Powell and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2009] AATA 816
•23 October 2009
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2009] AATA 816
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2009/2213
GENERAL ADMINISTRATIVE DIVISION ) Re IAN POWELL Applicant
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES & INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Mr R G Kenny, Senior Member Date23 October 2009
PlaceBrisbane
Decision The Tribunal varies the decision under review by extending the period during which the debt is written off to 30 November 2009; and affirms the decision under review in all other respects.
...............[Sgd]..........................
Senior Member
CATCHWORDS
SOCIAL SECURITY – pensions, benefits and entitlements – overpayment of family tax benefit – debt owed to the Commonwealth – payment of portion of debt due to Commonwealth error but applicant not in severe financial hardship – debt not waived – debt written off for a period due to prospect of financial situation improving – decision varied to extend write off period – applicant overpaid has a Family Tax Benefit child – decisions under review otherwise affirmed.
A New Tax System (Family Assistance) (Administration) Act 1999 (Cth), ss 71, 95, 97, 101, 142
A New Tax System (Family Assistance) Act 1999 (Cth), s 3Stubbs and Secretary, Department of Family and Community Services [2003] AATA 729
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
REASONS FOR DECISION
23 October 2009 Mr R G Kenny, Senior Member BACKGROUND
1. From 3 June 2007, Ian Powell (“the applicant”) and his wife had equal shared care of their two children. On 23 January 2008, he lodged a claim with the Family Assistance Office (“FAO”) for family tax benefit (“FTB”); a form of income support payable under the A New Tax System (Family Assistance) Act 1999 (“the Act”). His claim was accepted and FTB was payable to him from 1 July 2007.
2. The FAO received information from the Child Support Agency (“CSA”) that the amount of maintenance paid to Mr Powell by his wife from 27 September 2007 until 30 June 2008 was $1,281.44. Based on that figure, Mr Powell was paid a “top-up” of FTB in the amount of $1,898.60. Subsequently, the CSA updated the amount of maintenance that Mr Powell had received to $3,242.20. Based on that increased level of maintenance, an FAO delegate determined that Mr Powell had been overpaid FTB in the amount of $983.09 which was a debt owed by him to the Commonwealth. On 19 March 2009, that decision was affirmed by an authorised review officer. The matter came before the Social Security Appeals Tribunal (“SSAT”) which, on 28 April 2009, set aside the decision and remitted it to the FAO for the debt to be recalculated on the basis that the maintenance received by Mr Powell totalled $3,731.62. On 18 May 2009, that recalculation was done by an FAO delegate who determined that the debt had increased to $1,227.73.
3. On 21 May 2009, Mr Powell lodged an application for further review with the Administrative Appeals Tribunal (“the Tribunal”). In accordance with s 142(2)(d) of the A New Tax System (Family Assistance) (Administration) Act 1999 (“the Administration Act”), the decision made by the SSAT is taken to be the decision under review.
ISSUES AND LEGISLATION
4. Mr Powell does not dispute that he was overpaid FTB. His FTB payments were calculated on the basis of, initially, an estimate of his income for the 2007/2008 financial year and on the level of his wife’s maintenance payments as advised by the CSA. Mr Powell accepted that the concepts of income and maintenance are given extended meanings under the Act[1] and, in particular, that amounts paid by Mrs Powell directly to educational institutions may constitute maintenance, and therefore income, under the Act (non-agency payments). The initial debt of $983.09 took into account amounts of such non-agency payments which, as the CSA advised the FAO, had been made by Mrs Powell.
[1] See s 3 of the Act.
5. The evidence before the SSAT included a statement from the CSA, dated 2 December 2008, which identified a maintenance payment by Mrs Powell of $489.42. This was made on 29 February 2008 and had not been taken into account by the FAO in calculating the overpayment of FTB to Mr Powell. The SSAT’s remittal of the matter was for the purpose of including that in the calculations. As noted above, this was done and the overpayment increased, accordingly, to $1227.73.
6. Mr Powell does not dispute that calculation and I am satisfied, on the basis of the FAO files in evidence, that the overpayment was correctly calculated. I am also satisfied, in accordance with s 71(1) of the Administration Act, that the overpayment is a debt due to the Commonwealth by Mr Powell. Again, this was not disputed by Mr Powell whose concern is that parts of the debt should be written off because of his current financial circumstances or, alternatively, waived because those parts arose through no fault of his own but through error by the Commonwealth. In particular, he nominated that part of the debt referrable to the non-agency payment made by his wife on 10 July 2008 and that part of the debt referable to the additional amount of $489.42 identified by the SSAT.
