 1 divided by 0.3; and
(b) the amount specified in clause 33 of that SCHEDULE."

It is not disputed that the cut-out amount calculated in accordance with those provisions was $7,663 in this case.
The respondent's case is that, during the financial year from 1 July 2000 until 30 June 2001, Andrew had an adjustable taxable income which was in excess of the cut-out amount and that, as a result, he was no longer an FTB child at any time during that annual period. This meant that FTB payments which had been made to the applicant from 30 June 2000 until the payments were terminated on 29 March 2001 were monies to which the applicant was not entitled. In that regard, sub-section 71(1) of the A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act) reads:
"71 Debts arising in respect of family assistance other than child care benefit and family tax benefit advance
No entitlement to amount
(1) If:
(a) an amount has been paid to a person by way of family tax benefit, maternity allowance or maternity immunisation allowance (the assistance) in respect of a period or event; and
(b) the person was not entitled to the assistance in respect of that period or event;
the amount so paid is a debt due to the Commonwealth by the person."
The issues for the Tribunal to determine are whether or not Andrew was an FTB child during the relevant period; if not, whether the applicant was overpaid an amount of family tax benefit; and, if so overpaid, whether any such overpayment is a debt due by her to the Commonwealth.
Applicant's Case
The applicant gave evidence and said that she understood that her FTB payments would cease when Andrew left school at the end of 2000. She attended the Centrelink office in Toowoomba where she spoke to an officer and was advised that the payments would continue but that the payments would be subject to an income test. She understood that the officer had advised her that, in the event that Andrew obtained employment, the FTB payments would continue until he earned the amount of $7,663. She understood that, when that threshold was exceeded, the payments would cease.
The applicant said that Andrew had obtained employment in December 2000 and January 2001 working in vineyards in the St George area. He then took up employment in contract harvesting where the hours were long but the wages were correspondingly high. She said that he was aware of the threshold amount beyond which FTB payments would cease and contacted his mother prior to receiving the weekly wage which would have placed him beyond the threshold. This was in March 2001 and she said that she immediately contacted Centrelink and advised them that the FTB payments should cease because the threshold amount would be exceeded.
The applicant said that, in 2001, Andrew had deferred his commencement of University studies but that he had commenced a degree program in 2002. She also said that, during 2000, she and her husband had faced financial difficulty because her husband had experienced a downturn in available employment which had improved in 2001 and 2002. She said that her family were in good health with the exception that dental bills remained outstanding. She also said that she had outstanding credit card debts in an amount totalling some $3,000 and that there was the prospect of Andrew having to have a knee operation because of ligament damage he had sustained in football.
The applicant submitted that the procedures which had been applied by Centrelink were unfair in that they took away the incentive of a young person in Andrew's position from taking up employment. She said that he had worked hard during the relevant financial year and had accumulated an amount of some $15,000 and had done so to assist him in obtaining independent status for payment of Youth Allowance.
The applicant also referred to unfairness in the decision by Centrelink to recover all of the monies paid during the year and not just the amount that might have been paid after the threshold earning level of $7,663 had been reached. She believed that she had been fully eligible to receive the payment in the period from 1 July 2000 until the end of the year whilst Andrew was in school. She was critical of the introduction by the Government of a scheme which disadvantaged families because it was based upon the prospect of providing accurate estimates of income. She said that, in the case of Andrew, there was no way that she could predict whether he would take up employment in his first year out of school and what the amount of earnings from that employment would be.
The applicant said that she had been making payments in relation to the alleged debt to Centrelink in the amount of $20 per week and that the amount outstanding was in the order of $400.
Respondent's Submission
Ms Wallis-Dunn conceded that the applicant had believed that she was eligible to receive Family Tax Benefit whilst Andrew was at school, but submitted that the test of whether or not Andrew was an FTB child depended upon the terms of the relevant provisions of the Act. In relation to the threshold figure of $7,663, she submitted that FTB is payable not until that amount is earned but, rather, is paid unless that amount is earned. Once the threshold is exceeded, this means that, under section 22A of the Act, Andrew was no longer an FTB child at any time during the relevant tax year because his adjusted taxable income for the income year exceeded the threshold. It also meant that, under sub-section 71(2) of the Administration Act, an amount had been paid to the applicant by way of assistance which was greater than the amount that should have been paid to her. This meant that the amount paid during that year was a debt due to the Commonwealth by the applicant. The amount of that debt was $1,864.98.
Ms Wallis-Dunn also referred to the terms of section 102 of the Administration Act and to the Family Assistance Estimate Tolerance (Transition) Determination 2001 [exhibit R1] which made provision for the waiver of $1,000 of that debt. This meant that there was a residual debt of $864.98.
Ms Wallis-Dunn referred to the remaining waiver provisions of the Administration Act and submitted that there was no basis upon which the debt could be waived under those provisions.
Consideration
Family tax benefit payments may only be made to the applicant in the event that she has an FBT child. That is provided for in section 21 of the Act and, although the circumstances of the applicant and Andrew met the requirements of sub-section 22(2) of the Act, that provision must be read with the circumstances of exception listed in sub-section 22A(1) of the Act. That provision precludes Andrew from being an FTB child if his adjusted taxable income for the 2000/2001 income year equalled or exceeded the cut-out amount as calculated in accordance with sub-section 22A(2) of the Act. The Tribunal is reasonably satisfied that that amount was $7,663. The Tribunal is also reasonably satisfied that Andrew earned in excess of that amount during the relevant income year. In that situation, the applicant's circumstances are embraced by the terms of sub-section 71(1) of the Administration Act in that the amount of family tax benefit paid to her during that year were amounts to which she was not entitled. Pursuant to that provision, the amount is a debt due by her to the Commonwealth.
The Tribunal accepts the applicant's evidence that she believed that the FTB payments would continue until the threshold of $7,663 was exceeded. However, that understanding is not consistent with the specific terms of the Act which preclude Andrew from being an FTB child at any time during the income year if his adjusted taxable income during that year exceeded the threshold.
The Tribunal notes the terms of section 102 of the Administration Act and the terms of exhibit R1 which enable waiver of $1,000 of the debt. This means that the residual debt owed by the applicant to the Commonwealth is $864.98.
Section 97 of the Administration Act enables a debt to be waived in the case of error. The provision reads:
"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 a 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."
In this case, the Tribunal is reasonably satisfied that no proportion of the debt can be attributed solely to an administrative error made by an officer of the Commonwealth. It follows that no waiver can be made under that provision.
The Administration Act also makes provision for waiver of debts in special circumstances and, in that regard, section 101 of the Administration Act reads:
"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."

