Ratcliffe and Secretary, Department of Social Services (Social services second review)

[2020] AATA 3009

Ratcliffe and Secretary, Department of Social Services (Social services second review) [2020] AATA 3009 (19 August 2020)

Division:GENERAL DIVISION

File Number(s):      2019/6994

Re:Yeni Ratcliffe

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Dr I Alexander, Senior Member

Date:19 August 2020

Place:Sydney

The decision under review is affirmed.

................................[SGD]........................................

Dr I Alexander, Senior Member

CATCHWORDS

SOCIAL SECURITY – Family Tax Benefit – income tax return – notification obligations – Australian Taxation Office – 2016/2017 financial year – online tool – Acts Interpretation Act 1901 (Cth) – special circumstances – decision under review affirmed

LEGISLATION

Acts Interpretation Act 1901 (Cth) ss 28A, 29

A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) s 32J

CASES

Afghani and Secretary, Department of Social Services [2017] AATA 410

Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541
Hooker and Secretary, Department of Social Services [2015] AATA 732

Re Beadle and Director -General of Social Security (1984) 6 ALD 1

REASONS FOR DECISION

Dr I Alexander, Senior Member

19 August 2020

BACKGROUND

1. During the 2016/2017 financial year, Mrs Ratcliffe was in receipt of Family Tax Benefit (FTB) payments.

2. On 23 March 2018, the Department of Human Services (the Department or Centrelink), now known as Services Australia, issued a notice advising Mrs Ratcliffe that in order to receive her full FTB entitlement, she and her partner were required to lodge their 2016 /2017 income tax returns or “to tell us that you and your partner are not required to lodge a tax return, by 30 June 2018”. The notice was posted to Mrs Ratcliffe‘s correct home address.

3. On 10 July 2018, the Department issued a notice advising Mrs Ratcliffe that, “our records show that you and your partner have not yet lodged a tax return for the 2016/2017 financial year. Because of this... your Family Tax Benefit for 2016/2017 has been cancelled” and that “if you and your partner are not required to lodge a tax return you must tell us and confirm your income for 2016 /2017”. This notice was posted to the same home address.

4. On 3 September 2018, the Department issued a notice advising Mrs Ratcliffe that she was required to repay an amount of $6,738.64 representing FTB payments paid to her during the 2016/2017 financial year.

5. On 13 October 2018 and 16 October 2018, Mrs Ratcliffe contacted the Department by telephone about her FTB entitlement and was advised that her entitlement could not be finalised due to “outstanding reconciliation activity”.

6. On 8 November 2018, Mrs Ratcliffe notified the Department that she was not required to lodge a tax return for the 2016/2017 financial year and advised that she was unaware that she needed to notify the Department of the non-lodgement.[1] On the same day, the Department issued a notice advising Mrs Ratcliffe that she was entitled to $432.82 of FTB in addition to the $6,738.64 she had already received on the basis of her estimated family income. However, she was not entitled to the additional $1,989.26 of additional FTB entitlement based on her actual family income.

   [1] Section 37 documents, 52.

7. On 23 November 2018, Mrs Ratcliffe contacted the Department regarding a review of the decision on the basis that she was not required to lodge a tax return with the ATO and “was not aware that that she needed to advise Centrelink …has English as a 2^nd language and has trouble in understanding English. It was not brought to my partners [sic] attention, it wasn’t until customer saw a reduction in her FTB…”.[2]

   [2] Ibid 47.

8. On 11 January 2019, the applicant’s partner, Mr Ratcliffe, contacted the Department regarding the reconciliation process. He was advised that although Mrs Ratcliffe was not required to lodge a tax return, “they still need to ensure she reports to the ATO that she doesn’t have to lodge... [T]his can be done via phone or their online services”.[3]

   [3] Ibid 48.

9. On 12 January 2019, the Department finalised Mrs Ratcliffe’s FTB reconciliation for the 2016/2017 financial year and decided that she was not entitled to any additional payments “due to late notification of non-lodgement of tax return outside the allowable period”.[4]

   [4] Ibid 49.

