Smith and Secretary, Department of Families, Community Services and Indigenous Affairs

[2007] AATA 1938

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1938

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q 2007/35

GENERAL ADMINISTRATIVE  DIVISION		)
Re		Ellouise Smith

Applicant

And Secretary, Department of Families, Community Services and Indigenous Affairs

Respondent

And Terry Alexander

Third Party

DECISION

Tribunal Senior Member P McDermott, RFD

Date12 November 2007

PlaceBrisbane

Decision The Tribunal sets aside the decision under review and remits the matter to the respondent for reconsideration on the basis that for the period 1 July 2003 to 30 June 2005 payments of family tax benefit should be calculated in accordance with these reasons.

................[Sgd.].......................

Senior Member

Administrative Appeals Tribunal

ADMINISTRATIVE APPEALS TRIBUNAL                 )

)No: Q 200700035

General Administrative Division           )

Re: Ellouise Smith
Applicant

And: Secretary, Dept of Families, Community Services and
Indigenous Affairs
Respondent

CORRIGENDUM [2007] AATA 1938

TRIBUNAL:             Senior Member P McDermott RFD

DATE:                      20 November 2007

PLACE:                   Brisbane

The Decision and Reasons for Decision dated 12 November 2007 is amended so that the decision should now read:

The Tribunal remits the matter to the respondent for reconsideration pursuant to s 42D of the Administrative Appeals Tribunal Act 1975 with the direction that for the period 1 July 2003 to 30 June 2005 payments of Family Tax Benefit should be calculated in accordance with these reasons.

................................................................
  SENIOR MEMBER

CATCHWORDS

SOCIAL SECURITY – family tax benefit – entitlement to family tax benefit payments – pattern of care between parents – decision set aside and remitted

A New Tax System (Family Assistance) Act 1999 (Cth) ss 21(1)(a), 22, 59

A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) ss 71(2), 95, 97, 101

Warne and Secretary, Department of Family, Community Services and Indigenous Affairs [2006] AATA 159

REASONS FOR DECISION

November 2007	Senior Member P McDermott, RFD
Introduction

1.      Ms Ellouise Smith has sought a review of a decision of the respondent that she is entitled to be paid 70% of family tax benefit for her children for the period of 1 July 2003 until 30 June 2005. Ms Smith has contended that during that period she had her children in her care for a greater percentage of time and that the percentage of the family tax benefit payable should be increased accordingly. I have to decide upon the appropriate percentage of family tax benefit that Ms Smith is entitled to be paid for the period of 1 July 2003 until 30 June 2005.

Decisions

2.      On 16 March 2006 the respondent decided that Ms Smith was entitled to be paid 70% of family tax benefit for her three children for the period of 1 July 2003 until 30 June 2005. That decision also determined the family tax benefit which was payable to Ms Smith for the period of 1 July 2005 to 14 March 2006. However, the parties have agreed to the appropriate percentages which should apply to the latter period so it is not necessary for me to consider that further.

3.      On 26 April 2006 an authorised review officer affirmed the decision that Ms Smith was entitled to be paid 70% of family tax benefit for her three children for the period 1 July 2003 to 30 June 2005. A letter was sent to Ms Smith which contained reasons for affirming the decision. The authorised review officer had relied upon the form FAO12 which had been signed by Ms Smith stating that for the 2003/2004 and 2004/2005 financial years, the shared care of her children was 30 % with Mr Alexander and 70% with herself.

4.      On 20 December 2006 the Social Security Appeals Tribunal affirmed the decision of the authorised review officer. Ms Smith has sought a review of the decision.

5.      During the hearing I granted leave to Mr Terry Alexander, the father of the children, to be a third party in these proceedings. I took the view that Mr Alexander should be heard as any decision I make will affect his entitlements.

