Sgargetta and Secretary, Department of Social Services (Social services second review)
[2017] AATA 1519
•21 September 2017
Sgargetta and Secretary, Department of Social Services (Social services second review) [2017] AATA 1519 (21 September 2017)
Division:GENERAL DIVISION
File Numbers: 2017/0479, 2017/0480
Re:Elliot Sgargetta
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Ms Anna Burke, Member
Date:21 September 2017
Place:Melbourne
The Tribunal affirms the decision under review.
...............[sgd].........................................................
Ms Anna Burke, Member
FAMILY TAX BENEFIT – whether applicant entitled to family tax benefit – late lodgement of application – whether incorrect advice provided by Centrelink – decision affirmed
Legislation
Administrative Appeals Act 1975
A New Tax System (Family Assistance) Act 1991
A New Tax System (Family Assistance) (Administration) Act 1999Secondary Materials
Family Assistance Guide
REASONS FOR DECISION
Ms Anna Burke, Member
21 September 2017
Mr Sgargetta is seeking a second tier review of the determination of Centrelink that he was not entitled to family tax benefit (FTB) for the 2012-2013 and 2013-2014 financial years. Centrelink determined he did not fulfil the requirements of section 10(2)(b) of the A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act). Centrelink is the service provider for the Department of Social Services.
The application was heard on 8 August 2017. Mr Sgargetta was self-represented and accompanied by his father, who is also his accountant. Mr Mark Hester, government lawyer in the Freedom of Information and Litigation Team, Department of Human Services appeared for the respondent.
BACKGROUND
The FTB claim for the 2011-2012 financial year
On 4 January 2013 Mrs Sgargetta applied online for FTB for the 2011-2012 financial year. On 30 April 2013 Centrelink wrote to Mrs Sgargetta advising that she had been assessed, using her annual family income and family circumstances, as eligible for FBT of $7,818.88.
Mr Sgargetta claims that sometime in 2013 all Centrelink payments (including FTB) to his family ceased without any advice or notice from the Department and that to date, no explanation for the cessation of payments has been provided.
The FTB claim for the 2012-2013 financial year
Mr Sgargetta claims that on 18 February 2014 he applied online for FTB for the 2013‑2014 financial year. But he could not complete the application online as there was no ability on the electronic form to skip the lodgement of tax returns or seek other options.
Departmental records indicate that Mr Sgargetta commenced but did not complete an online claim for FBT on 18 February 2014. Mr Sgargetta then made numerous attempts to resolve the lodgement of his FTB claim for the 2012-2013 period by telephone and in person.
Mr Sgargetta claims that in October 2015 he was advised to submit a written claim form downloaded from the Department’s website, and to cross out the reference to 2014-2015 and insert the correct dates.
Mr Sgargetta submitted his claim for 2012/2013 with a covering letter of 12 December 2015, in which he states:
We understand that there is an obvious resistance to pay due to the lateness of filing, however our circumstances have been extreme which directly and indirectly has caused hardship to our family, thus delay in not filing earlier. You will note however an attempt was made to file this claim form approximately 2 years ago but was halted due to the inability to file a tax return at that time.
At the tribunal hearing Mr Sgargetta asserted that in October 2015, he was granted special circumstances in accordance with the Act to lodge his FBT application late until June 2016 to lodge his FTB 2012-2013 claim due to special circumstances.
Attached to his covering letter of 12 December 2015 was a letter from Mr Dennis Sgargetta, the Applicant’s father and accountant, dated 4 December 2015. In this letter, Mr Dennis Sgargetta provided written advice to the Department in respect of Mr Elliot Sgargetta’s tax returns. He advised:
[T]he Australian Tax Office has granted them special consideration with extended lodgement dates for their tax returns. To this end their 2013 Tax Returns have been lodged as of 30th November, 2015 with a current projected due date for their 2014 Tax Returns of 31st January 2015.
On 31 January 2016 Centrelink issued Mr Sgargetta with a notice advising that he could not be paid FTB for 2012-2013 as his claim had not been received by 30 June 2014.
On 19 March 2016 on internal review, a Centrelink Authorised Review Officer (ARO) affirmed the earlier Centrelink decision to reject his FTB lump sum payment claim for the 2012-2013 financial year as his claim was made out of time.
