Prosser; Secretary, Department of Family and Community Services

[2002] AATA 457

DECISION AND REASONS FOR DECISION [2002] AATA 457

ADMINISTRATIVE APPEALS TRIBUNAL      ) 
  )   No Q2001/1080
GENERAL ADMINISTRATIVE DIVISION        )

Re      SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        
  Applicant
           And    KAY PROSSER      
  Respondent

DECISION

Tribunal       Mr R G Kenny, Member    

Date14 June 2002

PlaceBrisbane

Decision      The Tribunal sets aside the decision under review and substitutes its decision that the amount of $199.66 is a debt due by the respondent to the Commonwealth.           

.............…(Sgnd)...............................
  R G Kenny
  Member
CATCHWORDS
SOCIAL SECURITY – family tax benefit advance - waiver of debt - Family Assistance Estimate Tolerance (Transition) Determination 2001

A New Tax System (Family Assistance) Act 1999 ss 22, 22A
A New Tax System (Family Assistance) (Administration) Act 1999 ss 33, 71A, 97, 102
Family Assistance Tolerance (Transition) Act 2001 ss 3

REASONS FOR DECISION

14 June 2002           Mr R G Kenny, Member                

Application

1. On 9 August 2001, a delegate of Centrelink on behalf of the Secretary, Department of Family and Community Services (the applicant) determined that Kay Prosser (the respondent) had been overpaid an amount of $199.66 by way of a family tax benefit advance, which was payable under the A New Tax System (Family Assistance) Act 1999 (the FA Act) and the A New Tax System (Family Assistance) (Administration) Act 1999 (the FAA Act), and that this was a debt due by her to the Commonwealth. That decision was affirmed by an authorised review officer on 26 September 2001. On 22 October 2001, the Social Security Appeals Tribunal set aside that decision and substituted its decision that recovery of the debt be waived. The applicant lodged an application for review of the decision by the Administrative Appeals Tribunal (the Tribunal).

2. The applicant was represented by Ms H Wallis–Dunn. The respondent attended the hearing but was not represented. In evidence were the T documents (exhibit 1), which included the application for review (T1), dated 23 November 2001. Also in evidence were:

   exhibit A1 – a statement of facts and contentions from the applicant;
   exhibit R1 - a statement of facts and contentions from the respondent;

Issues and Legislation

1. The respondent was paid advances of family payments after 1993 and, on 19 June 2000, she was advised by Centrelink that an advance of family tax benefit in the amount of $246.56 would be included in the payment that she was to receive on 13 July 2000. On 14 July 2000, she was advised that family tax benefit could no longer be paid to her because her daughter Danielle was, after her 16th birthday, to receive another Commonwealth benefit. By then, the advance had been paid to the respondent.

2. Under sections 22 and 22A of the FA Act, family tax benefit is payable to a person such as the respondent in relation to a child until reaching age 16 where, thereafter, the child is in receipt, as in this case, of a social security benefit of pension as provided for in the Social Security Act 1991. Provision is made in section 33 of the FAA Act for the determination of entitlement to an advance. It reads:

   "33 Determination of entitlement to family tax benefit advance
   (1) The Secretary must determine that an individual is entitled to be paid a family tax benefit advance for a standard advance period if:

   (a) on the advance assessment day (see subsection (2):

   (i) the individual is entitled to be paid family tax benefit by instalment; and

   (iii) the individual's Part A rate is equal to or exceeds twice the individual's FTB advance rate; and

   (b)   the individual has made a request to the Secretary for the payment of a family tax benefit advance for that period; and

   (c) the request is made before the end of that period; and

   (d) the individual is not an individual to whom subsection (1A) applies.

   (1A) This subsection applies to an individual who, on the advance assessment day, owes a debt to the Commonwealth (whether arising under this Act or not) that is recoverable under PART - 4 by means of deductions from the individual's instalments of family tax benefit under section 84.
   (2) An individual's advance assessment day for a standard advance period is:

   (a) if paragraph (b) does not apply- the first day in the standard advance period; or

   (b) the day on which the individual becomes entitled to be paid family tax benefit by instalment if:

   (i)the individual is not entitled to be paid family tax benefit by instalment on the first day in the standard advance period; and

   (ii) the individual becomes entitled to be paid family tax benefit by instalment during the standard advance period; and

   (iii) the individual becomes so entitled because of the birth of a child.

   (3) An individual's request may operate:

   (a) for a particular standard advance period; or

   (b) for a particular standard advance period and all subsequent standard advance periods.

