Sanders and Secretary, Department of Social Services (Social security second review) - [2024] ARTA 412

Sanders and Secretary, Department of Social Services (Social security second review) [2024] ARTA 412 (25 October 2024)
Applicant/s:  Betty Sanders
Respondent:  Secretary, Department of Social Services
Tribunal Number:                2023/4987
Tribunal:General Member S Evans
Place:Sydney
Date:25 October 2024

Decision:The Tribunal affirms the decision under review.

...........................[SGD]............................................
General Member S Evans
Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 161(1B)-161(1C) of the A New Tax System (Family Assistance) (Administration) Act 1999.
CATCHWORDS
Social Security – family tax benefit – whether entitled to family tax benefit supplement payments – failure to lodge income tax return by statutory date – failure to meet reconciliation requirements – whether special circumstances prevented lodgement by statutory date – decision affirmed.
LEGISLATION
A New Tax System (Family Assistance) (Administration) Act 1999
CASES
Drake and Minister for Immigration and Ethnic Affairs (No 2) 2 ALD 634
Beadle and Director-General of Social Security [1984] AATA 176
Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones [2012] FCA 639
Hooker and Secretary Dept of Social Services [2015] AATA 732
Secretary, Department of Social Services and Knapp [2018] AATA 1839
SECONDARY MATERIALS
Family Assistance Guide
STATEMENT OF REASONS