The FTB claim for the 2013-2014 financial year
Mr Sgargetta states that he mailed his FTB claim for the 2013-2014 period to the Department, as advised by a Centrelink employee. He also asserts he was given special circumstances to extend the period of lodgement until June 2016.
On 28 April 2016 Mr Sgargetta emailed his claim form after he was advised there was no record of his mailed claim form being received. He also included his 2014-2015 claim form at this time.
Centrelink records indicate Mr Sgargetta lodged an incomplete claim for 2013-2014 FBT on 28 April 2016.
On 4 May 2016 Centrelink wrote to Mr Sgargetta and advised:
You recently lodged correspondence indicating that you were lodging a Family Tax Benefit claim for 2014/2015 along with a claim form.
The claim form lodged was not a complete form as only some of the pages were lodged and some of the questions within the form had be modified such that the answers provided were not all for the same financial year.
If you wish to lodge a claim for Family Tax benefit for the 2013/2014 and the 2014/2015 financial years 2 separate claim forms need to be fully completed and lodged. As the time frame for lodging a claim for 2013/2014 has ended a statement will also be required setting out the reasons that prevented you from lodging the claim before 1 July 2015. A claim for 2014/2015 must be lodged before 1 July 2016.
Enclosed are claim forms for 2013/2014 and 2014/2105 along with notes booklet to assist with completing and lodging the forms.
The completed forms should be returned in the reply paid envelope or to your local Service Centre.
On 7 July 2016 Mr Sgargetta lodged via email an incomplete claim form for an annual lump sum payment of FBT for the 2013-2014 financial year.
On 13 July 2016 Centrelink issued Mr Sgargetta with a notice advising that he could not be paid FTB for the 2013-2014 financial year as his claim had not been received by 30 June 2015.
On 7 September 2016 on internal review, an ARO affirmed the earlier Centrelink decision to reject Mr Sgargetta’s FTB lump sum payment claim for the 2013-2014 financial year as his claim was made out of time.
On 20 September 2016 Mr Sgargetta lodged an application for review with the Social Security and Child Support Division of the Tribunal (Tier 1) in respect of the non-payment of benefits.
On 11 January 2017 the Social Security and Child Support Division of the Tribunal (Tier 1) affirmed the decisions of 19 March 2016 in respect of the 2012-2013 FBT, and 7 September 2016 in respect of 2013-2014 FBT.
Mr Sgargetta requests a review of the Tier 1 decision by the General and Other Divisions of the Tribunal (Tier 2). He stated in his application that: We’re about to lose our home with 2 small children, I have a life threatening illness, and that the government owes us at min: $43,148.17. There is no disputing that fact Imposing time constraints of 1-2 years to recoup monies owed us by Human Services is unconscionable and scandalous. Additionally, he alleges Centrelink staff provided him with false and misleading information in directing him to fill in incorrect forms with which to claim FTB, stating: If it’s apparently defective…? Then that’s due to their misconduct and misleading instructions.
Mr Elliot Sgargetta and his wife, Mrs Cybil Sgargetta, have two FTB-eligible children; a son born in born in 2011, and a daughter born in 2014. Since 2012 Mr Sgargetta has been embroiled in a complex and protracted dispute with National Australia Bank and Gadens law firm. Mr Dennis Sgargetta explained in his letter to Centrelink dated 4 December 2015 that his client is involved in past, present and future legal proceedings surrounding a contested home property re-possession by a mortgagee bank and is under financial stress. In 2013 Dr Paul Kertes, Cardiologist, confirmed that Mr Sgargetta was diagnosed with Hypertrophic Cardiomyopathy, a potentially life threatening heart condition, and advised that any activities that could cause excessive anxiety and stress on the heart should be avoided.
THE LEGISLATIVE CONTEXT
FTB is worked out as an annual entitlement, based on the combined adjusted income of the recipient and their partner. In the financial years in question, recipients could elect to receive FTB by fortnightly instalments based on their income assessments. Alternatively, they could elect to receive their full FTB entitlement as a lump sum after the end of the financial year.
Section 14A of the Administration Act deals with a claim for FTB for a past period that is, for one of the two income years, prior to the year in which the claim is made. Mr Sgargetta’s claims for both the 2012-2013 and 2013-2014 income years were made prior to the income year in which he lodged a claim, and therefore is covered by section 14A.
