Secretary, Department of Social Services and Catherine Cannon
[1983] AATA 248
•13 October 2015
Cannon; Secretary, Department of Social Services and (Social services second review) [2015] AATA 1028 (13 October 2015)
Division
General Division
File Number
2015/2494
Re
Secretary, Department of Social Services
APPLICANT
And
Catherine Cannon
RESPONDENT
DECISION
Tribunal Deputy President J W Constance
Date 13 October 2015 Date of written reasons 7 January 2016 Place Sydney The decision of the Social Security Appeals Tribunal made 15 April 2015 is set aside and substituted with a decision that Ms Cannon is not entitled to a top-up payment of Family Tax Benefit for the 2012/2013 financial year.
............[SGD]............................................................
J W Constance
Deputy PresidentCATCHWORDS
SOCIAL SECURITY - Family Tax Benefit - top-up payments - whether Applicant eligible for top-up 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 s 32C
CASES
Andrews and Director-General of Social Security [1983] AATA 248
Beadle and the Director-General of Social Security (1984) 6 ALD 1
Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577
Scott v Secretary, Department of Social Security; Scott and Another v Handley and Another [1999] FCA 1774Wilson and Director-General of Social Services [1981] AATA 88
SECONDARY MATERIALS
Centrelink e-reference policy document 007.36060
WRITTEN REASONS FOR DECISION
(DECISION GIVEN ORALLY ON 13 OCTOBER 2015)
Deputy President J W Constance
7 January 2016
INTRODUCTION
In this application the Secretary is seeking a review of the decision of the Social Security Appeals Tribunal made 15 April 2015, that Ms Cannon is entitled to receive a “top-up” payment for the Family Tax Benefit for the 2012/2013 financial year.
On 13 October 2015 I decided that the decision of the Social Security Appeals Tribunal should be set aside and substituted with a decision that Ms Cannon was not entitled to the benefit she claimed. I gave reasons for my decision orally.
I now give my reasons in writing.
BACKGROUND
Entitlement to the Family Tax Benefit is governed by section 58(1) and Schedule 1 of A New Tax System (Family Assistance) Act 1999 (Cth). The Schedule sets out the method of calculation of an individual’s entitlement.
The Social Security Appeals Tribunal set out the manner in which the scheme operates in paragraphs 8 and 9 of its decision:
8.Schedule 1 states that an individual’s correct rate of FTB is calculated taking into account the adjusted taxable income (ATI) of the individual, and their partner if they are partnered. Although payable at an annual rate based on actual annual income, a person can be paid FTB by fortnightly instalments throughout a year based on their estimate of what their and their partner’s annual income is likely to be, this estimate is often their taxable income in the previous financial year uplifted for inflation. When a person is paid by instalments, a reconciliation process is undertaken at the end of the financial year once actual income is known. If the income estimate used as the basis of payment was higher than the actual income, then a supplementary payment of the balance of FTB owing is made. This is known as a “top-up”.
9.To allow the reconciliation process to happen, the actual income of the payee and their partner needs to be known. The source of that information is their tax return or returns…
Ms Cannon’s only income during the 2012/13 financial year was the Family Tax Benefit. It is not in dispute that at no time was it necessary that she lodge a tax return to entitle her to the benefit of a top-up payment for that year. However, her partner, Mr Turner was required to lodge his 2012/13 income tax return by 30 June 2014 for Ms Cannon to be entitled to a top-up payment. On 21 July 2014 Mr Turner’s accountants lodged his return on his behalf.
LEGISLATION
Subsection 32C(2) of the A New Tax System (Family Assistance) (Administration) Act 1999 provides:
(2)If only one member of the couple was required to lodge an income tax return for the relevant income year, the relevant reconciliation time is the time when an assessment is made under the Income Tax Assessment Act 1936 of the member’s taxable income for the relevant income year, so long as the member’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 as the Secretary allows for that member under subparagraph (1)(c)(ii) or (iii), as the case requires.
Subparagraph 32C(1)(c)(iii) provides in part that the Secretary may allow additional time for a partner to lodge a return “if the Secretary is satisfied that there are special circumstances that prevented the other member from lodging the return before the end of that first income year”.
THE ISSUE FOR DETERMINATION
The issue before the Tribunal is whether the time for Mr Turner to lodge his 2012/13 tax return should be extended to 21 July 2013 by reason of special circumstances which prevented his lodging it on or before 30 June 2013.
CONSIDERATION
The meaning of “special circumstances”
The term “special circumstances” 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 of 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.[1]
[1] (1984) 6 ALD 1 at p.3.
Ms Cannon’s argument
Ms Cannon relied upon the following as being sufficient special circumstances:
·prior to the 2012/2013 financial year, the law required that her partner’s return be lodged within two years of the financial year in respect of which the Family Tax Benefit was claimed and neither she nor Mr Turner were aware of the change until after Mr Turner had lodged his return;
·the late lodgement of Mr Turner’s return was caused by Mr Turner’s accountants.