On 14 October 2024, the Administrative Appeals Tribunal (AAT) became the Administrative Review Tribunal (the Tribunal). Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (the Transitional Act), applications for review to the AAT that were not finalised before 14 October 2024 are taken to be an application for review to the Tribunal. The Transitional Act gives the Tribunal the authority to continue and finalise any aspect of the review not already completed by the AAT. This decision and statement of reasons is made by the Tribunal.
INTRODUCTION
Betty Sanders (the Applicant), seeks review of a decision of the Social Services and Child Support Division (AAT1) of the AAT dated 15 June 2023.[1] In that decision the AAT1 affirmed the decision of an Authorised Review Officer (ARO) at Services Australia (the Agency) to not pay the Applicant family tax benefit (FTB) top up payments for the 2019-20 financial year.[2] The ARO was not satisfied that the Applicant was prevented from meeting the FTB reconciliation requirement due to special circumstances.
[1] T1, p.1-16; T2, p.17-21.
[2] T7-T8, p.61-66.
The Applicant contends that she was prevented from lodging her tax return and notifying the Agency her partner was not required to lodge a return by 30 June 2021 because of special circumstances. The Secretary of the Department of Social Services (the Secretary) disagrees.
For the reasons that follow, the reviewable decision will be affirmed.
BACKGROUND
The following background taken from the Secretary’s Statement of Facts Issues and Contentions (SOFIC) is not controversial.
On 12 November 2018, the Agency stopped the Applicant’s fortnightly payments of FTB as she and Mr Sanders had not lodged tax returns for the 2026-17 financial year or advised they were not required to lodge returns for the 2016-17 financial year, and the Applicant had outstanding non-lodger debts as a result.[3]
[3] T4, p.54-56.
On 1 December 2020, the Agency cancelled the Applicant’s FTB as the Applicant and Mr Sanders had not lodged tax returns or advised they were not required to lodge tax returns, for the 2016-17, 2017-18 and 2018-19 financial years, and consequently had an outstanding non-lodger debt. In correspondence the Applicant was notified of the cancellation and advised:
• Your Family Tax Benefit payments have been cancelled because you and your partner have not lodged tax returns or advised you and your partner are not required to lodge tax returns for three or more financial years. You have outstanding non-lodger debts as a result of your family income not being confirmed.
• You can reclaim Family Tax Benefit as a fortnightly payment, once you have completed one of the following actions.
What you need to do
• You need to lodge all outstanding tax returns with the Australian Taxation Office for the financial years 2016-2017, 2017-2018 and 2018-2019.
• Your partner needs to lodge all outstanding tax returns with the Australian Taxation Office for the financial years 2016-2017, 2017-2018 and 2018-2019.
OR
• You must repay in full any outstanding non-lodger debts for the financial years 2016-2017, 2017-2018 and 2018-2019.[4]
[4] Respondent’s Statement of Facts Issues and Contentions (‘R SOFIC’), Attachment A, dated 1 December 2020.
On 19 March 2021, the Agency sent the Applicant a letter titled ‘Family Tax Benefit – you need to confirm your family income for 2019-20’. The correspondence reminded the Applicant she was required to confirm her family income for 2019-20 financial year by 30 June 2021 in order to get FTB top up payments.[5]
[5] T5, p57-58.
On 2 June 2022, the Applicant declared that Mr Sanders was not required to lodge a tax return for the 2019-20 financial year as he had no income. On 3 June 2022, the Applicant lodged her tax return for the 2019-20 financial year with the Australian Taxation Office (ATO).[6]
[6] T8, p.63.
On 7 June 2022, the Agency sent the Applicant correspondence about her 2019-20 FTB. She was advised that based on her actual family income she was entitled to $6,134.16 FTB but the Agency was unable to pay the Applicant FTB, including the FTB supplement, because she and her partner did not confirm their income for the 2019-20 financial year by 30 June 2021.[7] The correspondence stated in part:
You were paid Family Tax Benefit during the 2019-20 financial year based on your estimated family income. We have now checked your entitlement using your actual family income.
…
We are unable to pay your full Family Tax Benefit entitlement, including the Family Tax Benefit supplement because you and your partner did not confirm your income for the 2019-20 financial year by 30 June 2021.
If there were special circumstances that prevented you and your partner from confirming your income by 30 June 2021, please call us on 136 150.
[7] T9, p90-91.
On 19 August 2022, the Applicant made an application for a formal review of the 7 June 2022 decision.[8] On 13 October 2022, an Authorised Review Officer (ARO) affirmed the decision as after finding there was no evidence that the Applicant was prevented from lodging a tax return with the ATO, or advising her partner was not required to lodge a tax return by 30 June 2021 due to special circumstances.[9]
[8] T9, p.59-60.
[9] T7-T8, p.61-66.
The Applicant sought review of the ARO decision at the AAT1.[10] On 15 June 2023, the AAT1 affirmed the ARO’s decision and on 10 July 2023 the Applicant applied to the Tribunal for second-tier review of the AAT1 decision.[11]
[10] T9, p.67-95.
[11] T2, p.17-21.
LEGISLATION AND POLICY
The relevant legislation is set out in A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act). Government policy can be found in the Family Assistance Guide (the Guide). It is well established that the Tribunal is not bound by government policy, but it will generally be taken into consideration unless there are cogent reasons not to do so.[12]
