Pezeshkzad and Secretary, Department of Families, Community Services and Indigenous Affairs

[2007] AATA 1400

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1400

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2006/702

GENERAL ADMINISTRATIVE DIVISION		)
Re		NADER PEZESHKZAD

Applicant

And SECRETARY, DEPARTMENT of FAMILIES, COMMUNITY SERVICES and INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Mr RG Kenny, Member

Date5 June 2007

PlaceBrisbane

Decision The Tribunal affirms the decisions under review.

............[Sgd]............

RG Kenny
  Member

CATCHWORDS

SOCIAL SECURITY – overpayment of family tax benefit – applicant not an Australian resident – debt due to the Commonwealth – debt already repaid – no basis for writing off debt – no basis for waiver of debt – decisions affirmed

A New Tax System (Family Assistance) Act 1999 (Cth) s 21
A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) ss 19, 71, 95, 97, 101

Social Security Act 1991 (Cth) s 7

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25

REASONS FOR DECISION

5 June 2007    Mr RG Kenny, Member

Application

1.      On 24 October 2005, the Family Assistance Office (FAO) rejected a claim for family tax benefit by Nader Pezeshkzad (the applicant) for the 2003/2004 financial year.  On 3 November 2005, Mr Pezeshkzad was credited family tax benefit in the amount of $13,435.65 for the financial year 2004/2005.  However, on 9 June 2006, the FAO determined that Mr Pezeshkzad was not qualified to receive that benefit and an overpayment in that amount was raised as a debt due by him to the Commonwealth.  That decision, and the decision to reject his claim for the 2003/2004 financial year, were affirmed by an authorised review officer on 26 July 2006.  Both decisions were affirmed by the Social Security Appeals Tribunal on 29 August 2006.  Mr Pezeshkzad seeks review of those decisions by the Administrative Appeals Tribunal (the Tribunal).

Issues for Determination

2. Mr Pezeshkzad was refused family tax benefit because, in each of the financial years 2003/2004 and 2004/2005, he did not meet the residential requirements which are set out in s 21 of the A New Tax System (Family Assistance) Act 1999 (the FA Act). In so far as that provision is relevant in this matter, this was because he is not an “Australian resident” or a “special category visa holder residing in Australia” as those terms are defined in the FA Act. The overpayment of family tax benefit was determined to be a debt under s 71 of the A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act). Mr Pezeshkzad does not dispute either of those matters. Rather, Mr Pezeshkzad submitted that the debt arose because of administrative error made by the Commonwealth and should be waived for that reason and also because of his financial circumstances.

Mr Pezeshkzad’s Evidence

3.      Mr Pezeshkzad gave the following evidence.  He is a Canadian citizen and has resided in Australia with his family since he moved here from Canada in 1987.  Initially, he was granted a visa subclass 456.  On 13 December 2002, he was issued with a visa subclass 457. On 9 February 2006, he was granted a visa subclass 856 which entitled him to permanent residence. Since arriving in Australia, he has been engaged in employment.  Until about 12 months prior to the hearing, he worked as a design engineer for a private company.  His part-time interest was trading in gem stones which was conducted through a family business arrangement and, about 12 months ago, he surrendered his position as an engineer and worked full-time in the family business.  This business has not been successful and he has moved from a position where he was free from debt, at about the time when he appeared before the Social Security Appeals Tribunal, to one where he is now indebted to the extent of approximately $13,000.  Mr Pezeshkzad is currently seeking further employment as an engineer and is hopeful of obtaining work in the mining industry in Western Australia in the near future.

4.      Throughout his time in Australia, he has met his income tax obligations and has carried the financial burden associated with educating his three children.  He considered that the family tax benefit was designed to assist parents with meeting those financial burdens and, as a taxpayer, he believed he should be in receipt of it.

5.      Mr Pezeshkzad utilizes the services of a professional accountant to complete his taxation-related matters.  In the 2004/2005 financial year, his regular accountant was not available and he engaged another.  He recalled a discussion with the accountant concerning his residential status but was unable to remember whether he described himself as a “resident” or as a “temporary resident”.  At the time, he did not consider the distinction to be relevant and didn’t fully understand the distinction between them.  At the time, he was not aware of the existence of the family tax benefit and was not aware that the accountant had made the claim on his behalf.  He spoke to the accountant about six months later and referred him to the number of his visa ie subclass 457.  Even at that stage, the accountant told him that he was eligible for the family tax benefit.  The claim was processed as if he were a permanent resident and he was credited with family tax benefit in the amount of $13,435.65.  