   (4) If paragraph (3)(b) applies to an individual's request, the individual may withdraw the request at any time for standard advance periods for which the individual has not been paid a family tax benefit advance.
   (5) An individual cannot become entitled to be paid more than one family tax benefit advance for a standard advance period."

1. The FAA Act also makes provision for the situation where an advance payment is made and entitlement ceases during the period for which the advance was made, in which case a debt arises. In that regard, section 71A of the FAA Act reads:

   "71A Debts arising in respect of family tax benefit advances
   (1) If:

   (a) an individual receives an amount by way of family tax benefit advance; and

   (b)   on a particular day, before the end of the family tax benefit advance period worked out in accordance with section 34:

   (i) the individual ceases to be entitled to be paid family tax benefit by instalment; or

   (ii) by virtue of the operation of subclause 5(2) or 25A(2) of SCHEDULE - 1 to the Family Assistance Act, the individual's Part A rate is no longer to be reduced by the FTB advance rate;

   the amount by which the family tax benefit advance exceeds the reduction amount calculated in accordance with subsection (2) becomes a debt due to the Commonwealth by the person.
   (2) For the purposes of subsection (1), the reduction amount in relation to an individual is an amount calculated in accordance with the formula:
   where:
   number of reduction days means the number of days in the individual's family tax benefit advance period worked out under section 34 during which the individual's Part A rate was reduced under subclause 5(1) or 25A(1) of SCHEDULE - 1 to the Family Assistance Act."

2. The FAA Act also makes provision for waiver of such debts in section 97 which reads:

   "97 Waiver of debt arising from error
   (1) The Secretary must waive the right to recover the proportion (the administrative error proportion ) of a debt that is attributable solely to an administrative error made by the Commonwealth if subsection (2) or (3) applies to that proportion of the debt.
   (2) The Secretary must waive the administrative error proportion of a debt if:

   (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.

   (3) The Secretary must waive the administrative error proportion of a debt if:

   (a) the payment or payments were made in respect of the debtor's eligibility for family assistance for a period or event (the eligibility period or event ) that occurs in an income year; and

   (b) the debt is raised after the end of:

   (i)the debtor's next income year after the one in which the eligibility period or event occurs; or

   (ii) the period of 13 weeks starting on the day on which the payment that gave rise to the debt was made;

   whichever ends last; and

   (c)   the debtor received in good faith the payment or payments that gave rise to the administrative error proportion of the debt.

   (4) For the purposes of this section, the administrative error proportion of the debt may be 100% of the debt."

3. In 2001, the Family Assistance Tolerance (Transition) Act 2001 was enacted and it amended section 102 of the FAA Act which now reads:

   "102 Secretary may waive debts of a particular class
   (1) The Secretary may, on behalf of the Commonwealth, decide to waive the Commonwealth's right to recover debts, or parts of debts, arising under or as a result of this Act that are included in a class of debts specified by the Minister by determination in writing.
   (1A) A determination by the Minister under subsection (1):

   (a) may specify conditions to be met before the Secretary exercises the power to waive debts, or parts of debts, in the specified class; and

   (b) may specify limits on the amounts to be waived in relation to debts in the specified class.

   The Secretary must exercise the power to waive in accordance with any conditions or limits specified in the determination.
   (2) A decision under subsection (1) takes effect:

   (a) if no day is specified in the decision- on the day on which the decision is made; or

   (b) if a day is specified in the decision- on the day so specified (whether that day is before, after or on the day on which the decision is made).

   (3) A determination under subsection (1) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901."

