Pamplin and Secretary, Department of Family and Community Service S
[2003] AATA 1248
•10 December 2003
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2003] AATA 1248
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2003/559
GENERAL ADMINISTRATIVE DIVISION
)
Re DEBORAH PAMPLIN Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Professor T Sourdin, Member Date10 December 2003
PlaceSydney
Decision
The decision under review is affirmed. The Tribunal recommends that the matter be referred for consideration in respect of an Act of Grace payment.
[Sgd] T Sourdin
Member
CATCHWORDS
SOCIAL SECURITY – Family Tax Benefit ‘top up’ – whether Applicant eligible to have her Family Tax Benefit ‘topped up’ for the 2000/2001 financial year – Applicant did not provide an estimate of income at beginning of financial year – Applicant did not lodge tax return within 12 months of end of financial year – tax return not lodged earlier due to extension granted to accountants and Internet lodgment failure – no discretion to grant ‘top up’ payment – Act of Grace payment recommended – decision under review affirmed
LEGISLATION
A New Tax System (Family Assistance) Act 1999
A New Tax System (Family Assistance) Administration Act 1999, sections 16, 28
REASONS FOR DECISION
10 December 2003
Professor T Sourdin, Member 1. This is an application for review of a decision of the Social Security Appeals Tribunal (“the SSAT”) made on 27 February 2003 which affirmed the decision of an Authorised Review Officer (“ARO”) dated 7 November 2002 and a delegate of the Secretary, Department of Family and Community Services (“the Respondent”) dated 4 September 2002that Mrs Deborah Pamplin (“the Applicant”) was not eligible to have her Family Tax Benefit (“FTB”) ‘topped up’ for the 2000/2001 financial year. The Applicant lodged an application for review by the Administrative Appeals Tribunal (“the Tribunal”) on 4 April 2003.
2. The issue before the Tribunal is whether the Applicant was eligible for a ‘top up’ payment of FTB for the 2000/2001 financial year. The impact upon the Applicant is that if she were to be found eligible she would be entitled to a lump sum payment of FTB of $5,770.03.
3. Mr and Mrs Pamplin have two children – Karen aged 12 and Joel aged 6. For the tax year in question, Mr and Mrs Pamplin did not provide an ‘estimate’ of their income to the Respondent that would have enabled them to receive increased benefits throughout the year as they were unsure about what their income might be. Mr Pamplin works as a concrete pump driver and operator and he was unsure what the impact of the GST, weather changes and the downturn in the housing market might be upon his business. Mr and Mrs Pamplin did not wish to be in a situation where they had to pay back a FTB Payment because their income exceeded their estimate. Mr and Mrs Pamplin decided that they would prefer to take a minimum payment amount and then lodge tax returns to obtain a lump sum benefit if applicable. As it transpired, their income for the financial year 2000/01 was very low and a ‘top up’ payment was due.
4. Under the legislation, it was necessary for Mr and Mrs Pamplin to lodge their tax returns within 12 months of the end of the financial year to claim the ‘top up’ payment. Unfortunately however, Mr and Mrs Pamplin’s tax returns did not reach the Tax Department by the relevant ‘cut off’ date, 30 June 2002. This was through no fault of the Pamplin’s. It appears that the tax returns were prepared on time and an attempt was made to lodge the returns ‘online’ via the Internet. The Applicant’s tax return and that of the business partnership were lodged before 30th June 2002, however Mr Pamplin’s return was not ‘lodged’ until 7 July 2002. The tax agent acting for Mr and Mrs Pamplin received a batch return number relating to the Internet lodgement prior to 30 June 2002 – however Mr Pamplin’s returns were apparently not received by the tax office. There appears to be no dispute that an attempt was made to lodge all returns before 30 June 2002.
5. The Respondent considers that it has no discretion in this matter to pay a ‘top up’ amount. The Respondent has also noted that legislative changes are shortly to be made that will enable a discretion to operate in circumstances such as the Pamplin’s. However, those changes will apply to the tax year 2001/02 onwards and according to the Respondent, the Applicant and her husband would not be eligible for a ‘top up amount’.
6. A hearing before the Tribunal took place on 1 October 2003. On that day both the Applicant and her husband appeared as well as Mr Crane a chartered accountant. Mr Thistlethwaite, advocate, appeared for the Respondent.
7. The Tribunal had before it the documents provided by the Respondent pursuant to section 37 of the Administrative Appeals Tribunal Act1975 (“the T documents”). The Tribunal also took into evidence the following:
Exhibit No.
Document
Date
A1
Fax Cover sheet and Applicant’s Statement of Facts and Contentions
23 September 2003
A2
Email to Bruce Wheatley from Jodie Lentini titled ‘Clarity on Family Tax Benefit Announcements’
R1
Letter from Centrelink to Mr Grace
6 May 2003
R2
Statement of the Respondent’s position subsequent to the conference held at the AAT on 3 June 2003, signed by Emerson Thistlethwaite
1 July 2003
R3
Secretary’s Statement of Facts and Contentions with annexure A,B,C.
