Shanhun; Secretary, Department of Social Services (Social services second review)
[2016] AATA 675
•2 September 2016
Shanhun; Secretary, Department of Social Services (Social services second review) [2016] AATA 675 (2 September 2016)
Division
GENERAL DIVISION
File Number
2015/5206
Re
Secretary, Department of Social Services
APPLICANT
And
Vicki Shanhun
RESPONDENT
DECISION
Tribunal D. J. Morris, Member
Date 2 September 2016 Place Perth DECISION
The Tribunal sets aside the decision made on 3 September 2015, by the Social Services and Child Support Division of this Tribunal, and, in substitution therefor, affirms the original decision that the Respondent is not entitled to Family Tax Benefit supplements and top ups for the 2012-2013 income year.
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D. J. Morris, Member
CATCHWORDS
SOCIAL SERVICES – Family Tax Benefit (FTB) – whether respondent entitled to FTB top ups and supplementary amounts – late lodgement of tax return – failure by respondent’s accountants – whether respondent prevented from lodging tax return in relevant income year – whether special circumstances applicable – the test of ‘special circumstances’ – what is meant by ‘prevent’ – decision of SSCD Division set aside and new decision made – not entitled to FTB – original decision affirmed
LEGISLATION
A New Tax System (Family Assistance) Act 1999 – Schedule 1 – Clause 3 and 25
A New Tax System (Family Assistance)(Administration) Act 1999 – s 32A – s 32C – s 32C(3)(a)
CASES
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25; (2007) 44 AAR 436; (2007) 108 ALD 9
Apache Energy Pty Ltd and National Offshore Petroleum Safety and Environmental Management Authority and Another [2012] AATA 296; (2012) 127 ALD 652
Beadle and Director-General of Social Security (1985) 7 ALD 670; (1985) 60 ALR 225; [1984] AATA 176
Secretary, Department of Social Services and Cannon [2015] AATA 1028
Gavranic and Secretary, Department of Social Services [2015] AATA 934
Groth and Secretary, Department of Social Security (1995) 40 ALD 541; [1995] FCA 1708
Secretary, Department of Social Services and Bleeker [2016] AATA 290
Secretary, Department of Social Services and Johnson [2016] AATA 304
REASONS FOR DECISION
D. J. Morris, Member
2 September 2016
BACKGROUND
The Secretary, Department of Social Services (the Applicant) seeks a review of the decision of the Social Services and Child Support Division of the Administrative Appeals Tribunal (AAT1) of 3 September 2015, which set aside the decision of the Authorised Review Officer (ARO) of 5 June 2015, and decided that Ms Vicki Shanhun’s (the Respondent) entitlement to family tax benefit (FTB) for 2012-2013 be assessed on the basis that she met the reconciliation provisions for inclusion of the FTB Part A and Part B supplements for that year.
The hearing was held on 19 August 2016. The Applicant was represented Ms Bernadette Rayment. The Respondent was represented by Mr Levi Wheatcroft. Both the Respondent and Mr Wheatcroft gave evidence on affirmation and were cross-examined by counsel for the Applicant.
The Tribunal considered documents submitted by the Applicant under section 37 of the Administrative Appeals Tribunal Act 1975 (‘T’ documents).
The Tribunal also considered a submission tendered by the Respondent’s representative, Mr Wheatcroft dated 22 March 2016.
FACTS
A person’s eligibility for FTB payments is determined pursuant to Part 3 of A New TaxSystem (Family Assistance) Act 1999 (the Act) by application of Schedule 1 to that Act.
Clauses 3 and 25 of Schedule 1 provide for the inclusion of a Part A supplement in how the rate of FTB Part A is calculated and clause 29 provides for the inclusion of a Part B supplement in the calculation of FTB Part B.
Section 32A of A New Tax System (Family Assistance)(Administration) Act 1999 (the Administration Act) requires that the Secretary, Department of Social Services disregard the amounts of the FTB supplements when making or varying a determination until the claimant has, in the words of the statute “satisfied the FTB reconciliation conditions” which apply in the relevant period.
Section 32C of the Administration Act provides that an individual must lodge his or her 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.
