Smith; Secretary, Department of Social Services and (Social services second review)

[2017] AATA 699

Smith; Secretary, Department of Social Services and (Social services second review) [2017] AATA 699 (19 May 2017)

Division: General Division

File Number(s):      2016/3620

Re:Secretary, Department of Social Services

APPLICANT

AndAngelica Smith

RESPONDENT

DECISION

Tribunal:Deputy President S A Forgie

Date:19 May 2017

Place:Melbourne

The Tribunal decides:

(1)to set aside the decision made by the Tribunal in its Social Security and Child Support Division on 8 June 2016; and

(2)to substitute a decision affirming the applicant’s original decision of the 6 May 2015;

and notes that the effect of its decision is that the respondent is not entitled to receive Family Tax Benefit Part A Supplement and Part B Supplement for the 2012/2013 income year.

........[sgd]...........................................................

Deputy President S A Forgie

Catchwords

SOCIAL SECURITY – FAMILY TAX BENEFIT – reconciliation – one member of couple required to lodge income tax return before end of first income year after relevant income year unless special circumstances – whether special circumstances – Secretary’s decision affirmed

Legislation

A New Tax System (Family Assistance) (Administration) Act 1999 ss 3, 16, 17, 20, 28, 31A, 32AA, 32A, 32B, 32C, 32D, 32J, 104, 105, 105A, 105B, 107
A New Tax System (Family Assistance) Act 1999 ss 3; Sch 3 and cll 2, 3
Administrative Appeals Tribunal Act 1975 ss 37, 43
Family Assistance and Other Legislation Amendment Act 2013 ss 3; Sch 2B and items 18, 56
Income Tax Assessment Act 1936
Social Services and Other Legislation Amendment Act 2014 ss 3; Sch 3 and item 32; Sch 12 and item 19
Social Services Legislation Amendment (Family Assistance Alignment and Other Measures) Act 2016 s 3; Sch 1 and item 13
Social Services Legislation Amendment (Miscellaneous Measures) Act 2016 s 3; Sch 2 and items 4, 5, 6, 15, 21

Cases

Groth v Secretary, Department of Social Security [1995] FCA 1708; 40 ALD 541
Re Secretary, Department of Social Services and De Jager [2015] AATA 828
Riddell v Secretary, Department of Social Security [1993] FCA 261; (1993) 42 FCR 443; 114 ALR 340; 17 AAR 340; 30 ALD 31

Secondary Materials

REASONS FOR DECISION

Deputy President Forgie

1. The Secretary of the Department of Social Services (Secretary) applied for review of a decision made by the Tribunal’s Social Security and Child Support Division (AAT1 review) to set aside her decision and to remit the matter to the Secretary to reconsider Mrs Smith’s entitlement to Family Tax Benefit (FTB) on the basis that special circumstances existed. I have decided to set aside the AAT1 review decision and to substitute a decision affirming the original decision made by the Secretary under s 105 of the A New Tax System (Family Assistance) (Administration) Act 1999 (FA Administration Act). The practical effect of my decision is that Mrs Smith is not entitled to receive FTB Part A Supplement and FTB Part B Supplement. 

2. In reaching my conclusion, I have spent some time in examining the relevant legislative provisions as their application is affected by various amendments made over the years. I have decided that recent amendments apply to Mrs Smith’s position but have not accepted what I understand to be the Secretary’s position regarding review decisions made more than 52 weeks after the original decision was made. I have come to the conclusion that, where s 107(2)(d) of the FA Administration Act arises, the reference to the “review decision” is a reference to the review decision made by the Secretary under s 105 or under s 105 by virtue of s 105A. It is not a reference to the subsequent decision made by the Tribunal, whether at first or second tier review.

   BACKGROUND

3. There is no dispute between the parties as to a number of factual issues. In view of that and on the basis of the evidence in the documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T documents), I have made the findings of fact set out in this section of my reasons.