14A Restriction on determining claim where income tax return not lodged
(1)If, in relation to a claim for payment of family tax benefit made by an individual:
(a)the claim is for payment of that benefit for a past period; and
(b)the past period falls in an income year (the past period income year) that is one of the 2 income years before the one in which the claim is made; and
(c)one or more of subsections (2) to (3A) apply;
then the claim is taken never to have been made.
(2)This subsection applies if:
(a)the claimant is required to lodge an income tax return for the past period income year; and
(b)the claimant has not lodged the return before the end of:
(i)the first income year after the past period 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 claimant from lodging the return before the end of that first income year.
(3)This subsection applies if:
(a)at the time the claim is made, a person is the claimant’s partner, and that person was the claimant’s partner at any time during the past period; and
(b)that person is required to lodge an income tax return for the past period income year; and
(c)that person has not lodged the return before the end of:
(i) the first income year after the past period 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 person from lodging the income tax return before the end of that first income year.
(3A)This subsection applies if:
(a)the claimant, or any other individual whose adjusted taxable income is relevant in working out the claimant’s entitlement to, or rate of, family tax benefit for the past period, is not required to lodge an income tax return for the past period income year; and
(b)the claimant does not notify the Secretary of the amount of the claimant’s adjusted taxable income for the past period income year before the end of:
(i) the first income year after the past period 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 claimant from making that notification before the end of that first income year.
(4)The further period referred to in subparagraph (2)(b)(ii), (3)(c)(ii) or (3A)(b)(ii) must end no later than the end of the second income year after the past period income year.
ISSUES
(a)Did Mr Sgargetta have an entitlement to FTB for the 2012-2013 income year?
(b)Did Mr Sgargetta have an entitlement to FTB for the 2013-2014 income year?
CONSIDERATION
The FTB claim for the 2012-2013 financial year
Mr Sgargetta outlined the lengthy and arduous process he undertook to lodge a claim for the annual lump sum payment for FTB for the 2012-2013 financial year. He explained this process was compounded by the devastating financial and legal issues he and his family were facing at the time.
Mr Sgargetta contended his form lodged on 18 February 2014 should have been accepted by the Department as an effective form. At the hearing, Mr Sgargetta claims he held this belief as he was advised via telephone that he had no need to submit a tax return; that his claim would be considered regardless and paid on a pro rata basis.
Additionally, Mr Sgargetta had an exemption from the ATO that permitted him to submit his tax return by 30 November 2015. As such, he believed he had been granted special circumstances by Centrelink in respect of the late lodgement of his FTB claim. The respondent advised that an exemption from the ATO does not give rise to special circumstances for FTB purposes, and that there was no indication on Mr Sgargetta’s Centrelink record that a special circumstance exemption had been granted.
At the hearing the respondent advised that Centrelink has no ambit or requirement to monitor claims when they are lodged to ensure they are compliant. He explained that they only review claims once they are completed and as such, Mr Sgargetta’s claim was treated like it was still sitting on his kitchen table and never lodged.
On 4 December 2015 an electronic file note documents Mr Sgargetta contact with Centrelink as follows:
Customer has contacted to arrange an appointment at CSC r.e. lodgement of FTB claims. Customer advised that he is claiming 14/15. 13/14 & 12/13. Customer states he was advised to use 14/15 claim forms for all three financial years and then change the dates on these forms for all three financial years and then change the dates on these forms to 12/13 and 13/14. Advised that this advice was incorrect. Claims would not be effective. Have manually printed a FA054 for 13/14. Advised customer that this will be immediately rejected as outside timeframes. Customer can then contact to appeal as well as request lodgement of tax return extensions (customer states that he had a very good reason).
Customer was advised that he is unable to claim 12/13 FTB anymore. There is no claim form that I can issue and timeframe for claim lodgement and income confirmation extensions has also passed. Customer continued to state that he had to try and that his accountant will vouch for him. Customer was advised that claims made on incorrect forms will be made not effective and are not able to be appealed as an effective claim must first be made. Customer stated that he wished to try anyway.
The respondent submitted that the Department did not receive an effective claim form from Mr Sgargetta until 16 December 2015.