Common ground
In this matter the following was common ground between the Applicant and Respondent:
i.that the Respondent was receiving FTB by way of fortnightly instalments, having provided the Department with an estimate of her and her husband’s income;
ii.that on 11 July 2014, the Department undertook a reconciliation of the Respondent’s entitlement to FTB payments and it was decided that, as the Respondent had failed to confirm her 2012-2013 income by 30 June 2014, she was not entitled to receive any top-up payments or FTB supplements. Accordingly, she was only entitled to receive an adjusted amount of $4,938.45, being an entitled amount of $5,456.75 less the amount of $518.30 that she had already received;
iii.that on 14 April 2015, Ms Shanhun requested a review of this decision by an ARO and on 5 June 2015 the ARO affirmed the Department’s decision on the basis that she had not lodged her tax return by 30 June 2014 and that she had not demonstrated “special circumstances” for this non-compliance; and
iv.that the Respondent’s tax return for the 2012-2013 year had not been lodged until 1 July 2014.
The hearing therefore proceeded on this basis.
QUESTION BEFORE THE TRIBUNAL
The point at issue in this case is whether the provisions in s 32C of the Administration Act are applicable to Ms Shanhun. In other words, can she avail herself of the provisions set out in that section to receive the FTB supplements and top-ups for the 2012-2013 income year because “special circumstances” are demonstrated?
THE APPLICABLE LAW
Section 32C of the Administration Act states:
Relevant 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) that 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.
What happened?
Ms Shanhun attended the office of her accountant on 3 June 2014 with the paperwork necessary for the preparation of her 2012-2013 tax return. This was an accounting firm she had used in the past. She saw an accountant employed by the firm, Ms Lister.
Sometime in the next 27 days (the Respondent could not remember exactly when), Ms Shanhun either contacted the accounting firm, or was contacted by them, and learned that her tax return had been prepared and was ready for her signature.
On Monday 30 June 2014, Ms Shanhun, who lived about one hour’s drive from the town in which the accounting firm was situated, went to the office of the firm. She could not recall specifically whether she made a special trip, or had gone to town for other purposes. She could also not recall what time of the day she attended the offices of the firm. When she went to the firm, her draft tax return had been prepared and was awaiting her signature so that it could be lodged. She saw an administrative secretary and the accountant who had been responsible for preparing it, Ms Lister, and signed the electronic lodgement form. This form gave the firm the authority to lodge it electronically with the Australian Taxation Office. She did not see Mr Wheatcroft. At the hearing, Mr Wheatcroft could not say whether he was in the office that day or not.
For a reason unknown, but described in the submission of the representative of the Respondent, Mr Wheatcroft, as “the mishandling of an administrative function”, the Respondent’s tax return was not electronically lodged that day, and was not lodged until the following day, 1 July 2014. Mr Wheatcroft attributed the delay to “staffing issues and workload” in his firm.
In the hearing, Ms Shanhun was asked what she said to the staff she saw that day. She said she thanked them for preparing her tax return, signed it, and returned it to them. She gave no evidence that she asked the accountant she saw or the administrative secretary present to make sure the tax return was lodged before the close of business (given this was the last day it could be lodged), but it is reasonable to assume she expected that would in fact be done.
Mr Wheatcroft told the hearing he was aware of the 30 June deadline and he believed Ms Lister would have been aware of the deadline as well. He said that an estimated timeframe for the completion of work was agreed between each client and the firm but there was no way to substantiate any interactions between the Respondent and the firm between 3 June 2014 and 30 June 2014. He did not believe any additional information was sought from the Respondent. He said Ms Shanhun would have been contacted to say that the tax return was ready to be signed, but he cannot say when that was and Ms Shanhun’s file did not reveal that. Mr Wheatcroft said in evidence that Ms Shanhun’s tax return was neither complex nor simple, but it was ‘somewhere in between’.
The Respondent gave evidence that she knew that it was critical for receipt of the FTB payments and top-ups that her return be lodged before the end of the financial year. She did not dispute a submission from the Applicant that she had received a communication from the Department dated 21 March 2014 reminding her of the requirement for her and her partner to lodge their 2012-2013 tax returns by 30 June 2014, or otherwise, advise the Department if she or her partner were not required to lodge tax returns. The 21 March 2014 letter advised the Respondent that if she or her partner were required to lodge a tax return and did not do so by 30 June 2014, she would not be entitled to any FTB supplements or top-up payments for 2012-2013.
Relevantly, Ms Shanhun’s husband’s tax return was lodged on 20 June 2014 but, in cases of a couple, the applicable date for assessing eligibility when there is more than one tax return is the date that both returns are lodged, so in this case the date applicable is the date that the Respondent’s tax return was lodged.
