Perera and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2011] AATA 180

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 180

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2010/2418

GENERAL ADMINISTRATIVE DIVISION		)
Re		SUSIL PERERA

Applicant

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

Respondent

DECISION

Tribunal G. D. Friedman, Senior Member

Date17 February 2011

PlaceMelbourne

Decision:

For reasons given orally at the hearing, the Tribunal sets aside the decision of the Social Security Appeals Tribunal dated 12 May 2010 and remits the matter to Centrelink for recalculation of Mrs Perera’s entitlement to family tax benefit and rent assistance on the basis:

(1)   of actual rent paid from 23 September 2005;

(2)   that the date of effect of any determination in Mrs Perera’s favour be
1 July 2004; and

(3)   that Mrs Perera’s adjusted taxable income is:

(a)   $2,786 in the 2004/2005 financial year;

(b)   $4,081 in the 2005/2006 financial year;

(c)   $3,731 in the 2006/2007 financial year;

(d)   $8,491 in the 2007/2008 financial year; and

(e)   $ … [5,004] in the 2008/2009 financial year.

..............................................

Senior Member

EXTRACT OF PROCEEDINGS

ADMINISTRATIVE APPEALS TRIBUNAL

MR G.D. FRIEDMAN, Senior Member

No. 2010/2418

PERERA

and

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

MELBOURNE

11.12 AM, THURSDAY, 17 FEBRUARY 2011

MS S. PERERA appears in person
MS A. BRAMLEY appears for the respondent

MR FRIEDMAN:   The matter before me is a decision by the Social Security Appeals Tribunal that affirmed the decision of Centrelink made on 8 December 2009 that Mrs Perera has been paid the correct amount of family tax benefit in the years 2004/2005, 2005/2006, 2006/2007, 2007/2008 and 2008/2009.  What I need to determine is whether Mrs Perera has been paid the correct amount of family tax benefit for each of those years and if there is a favourable determination following this review the date of effect of that determination.  There is no dispute that
Mrs Perera has been receiving parenting payment partnered from 31 March 2004 to
3 January 2005 and since 1 January 2007, she has received disability support pension.  She has two children.  …  [Their dates of birth are known to Centrelink].  And there are records held by Centrelink of the various addresses [at] which Mrs Perera has resided.

On 1 June 2004, Centrelink sent her a letter reminding her of the need for her or her husband to lodge a tax return for 2002/2003 and reminding them of the consequences of not lodging a tax return in respect of the eligibility for family tax benefits.  And on 1 December 2004, she was advised that her family tax benefit entitlement in respect of 2003/2004 had been reassessed and she was to be paid an amount of $2446.27 and she was given an opportunity of asking for that decision to be reviewed.  Similarly, on 20 July 2005, she was advised of a tax - family tax benefit entitlement for 2003/2004 and the letter advising her of this also included … review rights.  Similarly, on 7 October 2005, she was sent a letter advising her of her entitlement to family tax benefit for 2004/2005 and as a result of reassessment, she was to be paid an amount of $455.94 but an amount of $1376.33 had been withheld to pay debts in relation to family tax benefit.

She received further advice from Centrelink on 21 October 2005 relating to the family tax benefit being paid to her and that rate included an amount of rent assistance and on 7 December 2005, she was advised of a reassessment of family tax benefit in respect of 2001 and 2002 and that she had been paid the correct entitlement.  On
7 December 2005, she was also advised of a reassessment of the family tax benefit for 2002/2003 and on 11 May 2006, she was advised of changes to the family tax benefit … from 1 July 2006.  …

MR FRIEDMAN:   [O]n [26] September 2006, she was advised of family tax benefit entitlement.  2005/2006 had been reassessed and she was to be paid $970.90 in relation [to that]. 

…

MR FRIEDMAN: …  On 20 September 2007, she was advised that her family tax entitlement for 2006/2007 had been reassessed and she was to be paid $1606.  In relation to 2007/2008, on 12 August 2008, she was sent a letter saying that a reassessment of the family tax benefit had been made and she was to be paid $1787.63.  In relation to 2008/2009, she was sent a letter on
2 October 2009 regarding a reassessment of family tax benefit and she was told she was to be paid $2427.25, and she lodged a request for review on 13 November 2009 and she said that her income had been incorrectly calculated and the authorised review officer replied to her on 8 December and that led to her application to the Social Security Appeals Tribunal on 5 March 2010.  The legislation that is relevant to this application is … [A] New Tax System (Family Assistance) Act 1999 and …
.