10. On 26 April 2019, Mrs Ratcliffe sought review of the decision.

11. On 9 May 2019, an authorised review officer (ARO) of the Department affirmed the decision not to pay Mrs Ratcliffe the full FTB top-up for the 2016/2017 financial year as she notified the Department after 30 June 2018 that she was not required to lodge a tax return in respect of the relevant financial year. The ARO did not find there were “special circumstances… that prevented” Mrs Ratcliffe from notifying the Department that she was not required to lodge a tax return for the 2016/2017 financial year by 30 June 2018.

12. On 27 September 2019, the Social Services and Child Support Division of the Administrative Appeals Tribunal (AAT1) affirmed the decision of the ARO, by finding “it is not appropriate to exercise the discretion in subparagraph 32J(2)(a)(ii) to extend the period for notification for Mrs Ratcliffe as no special circumstances existed in the 2016/2017 financial year which prevented her from advising Centrelink of her non-lodger status”.

13. On 29 October 2019, Mrs Ratcliffe applied for review of the AAT1 decision before the General Division of the Administrative Appeals Tribunal (the Tribunal).

14. The matter was heard on 28 July 2020. Mrs Ratcliffe was represented by her partner, Mr Ratcliffe, who also gave sworn oral evidence on her behalf.

15. In view of the temporary changes with regard to the suspension of face-to-face Tribunal hearings during the COVID-19 crisis, both parties appeared by telephone at the hearing. 

    LEGISLATION

16. The relevant legislation with respect to this matter is the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (the Administration Act).

17. Section 28 of the Administration Act deals with “Variation of instalment and past period determinations where income tax return not lodged”. If  income tax returns are not lodged within the financial year after the financial year for which they have been paid, the Department will consider that person as having no entitlement to FTB for that financial year. If the person subsequently lodges an income tax return, the Department recalculates their FTB entitlement.

18. Section 32J of the Administration Act provides for the “Relevant reconciliation – individual not required to lodge an income tax return”.

19. Subsection 32J(2) of the Administration Act states:

    (2)  The relevant reconciliation time is whichever is the earlier of the following times:

    (a)  the time after the end of the relevant income year when the first individual notifies the Secretary of the amount of the first individual’s adjusted taxable income for the relevant income year, so long as that notification occurs before the end of:

    (i)  the first income year after the relevant income year; or

    (ii)  such further period (if any) as the Secretary allows, if the Secretary is satisfied that there are special circumstances that prevented the first individual from making that notification before the end of that first income year…

    (emphasis added)

    ISSUES

20. There is no dispute that the relevant income year is the 2016/2017 financial year and that Mrs Ratcliffe was required to notify the Department by 30 June 2018 that she was not required to lodge an income tax return for that year.

21. As Mrs Ratcliffe did not notify the Department that she was not required to lodge an income tax return for the 2016/2017 financial year until 8 November 2018, the definitive issue in this matter is whether there were “special circumstances” which prevented her from making that notification before 30 June 2018.

    EVIDENCE

22. The only documentary evidence provided to the Tribunal by Mrs Ratcliffe included an undated copy of a card sent by Mr Ratcliffe’s mother and a copy of an email from the Deputy Commissioner of Taxation.

23. In the card Mr Ratcliffe’s mother noted that “I SENT A CARD A WEEK & A ½ ago BUT NO REPLY – THE P.O. COULDN’T HAVE POSTED IT”.

24. The email from the Deputy Commissioner of Taxation dated 16 July 2020, stated, inter alia, as follows:

    This email is issued in response to your complaint dated 9^th July 2020 regarding the Do I need to lodge tool…

    This email can confirm your observation that the Do I Need to Lodge tool does not contain any questions regarding Family Tax Benefit. However, as it was explained to you during your phone conversation with Robert Douglas on 14 July 20120, the primary purpose of the Do I Need to Lodge tool is to assist Taxpayers in determining whether they need to lodge an income tax return for a particular financial year.