The Tribunal had before it a copy of the electronic lodgement declaration signed by the Respondent and dated by her as ‘30 June 2014.’
Mr Wheatcroft in his submission and in evidence before the hearing submitted that special circumstances were applicable in this case. He referred to a serious illness that his de facto spouse had been diagnosed with and that this had caused him stress and preoccupation at the applicable time. He provided a letter dated 27 August 2015 from his general practitioner, Dr Charles Jansz, stating that he saw Mr Wheatcroft on 13 August 2014 “at which time he was showing significant signs of stress related to discovery that his partner had contracted a serious illness 6 weeks before”. Dr Jansz stated that Mr Wheatcroft may have suffered “impaired performance at work or home in his usual activities”.
In his evidence, Mr Wheatcroft agreed that “six weeks before” 27 August 2014 is mid-July. He could not precisely say when he had learned about the illness.
However, this particular factor is not material. Mr Wheatcroft may be a principal of the accounting firm but he was not himself involved in the preparation of the Respondent’s tax return. He gave evidence to the Tribunal that Ms Shanhun’s return was prepared by Ms Lister, another employed accountant in his firm. He gave no evidence that he had any contact with Ms Shanhun in this particular interaction with his firm at that time. The work had been allocated to someone else, who had carried it out. It is to his credit that he takes responsibility, as a principal in the firm, for the administrative failure which led to the Respondent’s tax return not being lodged on 30 June 2014, but personal factors that may have affected his work at that time (and which in evidence he said were not known at the time to Ms Lister) are not relevant.
The special circumstances referred to in the Administration Act must be special circumstances that apply to the Respondent, not to someone else.
Were there special circumstances that prevented lodgement?
In order to decide whether the AAT1’s decision was correct, therefore, the Tribunal must look at the words of Section 32C of the Administration Act and in particular whether special circumstances prevented the Respondent lodging her tax return.
The term “special circumstances” is not defined in the Act or the Administration Act.
In Groth v. Secretary, Department of Social Security, Kiefel J considered the meaning of the expression “special circumstances”. Her Honour said at [545]:
The phrase ‘special circumstances’, it has been said, although imprecise is sufficiently understood not to require judicial gloss: Beadle’s case [Beadle v Director-General of Social Security] at ALR 229 ALD 674, and for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.
In Angelakos v Secretary, Department of Employment and Workplace Relations, Besanko J warned against requiring there to be exceptional circumstances before there may be said to be special circumstances at [33]:
... I also note that the authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances. The danger is that the test will be overstated if the word ‘exceptional’ is emphasised. It was not the intention of Parliament to confine the exercise of the discretion to an exceptional case. There is less risk of overstatement if the words ‘unusual’ or ‘uncommon’ are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case. It may not be easy to postulate the ordinary or usual case other than in quite general terms and, in doing so, close attention must be given to the particular statutory context.
There have been a number of cases before the Tribunal where an accountant has failed to lodge a taxpayer’s return. For example, Secretary, Department of Social Services and Bleeker, Secretary, Department of Social Services and Cannon and Secretary, Department of Social Services and Johnson. The Applicant tendered a list of cases but the Tribunal issued a caution during the hearing that while these decisions may inform the Tribunal, each application must be considered afresh as an individual case. The doctrine of stare decisis does not apply to this Tribunal, for Tribunal decisions one to another. As Senior Member Fice correctly said in Apache Energy Pty Ltd and Chief Executive Officer of the National Offshore Petroleum Safety and Environmental Management Authority and Lander & Rogers Lawyers at [101]:
It is plain that this Tribunal exercises administrative power. It does not exercise judicial power.
However, as I have said, the Tribunal is also informed by previous decisions made in the Tribunal where the material facts of a particular situation may be very similar. In my view the Tribunal should endeavour to be consistent, without ever losing sight of the principle that each application for review turns on its own facts, on the applicable law, any policy that may have been applied, and on the relevant material taken into account, or not taken into account, by the original decision-maker.
One of the cases tendered by the Applicant was Gavranic and Secretary, Department of Social Services. In that case, Member McCallum decided that special circumstances did exist which prevented Mrs Gavranic from lodging her tax return. Mr Wheatcroft also referred to this decision in his submission. However, the facts were different from this case and involved personal matters directly affecting the taxpayer, Mrs Gavranic, and an honest error she made in using the ATO website. This highlights why previous Tribunal decisions in similar cases can be, at best, only informative.
