Reynolds and Department of Family and Community Services
[2000] AATA 865
•25 August 2000
DECISION AND REASONS FOR DECISION [2000] AATA 865
ADMINISTRATIVE APPEALS TRIBUNAL )
) Q2000/405
GENERAL ADMINISTRATIVE DIVISION )
Re KERRY REYNOLDS
Applicant
And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION AND ORAL REASONS FOR DECISION
Tribunal Miss WJF Purcell (Senior Member)
Date25 August 2000
PlaceBrisbane
Decision For the reasons given orally at the hearing of this matter, the Tribunal affirms the decision under review.
(Sgd) WJF Purcell
Senior Member
CATCHWORDS
SOCIAL SECURITY – family allowance – overpayment – payments made on the basis of estimate provided by applicant – whether special circumstances or administrative error existed to allow waiver of debt.
Social Security Act 1991 ss 885(1), 1069-H28, 1223(1), 1223(3), 1237A(1)
ORAL REASONS FOR DECISION
25 August 2000 Miss WJF Purcell (Senior Member)
This is an application for review of a decision of the Social Security Appeals Tribunal (the SSAT) of 13 March 2000, which affirmed a decision to raise and recover an over-payment of family allowance in the amount of $6482.15, for the period 16 July 1998 to 10 October 1999.
The evidence before the Tribunal comprised the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the T documents) together with exhibits tendered by the respondent (the Department). The applicant who gave oral evidence appeared on her own behalf, with the assistance of Ms Becker. Mr Letch appeared for the respondent (the Department).
The applicant lodged a claim for family payment, (as it was then called), in relation to two children, Katie and Sarah, on 7 July 1994. In a "Changes to your Income and Assets" form dated 30 June 1998, the applicant, at T5/31, provided an estimate of taxable income for the 1998/99 financial year for her and her husband, of $25,000. By way of a letter dated 6 July 1998, the Department informed her that she would be paid $218.45 for her daughters Katie and Sarah, every second Thursday. The letter also informed the applicant that as her yearly income was more than it was in the previous year, she would receive less family allowance. On the back of the letter it was stated that the income used by the Department to calculate the combined rate of payment was $25,000. A further letter was forwarded by the Department on 21 August 1998, [exhibit R1], advising of an increase in allowance because Sarah had turned 13. The letter referred again to the relevant income being $25,000.
On 8 October 1998, the applicant completed a "Review of Your Family Allowance and Child Care Assistance" form, at T7/40. She entered the figure "$19,485", in answer to question 4, in relation to her husband's taxable income for 1997/98. On 24 December 1998, a letter from the Department stated that she would be paid $237 for Katie and Sarah every second Thursday, and the letter stated further that the amount of family allowance had been calculated using the applicant's combined taxable income for the 1997/98 tax year. On the back of the letter the statement read that the income used for the calculation of the allowance was $19,845, and also stated that the applicant must notify the Department if she or her partner are self-employed, and their combined income would be more than $26,591.40 in the 1997/98 or 1998/99 financial year.
In the "Review of Your Family Allowance" form dated 6 October 1999, the applicant indicated at question 4, that the taxable income for her husband for the 1998/99 financial year was $34,790. On 3 December 1999 the Department wrote to the applicant, in part, as follows:
"You were paid family allowance from 16.2.98 to 10.10.98. Based on your combined estimate of combined income for the 1998/99 year of $25,000, as your actual income of $34,970 was more than 110 per cent of your estimate, you have been overpaid an amount of family allowance."
The amount of the overpayment was calculated at $6,482.15. The applicant requested a review of that decision, which was affirmed by an Authorised Review Officer on 3 February 2000. The SSAT decision which affirmed that decision is dated 13 March 2000, and the applicant applied to this Tribunal for review of that decision.
The legislation relevant to this review is:
885 Recalculation if income exceeds 110% of estimated amount
(1) If:
(a)in working out the rate of family allowance payable to a person, regard is had to the person's income for a tax year; and
(b)the income to which regard was had consisted of an amount estimated by the person; and
(c)the person's income for that tax year is more than 110% of the amount of the income on which the determination of the rate of family allowance was based;
the person's rate of family allowance is to be recalculated on the basis of that income
Income free area
1069-H28. A person's income free area is worked out using Table H2. A person's income free area is the FA basic free amount in column 1 plus an additional amount in column 2 for each FA child of the person (after the first).
TABLE H2 FAMILY ALLOWANCE - INCOME FREE AREA
column 1 column 2
FA basic free amount additional amount for each FA child (after the first)
$21,660.00 $624.00
Note: The FA basic free amount is indexed in line with CPI increases (see sections 1191 to 1194).
Recipient not qualified for payment or amount not payable
1223 Debts arising from lack of qualification, overpayment etc.
Recipient not qualified for payment or amount not payable(1) Subject to subsections (1A) and (1B), if an amount has been paid to a person by way of social security payment on or after 1 October 1997 and:
(a) the recipient was not qualified for the social security payment when it was granted; or
(b) the amount was not payable to the recipient;
the amount so paid is a debt due to the Commonwealth.