7. The Administration Act makes provision for a debt to be waived and for a debt to be written off[2]. Two bases for waiver have potential relevance to Mr Powell’s circumstances.
[2] See Division 4 of Part 4 of the Administration Act.
8. The first basis for waiver is where the debt, or in this case, part of it, is attributable solely to an administrative error made by the Commonwealth. That part of the debt must be waived if Mr Powell received the payment in good faith and would suffer severe financial hardship if it were not waived[3].
[3] See s 97 of the Administration Act.
9. The second basis for waiver is where there are special circumstances, other than financial hardship alone, that make it desirable to waive the part of the debt[4].
[4] See s 101 of the Administration Act.
10. The relevant ground for writing off part of a debt is that Mr Powell has no capacity to repay the debt[5].
SUBMISSIONS
[5] See s 95 of the Administration Act.
The non-agency payments
11. In relation to the non-agency payments, the FAO acted upon the CSA’s information that these had been paid by Mrs Powell directly to educational institutions attended by the children. Mrs Powell notified the CSA of the payments on 10 July 2008. The top-up payment of $1,898.60 was not made until October 2008 and did not take into account Mrs Powell’s non-agency payments. Mr Powell contended that, as both the CSA and the FAO were Commonwealth instrumentalities, the information should have been passed from one to the other and included in calculating his top-up. This would have decreased the top-up sum and, accordingly, part of the overpayment.
12. Mr Hamilton, advocate for the respondent, referred to the CSA documentation and FAO file notes to the effect that, although Mrs Powell advised the CSA of the non-agency payments in July 2008, the acceptance of 100% of them as non-agency payments of maintenance was disputed by Mr Powell. It was not until November 2008 that the CSA finally determined the matter against Mr Powell and accepted them as part of his maintenance income. Mr Hamilton submitted that this did not constitute an error by the Commonwealth. He also submitted that, because FTB is calculated on the basis of estimates of income and of maintenance, it was always the case that there would need to be a reconciliation when the actual levels of income and maintenance were known.
The amount identified by the SSAT
13. The amount of $489.42 identified by the SSAT was recorded by the CSA as having been received from Mrs Powell on 29 February 2008. This was several months before the calculation of the top-up payment of $1,898.60 in October 2008. Again, Mr Powell contended that, as both the CSA and the FAO were Commonwealth instrumentalities, the information should have been passed from one to the other and included in calculating his top-up. This would have further decreased the top-up sum and, accordingly, another part of the overpayment.
14. Mr Hamilton referred to an FAO file note which advised that the FAO had no record of this payment. However, he did not concede error on the basis that the correct level of FTB is only confirmed once actual income and maintenance payments are known.
CONSIDERATION
Waiver for administrative error: the non-agency payments
15. In October 2008, when the top-up payment was made to Mr Powell, CSA was aware of Mrs Powell’s non-agency payments relating to the children’s schooling. However, an FAO file note[6], completed on 29 June 2009, shows that the characterisation of these as maintenance was not completed by the CSA until 24 November 2008 following a further request to do so by Mrs Powell. In that situation, I am satisfied that there was no administrative error on the part of the Commonwealth in not treating these as maintenance at the time of making the top‑up payment to Mr Powell. At that time, they had not been characterised as maintenance. Accordingly, any part of the debt referrable to those payments cannot be waived under s 97 of the Administration Act.
[6] See Exhibit 2, Attachment C.
Waiver for administrative error: the amount identified by the SSAT
16. The CSA sent Mr Powell a statement, dated 2 December 2008, in which several payments and the dates of those payments were detailed. It included the amount of $489.42 and gave the date that payment was received by the CSA as 29 February 2008. Mr Powell provided a copy of that document to the SSAT where it was noted that the amount had not been included as part of Mr Powell’s maintenance. The FAO file note of 29 June 2009[7], referred to above, also deals with the sum of $489.42. That sum is identified as a taxation refund payment for Mrs Powell which was intercepted and paid to the CSA as maintenance for Mr Powell on 29 February 2008. The author of the FAO file note wrote that she had double checked the FAO system and could find no record of the payment. She wrote that she could find no explanation for it being missing from FAO records.
[7] Ibid.
17. CSA had a record of the payment of the amount of $489.42 in February 2008. The FAO, in October 2008, had no record of the payment and no explanation has been found for this. I am satisfied that there has been administrative error by the Commonwealth in the form of a communication breakdown between the CSA and the FAO both of which are Commonwealth instrumentalities. Mr Powell had a record of the payment but the letter advising him of it was dated 2 December 2008, well after the FAO decision regarding the top-up payment was made. Accordingly, there was no contribution by Mr Powell to the error and I am satisfied that it was solely a Commonwealth error. There is no evidence of any absence of good faith by Mr Powell in receiving his FTB. What remains to be considered is whether Mr Powell would suffer severe financial hardship if the relevant part of the debt were not waived.