26. The Tribunal is satisfied that the debt did not arise wholly or partly from the applicant or another person knowingly making a false statement or a false representation or failing or omitting to comply with the provision of the relevant legislation. The Act provides no guidance as to the meaning of the term special circumstances. The matter has been considered in the context of an identical provision in section 1237AAD of the Social Security Act 1991. In that regard, the Full Federal Court in Beadle v Director-General of Social Security (1985) 7 ALD 670 stated that it was not possible to lay down precise limits or precise rules for the meaning of the term. The Court indicated that this would depend upon the circumstances of each particular case but commented that, even though the term lacks precision, it was sufficiently understood "not to require judicial gloss" (at 674). There, the Court affirmed the decision of the Tribunal (Re Beadle and Director-General of Social Security(1984) 1 AAR 362) where (at 364) the Tribunal had acknowledged that the term was "incapable of precise or exhaustive definition" and that, to be special, the circumstances "must have a particular quality of unusualness that permits them to be described as special".
27. In Groth v Secretary, Department of Social Security (1995) 40 ALD 541, Kiefel J, after referring to the Federal Court's decision in Beadle's case, observed (at 545) that special circumstances:

"…would require something to distinguish [the] case from others, to take it out of the usual or ordinary case. … It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary."

28. In this case, reference has been made by the applicant to the financial circumstances that surrounded her family during the relevant period but, in accordance with section 101 of the Administration Act, financial hardship alone is unable to be taken into account. No other factors have emerged at the hearing or in the documentation before the Tribunal which would justify the waiver of the debt in this case.
Decision
29. The Tribunal affirms the decision under review.

I certify that the 29 preceding paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Member
Signed:         Sarah Oliver
  Associate
Date of Hearing  16 September 2002
Date of Decision  11 October 2002
The Applicant Appeared in Person
Solicitor for the Respondent    Ms H Wallis-Dunn, Advocate