SKORA and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

[2010] AATA 658

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 658

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2009/3993

GENERAL ADMINISTRATIVE  DIVISION		)
Re		CHRISTINA SKORA

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Miss E A Shanahan, Part-Time Member

Date30 July 2010

PlaceMelbourne

Decision For the reasons given orally at the conclusion of the Hearing in this matter on 30 July 2010 IT IS DECIDED that the decision of the Social Security Appeals Tribunal made on 15 July 2009 is affirmed.

(sgd) E A Shanahan

Part-Time Member

SOCIAL SECURITY – Family Tax Benefit – benefits paid by instalment – top up payments – failure to lodge tax return in the required period – arrears not payable – decision of the Social Security Appeals Tribunal affirmed.

A New Tax System (Family Assistance) Act 1999 (the Act)

Family Assistance (Administration) Act (the Administration Act)

Administrative AppealsTribunal Act1975

REASONS FOR DECISION

31 August 2010 Miss E A Shanahan, Member       

1.      Mrs Skora became entitled to payment of Family Tax Benefit (FTB) in the 2005-2006 financial year.  She was paid the benefit on a fortnightly basis and was therefore required to lodge an income tax return within two years of the end of that financial year, so that adjustments could be made to the FTB based on actual taxable income.  Mr and Mrs Skora did not lodge their 2005-2006 income tax returns until 13 April 2009.  On 17 April 2009 the Family Assistance Office, having reviewed Mrs Skora’s FTB for 2005-2006 using the actual family income, estimated that she had been entitled to $2,018.45. She had received $1,149.75 and had an entitlement to payment of the remaining $868.70; less an adjustment of the same amount, giving rise to a nil balance.

2.      Mrs Skora requested a reconsideration of this decision.  A Centrelink Authorised Review Officer (ARO) affirmed the decision on the basis that the Family Assistance law stated that the FTB recipient is not entitled to any potential top-up that would have otherwise been paid, if she had lodged her returns within the allowable period.  Mrs Skora applied to the Social Security Appeals Tribunal (SSAT) for a review of the ARO’s decision on 26 May 2009. On 15 July 2009 the SSAT affirmed the decision.  Mrs Skora then lodged an application for review of the SSAT’s decision by this Tribunal on 25 August 2009. 

3. The Tribunal was provided with the documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (the T Documents).  The Tribunal conducted a hearing by telephone at the Applicant’s request.  Mrs Skora represented herself and Ms Ailsa Bramley, a Centrelink advocate, appeared for the Respondent.  The issue before the Tribunal was whether the Applicant was entitled to payment of arrears of the FTB in respect of the 2005-2006 financial year. 

4.      Mrs Skora’s FTB for the 2005-2006 financial year had been calculated on the basis of an estimated combined income of $70,000 for that year, her husband anticipating an income of $40,000 and she an income of $30,000.  Their actual combined income, calculated after lodgement of their tax return for the year 2005-2006 on 13 April 2009, was $41,132.00.  On 17 April 2007 Centrelink wrote to Mrs Skora noting that she and her husband had not yet lodged a tax return for the year in question.   Centrelink advised her to lodge one immediately or to advise them by 30 June 2007 if she was not required to lodge a tax return.

5.      The letter also pointed out penalties that may result from failure to lodge a tax return.  She might have to repay all the benefit received and be ineligible for further FTB payment if she had not responded to the letter by 30 June 2007.   Centrelink sent a further letter to Mrs Skora on 13 November 2007.  On 12 November 2008 Centrelink notified Mrs Skora of a FTB debt of $1,279.80 in respect of the 2006-2007 financial year.  The original decision not to pay the FTB top up in respect of 2005-2006 financial year was made by Centrelink on 17 April 2009. 

6.      In her evidence before the Tribunal Mrs Skora agreed that she had received explanatory notes when she first applied for the FTB. She admitted that she had received the letter of 17 April 2007 and all the other documents but she said she had not noted the deadlines by which she was to reply.  She said she received many documents and had not read all of the documents properly.  She agreed that she should have read them.  She also agreed that she should have lodged her tax returns on time. She did not give a reason for not doing so.  However, she had told the SSAT that her husband had been ill. 

7.      Mrs Skora said that the major problem was that the Centrelink documents did not make the deadlines clear.  Despite this, she agreed that the date of 30 June 2007, by which time she was required to lodge a tax return, was included in the letter of 17 April 2007.  She contrasted the current format of letters to clients from Centrelink with those in existence prior to 2010.  She found the current format much clearer and easier to follow.  She found the dates to be prominently displayed and eye catching.

