Smith and Secretary, Department of Social Services (Social services second review)
[2017] AATA 135
•8 February 2017
Smith and Secretary, Department of Social Services (Social services second review) [2017] AATA 135 (8 February 2017)
Division
GENERAL DIVISION
File Number(s)
2016/4649
Re
Lee Smith
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Mr D. J. Morris, Member
Date 8 February 2017 Place Hobart DECISION
The Tribunal affirms the reviewable decision.
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D. J. Morris, Member
Catchwords
SOCIAL SERVICES – Family Tax Benefit (FTB) – whether applicant Australian resident at time of claim – whether FTB child in applicant’s care – factors to have regard to in determining Australian residency – FTB child – original decision affirmed
Legislation
A New Tax System (Family Assistance) Act 1999, ss 21, 22, 24
A New Tax System (Family Assistance)(Administration) Act 1999Social Security Act 1991, ss 3(1), 7(2) and 7(3)
CASES
Clifopoulos and Secretary to the Department of Social Security [1994] AATA 282
Hafza v Director-General of Social Security [1985] 60 ALR 674
Herbert v Byrne [1964] All ER 882
Joseph and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 728
Wybrow and Secretary, Department of Social Services [1992] AATA 315REASONS FOR DECISION
D. J. Morris, Member
8 February 2017
BACKGROUND
On 18 January 2016 the Applicant, Mr Lee Smith, lodged a claim online for family tax benefit (FTB) for his two minor children.
On 5 February 2016 Mr Smith was advised by the Department of Social Services (the Department) that his claim was rejected because he was assessed as not being an Australian resident. This was the original decision.
Mr Smith sought a review by an Authorised Review Officer (ARO), an officer of the Department not involved in the original decision. The ARO reviewed the original decision and on 24 February 2016 decided to affirm it.
Mr Smith applied to the Social Services and Child Support Division of this Tribunal (AAT1) for an independent review of the decision. AAT1 conducted a hearing on 16 August 2016 and affirmed the original decision.
Mr Smith sought a further review by the General Division of the Tribunal. The hearing was held on 10 January 2017. The Applicant represented himself, gave evidence and was cross-examined by the representative of the Respondent, Mr Brian Sparkes.
The Tribunal admitted into evidence documents submitted by the Respondent under section 37 of the Administrative Appeals Tribunal Act 1975 (‘T’ documents).
The Tribunal also admitted into evidence the following document submitted by the Applicant: Discharge Referral Note from St George Hospital, Sydney, dated 1 December 2016 relating to Mr Lee Smith (Exhibit A1).
QUESTION TO DETERMINE
The issue before the Tribunal was whether Mr Smith was an Australian resident on the date he lodged his application for FTB, 18 January 2016 and, if the answer to that question is ‘yes’, did Mr Smith have an FTB child in his care on that date?
THE CLAIM
Section 21 of A New Tax System (Family Assistance) Act 1999 (the Act) sets out when an individual is eligible for FTB in normal circumstances. Relevantly, section 21(1)(a) says that a person is eligible for FTB if the person has at least one FTB child. The term “FTB child” is set out in section 22. Inter alia, section 22(2) states that an individual is an FTB child of another individual (the adult) if the individual is aged under 16; and the individual is in the adult’s care; and the individual is an Australian resident, is a special category visa holder residing in Australia or is living with the adult and circumstances set out in section 22(5) relating to legal responsibility for the child are met.
Section 3(1) of the Act provides that the meaning of “Australian resident” is the same as the meaning in the Social Security Act 1991 (the SS Act).
Section 7(2) of the SS Act says that an Australian resident is a person who resides in Australia and is also in one of three categories: an Australian citizen; the holder of a permanent visa; or a special category visa holder who is a protected SCV holder.
Section 7(3) of the SS Act says:
(3) In deciding for the purposes of this Act whether or not a person is residing in Australia, regard must be had to:
(a) the nature of the accommodation used by the person in Australia; and
(b) the nature and extent of the family relationships the person has in Australia; and
(c) the nature and extent of the person's employment, business or financial ties with Australia; and
(d) the nature and extent of the person's assets located in Australia; and
(e) the frequency and duration of the person's travel outside Australia; and
(f) any other matter relevant to determining whether the person intends to remain permanently in Australia.