[A] New Tax System (Family Assistance) Administration Act 1999

There is no dispute that the rate of family tax benefit is calculated according to schedule 1 of the Family Assistance Act and that [it] depends on a number of factors such as the number of children, the age of the children, whether rent is paid and the amount if so, … the recipient’s income and the income of the recipient’s partner and the rate of family tax benefit is subject to an income test on the person’s adjusted taxable income.  In respect of Family Tax Benefit Part A, if the person is a member of a couple, the individual’s adjusted taxable income includes the adjusted taxable income of the partner that is specified in clause 3 and … [for] Family Tax Benefit B, the income test is in respect of the secondary income, the earner’s adjusted taxable income if the primary income earner’s is less than $150,000 and that is the case here.  Schedule 3 of the act deals with adjusted taxable income and clause 2 defines adjusted taxable income and it was amended with effect from the income year starting on or after 1 July 2009 by the Tax Laws Amendment (2009 Measures No 1) Act 2009, and given that Mrs Perera’s appeal is in respect of the income years prior to 1 July 2009, the relevant provision is clause 2 which prior to amendment … stated at subsection 1:

For the purpose of this act and subject to subclause 2 an individual’s adjusted taxable income for a particular income year is the sum of the following amounts (income components).

(a)         Individual’s taxable income for that year.
(b)         Individual’s adjusted fringe benefits total for that year.
(c)         The individual’s target foreign income for that year. 
(d)         The individual’s net rental property loss for that year.
(e)          The individual’s tax free pension or benefit for that year less the amount of the        individual’s deductible child maintenance expenditure for that year. 

It appears to me that paragraph (b) adjusted fringe benefit total and (c) the individual’s type of foreign income are not relevant to this application.  What is relevant is (d) and (e).  In relation to (d) is individual’s net rental property loss for that year.  Mrs Perera argued that a net property loss is a negative amount because it is a loss and therefore should be deducted from the taxable income as assessed by the Australia Taxation Office rather than being added to the taxable income as has been submitted by Centrelink.  She said that it would be unfair otherwise that a person being assessed for eligibility for family tax benefit should have a loss on rent – a rental property added to their income, in fact, she said it should be … she said it should be deducted.  Now, on the face of it, that argument seems plausible that why should a person who is being assessed for a social security benefit be penalised when a loss on rental property is, in fact, added to their taxable income … on the face of it, it makes a lot of sense.

However, as I pointed out during the hearing, it would seem to me and I am not an accountant, but it would seem to me that the reason behind the way the legislation is worded is that the taxable income as calculated by the Australian Taxation Office takes into account the net property loss in allowing the tax deductions so that if a person makes a loss on property investment that is tak[en] into account and that lowers their taxable income therefore it lowers the amount of tax they pay.  So to allow it a second time in the calculation of family tax benefit would, it seems to me and once again I am not an expert, not be appropriate.  Now, having said that, that is not the basis of my ruling in this matter.  I am bound to apply the legislation that is applicable to any application before me and the relevant legislation is the one that
I have read out and that is clause 2 of schedule 3 of the Family Assistance Act.  It is not the Social Security Act, it is a Family Assistance Act and clause 7 – no – I will come to that in a moment.

So in my view, the wording of paragraph (d) of subsection 1 of clause 2 that is the individual’s net rental property loss for that year is very clear that a loss is a loss if the wording was to be something like profit, then a net loss would be a negative amount but the wording of … that particular clause is the individual’s net rental property loss and in my view Ms Bramley, in her submission on behalf of Centrelink, is correct that a loss, in the way it is worded there, is a positive amount that it is a positive amount of a loss and as a consequence, the legislation requires me to add all the components of paragraph 1 of clause 2.  Therefore, the amount of the rental property loss for individual year as an amount of money needs to be added to
Mrs Perera’s taxable income for that year in the calculation of the adjusted taxable income.  So I do not accept her submission on that point.