4. Throughout the 2012/2013 income year, Mrs Smith was partnered and she and her husband had two dependent children.  She received FTB throughout the year.  The rate at which FTB was paid to Mrs Smith from 1 July 2012 had been assessed by the Department of Human Services (DHS) on the basis that Mr and Mrs Smith had an estimated combined adjusted taxable income of $69,589.  The sum of $13,866 was attributed to Mrs Smith’s estimated adjusted taxable income and the remaining $55,723 to Mr Smith.[1]  Mr Smiths’ income, however, was increased by a sum of $23,282 representing total net investment losses he had incurred.  That meant that Mrs Smith’s regular rate of FTB was calculated on the basis of a combined adjusted taxable income of $92,871.  DHS advised her of this figure in its letter to her dated 29 June 2012[2] and again in a letter dated 14 February 2013.[3]  In particular, it advised her that it had used FTB Part A Combined Income of $92,871 and FTB Part B Low Earner income of $13,866 in calculating her regular payment of Family Assistance. 

   [1] Centrelink Customer Record dated 1 July 2012: T documents; T14 at 44

   [2] T documents; T3 at 11-14

   [3] T documents; T3 at 15-17

5. On 17 March 2014, DHS wrote to Mrs Smith and started its letter with the heading:

   “Family Tax Benefit – Important action required by 30 June 2014”

   The text of the letter then read:

   “You now only have one year instead of two years to lodge a tax return, or to tell us if you and/or your partner are not required to lodge a tax return in order to receive your Full Family Tax Benefit entitlements.  For more information on this change, go to humanservices.gov.au/taxtime and select ‘Changes to the time period for lodging lump sum claims and confirming income’.
   
   To make sure you receive your full Family Tax Benefit entitlement, you and your partner need to lodge a 2012-2013 tax return, or tell us if you and/or your partner are not required to lodge a tax return, by 30 June 2014.
   
   There are benefits to lodging your 2012-2013 tax return or telling us if you are not required to lodge a tax return before 30 June 2014.  These include:

   ·Top up payment – if you were underpaid Family Tax Benefit, you may receive any payment owing as a lump sum.

   ·Family Tax Benefit supplements – depending on your circumstances, you may be entitled to an additional lump sum Family Tax Benefit supplement after the end of the financial year.
   
   

Supplement Year	Part A (maximum per child)	Part B (maximum per family)
2012-2013	$726.35	$354.05

If you and your partner do not take action by 30 June 2014

If you and your partner have not lodged a tax return or you have not advised us that you and your partner are not required to lodge a tax return/s by 30 June 2014:

·you will not be eligible for any further Family Tax Benefit, including the Family Tax Benefit supplements, for the 2012-2013 financial year

·you will have to pay back all of the Family Tax Benefit, including the Family Tax Benefit supplements, for the 2012-2013 financial year, and

·

you will no longer be able to receive Family Tax Benefit payments fortnightly.”[4]

[4] T documents; T5 at 18-19

1. Mr Smith did not lodge his tax return for the 2012/2013 income year until 3 March 2015 and so some nine months after 30 June 2014.[5]  Mrs Smith notified DHS on 6 May 2015 that she was not required to lodge a tax return for the 2012/2013 income year.[6] 

   [5] T documents; T4 at 43

   [6] Supplementary T documents; ST1

2. In a letter dated 6 May 2015, DHS advised Mrs Smith that she had been entitled to an amount of $10,749.98.  Of that amount, $3,391.39 had been paid to her but she was not entitled to the remaining $7,403.59 because she and her partner had not confirmed their income for the 2012/2013 income year before 30 June 2014.  The letter advised her that, if there were special circumstances that prevented her and her partner from doing that, she should telephone DHS.  It also advised her that FTB for the 2012/2013 income year had been calculated using actual income provided to DHS by the Australian Taxation Office (ATO).[7] 

   [7] T documents; T7 at 23-24

3. Mrs Smith applied for a review of that decision on 17 December 2015.[8]  An Authorised Review Officer (ARO) affirmed the decision that had been conveyed to Mrs Smith in the letter of 6 May 2015.  She did so in a decision dated 30 January 2016.[9] 

   [8] T documents; T8 at 25-26

   [9] T documents; T9 at 27-29

4. On 4 March 2016, Mrs Smith lodged an application to the Tribunal for review of the ARO’s decision.  It was heard in the Tribunal’s Social Security and Child Support Division (AAT1 review).  Mrs Smith lodged an undated report from Dr Roxana Irimia in support of her application.  Dr Irimia is Mrs Smith’s treating psychiatrist and the Tribunal had regard to her evidence regarding Mrs Smith’s mental health at the relevant times and to the impact on her ability to undertake administrative tasks.  It also had regard to Mrs Smith’s evidence that she was caring for her father who was suffering from cancer and that her husband was self-employed and relied on her.  The Tribunal decided to set aside the decision of the delegate of the Secretary as affirmed by the ARO and to remit it for reconsideration on the basis that there are special circumstances making it appropriate to extend the time by which Mr Smith’s tax return could be lodged for the purposes of assessment of Mrs Smith’s FTB entitlements to 3 March 2015.[10] 