1223 (3) Subject to subsection (4), if:
(a) an amount (the received amount) has been paid to a person by way of family allowance; and
(b) the person's rate of family allowance is recalculated under:(i) section 884 (amendment of assessable income); or
(ii) section 885 (underestimate of income); or
(iii) section 886 (failure to notify notifiable event); or
(iv) section 886A (overestimate of child maintenance expenditure); and
(c) the received amount is more than the amount (the correct amount) of the family allowance payable to the person;
the difference between the received amount and the correct amount is a debt due to the Commonwealth.
1237A Waiver of debt arising from error
Administrative error(1) Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.
Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor)."
The applicant contends that the amount of the over-payment is incorrect. The debt covers two over-payment periods, the first being 16 July 1998 to 1 January 1999, during which the $25,000 income estimate was used to calculate payments. The second period, being from 1 January 1999 until 10 October 1999. The taxable income of $19,845, being used to calculate payments for this period. She maintains that she did not receive the letter of 6 July 1998 from the Department, and cannot recall receiving the letter of 21 August 1998, which stated that her family allowance payments were being based on an estimate she provided on 30 June 1998 of $25,000. The letter of 24 December 1998 which states that her family allowance had been worked out using combined taxable income for 1997/98, also states that she is entitled to receive family allowance on this income for the 1999 calendar year.
The applicant maintains that while the letter of 6 July 1998 did not reach her, and that may not be the result of a Centrelink administrative error, the lack of reference in the letter of 24 December 1998 to the fact that combined taxable income of 1997/98 was being used to calculate payments from then on, deprived her of the opportunity to correct the over-payment at that point. Had she been made aware that her family allowance was being worked out according to an estimate, she would have exercised her right to provide a new estimate that would have minimised any over-payment.
The applicant contends further that the letter from the Department of 24 December 1998 was solely responsible for the second period of over-payment. It clearly states that family allowance payment would be determined using combined income for 1997/98, and that she was entitled to receive payment based on this determination of the 1999 calendar year. Based on the contents of this letter, the applicant contends that there was no possible way she could have realised that she was not entitled to family allowance at the rate that it was then paid. She further contends that if this letter had advised her correctly, she would have been able to avoid the over-payment by providing a revised estimate of her income.
The Department argues that a debt exists for the period 16 July 1998 to 10 October 1999, which cannot be waived. The applicant provided an estimate in July 1998/1999 income, following a notifiable event (her husband's commencement of work) which occurred on 1 April 1998. The family allowance rate calculator, in particular, section 1069 H19 of the Act, provides for consideration of the applicant's estimated 1998/1999 income from 1 July 1998. The estimate formed the basis for payment pursuant to section 1069 H21 of the Act, until 31 December 1998. The Department maintains, that regard was had to the estimate in the context of section 885 of the Act, and when the estimate turned out to be too low, by operation of the section, a re-calculation must occur.
The Department maintains also, that from 1 January 1999 entitlement was assessed on "Base year" 1997/98 income, of $19,845. The estimate of $25,000 did not exceed 110 per cent of the relevant "income free area" of $24,174, calculated pursuant to section 1068 H28 of the Act; and as such, pursuant to section 1069 H15 of the Act, the basis of entitlement became "the base year" of 1997/98. Regard had to be had to the 1998 estimated income from 1 January 1999, but as the estimate of $25,000 was outside the margin of error, a re-calculation pursuant to section 885 of the Act results in a debt for the period 1 January 1999 to 10 October 1999.
The Department submits that the information contained in the letter of 24 December 1998 was correct, based on the information provided by the applicant. She was earlier warned by the information on the form in which she provided the estimate of $25,000, for the 1998/99 year, the consequences of her estimate being too low, and it was indicated that a new estimate could be provided at any time. The Department contends finally that the cause of the debt was the applicant's incorrect estimate, and the operation of section 1237A1 of the Act is therefore precluded. There are no special circumstances which would warrant the exercise of the discretion provided in section 1237AAD of the Act, as the applicant's income being too high, cannot be seen to be such a special circumstance.
In my view the legislation applicable in this matter, is complicated, and the correspondence from the Department is certainly unhelpful, in that it does not set out as clearly as it could, the possible consequences of an incorrect estimate, and the basis of calculation of "base year", and "income free area." It must be very difficult for people such as the applicant to maintain a state of awareness of the basis of the Department's calculations. But, in any event, although sympathetic to the problems estimates may cause to applicants for benefit, the over-payment arose because the estimate was not accurate, and over an approximate 18 month period the applicant was over-paid more than $6,000, which it is accepted has not arisen because of any dishonesty or attempt to mislead on her part.
I have taken into account all of the applicant's evidence, and the submissions of the parties, but I must apply the legislation. On the whole of the evidence, I am satisfied that the over-payment did not arise due to administrative error, and that in all the circumstances of the matter these circumstances are not such that they are so special, and unusual, that the exercise of the discretion available under section 1237AAD of the Act is appropriate.
For these reasons the Tribunal affirms the decision under review.
I certify that the 16 preceding paragraphs are a true copy of the reasons for the decision herein of Miss WJF Purcell (Senior Member)
Signed: .....................................................................................
AssociateDate/s of Hearing 25 August 2000
Date of Decision 25 August 2000
Applicant In person
Respondent Mr S Letch, Departmental Advocate
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