The next point of disagreement is paragraph (e).  The individual’s tax free pension or benefit for that year.  Mrs Perera argued that her disability support pension is not a tax free pension or benefit for that year but is in fact a tax exempt benefit and when asked for her reasons for that she cited a section of the Social Security Act and that was section 24AB [to] … 24[AB]ZB which my associate has been unable to locate in the Social Security Act but as I understand Ms Perera’s arguments, she is saying that if one particular piece of legislation defines something in a certain way, then another piece of legislation would have to …[define it] in the same way as the first one otherwise there would be inconsistency.  Once again, on the face of it, that argument has some merit.  However, in practice it is very clear that an examination of any piece of legislation where there is a definition included may be totally different from a similar word or in fact, the same word in another piece of legislation, and I do not accept Mrs Perera’s argument that merely because a term may be defined in one Act that is she says the Social Security Act that necessarily has the same meaning in a different Act, in this case the Family Assistance Act and even if that were not the case, clause 7 of schedule 3 of the Family Assistance Act actually defines tax free pension or benefit as set out in paragraph (e) of clause 2 of schedule 1 and that defines a tax free pension or benefit as what the wording says:

For the purposes of a schedule the following payment received in an income tax year are tax free pensions or benefit for that year and that it includes under (a) a disability support pension under part 2.3 of the Social Security Act.

So even if I were to find favour with her first argument, this schedule 3 clause 7 actually defines what is a tax free pension or benefit and in this case, it defines it as a disability support pension.  So it may well seem unfair.  It may well seem inconsistent, and that wouldn’t be the first time that someone has said that in relation to the social security legislation or other legislation, but, as I said, I am bound by the legislation and here there is a clear definition of tax free pension or benefit for the purposes of that clause so I find that Mrs Perera’s disability support pension is a tax free pension or benefit for that year under paragraph (e) of paragraph 1 of clause 2.  Therefore, the amount of her disability support pension is to be added to the other matters that I have already raised, including her taxable income and her net rental property loss in determining adjusted taxable income which in turn determines the rate of family tax benefit.  Therefore, for determining the rate of family tax benefit …[A] both her adjusted taxable income and Mr Perera’s adjusted taxable income are used and for family tax benefit … [B] her adjusted taxable income is used as she is the secondary income earner.

And the rate of family tax benefit is set out in section 58 of the Family Assistance Act and section 60 and 61 deal with the rate of family tax benefit where the payment is shared between individuals.  [S]ection 62 and 63 deal with the rate of payment where either the child or individual are absent from Australia and those are not relevant to this application.  And as far as Family Tax Benefit Part A is concerned, schedule 1 has two methods for calculating it and method 1 applies where a recipient’s adjusted taxable income does not exceed the relevant high[er] … income free amount and applies a 20 per cent taper on adjusted taxable income over the income free area and under this method the income tested rate of family tax benefit …[A] cannot be reduced to an amount below the base rate of family tax benefit.  And method 2 applies when a recipient’s adjusted taxable income is higher than relevant higher income free area and applies a 30 per cent deduction on adjusted taxable income over the higher income free period to the recipient’s maximum rate.

And as Mrs Perera’s adjusted taxable income in the relevant income years did not exceed the higher rate, the higher income free area, I find that method 1 is the appropriate method is to use in calculating a rate of family tax benefit … [A]  and
I note that in schedule 1 if the individual or a partner is in receipt of a social security pension or benefit, the income excess is nil and the income tested rate is the same as the maximum rate.  And for the period 1 July 2004 to 30 July 2008, the relevant clause was clause 17, which has said that:

Application of income test to pension and benefit recipients and their partners.

And from 1 July 2008, the relevant clause is 38L, which is worded in the same way as clause 17.  On that basis, I find that Mrs Perera’s rate of family tax benefit is … calculated on the basis that her income excess is nil and she is entitled to maximum rate of family tax benefit in the period of 1 July 2004 to 3 January 2005 and from
1 June 2007 to 30 June 2009. 

In relation to Family Tax Benefit Part B, the method for working out the rate of the payment is given in schedule 1 part 4 in two parent families the rate of family tax benefit …[B] is subject to an income tax – income test on the income of a lower income earner, the secondary …[earner] and the rate of Family Tax Benefit B is reduced by 20 cents in every dollar in excess of the income free area and the relevant amounts have been provided to the tribunal so on that basis for the 2004/2005 year, Mrs Perera was paid family tax benefit by instalments each fortnight.  It was determined by reference to her two dependent children, [for] part A both were under 13 years of from 1 July 2004 to 14 July 2004 and there was one child under 13 and one child age 13 to 16 in the period 15 July 2004 to 30 June 2005 and for part B, both children are under the age of 18 years with the younger child being between the age of 5 and 15, and there was no rent assistance as Mrs Perera was a home owner in that financial year.  A fortnightly rate payment is based on estimates provided throughout that year being $18,200 from 1 July 2004, for
Mrs Perera $9100 and Mr Perera $9100 as taxable income; $37,600 from 13 October 2004, Mrs Perera taxable income $9600 and Mr Perera taxable income $28,000; and $30,790 from 6 December 2004, Mrs Perera $2790, Mr Perera $28,000 taxable income; and from 7 December 2004, $23,800, Mrs Perera taxable income $2800, Mr Perera taxable income $21,000.