    The Do I Need to Lodge tool asks questions regarding Australian Government taxable allowances…

    Family Tax Benefit is not a taxable Australian Government payment nor a requirement to lodge and so it is not required to be included in the questions of the Do I Need to Lodge tool…

    …any issues regarding Family Tax Benefit eligibility and payments are to be resolved directly with Centrelink.

    (emphasis added)

    Evidence of Mr Ratcliffe

25. In his oral evidence Mr Ratcliffe confirmed that he and Mrs Ratcliffe had lived in the same house between December 2011 and January 2020 and that the notices issued by the Department were all correctly addressed.

26. Initially, Mr Ratcliffe stated that the only letter from the Department that was not received was the notice dated 23 March 2018.

27. Subsequently, when asked by the Tribunal whether the notice dated 10 July 2018 was received, Mr Ratcliffe said “I’m not going to dispute that I’ve received it or haven’t received it. I don’t see that as being important”. He went on to say that the notice must not have been received because, if it had been, he “would have acted on it”.

28. Mr Ratcliffe explained that over several years he became aware that he had received reminder letters for utility payments not being paid on time. Also, on one occasion he had not received a replacement for an expired credit card. He believed that the original payment invoices and the replacement credit card had been sent to the wrong address. He also noticed that sometimes he received letters addressed to a nearby street with the same house number and similar street name. He said that he always returned these letters to the sender but never received any of his apparently missing letters.

29. When asked by the Tribunal whether he had contacted the post office about the recurrent missing mail, Mr Ratcliffe said that he had thought about it but “couldn’t see the point of it”.

30. Mr Ratcliffe explained he was unaware that there was a problem until Mrs Ratcliffe noticed a reduction in the FTB payments, which prompted her to contact the Department on 13 October 2018.

31. When asked by the Tribunal why the notification to the Department, that Mrs Ratcliffe was not required to lodge an income tax return for the 2016/2017 financial year, was not made until 8 November 2018, Mr Ratcliffe stated as follows:

    I actually went to go and see Centrelink in August, because I wanted to get this sorted out ASAP. Now, when I went to the Centrelink, in Auburn, I was told - I was told that - I wanted to know why the fortnightly benefits had stopped and they said - I was told then that I needed to submit to Centrelink the tax return… [5]See the person did not say - hang on, I’ll just have a look here. Okay, so I was told then that notification needed to be submitted to Centrelink

    So what happened was is that we went online to do that notification. We must have done it about 20 times, but the problem was is that it made no change to the fortnightly payments. What happened after that is that I then had to ring Centrelink to find out, “Why isn’t there a change to my wife’s payment, when we have, online, notified Centrelink that a tax return does not need to be lodged for the 2017 tax year?”. We were told - I was told, over the phone then, that a tax return needed to be lodged.[6]

    [5] There is no documentary evidence before the Tribunal that Mr Ratcliffe contacted Centrelink in August 2018.

    [6] See [9] above.

32. Mr Ratcliffe stated that he had “prevented” his partner from lodging a tax return because he had accessed the Australian Taxation Office’s (ATO) Do I Need To Lodge online tool in October 2017 when he was preparing his own income tax return and it determined that Mrs Ratcliffe was not required to lodge an income tax return for the 2016/2017 financial year.

33. Mr Ratcliffe claimed that he was “misled” by the ATO because the Do I Need To Lodge online tool “does not contain any questions regarding family tax benefits”. In support of his claim, Mr Ratcliffe referred to page 2 of the Centrelink notice dated 23 March 2018, which stated “to check if you are required to lodge a tax return go to the Australian Taxation Office’s website”. He claimed this was misleading.

34. Mr Ratcliffe stated that “we know that the ATO and Centrelink work very closely together, so whether or not you submit a tax return, the ATO - Centrelink would be aware of what income you earn during a particular financial year”.

35. Mr Ratcliffe subsequently conceded that he had assumed that, because his partner had not lodged a tax return, and did not need to lodge a tax return, that somehow the ATO would have informed Centrelink. He claims this assumption is supported by the 23 March 2018 Department notice.