23 September 2003
LEGISLATION
8. The relevant legislative provisions with respect to FTB are contained in A New Tax System (Family Assistance) Act 1999 (“the FA Act”) and A New Tax System (Family Assistance) Administration Act 1999 (“the FAA Act”). Section 28 of the FAA Act states:
“
28Variation of instalment and past period entitlement determinations where income tax return not lodged
(1) This section applies if:
(a)a determination under section 16 or 17 is in force at, or was in force before, a particular time; and
(b)there are one or more days (the cancellation days ) before the particular time in respect of which the following conditions are satisfied:
(i)the cancellation days occur in the income year (the cancellation income year ) that began 2 years before the beginning of the income year in which the particular time occurs;
(ii)the claimant is entitled to be paid family tax benefit under the determination for the cancellation days;
(iii)the claimant, or the claimant's partner at the particular time (if he or she was also the claimant's partner at some time in the cancellation income year), or both, are required to lodge an income tax return for the cancellation income year but have not done so by the particular time;
(iv)by the particular time, an assessment has not been made under the Income Tax Assessment Act 1936 of the taxable income for the cancellation income year of everyone to whom subparagraph (iii) applies.
Consequence of section applying
(2)If this section applies, the Secretary must vary the determination so that it has the effect that the claimant is not, and never was, entitled to family tax benefit for the cancellation days.
Consequence where income tax returns are later lodged
(3) If:
(a)after the Secretary varies the determination under subsection (2), an assessment is made under the Income Tax Assessment Act 1936 for the cancellation income year for everyone:
(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 of family tax benefit for the cancellation days;
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 the lesser of:
(c) that amount of family tax benefit; and
(d)the amount that the claimant was entitled to be paid before the variation under subsection (2) was made.”
9. The Tribunal agrees with the SSAT that there was a determination in force under Section 16 of the FAA Act and that therefore the cancellation days that applied from July 2000 to June 2001 began two years before 8 July 2002, the date on which Mr Pamplin’s return was lodged. The Tribunal is also satisfied that the conditions in subparagraphs 28(1)(b)(i) to (iv) of the FAA Act are satisfied.
10. Once these conditions are satisfied, the Respondent is required to determine that there is no further entitlement to FTB. The Tribunal agrees with the finding of the SSAT that there appears to be no discretion to enable the Respondent to pay a ‘top up’ amount.
11. In the view of the Tribunal, the Applicant and her husband acted in a prudent and appropriate manner. It is possible that their tax returns could have been lodged at a far earlier time than late June. However, evidence was given at the Tribunal that due to one of the partners in their accountancy firm being diagnosed with cancer, extensions in relation to the lodgement of tax returns were given to their accountants by the tax office. The Pamplin’s tax accountants were therefore not in a position to have lodged returns at an earlier time. It would appear that the Pamplin’s misfortune at not obtaining the ‘top up’ benefit resulted from this situation and the partially unsuccessful Internet lodgement of returns process. The Tribunal is satisfied however that the Pamplins acted in an appropriate manner throughout the relevant period and did all that they could have done to ensure that their tax returns were lodged on time.
12. In many instances, tax estimates are made by applicants as to their future taxable incomes that result in an overpayment of FTB. The Applicant and her husband were seeking to avoid such a situation and it is unfortunate that there appears to be no discretion to deal with the circumstances of Mr and Mrs Pamplin. It may be however that this matter could be referred on for a special Act of Grace payment – particularly as the Applicant and her husband have been disadvantaged in comparison with those applying in later years (due to the changing legislative requirements).
13. On 10 September 2003, a Bill was introduced into the House of Representatives to provide families, such as the Pamplins, with more time to lodge FTB returns. The Family Assistance Legislation (Extension of time Limits) Bill 2003 will vary the existing legislation to extend the time frame for payments of ‘top ups’ from one year to two years after the end of the income year to which the payments relate. The proposed legislation provides that the existing subsection 28(3) of the FAA Act be repealed and that the following subsection be inserted:
“Consequence where income tax returns are later lodged
(3) If:
(a)after the Secretary varies the determination under subsection (2), 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;
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 income tax returns for the cancellation year for the taxpayers involved were lodged with the Commissioner of Taxation during the income year that began 2 years after the beginning of the cancellation income year—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.”
14. The Tribunal recommends that consideration be given to an Act of Grace payment in view of the circumstances of this matter; the prudent and appropriate steps taken by the Pamplins and the fact that legislative changes will place later applicants in a more advantageous position. Evidence was given at the hearing that those legislative changes were not extended back to the 2000/01 tax year as a result of linkage records being destroyed after two years. (see also Section 6 of the Bill)
15.Accordingly, the Tribunal finds that the decision of the Respondent was correct and affirms that decision. The Tribunal also recommends that the matter be referred for consideration in respect of an Act of Grace payment in view of the circumstances of this matter.
I certify that the 15 preceding paragraphs are a true copy of
the reasons for the decision hereinProfessor T Sourdin, Member
Signed: A. Krilis
Associate
Dates of Hearing 29 September 2003
Date of Decision 10 December 2003
Representative for Applicant Self-RepresentedAdvocate for the Respondent Mr Emerson Thistlethwaite
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