18. Mr Powell is separated from his wife who currently has the care of the children. He works in real estate sales and receives a retainer of $586 per week. He also receives a commission on the sale of property out of which he must reimburse his principal for the retainer payments. He has had only one sale in recent times. He lives in premises which he rents at $410 per week. He has the usual business expenses associated with work in sales, such as his mobile phone (approximately $60 per month) and motor vehicle (approximately $80 per week). He valued his car at approximately $12,000 to $15,000. He receives no Centrelink payments. After general living expenses are met, none of his regular retainer money is left. Statements from the Bendigo Bank and the Westpac Bank, which were in evidence, confirm that he has virtually no savings and a credit card debt in excess of $1,000. Until a few years ago, Mr Powell and his wife were in business and it went into liquidation leaving him with personal debts of over $40,000. This is confirmed in a statement from the Commonwealth Bank. Mr Powell has survived by borrowing money from his sister. He owes her approximately $30,000 and intends to repay her when he is able to.
19. Mr Powell and his wife are currently involved in court proceedings in relation to the children. No property settlement has yet been completed. He and his wife do not own a house. In the week prior to the hearing in the Tribunal, a block of land owned jointly by them was sold for $242,000 but the settlement has not been completed. He was in arrears on mortgage payments and expects that, after all costs are met, a surplus of approximately $22,000 will be realised for them from the sale. Mr Powell described himself as being in good health and he is hopeful that the recent upturn in the housing market will afford him the opportunity to earn sales commissions.
20. No definition of severe financial hardship is given in the Act or the Administration Act. As the term is used in s 95 of the Administration Act, the Tribunal has noted:
Severe financial hardship, while not implying destitution, goes beyond straitened financial circumstances and imports a need for the particular case of a person to include financial suffering of a severe or extreme nature[8].
[8] Stubbs and Secretary, Department of Family and Community Services [2003] AATA 729 at para 20.
21. Further, in s 97(2) of the Administration Act, the issue is not whether Mr Powell is in severe financial hardship. Rather, it is whether he would suffer severe financial hardship if the part of the debt were not waived. As I understand it, the part of the debt which is referrable to the sum of $489.42 is the difference between the recalculated debt of $1,227.73 and that initially raised of $983.09, which is, approximately, $244. While Mr Powell has financial difficulties, he is not destitute nor living in straitened circumstances such that he would be unable to make that payment. However, in his case, I am satisfied that he will not be in severe financial hardship if the debt were not waived because, as will be seen below, it has been written off pending receipt by him of his share of the proceeds of the sale of his and his wife’s block of land. This part of the debt is not waived under s 97 of the Administration Act.
Waiver for special circumstances: both parts of the debt
22. A debt may be waived in special circumstances other than financial hardship alone[9]. The only aspect of Mr Powell’s circumstances which might be considered special is his financial situation. He faces the prospect of being divorced from his wife and of disputes concerning their children and their property. Those matters are not uncommon phenomena in Australian society. He is in good health. No other circumstance has been raised by him and I am satisfied that there are no factors, either individually or taken together, in this case that enable it to be characterised as unusual or unfair[10] such as to make them special for the purpose of waiving either of the two parts of the debt which are in issue.
[9] See s 101 of the Administration Act.
[10] See Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545.
Write off
23. The provision which enables a debt to be written off is s 95 of the Administration Act. One of the listed grounds is that Mr Powell has no capacity to repay the debt. This was given effect in the SSAT because of the upcoming sale of the block of land owned by Mr Powell and his wife and the prospect that this might improve his financial situation. Although the land has now been sold, Mr Powell has not yet received his share of the proceeds of the sale. His expectation is that, in a short time-frame, he and his wife will jointly receive approximately $22,000. I am satisfied that the debt should be written off until 30 November 2009 by which time the proceeds of the sale should have been received.
DECISION
24. The Tribunal varies the decision under review by extending the period during which the debt is written off to 30 November 2009; and affirms the decision under review in all other respects.
I certify that the 24 preceding paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Senior Member.
Signed: ...................[Sgd]..........................................................
Emily Clarke, AssociateDate of Hearing 14 October 2009
Date of Decision 23 October 2009
The Applicant was self-represented
Advocate for the Respondent Mr R Hamilton
1
1
0