   [10] T documents; T2 at 7-10

   THE EVIDENCE

5. I accept the evidence of Mr and Mrs Smith that Mrs Smith suffered a stroke in 1994.  A letter from the Royal Talbot Rehabilitation Centre at the Austin Hospital dated 18 May 1994 provides the basis for my finding that she made an excellent functional recovery from that stroke although it was noted that she had suffered from severe left retro-orbital headaches on a monthly basis and she was to be reviewed.  I find on the basis of Dr Irimia’s letter dated 21 September 2016 that she has suffered from mental illness since 19 February 2014.  That was the day on which Dr Irimia first saw Mrs Smith but she had previously seen Dr Lawson, who had retired.[11]  Mrs Smith said that she had consulted Dr Lawson for the two or three years before that.  In her letter, Dr Irimia states that she has seen Mrs Smith regularly every one to three months.  She had referred Mrs Smith to the Belmont Day Program (BDP), which had greatly assisted her:

   “… Mrs Smith has been very ill and it’s only in the last year that she has achieved some stability.  She is on a lot of medication and has been definitely unable to assist her husband with the tax returns during 2014/2015, probably 2013 as well, judging by how sick she was in February 2014 when she first attended my rooms.”

   [11] In giving evidence, Mrs Smith confirmed that was the date of her first consultation with Dr Irimia.

6. In an undated letter written by Dr Irimia and submitted by Mrs Smith to the AAT1 review, Dr Irimia wrote what she called a “letter of support” for Mrs Smith.  In it, she stated that Mrs Smith had been under her care since 2013 and that she had suffered from manic and depressive symptoms as well as anxiety, which had been negatively impacted upon by her late father’s illness.  Mrs Smith’s illness had a significant impact on her concentration, motivation and ability to function properly.  Therefore, she was unable to assist her husband in filing and compiling the family taxation returns.[12] 

   [12] T documents; T12 at 36-37

7. A letter dated 21 September 2016 from the Belmont Day Services at the Belmont Hospital shows that, except for two absences in 2014 and four in 2015, Mrs Smith attended the BDP once a week during the period from 5 September 2014 to 24 June 2015.  The letter does not set out any details of the program or of Mrs Smith’s health during that nine month period.

8. Mr and Mrs Smith spoke of her health in this period and of her work with her husband to organise his taxation affairs.  Before she became ill, she would collate the information and then give it to their accountant to prepare her husband’s income tax return.  She would bank any cheques.  Although she had not had any experience as a bookkeeper, she had picked up how to do the task.  Mrs Smith said that she had not thought about getting someone else to help her.  They had always collated the information themselves.  Mrs Smith would keep the receipts and documents in a shoe box and collate them towards the end of the financial year.

9. From about 2011 or 2012, Mrs Smith said, she has suffered more bad days than good days.  On a bad day, she gets up and gets the children to school and then goes back to bed for the day.  She would not answer the telephone if it rang.  On a good day, she could do most things other than the shopping.  Mrs Smith said that she would put on the washing and watch television.  She would become very anxious about getting in the car and going down the street and, at times, she could not do it.  If someone went with her, she would be a lot less anxious about going shopping.  Social activities were not on her agenda and she felt quite isolated.  Her concentration was not good and she could not read a novel.  She cannot use a computer and relies on her children if she needs it for anything.

10. Mrs Smith said that she would assist her mother in Maldon when she visited with her husband.  She would go shopping with her mother, she and her husband would have lunch with her and they generally provided moral support since Mrs Smith’s father died.

11. Mr Smith is a self-employed carpenter and has been since 2000.  He prepared some of the invoices for his business and all of the quotes and the GST returns that were due every three months.  In preparing his GST returns, he would add up the invoices.  Mr Smith did not want to do the work of collation for the income tax return as that would be like a slap in the face for his wife.  Collation had always been her job.   When she was ill, however, he would find letters that she had put away in the study and do so long after she had put them there.

