Rech; Secretary, Department of Social Services and (Social services second review)
[2016] AATA 543
•28 July 2016
Rech; Secretary, Department of Social Services and (Social services second review) [2016] AATA 543 (28 July 2016)
Division
GENERAL DIVISION
File Number
2015/3969
Re
Secretary, Department of Social Services
APPLICANT
And
Brooke Rech
RESPONDENT
DECISION
Tribunal Deputy President J W Constance
Date 28 July 2016 Place Sydney The decision of the Social Services and Child Support Division of the Administrative Appeals Tribunal, made 8 July 2015 is set aside and substituted with a decision that Ms Rech is not entitled to a supplementary payment of Family Tax Benefit for the 2012/2013 financial year.
................[sgd]........................................................
J W Constance
Deputy PresidentCATCHWORDS
SOCIAL SECURITY - Family Tax Benefit - whether Applicant eligible for supplementary payment - tax return lodgement requirements not met - whether special circumstances exist to allow extension of time for tax return lodgement - decision set aside and substituted
LEGISLATION
A New Tax System (Family Assistance) Act 1999 s 58(1), sch 1
A New Tax System (Family Assistance) (Administration) Act 1999 ss 32A, 32C, 32D
CASES
Beadle and the Director-General of Social Security (1984) 6 ALD 1
Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577
Secretary, Department of Social Services and Cannon [2015] AATA 1028
SECONDARY MATERIALS
Centrelink Family Assistance Guide, Version 1.187, 1 July 2016
REASONS FOR DECISION
Deputy President J W Constance
28 July 2016
INTRODUCTION
In this application the Secretary is seeking a review of the decision of the Social Services and Child Support Division, made 8 July 2015, that Ms Rech is entitled to receive a supplementary payment of Family Tax Benefit for the 2012/2013 financial year.
For the reasons which follow the decision under review will be set aside. In substitution it will be decided that Ms Rech is not entitled to receive the payment.
BACKGROUND
The following summary from the Statement of Facts and Contentions filed on behalf of the Secretary accurately sets out the administrative background to the application. Ms Rech agrees with this statement.
Section 58(1) of the Family Assistance Act provides that the annual rate of FTB is to be calculated in accordance with the rate calculator in Schedule 1 to the Family Assistance Act. Schedule 1 contains provisions that set out the method for calculating entitlement to FTB.
Section 32A of the Administration Act requires that the Secretary disregard the amounts of the FTB supplements when making or varying a determination until the claimant “has satisfied the FTB reconciliation conditions” which apply in the relevant period.
Sections 32C and 32D provide that an individual and their partner must lodge their tax returns within the first income year after the relevant income year, unless the Secretary is satisfied that there are “special circumstances” that prevented the individual from lodging the return before the end of that first income year.
It is not in dispute that Ms Rech and Mr Rech did not lodge their 2012/2013 tax returns until 8 August 2014.
The findings of fact in these reasons for decision are based on the evidence of Ms Rech unless otherwise stated. I am satisfied that Ms Rech was an honest witness who gave her evidence to the best of her recollection.
The evidence of Ms Rech
During the 2012/2013 financial year Mr and Ms Rech operated a business in partnership.
On 27 May 2014 Mr and Mrs Rech met with their accountant, Mr Willingale. They instructed him to prepare their 2012/2013 tax returns and gave him the necessary records to do so. They informed Mr Willingale that their income for the financial year had been significantly reduced and that it was important that Ms Rech receive the lump sum Family Tax Benefit payment. Ms Rech was aware of the need for their tax returns to be lodged by 30 June 2014 as she had received written notice from Centrelink advising her of this.
Mr Willingale was, and still is, an accountant employed by the firm Wilson Usnik & Associates, Accountants.
On three occasions between their initial meeting and 30 June 2014, the Accountants cancelled appointments made for Mr and Ms Rech to attend to sign the returns. Finally, towards the end of June 2014 they attended the Accountants’ office without an appointment and signed the returns at the front desk in the presence of a member of the Accountants’ staff.
Neither Ms Rech nor Mr Rech became aware that the returns had not been lodged on time until after 30 June 2014.
Letter from Mr Willingale
On 11 February 2015 Mr Willingale wrote to Centrelink in the following terms:
We are Accountants for the above client and have been for quite a number of years.
Mrs Rech brought her documents in relation to the 2013 financial year to our office well before the due date for lodgement with the Tax Office.
I was assigned to complete the business financials and associated tax returns. I do recall that the above client did mention that her tax return in particular needed to be lodged by 30th of June, 2014.
During the time that I was in charge of completing the work, my wife, who was suffering from terminal cancer, required constant palliative care from myself and eventually died at the end of March, 2014. This constant care, in itself, prevented me from completing the work in a reasonably quick fashion.
However, it transpired that her death had a profound effect on my ability to concentrate on my work which resulted in me not completing jobs very quickly.
Unfortunately this impacted Mrs Rech’s tax return lodgement as I overlooked the fact that we were supposed to lodge her return by 30th of June, 2014 for Centrelink purposes.