    CONSIDERATION

36. In order to extend the period for notification that Mrs Ratcliffe was not required to lodge an income tax return for the 2016/2017 financial year, the Tribunal must be satisfied, firstly, that circumstances existed that were special and, secondly, that those special circumstances prevented her from making the notification within time.[7]

    [7] Hooker and Secretary, Department of Social Services [2015] AATA 732.

37. The meaning of “special circumstances” has not been defined in the Administration Act, however, the meaning for the purposes of social security law has been considered by this Tribunal and the courts on many occasions. It is an expression “by its very nature incapable of precise or exhaustive definition” and its meaning will depend on the context in which the circumstances occur.[8] The circumstances need not be unique “but they must have a particular quality of unusualness that permits them to be described as special”.[9] It would require something to distinguish Mrs Ratcliffe’s case “from others, to take it out of the usual or ordinary case”.[10]

    [8] Re Beadle and Director -General of Social Security (1984) 6 ALD 1.

    [9] Ibid.

    [10] Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541.

38. The Respondent submits that there are no special circumstances in this case that prevented Mrs Ratcliffe from notifying the Department by 30 June 2018 that she was not required to lodge an income tax return for the 2016/2017 financial year.

39. In support of this submission, the Respondent cited numerous past cases in which the Tribunal clearly considered that unfamiliarity with the relevant legislation and a lack of knowledge of specific lodgement or notification requirements did not usually constitute “special circumstances”.

40. With respect to Mrs Ratcliffe’s claim that she did not receive the 23 March 2018 notice from the Department, the Respondent relies on sections 28A and 29 of the Acts Interpretation Act1901 (Cth) (AIA Act) which provide that a notice is served if it is sent by prepaid post to the person’s last known address.

41. In particular, the Respondent relies on subsection 29(1) of the AIA Act that states as follows:

    (1)  Where an Act authorizes or requires any document to be served by post, whether the expression “serve “ or the expression “give” or “send” or any other expression is used, then the service shall be deemed to be effected by properly addressing, prepaying and posting the document as a letter and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.

42. The Respondent further submits that Mrs Ratcliffe:

    …has not provided concrete evidence to rebut the deemed/presumed service of the notice dated 23 March 2018 that she had no recollection of receiving such notice. In such case, the Applicant is deemed to have received this notice.

43. In support of this submission, the Respondent indicated that none of the mailed notices were returned to Department.

44. On behalf of his partner, Mr Ratcliffe submitted as follows:

    (1) my wife was prevented by her husband from lodging a 2017 tax return;

    (2) if she was not prevented by her husband she would have lodged the 2017 tax return;

    (3) she did not receive for some reason or another that letter dated 23 March 2020 [sic]. I would know because she gives me those letters from Centrelink;

    (4) the letter from Centrelink … [is] flawed and should be set aside and made void

    (5) …I believe that the matters that we have discussed today do fit at least one of the special circumstances; and

    (6) …as it was mentioned earlier, ‘Why didn’t you simply go onto the Centrelink website?’ We had no reason to go onto the website unless we were going to change details of our personal circumstances.

45. Mr Ratcliffe identified two issues which he considered to satisfy “special circumstances”. He stated that:

    It’s unusual that when a person wants to know whether or not they’re obliged to submit an ATO tax return to be told by the ATO that they do not need to, that they are not told by the ATO that if they are receiving a family tax benefit or pretty much any other Centrelink entitlement that they need to advise Centrelink that a tax return does not need to be lodged…

    … the other one is exceptional, the exception being… is that the letter posted by Centrelink is flawed and it’s flawed because it refers to the ATO website, the one that both myself and the ATO have pointed out as being flawed and misleading so that’s an exceptional circumstance I believe and that’s the reason why I was thinking that that letter should be set aside. So we’re looking at unusual and exceptional.

    CONCLUSION

46. In my view, it is clear from the evidence before the Tribunal that Mr Ratcliffe had a misguided understanding of the relationship between the Department and the ATO with respect to FTB payments and the lodgement of his partner’s income tax return.