Ms Cannon’s ignorance of the change in the law concerning the lodgement of Mr Turner’s tax return
Ms Cannon gave evidence. I am satisfied that she was an honest witness who gave her evidence to the best of her recollection.
I accept that Ms Cannon was unaware of the change in the law whereby it was required that Mr Turner lodge his tax return within 12 months of the relevant financial year rather than within two years as had been the situation in relation to previous financial years.
I am satisfied that about 17 March 2014 the Secretary forwarded a letter to Ms Cannon advising her of the change in the law and the need for her partner to lodge his return by 30 June 2014.[2] On the basis of Ms Cannon’s evidence, I am satisfied that, for reasons which are unknown, Ms Cannon did not receive this letter.
[2] Exhibit A1 p.154.
I am satisfied also that the change was notified on Centrelink’s website but that Ms Cannon was unaware of this.
As a matter general principle, ignorance of the law is no excuse for a person’s failure to comply with it. In addition, there is no legal obligation on the Secretary or any Government Department to advise potential claimants of changes in the law which may adversely affect them.[3]
[3] Scott v Secretary, Department of Social Security; Scott and Another v Handley and Another [1999] FCA 1774.
On this basis I am satisfied that Ms Cannon’s lack of awareness of the changed law does not amount to special circumstances within the meaning of the Act. I note that this is consistent with the approach previously taken by the Tribunal.[4]
[4] See Wilson and Director-General of Social Services [1981] AATA 88; Andrews and Director-General of Social Security [1983] AATA 248.
I also note that Centrelink has issued a policy to guide the application of the law in these circumstances. eReference 007.36060 states, in part:
Customers may be granted an extension if they have special circumstances which prevented them from meeting the requirements by 30 June of the lodgement year.
Changes to the timeframe for FTB and CCB lump sum claim lodgement and income confirmation were promoted throughout the 2012 – 13 financial year …
What are special circumstances?
Special circumstances are by their very nature incapable of precise exhaustive definition. “Special circumstances” are generally due to situations that are unusual, uncommon or exceptional and each situation must be assessed on an individual basis.
A special circumstances extension should only be granted in limited circumstances where the customer and/or their partner, has been prevented from meeting the relevant requirements by the end of the lodgement year. The circumstances must be solely due to circumstances which are unusual or exceptional and are outside the customer’s control.
In all cases, consideration must be given to the reason why the customer was unable to meet the requirement within the allowable time period. When assessing a special circumstances extension request, the nature of the event (or impacts associated with the event) must have had a significant impact upon the customer’s capacity to meet the relevant requirement within the time allowed.
A special circumstances extension is not to be granted if a customer advises they were not aware of the change in lodgement periods, or because they ran out of time to meet the requirement. [Emphasis added].
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.[5] 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.
[5] Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577.
The failure of Mr Turner’s accountants to lodge his return by 30 June 2014
Mr Turner gave evidence that he forwarded his signed return to his accountants in time for it to be lodged by them by 30 June 2014. I accept this evidence.
By letter dated 26 August 2014 Mr Turner’s accountants advised Centrelink as follows:
We wish to advise that we act as Accountants for Miss Catherine Cannon and her partner James B Turner and wish to explain the circumstances behind the late lodgement of James’ 2013 Income tax return.
Mr Turner signed and posted his return back to our office on 26 June 2014, now at that stage we had a temporary secretary working for us and instead of putting the return into the lodgement tray she filed it in our store room.
Mr Turner rang our office on the 21 July 2014 wondering where his tax return was as it was a considerable amount of money, and hence we discovered it had not been lodged and was duly lodged on that date.
We take full responsibility for the late lodgement and consider Miss Cannon should not be penalised were a mistake on our part.
Should you require any further information please contact the writer.[6]
[6] Exhibit A1 p.157.
I do not consider that a mistake made by Mr Turner’s accountants can be properly regarded as a special circumstance to entitle Ms Cannon to receive the adjustment to the Family Tax Benefit. The Accountants have unequivocally admitted responsibility for their error and Ms Cannon may have a means of redress against them.
In any event, the policy to which I have referred states:
Note: an extension must not be granted if a tax agent/accountant advises that they were the cause of the late lodgement of tax returns even if the customer provided financial records before 30 June. Tax agent/accountants were advised of changes to lodgement periods.[7]
Again, there is no apparent reason why this policy should not be applied by the Tribunal.
[7] Exhibit A1 Supplementary Documents p.4.
CONCLUSION
The reviewable decision, being the decision of the Social Security Appeals Tribunal made on 15 April 2015, will be set aside, and in substitution the Tribunal will decide that Ms Cannon is not entitled to a “top-up” payment of Family Tax Benefit for the 2012/2013 financial year.
I certify that the preceding 25 (twenty -five) paragraphs are a true copy of the reasons for the decision herein of Deputy President J W Constance ...............[SGD].........................................................
Associate
Dated 7 January 2016
Date of hearing 13 October 2015 Date final submissions received 13 October 2015 Solicitors for the Applicant S Thompson, Sparke Helmore Respondent In person
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