Perera and Secretary, Department of Family and Community Services

[2004] AATA 70

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 70

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2003/1326

GENERAL ADMINISTRATIVE DIVISION

Re:SUSIL PERERA

Applicant

And:SECRETARY, DEPARTMENT OF

FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       G.D. Friedman, Member

Date:             16 January 2004

Place:            Melbourne

Decision:For the reasons given orally at the hearing, the Tribunal affirms the decision under review.

(sgd) G.D. Friedman

Member

SOCIAL SECURITY - cancellation of family tax benefit - failure to provide reasonable estimate of income - husband residing overseas - target foreign income - whether member of a couple

A New Tax System (Family Assistance) Act 1999 s 3(12), s 58, Schedule 3

A New Tax System [Family Assistance (Administration)] Act 1999   s 20, s 28A

Income Tax Assessment Act 1997

Social Security Act 1991 s 4(2)(a), s 4(6) and s 24

REASONS FOR DECISION

16 January 2004  G.D. Friedman, Member

1.      This is an application by Ms Susil Perera (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 31 October 2003.  The SSAT affirmed a decision of an authorised review officer of Centrelink dated 26 September 2003 to cancel the applicant’s family tax benefit (FTB) because the applicant did not provide a reasonable estimate of her income for 2003/2004. 

2.      At the hearing on 16 January 2004 the applicant represented herself, and Mr D. Perdon, a Centrelink advocate, represented the Secretary to the Department of Family and Community Services (the respondent).

3. The Tribunal received into evidence the documents lodged under s37 of the Administrative Appeals Tribunal Act 1975 (T1‑T41), together with two exhibits (Exhibits R1 and R2) lodged by the respondent.

BACKGROUND

4.      The applicant received FTB in relation to her two children.  On 6 July 2001 she provided an estimate of her adjustable taxation income (ATI) of $10,000 for 2001/2002.  On 27 July 2001 the applicant and her family left Australia  for the United States of America and she continued to receive FTB.  On 3 April 2003 the family returned to Australia and the applicant gave a new ATI estimate of $10,000 for 2002/2003.  In April 2003 the applicant’s husband left Australia for employment in the USA and he has remained there since.

5.      On 24 June 2003 the applicant advised Centrelink that her husband sent her $A700 per fortnight in financial support.  She later revised this figure to $A25,000 per year, although she was unwilling or unable to provide details of her husband's earnings.  On 9 July 2003 Centrelink cancelled the applicant’s FTB because she had failed to provide evidence of the husband’s overseas income to enable a reasonable estimate of her ATI for 2003/2004 to be made.  On 26 September 2003 an authorised review officer affirmed the decision.    

6.      On 7 October 2003 the applicant sought review of the decision by the SSAT.  Following the SSAT decision, the applicant lodged an application with the Tribunal on 2 December 2003 for review of the decision.

7.      The issue before the Tribunal is whether the ATI estimate for 2003/2004 provided by the applicant was reasonable.

EVIDENCE

8.      The applicant gave oral evidence that she and her family moved permanently to the USA in 2001 because her husband was unable to find suitable employment in Australia.  In the USA her husband obtained employment in Los Angeles selling computers and electrical equipment for two companies.  She said that they returned to Australia in March 2003 because the children preferred to live here, but in April 2003 her husband decided to resume employment in the USA, and re-located there alone. 

9.      The applicant confirmed that she and her husband remain a married couple despite their physical separation caused by his employment.  She said that they speak by telephone at least weekly, and he sends money regularly to support the family.  She told the Tribunal they hold joint bank accounts and are paying off a joint mortgage on their house.  She explained that her husband chooses to stay in the USA at present, and said that he has given no indication of when or if he intends to reunite the family.

10.     The applicant acknowledged that she had not provided Centrelink with an estimate of her husband’s income, which she stated was less than $US50,000 per year.  On request from Centrelink she provided several of her husband’s payslips (Exhibit R1) and revised her estimate, of moneys received from him, from $A25,000 to $A15,000 per year.  She emphasised that his income is taxed in the USA and is not taxable in Australia, so is not relevant to her eligibility for FTB.

11.     In written statements dated 26 November 2003 and 12 January 2004 the applicant said that according to taxation legislation her husband is not a resident of Australia for tax purposes, so his income is not taxable income or target foreign income and should not be taken into account in the calculation of FTB.  She stated further that she and her husband have one income but twice the expenses of other families because they maintain two households.  The applicant told the Tribunal that the duration of her physical separation from her husband has been sufficiently lengthy to be considered indefinite or no longer short term or temporary, so she is not a member of a couple for FTB purposes.