The Tribunal had before it a copy of Mr Smith’s FTB claim, submitted on-line to the Department, on 18 January 2016. In that claim Mr Smith cited his home address as a residence in West Moonah, a suburb of Hobart. In the section of the form headed ‘Australian Residence’, the Applicant stated that he was living in Australia on a permanent basis and that the date he started living in Australia was 14 January 2016. He stated that before that date he was residing in the Republic of the Philippines and had been a resident of that country from 21 August 2015 to 14 January 2016.
Mr Smith stated that he was making the FTB claim in relation to two minor children of which he is the father, a male born in April 2009 and a female born in October 2013. He stated that both of these children were born in the Philippines and arrived in Australia on 14 January 2016.
The ARO found, as a matter of fact, that Mr Smith was born in Australia in 1953 and is an Australian citizen, and that was also not contested by the Respondent.
It was common ground and conceded by the Respondent in this hearing that Mr Smith is an Australian citizen. The Tribunal also had before it evidence that both of the minor children who were the subject of his claim were Australian citizens by descent and that fact was also not contested by the Secretary. The Tribunal finds that Mr Smith is an Australian citizen, so he fulfils that part of the requirement of the Act.
Having established these facts, the next question that is necessary is to decide whether Mr Smith was an Australian resident at the time of his claim. This is necessary because section 7(2) of the SS Act has been written conjunctively – a person making a claim must be an Australian resident and fulfil one of the other mandatory qualifying categories, in Mr Smith’s case Australian citizenship.
Was Mr Smith an Australian resident at the date of his claim?
Mr Smith, in his submissions, drew the Tribunal’s attention to the remarks of Deputy President McDonald in Clifopoulos and Secretary to the Department of Social Security [1994] AATA 282 which said that the application of section 7(3) should not be done in a ‘mechanical way’ and that in coming to a conclusion about whether or not he was an Australian resident when he made his claim, the Tribunal should take into account all the relevant circumstances relating to his situation.
The Tribunal agrees that, in considering this question, the correct approach is not to “tick or cross” the particular factors set out in section 7(3) for which a decision-maker must have regard and come to some sort of arithmetical result. But it is clear that the Parliament has stipulated that these particular factors must be taken into account in deciding whether or not a person is an Australian resident – they are, in effect, the stepping stones that must be trod along the path to making that determination.
The last provision in the subsection, section 7(3)(f) indicates to me that the Parliament did not expect the foregoing factors to be the only factors taken into account, because it says that a decision-maker must consider any other relevant matter in determining whether the person intends to remain permanently in Australia.
Accordingly, in deciding whether the original conclusion that Mr Smith was not an Australian resident was correct when he made his claim, I must look at the facts and how they should be regarded in applying the law.
Mr Smith told the Tribunal that when he comes to Hobart to see family, he stays with a former spouse in her home and it was her address that he put on his FTB claim form. He says he keeps some clothes and minor personal effects at that residence. He said that he owns no real estate in Australia but he has a lease on a house in central Hobart that has been sub-let for many years to a commercial business and for which he receives a small return. He told the Tribunal he had never lived at this property and his only interest is being the head leaseholder.
Mr Smith has several children living in Australia and two attended the hearing, one adult and one a minor. He said his aged mother lives in Tasmania and he has grandchildren here. One son from a former marriage has particular learning challenges and Mr Smith comes to Tasmania at least once a year to meet with his son’s teachers to help set out his son’s educational plan for the year ahead. He told the Tribunal he was ‘constantly’ in touch on email and by telephone dealing with his son’s special needs and talking to other people in Australia. He said that his ties were firmly in Australia.
Mr Smith’s assiduousness in regard to the educational needs of his son was not contested by the Respondent, and the Tribunal accepts it.
Mr Smith put forward no evidence of any employment, business or financial ties with Australia, save for holding a commercial lease as mentioned above. The Tribunal had before it travel data obtained by the Respondent from the Department of Immigration and Border Protection for the period between 1 October 2009 and 14 January 2016. This data recorded Mr Smith’s movements into and out of Australia and showed that, in this particular period, he was out of Australia for 74 per cent of the time.
Mr Smith did not dispute these figures. He explained that he lives in the Republic of the Philippines with a former wife in the same residence and that they jointly care for the two children, the subject of the FTB claim. He told the Tribunal that he is precluded by local law from owning real estate in that country but that he had had a long lease on a property which he had recently sold and he was planning then to move to another residence in the north of the country.
He gave evidence that he lives in the Philippines because of its warmer climate and said that it assisted with dealing with his medical conditions. Relevantly, Mr Smith is on an Australian Disability Support Pension (DSP) and was granted unlimited portability of that pension to enable him to spend longer periods outside Australia. Without unlimited portability, the recipient of a DSP cannot normally be absent from Australia for a period greater than four weeks in a 12 month period without the DSP being suspended or cancelled.