6.      Having received the family tax benefits for the 2004/2005 financial year, Mr Pezeshkzad then approached a Centrelink office to inquire about the benefit for the previous financial year.  Subsequently, he made a claim for family tax benefit for the 2003/2004 financial year.  This was rejected on the basis that he was not a permanent resident and the decision was also made to recover the benefit paid to him in the 2004/2005 financial year.

7.      Mr Pezeshkzad conceded that he had been mistaken in not providing the correct identification of his visa status to his accountant.  However, he considered that it was the Commonwealth which was in error because it had failed to ensure that persons providing financial advice, such as his accountant, were aware of the significance of residential status for the purposes of claiming benefits.  He also submitted that claim forms should include a question which required a claimant to identify his/her visa status so that those who processed the claim would not make payments to persons not qualified to receive them.

8.      The sum of $13,435.65 paid to Mr Pezeshkzad has now been recovered by the Commonwealth.

Consideration

9. The eligibility criteria for the family tax benefit are set out in s 21 of the FA Act. Of relevance in this matter is the requirement that the recipient to be an “Australian resident” or a “special category visa holder residing in Australia”. Under s 7(2) of the Social Security Act 1991 (the SSA Act), an “Australian resident” is a person who resides in Australia and who is an Australian citizen, the holder of a permanent visa or a special category visa holder who is a protected SCV holder. It is not in dispute and I am satisfied that the visa subclass 457 which applied to Mr Pezeshkzad in each of the financial years in question does not bring him within the terms of that provision. It follows that Mr Pezeshkzad was not eligible to receive the family tax benefit in either the 2003/2004 or the 2004/2005 financial years and, accordingly, his claims for those years have been correctly rejected in accordance with s 19 of the Administration Act. It also follows that he was not eligible to receive the family tax benefit paid to him for the 2004/2005 financial year. In accordance with s 71 of the Administration Act, this amount of $13,435.65 is a debt owed by him to the Commonwealth.

10. Provision is made in the Administration Act for the non-recovery of debts in certain situations. Under s 95 thereof, a debt may be written off. The only ground of potential relevance to writing the debt off in this matter is that there is no capacity for the debt to be repaid. As noted above, the debt has already been recovered by the Commonwealth. This was through withholdings from the 2005/2006 financial year and, accordingly, the capacity to repay the debt does not arise.

11. A debt may also be waived. Of potential relevance to that procedure in Mr Pezeshkzad’s situation are s 97 of the Administration Act which relates to administrative error and s 101 thereof which relates to special circumstances.

12. Under s 97(1) and (2) of the Administration Act, the debt must be waived if it was attributable solely to an administrative error made by the Commonwealth and:

(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.

13. In evidence were documents published by the Family Assistance Office and the Australian Taxation Office providing detailed instructions relating to claims for family tax benefit in each of the financial years relevant in this matter. In particular, those documents set out the residency requirements which must be met by a claimant and this includes specific reference to the various subclasses of temporary visas which will entitle a person to meet those requirements. Those documents also contain the advice that a person who is unsure of his/her residency status can contact the Family Assistance Office for further information. Given the public availability of those documents, I am satisfied that error by the Commonwealth to inform people of the significance of residential status, as relied upon by Mr Pezeshkzad, does not arise. Rather, the overpayment came about through the actions of the accountant who completed Mr Pezeshkzad’s claim for family tax benefit or, otherwise, through the giving of incorrect information to the accountant by Mr Pezeshkzad. In any event, I am satisfied that the overpayment did not arise solely through administrative error by the Commonwealth. It follows that the debt can not be waived under the s 97 of the Administration Act.

14. 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.

15.     I am satisfied that Mr Pezeshkzad and his accountant did not knowingly make a false statement or false representation or knowingly fail or omit to comply with any relevant legislation.  Indeed, no contentions to the contrary were raised by the respondent. 

16.     For special circumstances to be found, there must be something about  Mr Pezeshkzad’s situation which makes it “unusual” or “uncommon” such that it distinguishes it from the ordinary or usual case: see Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 per Besanko J at para 33. Mr Pezeshkzad has made reference to his current financial situation. However, no other aspect of his situation has been raised which would distinguish it in the manner described above and I am satisfied that it is not so unusual or uncommon as to extend to the waiver of the debt. Indeed, unlike many other instances where waiver in special circumstances is sought, the debt in Mr Pezeshkzad’s case has already been recovered by the Commonwealth.

Decision

17.     The Tribunal affirms the decisions under review. 

I certify that the 17 preceding paragraphs are a true copy of the reasons for the decision herein of Mr RG Kenny, Member

Signed:         Fiona Kamst

Legal Research Officer

Date of Hearing  28 May 2007 
Date of Decision  5 June 2007
For the Respondent                  Mr T Ffrench, departmental advocate
The Applicant was not represented