Pearce (Battye) and Secretary, Department of Social Services (Social services second review)

[2022] AATA 4273

Pearce (Battye) and Secretary, Department of Social Services (Social services second review) [2022] AATA 4273 (13 December 2022)

Division:GENERAL DIVISION

File Number(s):      2022/2776

Re:Maureen Pearce (Battye)

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

Decision

Tribunal:Senior Member K Millar

Date:13 December 2022

Place:Adelaide

The Tribunal affirms the decisions under review

.............[sgnd].................................................

Senior Member K Millar

CATCHWORDS

Family Tax benefit – failure to lodge tax returns – decision affirmed.

LEGISLATION

A New Tax System (Family Assistance) (Administration) Act 1999 (Cth)

REASONS FOR DECISION

Senior Member K Millar

13 December 2022

1. Ms Pearce has been receiving Family Tax Benefit (FTB) since 2007 on a fortnightly basis, with her rate of FTB calculated by reference to an estimate of her income.

2. Where the rate of FTB is paid on a fortnightly basis using an estimate of a person’s income, the FTB paid is reconciled against the person’s taxable income after a tax return is lodged.  If the person has been underpaid FTB, their FTB payment is “topped-up”.

3. To be eligible for top-up payments, a person must lodge their tax return, or be exempt from lodging a return, within a particular period.

4. Ms Pearce received FTB in the 2017, 2018 and 2019 financial years.  She lodged her tax returns for those financial years on 19 July 2021. As a result, she was advised that she was not eligible for top-up payments or the FTB supplement for those financial years.  An Authorised Review Officer and the Social Services and Child Support Division (AAT1) affirmed the decisions not to pay a top-up or supplement for each of these financial years.

5. Ms Pearce has applied for a further review of the decision not to pay her a FTB top-up or supplement for the 2017, 2018 and 2019 financial years.

6. Ms Pearce acknowledges that the legislation does not provide a discretion to extend the period in which her tax returns can be lodged but would like to bring attention to the difficulty faced by people in her situation in meeting this requirement.  

   Ms Pearce’s evidence

7. Ms Pearce experienced family violence and states she separated from her husband in November 2014. Her efforts to re-establish herself and mental ill health had the effect that she could not manage paperwork, and she did not lodge her tax returns for these financial years until 19 July 2021.

8. Ms Pearce said that she was brought up with strong Christian values, that there was an element of brainwashing in her marriage, and that she was isolated from non-Christian friends. Ms Pearce and her two older children are receiving psychiatric care because of their experiences.  After she separated from her husband, Ms Pearce took on the mortgage and debt, and could not afford hot water and food. Ms Pearce said she was scared to seek assistance in case her children were taken away from her, and lived off her credit card, food charities and income from a rental property as well as working a little. In the financial years in question, she thought her estimates of income were around $35,000 and she was earning approximately $25,000.

9. Her mental ill health resulted in her being unable to maintain her house or open any mail. She eventually had the assistance of her cousin to access services and complete her tax returns. She considers the legislation is unreasonable in requiring her to lodge her tax returns within two years in the circumstances.

   CONSIDERATION

10. The legislation that relates to the payment of FTB is in the A New Tax System (Family Assistance) (Administration) Act 1999 (the Act).

11. Under s 32A of the Act, the Secretary must disregard amounts otherwise payable unless the person satisfies the FTB reconciliation provisions.

12. The FTB reconciliation provision are set out in s 32C of the Act.  As it applies to Ms Pearce, this requires her to lodge her income tax return within a year after the end of the financial year to which the payment relates.

13. This period can be extended under s 31C(3)(b) if there are special circumstances that prevented her lodging her return before the end of the financial year.  However, under s 32C(4) of the Act, the extension must end no later than the end of the second income year after the relevant income year.

14. This means that for the 2016/2017 financial year, Ms Pearce must lodge her income tax return by 30 June 2019, for the 2017/2018 financial year by 30 June 2020 and for the 2018/2019 financial year by 30 June 2021.

15. Ms Pearce lodged her income tax returns on 19 July 2021, which is later than the period in which to lodge these returns, and she cannot be paid FTB top-up or supplement for these financial years.

16. While Ms Pearce faced difficult circumstances in the period in question, the legislation does not permit an extension to lodge an income tax return beyond two years after the end of the relevant financial year.  As there is no discretion to allow the Tribunal to take into account Ms Pearce’s circumstances at the time the decisions under review must be affirmed.

    DECISION

17. The Tribunal affirms the decisions under review.

I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for the decision herein of Senior Member K Millar

....................[sgnd]..........................

Legal Associate

Dated: 13 December 2022

Date of Hearing: 5 December 2022

Advocate for the Applicant:

Self-Represented

Advocate for the Respondent:

Riley Calaby

Services Australia