6.      Ms Smith had previously been paid 100% of the family tax benefit for her children for the period 1 July 2003 to 30 June 2005. Any decision that she is entitled to a lesser percentage of family fax benefit will necessarily result an overpayment of family tax benefit. I will consider the issue of any overpayment in separate proceedings to which Mr Alexander is not a party.

History of the matter

7.      From 1 July 2003 until 30 June 2005, Ms Smith was paid family tax benefit for her three children. She was paid 100% of the family tax benefit on the basis that they were in her care 100% of the time. On the claim form lodged for family tax benefit, she ticked ‘no’ to the question: “Do you share care of this child with any other person other than your current partner?” She stated that she had ticked “no” to that question as she had interpreted the question to refer to shared custody. However, during that period which covers the 2003/2004 and 2004/2005 financial years (and which I shall refer to as the “relevant period”) the children had also been in the care of Mr Alexander.

8.      On 3 March 2006 Mr Alexander made a claim for family tax benefit in respect of his three children. This claim included a claim for the relevant period.

9.      The claim of Mr Alexander was based on a form FA012 which bears the signature of Ms Smith as well as that of Mr Alexander. The form contains the statement that for the 2003/2004 and 2004/2005 financial years the shared care of her children was 30% with Mr Alexander and 70% with Ms Smith.

10.     It was only after Mr Alexander’s claim was made that the respondent decided the applicant had been overpaid family tax benefit. Instalments to recover that overpayment are currently being deducted from the family tax benefit payments to Ms Smith.

Entitlement to family tax benefit

11.     Ms Smith’s and Mr Alexander’s entitlement to receive family tax benefit is conferred by the A New Tax System (Family Assistance) Act 1999 (“the Act”). Under the Act an individual is eligible for family tax benefit if the individual has at least one “FTB child”: see s 21(1)(a). An “FTB child” is defined by s 22 of that Act to be a child of an adult where the child is aged under 18 years and where the adult is legally responsible for the day-to-day care, welfare and development of the child, and the child is in the care of the adult and the child is an Australian resident: see s 22(1) and (2).

12. The Act enables a child to be an “FTB child” of more than one individual. That will occur where the Secretary is satisfied that there has been or will be a “pattern of care” where the child is an “FTB child” of more than one individual who has care for the “FTB child” for at least 10% of the period for which family tax benefit is being claimed. A child is to be taken to be an “FBT child” of that individual for the purposes of s 22 on each day in that period, whether or not the child was in that individual's care on that day: see s 22(7).

13.     I am satisfied that each of the three children is a child of both Ms Smith and Mr Alexander and that both individuals had the care of their children.  The respondent was justified in coming to the conclusion that each child was a “FTB child” of both Ms Smith and Mr Alexander.

14. Where a child is an “FTB child” of more than one individual, the Secretary may under the Act, determine the percentage of family tax benefit to be paid to each individual: see s 59.

15.     I have already adverted to the fact that Mr Alexander’s claim was accompanied by a form FA012, signed by Ms Smith, stating that for the 2003/2004 and 2004/2005 financial years the shared care of the children was 30% with Mr Alexander and 70% with Ms Smith.

16.     In these circumstances the respondent decided on 16 March 2006 that for the relevant period, Ms Smith was entitled to receive only 70% of family tax benefit instead of the 100% of family tax benefit she was previously granted. The respondent also decided that Mr Alexander was entitled to receive 30% of family tax benefit for the relevant.

Consideration

17.     In this application I have to determine the “pattern of care” for the three children during the relevant period.

18.     I make the observation that during the hearing I was concerned that the evidence before me was relevant to the resolution of the dispute. I was prepared to hear evidence of the time that the children spent with each parent.  Having regard to the decision of Deputy President PE Hack SC in Warne and Secretary, Department of Family, Community Services and Indigenous Affairs [2006] AATA 159, I was also prepared to receive evidence of any expenditure of the parties..