    THE SUBMISSIONS

12. On behalf of the Secretary, Mr Noonan submitted that, despite Mrs Smith’s having satisfied the reconciliation conditions of s 32J of the FA Administration Act in 2015 when she notified DHS that she was not required to lodge an income tax return, s 107(1AA) of that same Act prevents payment of the increased FTB entitlement to her. It does so because the review decision, which was made on 6 May 2015, had the effect of increasing her entitlement to be paid FTB by instalment. Given the date of that review decision, it was made more than 52 weeks after the original determination, which had been made on 29 June 2012. Section 107(1AA) applies to achieve that effect, Mr Noonan submitted, even though the Secretary made his decision before 1 December 2016 when s 107(1AA) came into operation by virtue of the Social Services Legislation Amendment (Family Assistance Alignment and Other Measures) Act 2016[13] (Alignment Act).  The Tribunal must also apply s 107(1AA) as it stands in the shoes of the Secretary when reviewing her decisions.  Therefore, the reference to the “review decision” in s 107 as amended in 2016 must be read as a reference to the review decision made by the Tribunal in its first tier review (AAT1) and then to the review decision made by the Tribunal in its second tier review (AAT2).

    LEGISLATIVE FRAMEWORK:  Outline of legislative provisions relating to FTB and the 2012/2013 income year before 2016 amendments

    [13] Act No. 85 of 2016

13. At the time that Mr Smith lodged his tax return for the 2012/2013 income year and Mrs Smith advised DHS that she was not required to lodge a tax return for that same year, the FA Administration Act was yet to be amended by the Social Services Legislation Amendment (Miscellaneous Measures) Act 2016[14] (SSLAMM Act) and by the Alignment Act. In the context of this case, they made relevant amendments to s 32J and to s 107 of the FA Administration Act. In order to understand the recent amendments, I have set out the legislation as it was in force during the 2012/2013 income year as well as when it dealt with their obligations to lodge, or not lodge, their income tax returns for that period.

    [14] Act No. 46 of 2016

    A.Eligibility to be paid FTB

14. A person’s eligibility to be paid FTB is determined under the A New Tax System (Family Assistance) Act 1999 (FA Act).  Even if he or she is eligible to be paid it, his or her entitlement is determined under the FA Administration Act.  He or she must, for example, be an individual or an approved care organisation and must make a claim in a manner specified in Division 1 of Part 3 of that legislation.  Provision is made in the FA Administration Act for restrictions on what is required for a claim to be effective and for the determination of claims for payment of FTB.  

15. With regard to the rate of payment of FTB, a determination may be based on an estimate, an indexed estimate or indexed actual income. Payment may be by instalment or by a single payment in respect of a past period. Determinations are the subject of Subdivision B of Division 1 of Part 3. Section 16 is concerned with the Secretary’s determination of a claim for FTB by instalment and s 17 with a determination of a past period entitlement claim. Determination under s 16 is relevant in this case. Section 16(2) provides:

    “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.”

16. In certain circumstances, the Secretary must determine an individual’s eligibility for FTB or the rate at which FTB is required to be paid to an individual, on the basis of an estimate. The relevant circumstance in this case is set out in s 20(1)(b) and is:

    “information about the amount of adjusted taxable income needed for the determination of the eligibility or rate is not available (for example, because the taxable income of the individual or another individual cannot be known until after the end of the relevant income year)”.

17. The expression “adjusted taxable income” was defined in cl 2 of Schedule 3 to the FA Act.[15]  Clause 2(1) provides:

    [15] Expressions that are used in the FA Administration Act and are defined in the FA Act have the same meaning: FA Administration Act; s 3(2).

    “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;

    (b)       the individual’s adjusted fringe benefits total for that year;

    (c)       the individual’s target foreign income for that year;

    (d)the individual’s total net investment loss (within the meaning of the Income Tax Assessment Act 1997) for that year;

    (e)the individual’s tax free pension or benefit for that year;

    (f)the individual’s reportable superannuation contributions (within the meaning of the Income Tax Assessment Act 1997) for that year;

    less the amount of the individual’s deductible child maintenance expenditure for that year.”