Under section 10(2) of the Administration Act, the latest date for an effective claim for FTB for the 2012-2013 financial year to be lodged was 30 June 2015. The respondent submitted that as such, Mr Sgargetta was out of time and consequently, he has in fact not made an effective claim in accordance with section 13 of the Administration Act.
The Tribunal was satisfied Mr Sgargetta had attempted to lodge an effective claim form inside the qualifying period but did not succeed until 15 December 2015. Consequently, the Tribunal finds that an effective form for FTB for 2012-2013 was not lodged in time and affirms the original decision to reject the claim.
The FTB claim for the 2013-2014 financial year
Mr Sgargetta again outlined the lengthy and arduous process he undertook to lodge a claim for the annual lump sum payment for FTB for the 2013-2014 financial year. He documented an email and phone trail between himself and the Department in which he attempted to mail and lodge via email his claim form. He stated at the hearing he had been advised by the Department he needed to print the form and complete it manually as he no longer had an active account in the system and could no longer access documentation online. He again explained that the devastating financial, legal, and health issues facing himself and his family continued throughout this period.
On 18 March 2016 an electronic file note documents Centrelink’s contact with Mr Sgargetta via phone in respect of ministerial correspondence to clarify FTB claims. The file note states:
Cust advised only lodged 12/13 so far. Intend to lodge 13/14 and 14/15, time frame for lodgement advised to customer. Cust advised they have a claim for 13/14 nearly completed, advised customer best to lodge claim at local office and also needs to provide photo Id to update security creditenails [sic] for their online account. Advised customer to lodge 14/15 claim as an online claim. Customer indicated they would take that action.
Mr Sgargetta contended his form lodged on 28 April 2016 should have been accepted by the Department as an effective form, as it was lodged as instructed by a Centrelink staff member and he was never appropriately advised this form was non-complaint.
Mr Sgargetta relied on the letter from the Department of the 4 May 2016 in which he believed he was advised he had completed an otherwise effective form but had failed to provide a reason why his claim was out of time. The respondent disputed this interpretation of the letter but conceded it could have been better written and should have highlighted the urgency for Mr Sgargetta to lodge his claim, as he would shortly be out of time.
The respondent submitted that the Department did not receive an effective claim form from Mr Sgargetta until 7 July 2016.
Under section 10(2) of the Administration Act, the latest date for an effective claim for FTB to be lodged for the 2013-2014 financial year was 30 June 2016. As such, the respondent submitted Mr Sgargetta was out of time and consequently, he has not made an effective claim, in accordance with section 13 of the Administration Act.
The Tribunal was satisfied Mr Sgargetta had attempted to lodge an effective claim form inside the qualifying period but did not succeed until 7 July 2016. Consequently, the Tribunal finds that an effective form for FTB for 2013-2014 was not lodged in time and affirms the original decision to reject the claim.
The FTB claim for the 2014-2015 financial year and other benefits such as child care rebate not paid to Mr and Mrs Sgargetta
Mr Sgargetta sought to raise the issues of the cessation of all his Centrelink benefits from 2012, as well as the non-payment of his FTB annual lump sum claim for the 2014-2015 financial year. Mr Sgargetta was under the impression he had raised these matters with Centrelink and that they had been dealt with during the Social Security and Child Support Division hearing of the Tribunal (Tier 1).
In an email to the Department dated 19 July 2016 and a fax of 12 September 2016 Mr Sgargetta makes it clear that he believes he is owed FTB for the 2014-2015 financial year as well as child care benefit. A letter from Centrelink to Mr Sgargetta of 10 October 2016 indicates Mr Sgargetta’s claim for the 2014-2015 financial year, which was attached to an email of 10 August 2016, was rejected as being made outside the allowable time to claim.
In Mr Sgargetta’s original ‘Application for Review Form AAT first review of a centrelink decision’ dated 15 September 2016, he indicates that his application is in respect of family payments and the decision he would like reviewed is rejection of claim. In an email to the AAT of 20 September 2016 he indicates that the application attached is in respect of three years FBT and CCR owed.