Therefore, I agree with the contention on behalf of Centrelink that the adjusted taxable income for Mrs Perera for that income year was $2796, as a consequence of the taxable income, being $2796, and for Mr Perera $22,599 as his taxable income was $22,599 and I note that there was a reconciliation completed on 7 October 2005.  Mrs Perera had been paid $9490.97 and ...  was $11323.54 and her top up payment was reduced as repayment to a debt and the balance was paid to her on
7 October 2005 that being $455.94 and her rate of Family Benefit Part A was not subject to income tax and was not reduced as a result of income in that year because she was in receipt of parenting payment for the period 1 July 2004 to
3 January 2005 and the combined adjusted taxable income was less than [the] income free area.

She was the second income earner in that area in that year and her adjusted taxable income was below the income free area therefore, her Family Tax Benefit Part B was not reduced by the income tax test.  So that was for 2004/2005.  2005/2006, she was paid family tax benefit again and in that income year, the rate of family tax benefit was determined by reference to her two dependent children and in relation to Family Tax Benefit Part A, one child 13 years of age, one child between 13 and 16 from the period 15 July 2004 to 30 June 2005.  Family Tax Benefit Part B, there were two children under 18 years and the younger one was age between 5 and 15 years.  The … [rent] assistance was paid from 23 February 2005 to 30 June 2006 on the basis that Mrs Perera was paying private rent of $290 per week.

Her fortnightly rate of payment was based on a number of estimates and they were $23,800 from 1 July 2005 and that … estimate was based on her taxable income of zero dollars and Mr Perera’s taxable income of $24,300 less a net property loss of - $4700 and an amount of $29,000 from 31 October 2005, Mrs Perera’s taxable income of zero dollars, Mr Perera taxable income $24,300 and a net property loss of $4700.  Therefore, Mrs Perera’s adjusted taxable income for that year was $4081 being net rental property loss of $4081 which, of course, is added to her taxable income of zero dollars.  And for Mr Perera $32,234 being taxable income of $28,153 to which is added for the reasons I have already given net rental property loss of $4081.  After reconciliation was done, Mrs Perera had an entitlement to $13,565.89 and a top up amount to account for the amount that she should have been paid was made to her by the Australian Taxation Office and that was $970.90.

Mrs Perera’s combined adjusted taxable income of $36,315 exceeded the income free area of $33,361 and neither she nor Mr Perera were in receipt of a social security pension or benefit.  The Family Tax Benefit Part A was therefore subject to the income … test and the amount of affecting income, that is the amount to be deducted from the maximum rate of benefit was $590.80 being 20 per cent of 2954 and that was calculated as a difference between $36,315 and [$]33,361, and
Mrs Perera was the secondary income earner.  Her adjusted taxable income was a low income free area as such.  The rate of Family Tax Benefit Part B was not reduced by the income tax.  So that was 2005/2006.  In 2006/2007, … Mrs Perera was paid family tax benefit.  During that year, the payment of family tax benefit was determined in relation to the two dependent children for the Family Tax Benefit Part A.  There was one child under 13 years of age, one child between 13 and 15 years in the period 1 July 2006 to 1 December 2006 and two children aged 13 to 15 from

2 December 2006 to 30 June 2007. 

Her Family Tax Benefit Part B, there were two children under 18 years of age and the youngest child was age between 5 and 15 years.  There was also rent assistance paid given that Mrs Perera was paying a private rent of $290 per week from 1 July 2006 to 30 July 2006 and rent at the rate of $290.77 from 31 July 2007.  Mrs Perera’s fortnightly rate of payment was based on estimates provided throughout the year and they were $23,000 from 1 July 2006 being Mrs Perera’s taxable income of zero and Mr Perera’s taxable income of $22,000 and … net rental property loss of $1000 and from 2 December 2006, $31,000 being Mrs Perera’s taxable income of zero net rental property loss $4000 and Mr Perera’s taxable income $24,300 worth and net rental property loss of $4000.  I accept the submission by Ms Bramley that adjusted taxable income … for that year was for
Mrs Perera $3731 once again that being calculated at a taxable income of zero dollars and to which was added the net rental property loss of $3731 for the reasons I have already stated and for Mr Perera $30,756 being his taxable income of $27,025 plus a net rental property loss of $3731.