    Where an individual is a member of a couple, his or her adjusted taxable income for an income year includes the adjusted taxable income for that year of the individual’s partner.[16]

    [16] FA Act; s 3; Schedule 3; cl 3(1)

18. The Secretary does not have to accept an estimate of an individual’s adjusted taxable income if she does not consider the estimate reasonable.[17]  If that is the position, neither the individual’s eligibility for FTB nor the rate of payment can be determined and the Secretary must determine under s 19 that the claimant is not entitled to be paid FTB for each day on which the determination is in force.[18]

    [17] FA Administration Act; s 20(2)

    [18] FA Administration Act; s 20(2)

    B.       Variation of determination

1. The Secretary may vary a determination in the circumstances set out in Subdivision C of Division 1 of Part 3 of the FA Administration Act. 

2. Section 28 provides for the situation in which a determination has been made under either ss 16 or 17 but, at a particular time, there are one or more days that match the criteria set out in s 28(1)(b). These days are known as “cancellation days”.  The criteria are:

   “(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;

   (iii)the 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.”[19]

   If those circumstances apply, the Secretary must, under s 28(2), vary the determination so that it has effect that the claimant is not, and never was, entitled to FTB for the cancellation days. 

   [19] FA Administration Act; s 28(2)

3. Regard must be had to s 28(3) if, after the Secretary has varied a determination under s 28(2), an assessment is made under the Income Tax Assessment Act 1936 (ITAA36) for the cancellation income year for everyone who was required to lodge an income tax return as required by s 28(1)(b)(iii) and in respect of whom an assessment had not been made before the determination was varied. If the claimant and the claimant’s partner have not separated and if the Secretary is satisfied that the claimant was eligible for an amount of FTB for the cancellation days, she must again vary the determination so that it has effect that, for the cancellation days, the claimant is entitled to be paid:

   “(c)     if each of the taxpayers involved lodged an income tax return with the Commissioner of Taxation:

   (i)before the end of the income year after the cancellation income year; or

   (ii)within such further period as the taxpayer is allowed under Subdivision D of Division 1 of this Part;

   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.”[20]

   [20] FA Administration Act; s 28(3)(c). Similar provisions apply if the Secretary does not consider an estimate to be reasonable: FA Administration Act; s28A.

4. Section 28(3)(c) was inserted with effect from 28 June 2013 by the Family Assistance and Other Legislation Amendment Act 2013 (2013 Amendment Act).[21]  It applied in relation to a past period falling in the 2012/2013 income year or a later income year.[22] 

   [21] 2013 Amendment Act; s 3 and Schedule 2B, item 18; and for commencement see s 2(1); item 9G.

   [22] 2013 Amendment Act; s 3 and Schedule 2B, item 56(1)

5. If a claimant provides a revised estimate of his or her adjusted taxable income and the Secretary considers it reasonable then, in certain circumstances, the Secretary must vary the determination so that the claimant’s FTB is determined on the basis of the revised estimate. That is the effect of s 31A of the FA Administration Act.

   C.       Non-payment of FTB for non-lodgement of tax returns

6. Sub-division CA is concerned with the non-payment of FTB for non-lodgement of a tax return. Section 32AA provides that, if the Secretary makes a determination under s 28(2), she must not make a payment of FTB worked out on an estimated basis to the claimant.

   D.       FTB reconciliation conditions

7. Sub-division D Division 1 of Part 3 of the FA Administration Act is concerned with FTB reconciliation conditions. Section 32A applies to:

   “… a decision of the Secretary to make or vary a section 16 or 17 determination if, as a result of the decision, an individual (the first individual) is entitled to be paid family tax benefit at a particular rate in respect of a period (the same-rate benefit period) that consists of, or is included in, a particular income year (the relevant income year).”[23]

   In making or varying the determination, the Secretary must, except for the purposes of working out the amount of a clean energy advance,[24] disregard certain provisions of the FA Act specified in s 32A(2) unless and until the first individual has satisfied the “FTB reconciliation conditions” for the same-rate benefit period or, if more than same-rate benefit period, for each of those periods.  Those provisions relate to the calculation of an individual’s FTB Part A and FTB Part B supplements.

   [23] FA Administration Act; s 32A(2)

   [24] FA Administration Act; s 32A(3)

8. The first individual satisfies the FTB reconciliation conditions for a same-rate benefit period if any one of ss 32C to 32Q applies to that first individual for the same-rate benefit period at the reconciliation time. If two or more apply, the reconciliation time is the latest of the times determined under ss 32C to 32Q. That is the effect of s 32B. I will set out three of those provisions but only s 32C applies to Mrs Smith’s circumstances.