4. The issue before the Tribunal is whether there should be waiver of the respondent's debt.

Applicant's Case

1. Ms Wallis–Dunn submitted that entitlement to the family tax benefit ceased in this case when the respondent's daughter turned 16 years of age on 5 August 2000. That was during the advance period for which the respondent was paid $246.56 on 13 July 2000. As a result, monies which had not been repaid from the advance as at that date, in the amount of $199.66, constituted a debt due to the Commonwealth. She submitted that the Social Security Appeals Tribunal had correctly determined that there was a debt which could not be waived under section 97 of the FAA Act. However, she submitted that the Social Security Appeals Tribunal had proceeded incorrectly to waive the debt under section 102 of the FAA Act.
   10. Ms Wallis–Dunn submitted that the types of debts to which section 102 of the FAA Act had application were those associated with overpayments due to incorrectly estimated income or shared care of children and not the circumstances of the respondent. She referred to the Explanatory Memorandum applicable to the Family Assistance Tolerance (Transition) Act 2001 and also to the relevant ministerial determination as authority for that allocating that limited ambit to the provision.
   Respondent's Submission
   The respondent accepted that there had been a debt because of her daughter turning 16 years of age during the advance period. She said that the debt had now been repaid in full and submitted that the Social Security Appeals Tribunal decision should stand because there was no basis advanced to the Tribunal to overturn it. She referred to the relatively small amount of the debt, from Centrelink's perspective, and submitted that Centrelink should accept the decision. She referred to a press release by the relevant minister concerning debts of family tax benefit under $1,000 which would be waived in certain cases and believed that her debt fell into that category.
   The respondent referred to significant health problems and personal difficulties that she has faced in recent years and also said that she was experiencing financial difficulty.
   Consideration
   13. The undisputed facts in this case are as follows. The respondent was paid advances of family tax benefit in relation to her daughter, Danielle, who turned 16 years of age on 5 August 2000 and who received a Commonwealth benefit thereafter. Payments had been made to the respondent by way of advances since 1993 and, on 19 June 2000 (see exhibit T11), she was advised by Centrelink that an advance of family tax benefit in the amount of $246.56 would be included in the payment that she was to receive on 13 July 2000. On 14 July 2000 (see exhibit T12), she was advised that family tax benefit could no longer be paid to her because Danielle was, after her 16th birthday, to receive another Commonwealth benefit. By then, the advance had been paid to the respondent and this meant that an overpayment had occurred. The amount of that overpayment was $199.66 and it is not disputed that this is a debt due by the respondent to the Commonwealth. The issue for the Tribunal is whether the debt of $199.66 can be waived.
   14. Under section 97 of the FAA Act, a debt will not be waived unless it arose solely through administrative error by the Commonwealth agency, in this case, Centrelink. Even then, it must be the case that the monies were received by the respondent in good faith and that she would suffer severe financial hardship if the debt were not waived. Here, the process of instituting periodic advances was commenced by the respondent and continued by Centrelink. The policy of Centrelink is that it will continue such an arrangement until requested to make a change (see exhibit 19A). In this case, Centrelink continued the process initiated by the applicant and I am satisfied that it was not solely administrative error by Centrelink which was responsible for the advance being made. That means that the debt can not be waived under section 97 of the FAA Act.
   15. An alternative means, which has been raised in this matter, of waiving the debt is through the application of section 102 of the FAA Act. This provision has a limited application. It only applies to debts arising under or as a result of the FAA Act that are included in a class of debts specified by the Minister by determination in writing. In evidence before the Tribunal was the Family Assistance Estimate Tolerance (Transition) Determination 2001 made under the FAA Act (see exhibit T13C). Part 2 relates to the waiver of debts of a particular class and section 4 thereof relevantly reads:

   "Subject to this section, a debt due to the Commonwealth by a person is included in a class of debts for the purposes of section 102 (of the FAA Act…) … if:

   (a)   the debt is:

   (i)a family tax benefit debt of the person;

   (ii).… and

   (b)   the debt arose because of an amount paid:

   (i)during the 2000-2001 income year;

   (ii)… and

   (c)   the whole or part of the debt arose because of action taken to take proper account of one or more of the following:

   (i)a person's adjustable taxable income for the 2000-2001 income year; or

   (ii)a person's maintenance income during the 2000-2001 income year; or

   (iii)the pattern of a person's care for a child …; or

   (iv)circumstances that affect a person's multiple child % …"

16. Those three requirements are stated in a cumulative manner and this means that all must be met. The respondent meets the first and second requirements in paragraphs (a) and (b), respectively. However, she does not meet the third in paragraph (c) because the reason for the debt was not associated with income amounts or child care arrangements. The Tribunal had in evidence a copy of the press release, dated 1 July 2001, from the Minister of Family and Community Services (see T13B). It refers to the waiver of debts of up to $1,000 but only in circumstance where there were incorrect estimates of income or of child sharing arrangements. This is in the same terms as the ministerial determination. The respondent's debt can not be waived under section 102 of the FAA Act.
17. There is no other basis on which the Tribunal is able to waive the respondent's debt and, therefore, it is obliged to set aside the decision under review.
Decision
18. The Tribunal sets aside the decision under review and substitutes its decision that the amount of $199.66 is a debt due by the respondent to the Commonwealth.

I certify that the 18 preceding paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Member

Signed:         Sarah Oliver
  Associate

Date of Hearing  5 June 2002
Date of Decision  14 June 2002
Solicitor for the Applicant         Ms H Wallis-Dunn, Departmental Advocate
The Respondent Appeared in Person