Once again, there was a reconciliation completed and the result was Mrs Perera had been paid less than her entitlements.  Her entitlements were $15899.48 and the top up payment of $1606 was made to her by the Australian Taxation Office.  During the period 1 July 2006 to 31 May 2007, neither Mrs Perera nor her husband was in receipt of social security payment or benefit.  So the rate of Family Tax Benefit A was subject to the income tax – income test.  However, the combined adjusted taxable income did not exceed the income free area and the rate of Family Tax Benefit Part A was not reduced.  In the period 1 June 2007 to 30 June 2007,
Mrs Perera was in receipt of disability support pension and the rate of Family Tax Benefit Part A is taken to have an income excess of nil so the rate of Family Tax Benefit A was not reduced, and Mrs Perera was the secondary income earner and her adjusted taxable income was below the income free area consequently the rate of Family Tax Benefit Part B was not reduced by an income test so that was 2006/2007.

For the year 2007/2008, Mrs Perera was paid family tax benefit.  The rate was determined by reference to two dependent children in terms of Family Tax Benefit Part A.  There were two children age 13 to 15 from 1 July 2007 to 14 July 2007 and one child age 13 to 15 from 15 July 2007 to 30 June 2008.  In respect of Family Tax Benefit Part B, there were two children under the age of 18 years from 1 July 2007 to 14 July 2007 and one child under 18 years of age from 15 July 2007 to 30 June 2008.  And there was rent assistance paid to Mrs Perera on the basis of her paying private rent in the amount of $290.77 per week from 31 July 2007.  Mrs Perera’s fortnightly rate of payment was based on estimates provided for that year being $32,426 from 1 July 2007 comprising for Mrs Perera a taxable income of zero and a net rental property loss of $4194.  For Mr Perera taxable income $24,058 with a net rental property loss of $4194.

Further … from 9 July 2007, the estimate was $39,426 being Mrs Perera’s taxable income of zero, … net rental property loss of $4000, tax free pension $7000. 
Mr Perera’s taxable income of $24,300, net rental property loss of $4000 and from
6 August 2007, the amount was $53,368 comprising Mrs Perera’s taxable income of $5000 and net rental property loss of $4194 with tax free pension of $7000 and for Mr Perera taxable income of $33,000 and a net rental property loss of $4194. 
I accept the submission by Ms Bramley on behalf of Centrelink therefore that the adjusted taxable income for that particular year was for Mrs Perera $8491 being her taxable income of $1000 plus her net rental property loss of $3378 and a tax free disability support pension payment of $4113 and for Mr Perera taxable income of $34,457 plus a net rental property loss of $...[3,378].

There was a further reconciliation done on 1 – 4 August 2008.  The result was
Mrs Perera’s entitlement was $10,267.86 and a top up amount of $1787.63 was included in her income tax assessment.  And the figures used for the reconciliation were $11,378 for Mrs Perera and $37,835 for Mr Perera and the reconciliation for that year was undertaken on the basis that Mrs Perera’s income was $11,378 and that was based on information provided … by the Australian Taxation office and the amount of $7000 taken from the most recent estimate from the amount recorded in income screens from the family assistance office.  The affecting income in that income year for Family Tax Benefit Part A was $1399.60 being 20 per cent of the difference between $11,378 and $4380 being the income free area.  And in her submission, Ms Bramley said that that … was incorrect because the details of disability support pension paid to Mrs Perera in that year were $4113 and in that year, she was in receipt of disability support pension and was taken to have an income excess of nil and as a consequence, the rate of Family Tax Benefit Part A was not reduced as a result of income test.

In that particular year, Mrs Perera was a second income earner and the adjusted taxable income was $8491 and as her adjusted taxable income exceeded the income free area of $4390 the rate of Family Tax Benefit Part B was reduced by the affecting income of $822.20 being 20 per cent of the difference between adjusted taxable income of $8491 and the income free area of $4380 so that is 2007/2008.  Finally, then for the year 2008/2009, Mrs Perera was paid family tax benefit and in that year it was determined by reference to one dependent child in respect of Family Tax Benefit Part A, her one child was age 13 to 15 years from 1 … July 2007 to
30 June 2008.  In respect of Family Tax Benefit Part B, there was one child age under 18 years from 1 July 2007 to 30 June 2008.  There was rent assistance paid to Mrs Perera on the basis that she was paying private rent in the amount of $290.77 per week.