[12] See Drake and Minister for Immigration and Ethnic Affairs (No 2) 2 ALD 634.
Subdivision D of the Administration Act sets out the FTB reconciliation conditions. Section 32A of the Administration Act requires that the Secretary disregard the amounts of the FTB supplements when making or varying a determination about a person’s FTB entitlements for an income year until the person ‘has satisfied the FTB reconciliation conditions’ which apply to the relevant income year.
The effect of section 32B of the Administration Act is that a person satisfies the FTB reconciliation conditions at the time they have satisfied all of the relevant reconciliation times which apply to them in sections 32C to 32Q of the Administration Act.
Section 28 of the Administration Act deals with variation of instalment and past period entitlement determinations where an income tax return is not lodged. Similar to section 32B, the effect of section 28 is that a person is not entitled to top up payments of FTB unless the person and their partner satisfy the FTB reconciliation conditions.
Subsection 28(3) of the Administration Act provides:
(3)If:
(a)after the Secretary varies the determination under subsection (2) or (6), an assessment is made under the Income Tax Assessment Act 1936 for the cancellation income year for everyone (the taxpayers involved):
(i)who was required to lodge an income tax return as mentioned in subparagraph (1)(b)(iii); and
(ii)in respect of whom an assessment had not been made before the determination was varied; and
(b)the Secretary is satisfied that the claimant was eligible for an amount (the recalculated amount) of family tax benefit for the cancellation days; and
(ba)subsection (4) (which is about when the claimant and the claimant’s partner separate after the determination is varied) does not apply;
the Secretary must again vary the determination so that it has the effect that, for the cancellation days, the claimant is entitled to be paid:
(c)if each of the taxpayers involved lodged an income tax return with the Commissioner of Taxation:
(i)before the end of the income year after the cancellation income year; or
(ii)within such further period as the taxpayer is allowed under Subdivision D of Division 1 of this Part;
the recalculated amount; or
(d)in any other case—the lesser of:
(i)the recalculated amount; and
(ii)the amount that the claimant was entitled to be paid before the variation under subsection (2) was made.
Subdivision D of Division 1 of Part 3 of the Administration Act contains the FTB reconciliation conditions from section 32A-32Q of the Administration Act.
For the Applicant to have satisfied the FTB reconciliation conditions and receive the full FTB entitlement for the 2019-20 financial year based on her actual combined adjusted taxable income, she and her partner were required to respectively satisfy section 32C and 32J of the Administration Act. Section 32C of the Administration Act provides:
32CRelevant reconciliation time—first individual must lodge tax return
(1)This section applies to the first individual for a same‑rate benefit period if:
(a)the first individual is or was required to lodge an income tax return for the relevant income year; and
(b)clause 38L of Schedule 1 to the Family Assistance Act did not apply to the first individual at any time during the same‑rate benefit period.
(2)Disregard paragraph (1)(b) if the first individual was a member of a couple at any time during the same‑rate benefit period.
(3)The relevant reconciliation time is the time when an assessment is made under the Income Tax Assessment Act 1936 of the first individual’s taxable income for the relevant income year, so long as the first individual’s income tax return for the relevant income year was lodged before the end of:
(a)the first income year after the relevant income year; or
(b)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 lodging the return before the end of that first income year.
(4)The further period under paragraph (3)(b) must end no later than the end of the second income year after the relevant income year.
Section 32J of the Administration Act provides:
32JRelevant reconciliation time—individual not required to lodge an income tax return
(1)This section applies to the first individual for a same‑rate benefit period if:
(a)the first individual; or
(b)any other individual whose adjusted taxable income is relevant in working out the first individual’s entitlement to, or rate of, family tax benefit for the same‑rate benefit period;
is not required to lodge an income tax return for the relevant income year.
(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;
(b)the time after the end of the relevant income year when the Secretary becomes satisfied that the first individual’s adjusted taxable income for the relevant income year can be worked out without receiving a notification from the first individual, so long as the Secretary becomes so satisfied before the end of the first income year after the relevant income year.
(3) The further period under subparagraph (2)(a)(ii) must end no later than the end of the second income year after the relevant income year.
The reconciliation time can be extended by a ‘further period’ of up to one more income year after the relevant year subject to the preconditions in 32C and 32J of the Administration Act. Both require that the Secretary (or the Tribunal standing in the shoes of the Secretary) is satisfied that there are special circumstances that prevented lodging an income tax return, or notifying the Agency an income tax return was not required, before the end of the first income year after the relevant year.
ISSUES TO BE DETERMINED