In this matter, the Tribunal finds that there were no particular “unusual” or “uncommon” circumstances, nor that they were “out of the ordinary”. The Respondent had waited until the twelfth month of the year in which she needed to lodge her tax return in order to receive the FTB supplements. She had received a letter from the Department in March 2014 reminding her of the requirement to lodge the return and the consequences in regard to FTB supplements if a tax return is not lodged. The evidence that she gave to the hearing was that she was ‘not good with paperwork’, but she did not put forward any other reason for waiting until 3 June to engage her accountant. There is nothing particularly “unusual” or “special” or “out of the ordinary” in this conduct.
In considering this application for review, I must look at the whole of this particular limb of section 32C(3)(a) of the Administration Act together in its statutory context. The Parliament has enacted this section to allow discretion in a limited field with the phrase that there “…are special circumstances that prevented…” the taxpayer from lodging his or her return before the end of the relevant financial year. (emphasis added)
The Respondent gave no evidence that that she contacted the accounting firm to remind them that it was essential that the tax return be lodged. She gave evidence that she could not be sure that she went to the firm on the day she signed the electronic lodgement form specifically with that deadline in mind, though it is reasonable for her to assume, having put this matter into the hands of her accountants, that they would be seized of the need for the return to be lodged in a timely way.
The Respondent and Mr Wheatcroft gave their evidence in a candid and straightforward manner. I have no reason to doubt their honesty. It is regrettable that an administrative failing by the Respondent’s firm led to her tax return not being lodged on time.
I accept that it was beyond the control of the Respondent that the firm did not lodge her tax return for the 2012-2013 financial year until 1 July 2014. But it was not beyond her control to have signed the authority to lodge her return earlier than the very last day of the relevant period. So while there may be specific cases where the ‘special circumstances preventing lodgement’ provisions as provided by section 32C of the Administration Act may be enlivened, the two essential ingredients to be satisfied, to my mind, must be that (1) the special circumstances exist; and (2) that these special circumstances acted to prevent the individual – the taxpayer claiming the benefit – from lodging his or her return on time.
In looking at the meaning of this complete clause in the Administration Act, in the absence of a statutory definition, the Tribunal must look at the ordinary, everyday meaning of the word “prevent”. The Oxford English Dictionary definition of “prevent” is: ‘stop [someone] from doing something. The Macquarie Dictionary defines “prevent” as: “to keep from occurring; to hinder (a person, etc.) from doing something”.
CONCLUSION
The Tribunal finds, factually, that the Respondent was not stopped or hindered from lodging her tax return earlier than 30 June 2014. Ms Shanhun had the preceding twelve month period from the end of the 2012-2013 financial year in which to compile her relevant documents and submit them to the Australian Tax Office. She was not stopped or hindered from doing this by a circumstance that was unusual or uncommon and which applied personally to her.
Therefore, reading the relevant part of section 32C of the Administration Act together, the Tribunal finds, with respect, that AAT1 was wrong. There were no special circumstances which were out of the ordinary, to borrow Keifel J’s description, or which were unusual or uncommon, which stopped or hindered the Respondent from lodging her tax return at any time in the relevant 12 month period.
There is no provision in the Act or the Administration Act for any discretion to be imposed when there is a failure of a tax agent acting on behalf of a taxpayer. The onus is on a taxpayer seeking to avail themselves of a benefit to ensure that the statutory obligations required to claim that benefit are met. This may seem harsh when there has been a failure by someone else entrusted to ensure that the obligation was fulfilled, but the Parliament has in this enactment made clear that discretion in applying this provision of the Administration Act may only be applied if special circumstances apply to the taxpayer, herself or himself. I cannot find such special circumstances prevented lodgement in this case.
DECISION
The Tribunal sets aside the decision made on 3 September 2015 by the Social Services and Child Support Division of this Tribunal, and, in substitution therefor, affirms the original decision that the Respondent is not entitled to Family Tax Benefit supplements and top ups for the 2012-2013 income year.
I certify that the preceding 42 (forty -two) paragraphs are a true copy of the reasons for the decision herein of D. J. Morris, Member .....[Sgd]...................................................................
Administrative Assistant
Dated 2 September 2016
Date of hearing 19 August 2016 Representative for the
ApplicantMs B Rayment Solicitors for the Applicant
Mills Oakley Lawyers
Representative for the
RespondentMr L Wheatcroft
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