Her fortnightly rate of payment was made on a number of estimates during that year and they are $54,358 from 1 July 2008 being for Mrs Perera taxable income of $4152, net rental property loss of $4343, tax free pension of $7266 and for
Mr Perera taxable income of $34,254 and a net rental property loss of $4343.  From 21 August 2008, the estimate was $55,035 being for Mrs Perera taxable income $4152, net rental property loss of $4343, tax free pension of $7266 and for
Mr Perera taxable income of $35,767 and a net rental property loss of $3507. 
I accept the submission by Ms Bramley that the adjusted taxable income for that year was for Mrs Perera $5004 consisting of net rental property loss of $1471 plus a tax free disability support pension of $3533 and for Mr Perera $47,061 comprising a taxable income of $45,590 plus a net rental property loss of $1471.  Her reconciliation for that year was notified to her on 4 August 2009.

She has been paid an amount in instalments of $8593.74 but was entitled to $11,010.99 and [a] top up payment of $2427.25 was paid to her on 7 October 2009. The amounts used in the reconciliation were $... [5004] for Mrs Perera being the net rental property loss of $1471 and a non-taxable pension of $... [3533] and for
Mr Perera $... [47061] which comprised a taxable income of $... [45590] and a net rental property loss of $ … [1471] and the reconciliation was on the basis that her income was $ … [5004]. And that was based on information provided to the tax office and an amount … taken from the most recent amount as recorded on the income screens from the family assistance office. The affecting income in the income year for Family Tax Benefit Part B was $ … [95.60] being 20 per cent of the difference between $ … [5004] and $4526. And I accept Ms Bramley’s submission that the reconciliation for 2008/2009 was based on an incorrect amount and in that year, she was in receipt of disability support pension and was taken to have an income excess of nil as such the rate of Family Tax Benefit Part A is not reduced as a result of the income test.

In that year, Mrs Perera was a secondary income earner. Her adjusted taxable income was $5004 and as her adjusted taxable income exceeded income free area of $4526 the rate of Family Tax Benefit Part B is to be reduced. The affecting income for that year is $95.60 being 20 per cent of the difference between adjusted taxable income $5004 of income free area of $ … [4526]. So as a consequence of those findings in relati[on] to each of the years, I have to make a determination whether Mrs Perera is being paid the family tax benefit at the correct rate. The Social Security Appeals Tribunal said she had. … [I]n the light of the revised calculations by Mr Bramley on behalf of Centrelink, I accept that Mrs Perera has been underpaid family tax benefit in years 2007/2008 and 2008/2009 as a consequence of the use of income amounts that were incorrect using the reconciliation in the family tax benefit entitlement in both those years and it appears that she will receive an amount that takes into account that her entitlement was incorrectly calculated.

In relation to rent assistance, she was paid rent assistance on the basis of her paying $297.77 from 23 September 2005 to 30 June 2009 and I accept
Ms Bramley’s submission and supported by evidence given by Mrs Perera that the amount of rent paid was not at all the times the amount of $290.77 a week but it increased during the period from 23 September 2005 which will have an impact on the amount of family tax benefit payable to her.  Given my findings at this stage,
I need to make a decision on the date of effect of a favouring decision and the relevant section of the Administration Act in section 109A that provides that an applicant may initiate a review of the decision and section 109D requires an application for review of family tax benefit must be made within 52 weeks of the person being notified of the decision.  However, the 52 week time limit as specified in section 109A does not apply if the decision is an accepted decision and section 109D subsection 6 provides that an accepted decision includes a decision related to payment of family tax benefit by instalment.