The Respondent did not contest Mr Smith’s contentions about his health and the reasons he lives abroad but submitted that nothing turns on that fact.
I am inclined to agree with the Respondent on this particular point. In considering whether a person is or is not an Australian resident, the reason they might be living or spending significant periods outside Australia and what their assets or other circumstances might be in another country is only relevant in considering their intentions. Otherwise, where they live, and why, is not especially germane to the question of Australian residency.
The Respondent alerted the Tribunal to a previous Tribunal decision, Joseph and the Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 728. In that decision, Deputy President Groom said, relevantly:
“There may be many reasons why a person takes up residence in a particular place … a move might be necessary for health reasons. The particular reason for a person taking up residence at a place has limited relevance to the question of whether it is truly the person’s place of residence except in so far as it helps to explain if it is the person’s intention to treat that place as home and to genuinely make it their settled abode.”
Mr Smith submitted that the Tribunal should consider the decision in Wybrow and Secretary, Department of Social Security [1992] AATA 315.
In that case, Mr Wybrow had spent many years in Japan. He worked first for the New South Wales Government there, and then for a charitable organisation which provided assistance to the children of Australian soldiers and Japanese nationals left behind after World War II. Mr Wybrow owned a residence in Australia and paid taxes in Australia. He did not own property in Japan. He did not earn income there or pay taxes. When he was there he lived where he worked, or sometimes at a friend’s house. His wife remained in their matrimonial home in Sydney. All of his expenses were funded by the charitable organisation. He told the Tribunal that his residence in Australia was his home, and he had always regarded it as such. He had no family in Japan. The work he did in Japan was beneficial to Australia’s interests.
Mr Smith’s situation may be distinguished from Mr Wybrow’s. Mr Smith does not own a residence in Australia. Mr Smith is not living away from Australia for some reason outside his control which requires him to do so, unlike Mr Wybrow who was obliged by his employment to reside in Japan; Mr Smith lives away from Australia by his own choice. Like Mr Wybrow, Mr Smith has family in Australia, but unlike him, he also has family, including the subject children, living with him in the Philippines.
It is clear to the Tribunal that a person may be absent for extended periods from a place without that place necessarily ceasing to be his or her principal home. For example, Lord Denning MR said in Herbert v Byrne (1964) 1 All ER 884 in considering whether a tenant was in “personal occupation” of a house:
“A sea captain may be away from his house for months at a time but it is none the less his house”.
But in that case, the sea captain is away because of his work, and his ship does not become his residence, even if his absences may be for very long periods. He is still ‘resident’ back at his house on shore, because his intention is that that house is his permanent residence, he will return to it, and he has no other.
In Hafza v Director-General of Social Security [1985] 60 ALR 674, the Federal Court stated that a person’s settled or usual place of abode is significant in determining where that person is resident. Wilcox J stated:
“There is a plethora of decisions, arising in various contexts, but predominantly matrimonial causes and revenue cases, relating to the legal concept of residence. As a general concept residence includes two elements: physical presence in a particular place and the intention to treat that place as home; at least for the time being, not necessarily forever. The concept was explained in a taxation case, Koitaki Para Rubber Estates v Federal Commissioner of Taxation (1941) 64 CLR 241 at [249] by Williams J:
The place of residence of an individual is determined, not by the situation of some business or property which he is carrying on or owns, but by reference to where he eats and sleeps and has his settled place of abode. If he maintains a home or homes he resides in the locality or localities where it or they are situate, but he may also reside where he habitually lives even if this is in hotels or on a yacht or some other abode.”
[Emphases added.]
Therefore, where a person physically is, the place that they intend to treat as their home – where, in short, he has his settled place of abode is important in the Tribunal’s consideration of this matter.
Mr Smith gave evidence that when he travelled to Australia he sometimes buys return tickets to the Philippines and sometimes one-way tickets; he tries to get the cheapest tickets. He said he had never expressed the view that he would never return to Australia and that he will “when my health lets me”. He said that he was awaiting advice from the Austin Hospital about potential surgery and that his health might improve to allow him to come back.