The issue to be determined by the Tribunal is whether the Applicant is entitled to FTB top up and supplements totalling $6,136,16 for the 2019-20 financial year. The Applicant advised Mr Sanders was not required to lodge a tax return for the 2019-20 financial year on 2 June 2022, and she lodged her tax return with the ATO for the 2019-20 financial year on 3 June 2022. These dates are after the end of the first income year after the relevant income year and before the end of the second income year after the relevant income year.
Whether to extend the reconciliation time requires consideration of whether there are special circumstances which prevented the Applicant:
(a)from lodging her tax return by 30 June 2021;
(b)from notifying the Agency of Mr Sander’s adjustable income by 30 June 2021.
EVIDENCE
Delay in lodging the Applicant’s tax return:
The Applicant was made bankrupt on 29 September 2016, which she says placed her under significant pressure.[13] She did not lodge an income tax return for the 2016-17 financial year onwards until June 2022.[14]
[13] T9, p.75-77.
[14] Ibid, p.92.
In February 2017 the Applicant was required to provide her trustee all original documents relating to her 2016-17 financial year income tax return. The documents included those relating to an investment property she had sold in August 2016. After the individual she had provided the documents to left the trustee, the Applicant unsuccessfully sought to have the documents returned to her. She contacted the trustee in May and September 2019, requesting the documents be returned. When she contacted the trustee again in August 2020, she was told the documents had been archived.[15]
[15] Ibid, p.68.
It was the Applicant’s understanding that she could not finalise her tax returns without access to the documents which were held by the trustee.
In January 2022 the Applicant consulted an accountant who advised her to submit her overdue tax returns. She explained to the accountant that the trustee was holding relevant documents which were required to complete her tax returns from 2017 onwards.[16] The Applicant writes that her accountant “…advised that she could lodge her tax returns with the documents she had, and when she received the rest of the documents she could amend her return”.[17]
[16] Ibid, p.69.
[17] T2, p.20.
In her application for review the Applicant explained she did not consult an accountant earlier than January 2022 because of the COVID-19 pandemic and Mr Sander’s ill health.[18] Mr Stolyar became ill in August 2020 and was diagnosed with end stage renal disease during the COVID-19 lockdown. She writes in part:
From August 2020, my husband was required to receive numerous operations and required dialysis 3 times a week for 6 hours each session. We were told he was considered high risk should he contract COVID-19 and was instructed by the hospital staff for our direct family to follow strict isolation. Most of 2020 and 2021 we were either in strict lockdown and our family, as a precaution for my husband's health, were isolated within our household direct family members. There would have been no opportunity for me to see anyone, let alone seek a new accountant until early 2022.[19]
[18] T1, p.4.
[19] T1, p.4.
The Applicant has provided evidence of Mr Sander’s medical condition, which includes a medical report from Professor [Issac Gomez] dated 30 November 2021 confirming Mr Sanders was receiving treatment for end stage renal disease.[20] Mr Sanders has also provided a statement in which he confirms he became ill on 20 July 2020 and was admitted to ICU later that month. He remained in hospital until 21 August. Mr Sanders was advised by doctors to minimise his exposure to the community to reduce his risk of contracting COVID-19. Between August 2020 and January 2022 Mr Sanders and the Applicant self-isolated.[21] Mr Sanders writes that in early 2022, when the COVID-19 ‘situation was under control’ and the government had lifted restrictions, he and the Applicant made plans to see their accountant and finalise their tax returns.[22]
[20] T1, p.6-7.
[21] Witness Statement of Gary Sanders dated 13 March 2024
[22] Ibid.
At the hearing the Applicant explained it was important to minimise her exposure in the community to avoid passing the virus on to her husband. When asked why she did not contact her accountant remotely, the Applicant explained that her usual practice is to visit her accountant in person with a box of documents relevant to her return. She also lacked access to scanning and printing facilities at home which would allow her and Mr Sanders to prepare their tax returns by electronic means.
The Secretary’s representative took the Applicant to the Federal Court decision of Schott (Trustee), in the matter of Stolyar (Bankrupt) v Stolyar [2022] FCA 691 where at [29] it is recorded:
The respondents principally relied on evidence given by Gary [Sanders] who swore two affidavits, the first on 16 October 2020 and the second, by which Ian sought to correct and expand upon some of the evidence given in his first affidavit, on 16 April 2021. Gary was cross-examined over a period of four days.
The Applicant confirmed that Mr Sanders gave evidence in person and attended the Federal Court for four days in person with the approval of his doctors. She also confirmed there had been in person meetings with solicitors and barristers during that time.
Advice given by the Agency:
The Applicant contends that when she received the correspondence of 12 November 2018 notifying her that due to non-lodgement she would no longer receive FTB payments, she called the Agency and explained she was not able to lodge her income tax returns due to the trustee holding her original documents.[23] During the call she was told by an Agency service officer that they would need to complete a financial hardship assessment before the Applicant could start repaying her non-lodger debt. After completing the assessment, it was agreed the Applicant would repay $50 per fortnight from 31 December 2018.
[23] Applicant’s Response to the Respondent’s Statement of Issues and Contentions dated 19 June 2024, at [6].