I take into account that on 13 November 2009, Mrs Perera sought review of a family tax … benefit for the previous five income years and throughout each income year, she received notices advising of fortnightly rate.  However, as these notices were in respect of family tax benefit by instalments, I am satisfied that they are accepted decisions and are therefore not subject to the 52 week time limit.  In addition to the regular notices advising her of the ongoing rate of family tax benefit, she has also received notices advising of the outcome of reconciliation every year and those decisions are not accepted decisions under section 109D subsection 6 because they are not decisions resulting from a review by the Commissioner of Taxation or Child Support Registrar and they are not decisions referred to section 109 subsection 3.  Section 109D subsection 2 enables the [S]ecretary to extend the time limit in special circumstances and Mrs Perera has argued that the 52 week limit should not apply in special circumstances prevented her from requesting a review in 52 weeks and section 109E of the Administration Act limits the date of effect of a favourable determination in respect of decisions about family tax benefits paid by instalments.

And the effect of that section is to limit arrears payable as a result of review which means … that any arrears of family tax benefit including where there is a component of rent assistance can only be paid from the first date of the income year before the income year in which the review is made if a request for review is made over the
52 weeks after the notice of the original decision is made.  And I take into account that Mrs Perera sought review of the family tax benefit entitlement on 13 November 2009 for a number of years and the request was made more than 52 weeks after she was given notices of a fortnightly rate.  Therefore, if her entitlement [to] family tax benefits in any of the years that she sought review is increased as a result of her request for her review dated 13 November 2009, the earliest date of effect will be
1 July 2008 which is the first day of the income year prior to the income year of the review decision.  That means that the only income year for which arrears can be paid would be 2008/2009 financial year.  That is unless a discretion in section 109D subsection 2 is exercised and the period in which she requested review is extended beyond 52 weeks.

In Ms Bramley’s amended statement of facts and contentions, she submitted that the discretion in section 109D subsection 2 should be exercised in respect of
Mrs Perera’s request for review and that if the discretion is exercised by me, there will be no limit on the arrears payable as a result of review by virtue of section 109E and basically what that means is even that the income years for which Mrs Perera is seeking review go back a number of years she would be prevented from receiving the arrears from the early years by virtue of the fact that she applied on
13 November 2009.  However, I am persuaded that in all the circumstances, it is appropriate to exercise the discretion under section 109D subsection 2.  Therefore, any arrears payable as a result of my decision today will be payable for whatever year it is found that arrears are payable and it won’t be limited to those years as specified in the legislation. 

There were a number of other issues raised by Mrs Perera that I want to deal with … very briefly.  She states that an amount withheld … from 2004/2005 year and from instalments in 2005/2006 towards repayment of the previous family tax benefit have not been repaid to her.  I note that the records held by Centrelink show that on
11 October 2004 an amount of $1376.63 was withheld from the family tax benefit reconciliation top up for 2004/2005 and that amount was credited towards debt – a debt identification which was a family tax benefit debt paid in … respect of a debt paid for family tax benefit in 2001/2002 and that she was advised … [about] that on
6 May 2004.  In December 2005, family tax benefit entitlement for 2001/2002 year was reassessed and a further decision was made that she be paid the correct amount in respect of 2001/2002 and an amount of $2216.63 was paid to her on
12 December 2005 and that amount was a total amount that had been withheld from her fortnightly instalments in the period 6 May 2004 to 8 December 2005 and the amount withheld on 11 October 2004.

In relation to indexation, schedule 4 of the Administration Act provides details and although the rate of Family Tax Benefit Part A and B are only indexed annually from 1 July maximum rent assistance and the rent assistance ...  are indexed in March and September which once again illustrates that the terminology used in one [A]ct is not necessarily applied in the same way in another [A]ct.  And [as to] the question of whether rent assistance should be included in reconciliation, I note that in division 1 part 2 of the family tax benefit calculated in schedule 1 of the Administration Act, the method for calculating the rate of Family Tax Benefit Part A clause 3 provides the individual’s maximum rate, includes the individual’s rent assistance and as rent assistance is a component of the individual’s maximum rate, it is included in the reconciliation process so I am satisfied that that … is … the case here.

As a consequence of my reasons today, I am going to set aside the decision of the Social Security Appeals Tribunal dated 12 May 2010 and I am going to remit the matter to Centrelink on the basis that her entitlement to family tax benefit be reassessed on the basis that … Mrs Perera’s adjusted taxable income is for 2004/2005, $20,786; for 2005/2006, $4081; for 2006/2007, $3731; for 2007/2008, $8491; for 2008/2009, $...[5004] and on the basis of her actual rent paid from the information available to Centrelink from 23 September 2005 and I have already made a ruling that the discretion in section 109 subsection 2 paragraph 6 allows all arrears payable to her to be paid and not limit it to that contained in other relevant sections of the Act. 

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