9. Section 32J applies if an individual is not required to lodge an income tax return for the relevant income year being 2012/2013. Before its amendment by the Social Services and Other Legislation Amendment Act 2014[25] (2014 Amendment Act) with effect from 1 May 2014, s 32J provided that:

   “This section applies to the first individual for a same-rate benefit period if:

   (a)       the first individual; or

   (b)any other individual  (other than an FTB child, or regular care child, of the first individual) whose adjusted taxable income is relevant in working out the first individual’s entitlement to, or rate of, family tax benefit for the same-rate benefit period;

   is not required to lodge an income tax return for the relevant income year.”

   [25] Act No. 14 of 2014; s 3, Schedule 3, Item 32

10. Section 32J(2) went on to provide that:

    “The relevant reconciliation time is whichever is the earlier of the following times:

    (a)the time after the end of the relevant income year when the first individual notifies the Secretary of the amount of the first individual’s adjusted taxable income for the relevant income year;

    (b)the time after the end of the relevant income year when the Secretary becomes satisfied that the first individual’s adjusted taxable income for the relevant income year can be worked out without receiving a notification from the first individual.”

    The amendment made to s 32J with effect from 1 May 2014 was to omit the words “(other than an FTB child, or regular care child, of the first individual)” following the words “other individual” in s 32J(1)(b).[26] No amendments were made to s 32J(2).

    [26] 2014 Amendment Act; s 3, Schedule 3, Item 32

11. Of relevance to Mrs Smith’s circumstances is s 32C. That section has been amended on a number of occasions over the years. Those amendments have included its repeal and substitution by the 2014 Amendment Act[27] and, before that, its amendment by the 2013 Amendment Act. It has not been amended by either the SSLAMM Act or the Alignment Act. Its substance, both before and after its amendment by the 2014 Amendment Act, is very similar. Sections 32C(1) and (2) related to a situation in which only one member of a couple was required to lodge an income tax return. Following their amendment by the 2013 Amendment Act but before their amendment by the 2014 Amendment Act, they and s 32C(4) provided:

    [27] 2014 Amendment Act; s 3 and Schedule 12, Item 16

    “(1)     This section applies to the first individual for a same-rate benefit period if:

    (a)the first individual was a member of a couple throughout the same-rate benefit period; and

    (b)the first individual or other member of the couple is or was required to lodge an income tax return for the relevant income year; and

    (c)the first individual continues to be a member of the couple until the end of the latest of the following:

    (i)the first income year after the relevant income year;

    (ii)such further period (if any) as the Secretary allows for the first individual to lodge the return, 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;

    (iii)such further period (if any) as the Secretary allows for the other member of the couple to lodge the return, if the Secretary is satisfied that there are special circumstances that prevented the other member from lodging the return before the end of that first income year.

    (2)If only one member of the couple was required to lodge an income tax return for the relevant income year, the relevant reconciliation time is the time when an assessment is made under the Income Tax Assessment Act 1936 of the member’s taxable income for the relevant income year, so long as the member’s income tax return for the relevant year was lodged before the end of:

    (a)the first income year after the relevant income year; or

    (b)such further period as the Secretary allows for that member under subparagraph (1)(c)(ii) or (iii), as the case requires.

    (3)…

    (4)The further period under subparagraph (1)(c)(ii) or (iii) must end no later than the end of the second income year after the relevant income year.”

12. After their amendment, by the 2014 Amendment Act, ss 32C(1), (2) and (3) and (4) provided:

    “(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)…

    (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) as 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.”