19.     I make the observation that both parents do care for their children. There was evidence before me that Ms Smith was co-operative in entrusting Mr Alexander with the care of the children. It is beneficial that Mr Alexander has the support of Ms Barnes. I am sure that both parents are concerned with the welfare of the children. Both parents have collaborated to ensure that ‘changeover’ arrangements occur satisfactorily.  

20.     In determining this application I was not concerned to enter into moral questions such as why a relationship may have broken up. I am also not concerned to dwell upon what some may regard as instances of misconduct on the part of an individual. It was indeed to the credit of Ms Smith that she decided to not call some of her intended witnesses after reflecting whether their evidence would actually assist me in making a decision in this application.

21.     I have already made mention that the FA012 form was purported to have been signed by Ms Smith. On that form it was stated for the 2003/2004 and 2004/2005 financial years the shared care of the children was 30 % with Mr Alexander and 70% with Ms Smith.

22.     Ms Smith contended that she had signed a blank FA012 form. However, she has not been consistent in her explanation of the circumstances of its signing. In her initial discussions with Centrelink, she informed the officer that she believed Mr Alexander had altered the form. She did not mention that she had signed a blank form.

23.     I have taken into account the evidence before me and have come to the conclusion that Ms Smith had indeed signed the form. However, I have concluded that she did not then fully appreciate that she would be placed in a position where she would have to repay any overpayment of family tax benefit. There was evidence before me that she had signed the form at the end of a tiring journey when under some stress. I am satisfied she had, at least, looked through the form before signing.

24.     It was one of Ms Smith’s contentions that the FA012 form was collected by Mr Alexander after the date it was purportedly signed. There is certainly evidence that on that occasion Mr Alexander had collected several Centrelink forms including a FA012 form. However, I am not justified in making the inference that the actual FA012 form was in the bundle of documents collected by Mr Alexander was the actual form submitted to Centrelink.

25.     At the hearing Ms Smith produced her diaries for the years 2000 and 2002. These were admitted as evidence without objection [ex. B]. The 2002 diary records that Ms Smith had the children in her care for about 90% of that year. In some circumstances a diary from a year which is prior to the relevant period may have some value if arrangements have remained unaltered. However, this is not such a case. Ms Smith has contended that after 2002 Mr Alexander had less care of the children than before.

26.     I have come to the conclusion that the diaries which have been produced do not assist me in relation to the decision which I have to make. I have accepted Ms Smith’s explanation that she has been unable to find diaries for the relevant period. This is understandable in view of the fact she has moved house.

27.     It is not possible on the state of the available evidence for me to make an accurate finding on the “pattern of care” of the children. There are no records which enable me to make such a finding. As is not uncommon in cases of this nature, Ms Smith and Mr Alexander have markedly different accounts of the “pattern of care” of the children.

28.     Ms Smith contends that during the relevant period the children spent one, or at the most two, nights a week with Mr Alexander. Ms Smith stated that this occurred every two or three weeks. The position is complicated by the fact that not all three children would have been with Mr Alexander at the one time. One child might have been in the care of the parents of a friend of that child.

29.     In these circumstances the FA012 form signed by both parties is an important item of evidence. It is the only written evidence in relation to the pattern of care. I have come to the conclusion that the evidence that I have heard from the witnesses has not displaced the pattern of care which is mentioned on the FA012 form.

30.     There was considerable variance in the evidence as to the pattern of care of the children between the witnesses called by Ms Smith. I am satisfied those witnesses were unable to give accurate evidence of the pattern of care.

31.     There was some disparity in the period Mr Alexander actually had the children when they were in his care. One witness, Ms Daldry, remarked in her statement that outside of school holidays Mr Alexander would have the children in his care “for one night out of every second or mostly third weekend” [ex. M]. In contrast, Ms Stocks in her evidence stated that Mr Alexander had the children “for a couple of days at a time”.