The end result was that we did not lodge her return until 8th August 2014. Mrs Rech has advised us that this late lodgement has caused yourselves to deny her a Family Tax Benefit refund.
I do request that you allow the processing of the above mentioned Family Tax Benefit refund as the delay in lodging her 2013 tax return was in no way caused by herself but was due to my unfortunate family situation during the middle of last year.[1]
[1] Exhibit A1 p.31.
THE ISSUE
The issue for determination is whether “special circumstances” existed which prevented Mr and Ms Rech lodging their tax returns for the 2012/2013 financial year by 30 June 2014.
CONSIDERATION
The meaning of “special circumstances”
The term “special” is not defined in the Act. It is therefore necessary to apply the ordinary meaning of the words used. Included in the various definitions provided by the Macquarie Dictionary (Revised Third Edition) are “extraordinary; exceptional”. In my view these are words which would generally be taken to be synonymous with “special” in the context in which the word is used in the Act.
Although it is necessary to be careful not to substitute the words of a Statute with other words when interpreting the words used, this Tribunal provided some guidance in Beadle and the Director-General of Social Security when it said:
An expression such as “special circumstances” is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances of unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.[2]
[2] (1984) 6 ALD 1 at p.3.
Ms Rech’s argument
Ms Rech relied upon the following as being sufficient special circumstances:
·she and her partner gave instructions to their Accountants well before 30 June 2014;
·they had advised Mr Willingale of the necessity for the returns to be lodged no later than 30 June 2014;
·they had taken all reasonable steps to ensure that this was done;
·that the failure to lodge the returns on time was caused by Mr Willingale’s need to care for his terminally ill-wife and to recover following her death; the delay was not caused by his negligence;
·her need for the payment by reason of the significant loss of income experienced by the partnership.
Centrelink Policy Guide
Centrelink has issued a policy to guide the application of the law in these circumstances. The Family Assistance Guide under the heading ‘Reconciliation Process’, provides in part:
Extensions to the tax lodgement timeframe may be granted in special circumstances.
Note: Lodgements of tax returns are the responsibility of the individual, including those who lodge via a tax agent. Providing financial statements to a tax agent or accountant prior to 30 June of the relevant lodgement year does not constitute lodgement of tax returns for FTB purposes. Extensions to the lodgement period may be granted if there are special circumstances. Special circumstances are circumstances that are unusual, uncommon or exceptional. Failure by an accountant or tax agent to lodge a tax return within the lodgement period (e.g. forgetting to lodge in time or delay due to high workloads) will not ordinarily constitute special circumstances.
Although a policy such as this is not binding on the Tribunal, it should be applied unless there is good reason not to do so.[3] I see no reason in this case why the policy should not be applied. It is consistent with the conclusion I have already reached independently of the policy.
[3] Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577.
Discussion
I do not consider that the mistake made by Ms Rech’s Accountants amounted to “special circumstances”. This is not to say that I do not accept that Mr Willingale’s personal circumstances are not an adequate and understandable explanation for his inability to complete his work on time. However, this does not explain the failure of the firm by which he was employed to properly manage his work during the extremely difficult situation he faced.
The letterhead of the firm[4] discloses that Mr Usnik was the principal at the time and that he had at least one associate. The letterhead does not disclose Mr Willingale as an associate, although on 11 February 2015 he signed his letter to Centrelink as such.
[4] Exhibit A1 p.31.
I am satisfied that as at 30 June 2014 there were other accountants available who could have attended to the lodgement of the returns signed by Mr and Ms Rech shortly before that date. There is no explanation given as to why this did not occur
As was the situation in Secretary, Department of Social Services and Cannon[5], the accountant has admitted responsibility for his error and Ms Rech may have a means of redress against the firm. It was not the personal circumstances of Mr Willingale which prevented Mr and Ms Rech from lodging their returns. Rather it was the failure of the firm instructed by them to act in accordance with their clear instructions and to lodge the returns which were signed prior to 30 June 2014. Mr and Mrs Rech could have lodged their returns themselves once they had been signed. Nothing prevented their doing this. Understandably, but unfortunately for Ms Rech, they relied on their Accountants to do this on their behalf.
[5] [2015] AATA 1028.
CONCLUSION
The reviewable decision, being the decision of the Social Services and Child Support Division of the Administrative Appeals Tribunal, made on 8 July 2015, will be set aside, and in substitution it will be decided that Ms Rech is not entitled to a supplementary payment of Family Tax Benefit for the 2012/2013 financial year.
I certify that the preceding 22 (twenty -two) paragraphs are a true copy of the reasons for the decision herein of Deputy President J W Constance. ..................[sgd]......................................................
Associate
Dated 28 July 2016
Date of hearing 4 May 2016 Date final submissions received 4 May 2016 Solicitors for the Applicant Mr J Pope; Pope & Spinks Solicitors Solicitors for the Respondent Ms K Martini; Department of Human Services
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