8.      As the Tribunal was not familiar with these changes Ms Bramley explained that the format had been changed in late 2009 in anticipation of amendments to the Act.  These amendments had yet to come into force.  Mrs Skora believed that many recipients of various benefits would have the same difficulties she experienced and was keen to obtain any available data as to the incidence of such errors.  Neither the Tribunal nor Ms Bramley could provide her with such information and Ms Bramley referred her to Centrelink to make such enquiries.  Mrs Skora was of the opinion that her daughter, Angelica, was being penalised for her mother’s oversights. 

LEGISLATION

9.      Section 58 of the Act provides for the calculation of FTB:

Annual rate of family tax benefit for individuals

(1)Subject to sections 60 to 63, an individual’s annual rate of family tax benefit is to be calculated in accordance with the Rate Calculator in Schedule 1.

Schedule 1, Parts 2 and 3 of the Act provide for an income test that requires the maximum rate of FTB to be reduced by a formula that takes into account the individual’s adjusted taxable income. 

10.     Clause 2(1) of Schedule 3 defines adjustable taxable income:

2 Adjusted taxable income

(1)For the purposes of this Act and subject to subclause (2), an individual’s adjusted taxable income for a particular income year is the sum of the following amounts (income components):

(a)     the individual’s taxable income for that year; …

11.     Provisions in Clause 3 of Schedule 2 include in the adjusted taxable income the income of the other member of a couple. 

12.     Section 28 of the Administration Act states:

Variation of instalment and past period entitlement determinations where income tax return not lodged

(1)     This section applies if:

(a)a determination under section 16 or 17 is in force at, or was in force before, a particular time; and

(b)there are one or more days (the cancellation days ) before the particular time in respect of which the following conditions are satisfied:

(i)the cancellation days occur in the income year (the cancellation income year ) that began 2 years before the beginning of the income year in which the particular time occurs;

(ii)the claimant is entitled to be paid family tax benefit under the determination for the cancellation days;

(iiithe claimant, or the claimant's partner at the particular time (if he or she was also the claimant's partner at some time in the cancellation income year), or both, are required to lodge an income tax return for the cancellation income year but have not done so by the particular time;

(iv)by the particular time, an assessment has not been made under the Income Tax Assessment Act 1936 of the taxable income for the cancellation income year of everyone to whom subparagraph (iii) applies.

Consequence of section applying

(2)If this section applies, the Secretary must vary the determination so that it has the effect that the claimant is not, and never was, entitled to family tax benefit for the cancellation days.

Consequence where income tax returns are later lodged

(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 income tax returns for the cancellation income year for the taxpayers involved were lodged with the Commissioner of Taxation during the income year that began 2 years after the beginning of the cancellation income year--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.

13.     Section 16 of the Administration Act relates to instalment entitlement claims:

Determination of instalment entitlement claim

(1)This section applies if the claim is one for payment of family tax benefit by instalment.

(2)If the Secretary is satisfied that the claimant is, at the time the Secretary makes the determination on the claim, eligible for family tax benefit in accordance with Subdivision A or C of Division 1 of Part 3 of the Family Assistance Act, the Secretary must determine that the claimant is entitled to be paid family tax benefit for each day on which the determination is in force at the daily rate at which the Secretary considers the claimant to be eligible.

SUBMISSIONS

14.     Mrs Skora relied on the evidence she had given.  Ms Bramley submitted that following a reconciliation of payments by instalment with the lodged income tax return, a debt or top-up payment was only payable if the tax return had been lodged by the end of the two-year period of the financial year under consideration; that is by 30 June 2008.  As Mrs Skora and her husband had not lodged their tax returns until 13 April 2009, a top-up payment was not payable. 

TRIBUNAL’S DELIBERATIONS

15.     Mrs Skora acknowledged that she had received all the letters Centrelink had sent her about FTB allowances.  Mrs Skora also admitted that she had not read all the documents properly. The Tribunal has no alternative but to affirm the decision of the SSAT of 15 July 2009 as Mrs Skora did not meet the legislative requirements despite adequate written advice from Centrelink regarding her obligations under the Act. 

I certify that the fifteen [15] preceding paragraphs are a true copy of the reasons for the decision herein of
Miss E A Shanahan, Member

(sgd) Mya Anumarlapudi
  Clerk

Date of Hearing  30 July 2010
Date of Decision  30 July 2010
Representative for the Applicant    Self-Represented
Solicitor for the Respondent          Ms A. Bramley, Centrelink Advocacy Branch