32.     Some of the witnesses gave evidence of the percentage of care by a parent. For instance, Ms Daldry, remarked in her statement “I would approximate that Terry had the children about 5% of each school holidays” [ex. M]. In cross-examination she frankly stated “I don’t know fully”. She also acknowledged that she had made a “rough estimate”.  She also stated “I am not good at percentages”.

33.     Ms Nielsen, the mother of Ms Smith, remarked in her statement: “Terry Alexander never had possession of the children in this period of time” [statement 19 April 2007, ex. Q]. That statement is certainly not correct. Ms Smith and other witnesses called by Ms Smith stated that Mr Alexander had periods of care of the children during the relevant period. Ms Nielsen also stated that Mr Alexander only had the children overnight once a month. This is quite different from the preponderance of evidence that in every month Mr Alexander had the children for, at least, a number of nights. I do not regard the evidence of Ms Nielsen as being accurate.

34.     The witnesses called by Ms Smith have not been in a position to provide accurate evidence as to the pattern of care of the children. This is also the case of the evidence from Ms Ferguson and Ms Florence, whose children were involved in some sleepovers. Some witnesses who saw the children in the care of Ms Smith at a gym would not be able to verify if the children were in the overnight care of Mr Alexander.

35.     Ms Stocks mentioned that Mr Alexander had the children in his care for “4 to 6 nights a month, maybe more”.

36.     There was some evidence before me from Mr Shane Johnston, the former partner of Ms Smith. Mr Johnson was called to give evidence by Mr Alexander. Mr Johnson estimated that Mr Alexander had the children in his care for up to 3 to 4 nights a week. I do not regard his estimate as accurate. It even exceeds the estimate of Mr Alexander and his partner, Ms Barnes of care for 2 to 3 nights per week. I also mention there are some unresolved legal issues between Ms Smith and Mr Johnson.

37.     After considering the evidence I find that the information as to the “pattern of care” of the children that is provided in the FA012 form actually reflects the pattern of care of the children. I consider that Mr Alexander and Ms M Barnes have inserted a fair estimate of the pattern of care.

38.     However, resolving the “pattern of care” of the children is not the end of the matter. In Warne and Secretary, Department of Family, Community Services and Indigenous Affairs [2006] AATA 159, Deputy President PE Hack SC remarked, at [27], that “it is appropriate for the Tribunal to consider proportionality of FTB payments on the basis of financial as well as temporal factors”.

39.     There was evidence before me from Mr Scott that Mr Alexander had contributed $5 per week as child support for all three children. This evidence was not contradicted by Mr Alexander.

40.     There was also evidence that Mr Alexander had purchased the children’s clothes and other items. Mr Alexander also paid for travel on one occasion. I accept that Mr Alexander is unable to work because of his injured shoulder. One witness made an allegation that Mr Alexander was accepting “cash under the table”. I regard that allegation as unsubstantiated. No evidence was placed before me to support that allegation.

41.     While I do not have evidence before me as to the respective financial contributions of both parents, it is clear that Ms Smith has by far the greater financial responsibility for the care of the children. Ms Smith has always been in employment while Mr Alexander is unable to obtain suitable employment. It is clear that Mr Alexander had limited resources to apply to the care of the children. Ms Smith has had to bear the greater financial burden of raising the children including paying for the medical care, schooling and clothing of the children.

42.     In the circumstances I consider that it is appropriate to make an adjustment in favour of Ms Smith.  The respondent should make that determination on the amount of the adjustment after giving both parties the opportunity to make submissions on this issue.

Decision

43.     I set aside the decision under review and remits the matter to the respondent for reconsideration on the basis that for the period 1 July 2003 to 30 June 2005 payments of family tax benefit should be calculated in accordance with these reasons.

I certify that the 43 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member P McDermott, RFD.

Signed:         .....................................................................................
           Mr S O’Grady, Associate

Date of Hearing  9 & 10 July 2007
Date of further submissions     9 August 2007
Date of Decision  12 November 2007
For the applicant  Self-represented
For the respondent                   Ms K Hamilton, a departmental advocate