Mr Sgargetta advised the Tribunal that he had been very confused by the Tier 1 hearing as it had happened over the phone and he was not completely sure which matters had been addressed. The Tribunal advised Mr Sgargetta it had no jurisdiction in which to review these matters as they were not part of the Tier 1 process currently under review. The respondent advised Mr Sgargetta he could seek at the first instance, an internal Centrelink review of these matters to progress any additional claims Mr Sgargetta had in respect of the non-payments.
POSSIBLE RECOURSE FOR THE APPLICANT
This Tribunal has affirmed the decision of the Social Security and Child Support Division Tribunal (Tier 1). As such, Mr Sgargetta has been found to not be entitled to FTB payments as he lodged out of time and effectively has been found not to have made an effective claim.
The Tribunal also addressed the prospect of Mr Sgargetta seeking redress by making a claim for compensation under the Scheme for Compensation of Detriment caused by Defective Administration (the CDDA Scheme), which is administered by the Department of Finance. Defective administration is defined as:
- a specific and unreasonable lapse in complying with existing administrative procedures; or
- an unreasonable failure to institute appropriate administrative procedures; or
- an unreasonable failure to give to (or for) an applicant, the proper advice that was within the officer's power and knowledge to give (or reasonably capable of being obtained by the officer to give); or
- giving advice to (or for) an applicant that was, in all the circumstances, incorrect or ambiguous.
The respondent advised Mr Sgargetta he could pursue CDDA as an avenue to seek compensation and provided Mr Sgargetta at the hearing with the relevant information needed to lodge a claim under the CDDA scheme.
It was explained to Mr Sgargetta that he could only pursue a claim for CDDA as an avenue of last resort when there is no other avenue of redress available. As such, he would have to either withdraw the current matter under appeal, or await the outcome of this hearing to apply under the CDDA scheme. Mr Sgargetta was adamant that he had applied correctly for the FTB and would not be withdrawing his application before the Tribunal.
Applications under the CDDA Scheme are discretionary, they are assessed on their individual merits, and a finding that a mistake has been made by an official does not automatically mean compensation is payable. The Tribunal advised Mr Sgargetta that it had no jurisdiction in respect of perceived defective administrative matters of the Department of Human Services and had no jurisdiction over the administration of the CDDA scheme. Whilst the Tribunal advised Mr Sgargetta it had no way of assessing if his claims might be successful if he lodged a request, it nevertheless encouraged him to lodge an application as it would appear there were administrative errors and inappropriate advice had been provided to Mr Sgargetta at numerous times in the course of attempting to lodge his FTB claim.
Mr Sgargetta requested that the respondent provide in writing that the processing of his numerous claims had been defective, and that the conduct of personnel involved had been unsatisfactory. The respondent declined to provide such a response but did state at the hearing that: I can give no guarantees that a compensation claim would be successful. However, he has chronicled events very well.
The respondent stated at the hearing:
As this is unfolding it is concerning, isn’t it, the 2014-2015 claim has not been accepted hasn’t been through the authorised review officer you mentioned it in your application and it wasn’t reviewed by the AAT.
I’m not in any way and this department is not any way hostile towards what you are saying in hindsight we can see where things could have done been so much better.
Certainly that’s what the claim for compensation from the federal administration, which I will talk to Mr Sgargetta after this if he wants me to do that, can repress these things. But certainly there have been issues please don’t think we don’t think this was handled any way perfectly but unfortunately for the 2012 – 2013 financial year lump sum claim was not lodged you had good reason for not being able to do it but it was not lodged and it didn’t become a claim until the 18 December 2015 and let’s be clear the 2012-2013 financial year is the first year where you have the one plus one.
CONCLUSION
Having carefully considered all the evidence before the Tribunal, I find that Mr Sgargetta is not entitled to a lump sum FTB payment for the financial years 2012-2013 and 2013-2014 as he lodged out of time and effectively has been found not to have made an effective claim.
I certify that the preceding 52 (fifty‑two) paragraphs are a true copy of the reasons for the decision herein of Ms Anna Burke, Member
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Associate
Dated: 21 September 2017
Date of hearing: 8 August 2017 Applicant: In person Advocate for the Respondent: Mr Mark Hester Solicitors for the Respondent: Department of Human Services
Key Legal Topics
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Administrative Law
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Statutory Interpretation
Legal Concepts
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Appeal
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Jurisdiction
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Procedural Fairness
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Standing
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Statutory Construction
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