47. Mr Ratcliffe appears to have assumed that by accessing the ATO “Do I Need To Lodge” online tool and establishing that his partner did not need to lodge an income tax return, the ATO would notify the Department. As a result of this mistaken assumption it appears that neither the Department nor the ATO had been informed of Mrs Ratcliffe’s income for the 2016/2017 financial year.

48. Mr Ratcliffe’s assertion that he had “prevented’’ his partner from lodging a tax return for the 2016/2017 financial year is, in my view, an attempt to satisfy the requirement for “special circumstances”.

49. On my reading of section 32J of the Administration Act, “that prevented… from making” implies an intervention where a person is actively “hindered” or “stopped”.[11] In Mrs Ratcliffe’s situation, it appears that she simply accepted her partner’s assumption that she did need to lodge an income tax return for the 2016/2017 financial year.

    [11] Afghani and Secretary, Department of Social Services [2017] AATA 410.

50. Furthermore, the relevant issue is not whether Mrs Ratcliffe was prevented from lodging an income tax return but whether she was prevented from notifying the Department of her non-lodgement status by 30 June 2018.

51. Mr Ratcliffe submitted that his partner did not receive the notice dated 23 March 2018 and therefore did not know she had to notify the Department that she was not required to lodge an income tax return for the 2016/2017 financial year before 30 June 2018.

52. Although I found Mr Ratcliffe’s explanation about the postal issues somewhat unconvincing, I accept that it is possible his partner was not aware of the requirement to notify the Department by 30 June 2018. However, on the available evidence, I am not persuaded that she was not aware of the notification requirement as of 10 July 2018 when she was notified that her FTB entitlement for the 2016/2017 financial year was cancelled.

1. Furthermore, Mr Ratcliffe was unable to provide a convincing explanation as to why his partner did not contact the Department until 13 October 2018 and did not notify the Department that she was not required to lodge an income tax return for the 2016/2017 financial year until 8 November 2018.

2. I note that there is no evidence of any other reasons which prevented Mrs Ratcliffe from notifying the Department that she was not required to lodge an income tax return for the 2016/2017 financial year by 30 June 2018.

3. Mr Ratcliffe’s focus on the notice dated 23 March 2018 which he described as “flawed” and “misleading” I found somewhat puzzling, particularly as he claimed that that the notice was not received.

4. On my reading of the document, I am satisfied that the relevant requirements and options were clearly explained, and I reject Mr Ratcliffe’s assertion that the document was either flawed or misleading.

5. Mr Ratcliffe’ submission, that it was “unusual” that he or his partner were not informed by the ATO that, if his partner was receiving a FTB payments and was not required to lodge an income tax return for that year, she was required to notify Centrelink, I find to be without merit.

6. It is clear that FTB payments are administered by the  Department and not the ATO and, in my view, the Centrelink notices sent to customers provide a comprehensive and unambiguous description of the notification requirements.

7. Furthermore, it is not clear how accessing the ATO “Do I Need To Lodge” online tool actually informs the ATO of a person’s real income in a particular financial year.

8. In conclusion, I am satisfied that, on the available evidence, there are no “special circumstances” that prevented Mrs Ratcliffe from notifying the Department that she was not required to lodge an income tax return for the 2016/2017 financial year by 30 June 2018.

9. This means that there are no grounds to extend the period of notification and, therefore, Mrs Ratcliffe is not entitled to receive FTB top-up and supplement payments for the 2016/2017 financial year.

   DECISION

10. For the reasons set out above, the Tribunal is satisfied that there are no special circumstances which prevented Mrs Ratcliffe from notifying the Department that she was not required to lodge an income tax return for the 2016/2017 financial year by 30 June 2018. Mrs Ratcliffe is not entitled to receive FTB top-up and supplement payments for the 2016/2017 financial year.

11. The decision under review is affirmed.

I certify that the preceding 63 (sixty -three) paragraphs are a true copy of the reasons for the decision herein of Dr I Alexander, Senior Member

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Associate

Dated: 19 August 2020

Date of hearing:	28 July 2020
Advocate for the Applicant:	Mr T Ratcliffe
Solicitors for the Respondent:	Services Australia