Under cross-examination Mr Smith said he cited a Hobart address in his FTB claim form because he regarded Australia as his permanent home and the Philippines as his temporary home. He told the Tribunal that the time of the claim was the first occasion when the minor children had come to Australia and the main purpose of the visit was to see their grandmother and undergo Australian vaccinations. He agreed that about three-quarters of his time is spent out of Australia and that his time out of Australia, year by year, had increased over the years. He agreed that when he made his FTB claim in January 2016 he had no specific plans to return to Australia.
In coming to a conclusion about this matter, I take into account that Mr Smith does have significant family links in Australia and that he has frequent contact with his children and other family members here. However, his absence is not transient or temporary, in the sense of there being a date or even a timeframe for him to return. Since at least 2009 he has spent the vast majority of each year out of Australia. He does not maintain a residence here. He has no significant assets here. He lives in another country and on his own evidence to the hearing that he is in the process of procuring a new residence there (accepting it will be a leasehold) he has evinced no particular intention to return to live in Australia other than a vague future general desire.
In the claim form Mr Smith lodged on 18 January 2016 next to ‘Residence’ he put “I am living in Australia on a permanent basis.” In filling in the details for the two minor children he said “[Name of child] lives in Australia.” Elsewhere in the form he stated that all three of them had commenced residing at the Moonah address on 14 January 2016. In evidence to this hearing he agreed that they all returned to the Philippines on 21 February 2016.
So in summary, considering the factors section 7(3) requires a decision-maker to have regard to, I note Mr Smith does not maintain a residence or have any assets in Australia other than some clothes and minor personal effects. I note that he has extensive family connexions in Australia, including his mother, former spouses and a number of children and other extended family. I note that the only business or financial ties Mr Smith has in Australia of which the Tribunal was aware was the head-lease of the house in Hobart. I note, and Mr Smith accepts, the evidence of the frequency and length of Mr Smith’s absences from Australia.
Section 7(3)(f) of the SS Act, to which Mr Smith drew the Tribunal’s intention, that requires me to look at any other matter relevant to determining Mr Smith’s intention to remain permanently in Australia does not help him at all. He plainly did not intend to remain permanently in Australia when he made his claim.
Taking into account all the matters to which I must have regard under section 7(3), I find that the Applicant was not permanently resident at the time of his claim. By his own admission, he only visited for a matter of weeks and then returned to his usual place of residence in the Philippines with his children. I might have come to a different conclusion if Mr Smith had at that time, or even shortly afterwards, returned to Australia with the children and had settled back at an Australian address, but there is simply no evidence of that. In fact, he agreed that the children had not returned to Australia at all since that visit.
I take into account Mr Smith’s evidence about his health and possible surgery in the future, and note the evidence that he experienced a significant health scare and was recently admitted to hospital in Sydney, but my task is to look at whether the decision taken in relation to assessing his eligibility for FTB on the date he made his claim, 18 January 2016, was correct, and I conclude that it was. I find that Mr Smith was not an Australian resident as required by the legislation at the time he made his claim.
The claim therefore fails, because the legislation requires that a person must be an Australian resident, as well as fulfil other requirements.
Does Mr Smith have an FTB child?
However, for completeness, I will also consider the question of whether or not Mr Smith has an FTB child. As mentioned above, the Act sets out in section 22 the requirements for deciding whether an individual has an FTB child. In addition, section 24 of the Act provides for the effect of absences of an FTB child outside Australia.
Section 24(1) provides that if a child born outside of Australia is an FTB child at birth and the child continues to be out of Australia for more than 56 weeks, the child is not an FTB child at any time after the period of 56 weeks beginning on the first day of the child’s absence from Australia.
Both of Mr Smith’s children named in his claim have been absent from Australia since birth, 2009 and 2013 respectively. In his own evidence, Mr Smith told the Tribunal that their visit to Australia in January 2016 was the first time they had come to this country. Neither of them was therefore an FTB child under the Act on the date of Mr Smith’s claim.
The law provides for an extension of this 56 week period in certain stipulated circumstances set out in section 24. No submissions were made by the Applicant that any of these circumstances applied to his minor children and there was no other evidence before me that any of these circumstances were applicable in this case. Accordingly, even if I were to conclude that Mr Smith was an Australian resident at the date of his claim (which I have not), he would not be eligible for this benefit because he did not at that time have an FTB child in his care.
DECISION
The Tribunal decides to affirm the reviewable decision.
I certify that the preceding 49 (forty-nine) paragraphs are a true copy of the reasons for the decision herein of D. J. Morris, Member
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Associate
Dated: 8 February 2017
Date(s) of hearing: 10 January 2017 Applicant: In person Counsel for the Respondent: Mr Brian Sparkes
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