CONSIDERATION OF THE ISSUES

12. Section 58 of the A New Tax System (Family Assistance) Act 1999 (the Family Assistance Act) provides that a person’s rate of FTB is to be calculated in accordance with the Rate Calculator in Schedule 1 which takes into account the person’s ATI. Clause 2 of Schedule 3 of the Family Assistance Act defines the ATI as the sum of the individual’s:

·   taxable income;

·   adjusted fringe benefits total;

·   target foreign income;

·   net rental property loss; and

·   tax-free pension or benefit.

13. Clause 3(1) of Schedule 3 of the Family Assistance Act provides that if the individual is a member of a couple, the ATI of the individual’s partner is included for the purpose of determining the individual’s ATI for an income year. Clause 5 of Schedule 3 provides that target foreign income includes income earned outside Australia that is not taxable income or a fringe benefit. Taxable income is defined in s3(12) of the Family Assistance Act as having the same meaning as in the Income Tax Assessment Act 1997, which is assessable income less deductions to which the Australian tax rates are applied.

14. Section 4(2)(a) of the Social Security Act 1991 (the SS Act) provides that a person is a member of a couple if

4(2)        …

(a)the person is legally married to another person and is not, in the Secretary's opinion (formed as mentioned in subsection (3)), living separately and apart from the other person on a permanent or indefinite basis.

Section 4(6) of the SS Act provides that a person is not a member of a couple if a determination is made under s24 of the Act that special circumstances apply.

15. Section 20 of the A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act) provides that the determination of the rate of FTB may be based on an estimate of ATI if the Secretary of the respondent considers the estimate to be reasonable.. Section 28A of the Administration Act provides that a determination may be varied if the Secretary does not consider the estimate to be reasonable.

16.     Mr Perdon submitted that the applicant and her husband are married to each other and regard themselves as members of a couple for FTB purposes.  Therefore, their ATI is their combined ATI, which includes the target foreign income received by the applicant’s husband in excess of the applicant’s estimate of $25,000, or $15,000 for 2003/2004.  He said that, on the basis of the husband’s payslips, his estimated income for 2003/2004 is about $A42,000.  Mr Perdon referred to the definition of target foreign income in the legislation and submitted that the husband’s income satisfies the criteria.   

17.     In reaching its decision the Tribunal takes into account the oral and written evidence and submissions made at the hearing. 

18.     The Tribunal accepts the applicant’s evidence that her husband has chosen to remain in the USA because his employment opportunities there provide the best means of supporting his family financially.  The Tribunal also accepts that the couple remains in a married relationship, but has chosen to live apart temporarily for financial reasons and the children’s preference for residing in Australia.  The Tribunal notes that the husband provides regular financial support for his family.  There is no evidence that the separation is permanent.  The Tribunal takes into account that the applicant and her husband have joint bank accounts and a joint mortgage, and are in regular contact with each other.  The Tribunal notes that the separation has been for a period of less than twelve months.  Apart from suggestions of limited employment opportunities, there are no impediments to the husband, who is an Australian citizen, residing in Australia and the parties pooling their resources.  Equally there is no legal impediment to the applicant and her children from joining her husband in the USA. 

19. For these reasons, the Tribunal is satisfied that the applicant and her husband are not living separately and apart from each other on a permanent or indefinite basis, and the Tribunal finds that the applicant is a member of a couple under s4(2) of the SS Act. There is no persuasive evidence that there are special circumstances in this case under s24(1) of the SS Act, such that the applicant should not be treated as a member of a couple.

20. Under Clause 3 of Schedule 3 of the Family Assistance Act the ATI of the husband must be included in the applicant’s ATI. The Tribunal finds that the definition of foreign income under s10A of the SS Act includes the husband’s income from earnings in the USA. His income constitutes target foreign income as defined in Clause 5 of Schedule 3 of the Family Assistance Act, even though it is foreign income not taxable in Australia. The Tribunal does not accept the submission by the applicant that, as her husband is not a resident of Australia, his income cannot be treated as target foreign income.

21. The Tribunal takes into account that, prior to July 2003, the applicant was in receipt of FTB based on an estimate of income. On 9 July 2003 she submitted to Centrelink an estimate of her income for 2003/2004, and the estimate did not include details of the husband’s income other than his contribution to the family in financial support. As the applicant’s ATI must include the husband’s ATI, the Tribunal is satisfied that the estimate of income provided by the applicant was unreasonable, and cancellation of the applicant’s FTB under s28A of the Administration Act was appropriate.

DECISION

22.      For reasons given orally at the hearing, the Tribunal affirms the decision under review.

I certify that the twenty-two [22] preceding paragraphs are a true copy of the reasons for the decision of:

G.D. Friedman, Member

(sgd)       Catherine Thomas

Clerk

Date of hearing:  16 January 2004

Date of decision:  16 January 2004
Advocate for applicant:                Self-represented
Advocate for respondent:            Mr D. Perdon, Centrelink