The Applicant submits that she was advised by the Agency that “…once she lodges her tax return, she will be back paid her family tax payments for previous years plus any repayment…”.[24] The Agency completed further hardship assessments in May 2019 and June 2021. She submits that on both occasions, she was assured “…that when she lodges her tax returns that she will get back paid her family tax payments for previous years plus any repayment”.[25]
[24] Ibid.
[25] Ibid at [7].
The Applicant claims to have been in ‘constant contact’ with the Agency between December 2018 and August 2022. She says she was assured that if she maintained her repayment plan, “…all repayments will be balanced and she will be paid back her repayment plan and any outstanding payments”.[26]
[26] Ibid at [33].
The Applicant was not aware of the reconciliation reporting requirements
The Applicant contends she was unaware she was required to inform the Agency that Mr Sanders was not required to lodge a tax return when he had no income, nor advised of the deadline in which to lodge her income tax return to qualify for FTB top-ups. In any event, the Applicant argues that the Agency was advised that Mr Sanders did not work and has no income as part of the financial hardship assessments completed in December 2018, May 2019 and June 2021. She also notes that on 5 September 2019 she told the Agency that Mr Sanders could not work in his chosen field of work due to declaring bankruptcy.[27]
[27] T10, p.96.
CONSIDERATION
Were there special circumstances that prevented the Applicant from meeting the reconciliation requirements?
The phrase ‘special circumstances’ is not defined in the Administration Act or in related legislation. However, it has been considered extensively by the courts and the AAT. In Beadle and Director-General of Social Security, the AAT stated that:
An expression such as “special circumstances” is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are 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.[28]
[28] [1984] AATA 176.
In Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones,[29] the Federal Court observed that ‘special circumstances’ is ‘sufficiently understood as including events or things that render the operation of the statute in a particular case as unfair, unintended or unjust’ and set out that ‘what is required is something that takes the case out of the ordinary, and unfairness or unintended consequences may show that this exists’.
[29] [2012] FCA 639.
A similar provision to that in section 32C and 32J, relating to the same time limits and ‘special circumstances’ provisions, is contained in subparagraph 10(2)(b)(ii) of the Administration Act. In Hooker and Secretary Dept of Social Services Senior Member Toohey set out a two-part test for applying the special circumstances provisions in provided by 10(2)(b)(ii):
In order for the time for making a claim to be extended, the Secretary (and so the Tribunal) must be satisfied, firstly, that circumstances existed that were special and, secondly, that those special circumstances prevented the claimant from making his or her claim within time
…In the case of a late claim for FTB, the special circumstances must prevent a person from making a claim on time. That is a more stringent, two-part test.[30]
[30] [2015] AATA 732.
This approach has been adopted in decisions by the AAT and it is appropriate to apply it in this matter. For the Application to succeed, the Applicant is required to show that special circumstances exist and that the circumstances prevented her and Mr Sanders from meeting the reconciliation conditions.
I acknowledge the Applicant’s bankruptcy was disruptive and stressful for the Applicant, I accept she was deprived of access to documents she understood she required to complete her income tax returns. However, the Applicant had not filed an income tax return for the 2016-17 financial year onwards. I acknowledge the Applicant first attempted to retrieve the documents relating to the sale of her investment property in 2019, but she did not arrange to meet with an accountant until January 2022. I do not accept that she was not able to make arrangements to meet with an accountant in time to file her 2019-20 financial year income tax return before 30 June 2021.
The COVID-19 pandemic began in early 2020 and Mr Sander’s significant health issues emerged in mid-2020. The Applicant contends that in combination they amount to special circumstances. There is ample evidence of Mr Sander’s health condition and regular hospitalisation from June 2020. However, I do not accept Mr Sander’s conditions prevented the Applicant meeting with her accountant and lodging her 2019-20 financial year income tax return. Mr Sander’s in person attendance at Federal Court in 2021 indicates that face to face meetings were possible after Mr Sander’s diagnosis during the pandemic. In any event, I do not accept the Applicant was unable interact with her accountant using electronic means.
Regarding the Applicant’s awareness of the reporting requirements, the Agency sent the Applicant correspondence on 19 March 2021 clearly notifying her of the requirement to lodge tax returns or tell the Agency they were not required to do so by 30 June 2021.[31] The AAT1 decision states that the Applicant understood that correspondence was a computer generated letter and that staff had not alerted her to the reporting requirements throughout her dealings with the Agency.[32] Nonetheless, the Applicant confirmed having received this and other notices detailing the FTB top-up reporting requirements.
[31] T5, p.57-58.
[32] T2, p19.
The Applicant claims she was provided advice on numerous occasions relating to FTB back payment, which proved incorrect. There is no documentary evidence to suggest the Agency gave her the advice she claims, and I note the Applicant contends that she had contact with the Agency which is either not recorded or recorded in insufficient detail. Given the paucity of evidence, I consider it unlikely the Agency provided the advice she claims, and certainly not on more than one occasion.
In Secretary, Department of Social Services and Knapp [2018] AATA 1839 the AAT considered an application following late lodgement of a claim for FTB by a single mother coping with her son’s addiction to illicit drugs finding at [41]:
On her evidence, when the Respondent received the notice advising her of the due date for the filing of her income tax return, she did not adequately turn her mind to the need to file the return as required. She had not realised that her belief as to the required filing date was wrong as she was concentrating on the issues relating to her son’s drug addiction. There is no evidence before me that the Respondent was prevented from filing her income tax return as a consequence of those personal issues. She simply failed to give it the proper and earnest consideration that was required and as a result was 20 days late in filing her income tax return.
Similarly, the evidence does not support the Applicant being prevented from lodging her income tax return or otherwise meeting the reconciliation conditions as a consequence of the personal issues and circumstances that existed.
CONCLUSION
The combination of the Applicant’s bankruptcy, the pandemic and Mr Sander’s renal failure would have been difficult and stressful. However, I do not consider the circumstances were exceptional or unusual enough to rise to the level of ‘special circumstances’. Even if I were to accept that they amount to special circumstances, I am not satisfied they prevented the Applicant from lodging her income tax return or informing the Agency that Mr Sander’s was not required to lodge by 30 June 2021.
DECISION
For the reasons set out above, the reviewable decision is affirmed.

Date(s) of hearing: 12 September 2024

Applicant: In person

Solicitors for the Respondent: N Donaghy, Services Australia

Date(s) of hearing:	12 September 2024
Applicant:	In person
Solicitors for the Respondent:	N Donaghy, Services Australia