13. Amendments were made to s 32D and, although it is not directly relevant in this case, it is relevant in understanding Re Secretary, Department of Social Services and De Jager,[28] (De Jager) to which I was referred and will come to shortly. Section 32D applies to the first individual who meets three criteria: is a member of a couple throughout a same-rate benefit period; the other member of that couple is or was required to lodge an income tax return for the relevant income year; and the first individual continues to be a member of the couple until either the end of the first income year after the relevant income year or such further period, if any, as the Secretary allows after being satisfied that special circumstances prevented the partner from lodging the return before the end of the first income year. The relevant reconciliation time is the time when an assessment is made under the ITAA36 of the partner’s taxable income for the relevant income year provided his or her income tax return was lodged before the end of the first income year after the relevant income year or such further period, if any, that the Secretary allows because “special circumstances” prevented the partner from lodging that return before the end of the first income year.  The further period allowed by the Secretary “… must end no later than the end of the second income year after the relevant income year.”[29]

    [28] [2015] AATA 828; Kerr J, President, and Senior Member McCabe, as he then was

    [29] FA Administration Act; ss 32D(2)(b) when read with ss 32D(1)(c) and (3)

    E. Review of determinations made under sections 16 or 17

14. Part 5 of the FA Administration Act is concerned with the review of decisions.  

    E.1      Review of certain decisions on Secretary’s own initiative       

15. Division 1 of that Part is concerned with internal review of decisions and Subdivision A of that Division with review by the Secretary on her own initiative. Section 104 provides that the Secretary may review a decision of any officer under the family assistance law other than those specified in s 104(a) to (e) of the FA Administration Act.

16. Section 105(1) provides:

    “If:

    (a)a decision (the original decision) is a decision that, under section 104, the Secretary may review under this section; and

    (b)the Secretary is satisfied that there is sufficient reason to review the decision;

    the Secretary may review the decision.”

    The Secretary may do so even if an application has been made to the Tribunal for review in relation to the decision.[30]

    [30] FA Administration Act; s 105(2)

17. Determinations or variations under ss 16 and 17 are not included among those listed in the exclusionary provisions of s 104 and so would seem to be reviewable. Decisions to make or vary a determination so that an individual is entitled to be paid FTB at a particular rate in respect of a particular period that consists of, or is included in, a particular income year, are the subject of s 105A. If certain criteria are met, the Secretary is taken to be satisfied that there is sufficient reason to review the determination or variation[31] and must exercise the power to review the determination or variation under s 105.[32] The first criterion is that the Secretary must have disregarded one or more of the provisions set out in s 32A(2) of the FA Act and repeated in s 105A(2) in making or varying the determination. They relate to FTB Part A Supplement and FTB Part B Supplement. It must also be the case that, had s 32A not been enacted, the Secretary would have had to take account of one or more of those provisions. Finally, the Secretary must be satisfied that the first individual satisfies the FTB reconciliation conditions for the same-rate benefit period or, if two or more, for each of those same-rate benefit periods.

    [31] FA Administration Act; ss 105A(2)(d) and 105B(2A)(a)

    [32] FA Administration Act; ss 105A(2)(e)

18. In exercising the power conferred by s 105, the Secretary must have regard to the matters set out in s 105A(2)(a).[33] The Secretary would then be exercising powers under s 105(1) and the decision made on review would have been made under that same section.

    [33] FA Administration Act; ss 105A(2)(f)

    E.2Date of effect of decisions made on review of determinations under s 105

19. Section 107 provided for the date of effect of certain decisions made under s 105. Before its amendment by the Alignment Act, s 107(1A) was not part of s 107. Section 107(1) provided:

    “Subject to subsections (3), (3A), (3B), (3C) and (3D), if:

    (a)the Secretary reviews, under section 105, a decision (the original decision) relating to the payment to a person of family tax benefit by instalment; and

    (b)the Secretary decides (the review decision) to vary the original decision or set aside the original decision and substitute a new decision; and

    (c)the review decision will have the effect of creating or increasing an entitlement to be paid family tax benefit by instalment; and

    (d)the review decision is made more than 52 weeks after the person concerned was given notice of the original decision;

    the date of effect of the review decision is:

    (e)unless paragraph (f) applies—the date that would give full effect to the review decision; or

    (f)if the date referred to in paragraph (e) is earlier than the first day of the income year before the income year in which the review decision was made — that first day.”

20. In so far as it relates to FTB, s 107(3) provided:

    “Subsection (1) … does not limit the date of effect of a review decision in respect of an original decision that relates to the payment to a person of:

    (a)       family tax benefit by instalment; or

    (b)       …

    if the review was undertaken because the Commissioner of Taxation had made an assessment of the taxable income for a particular income year of each person:

    (c)whose taxable income is relevant in determining the first-mentioned person’s eligibility for, or rate of, family tax benefit …; and

    (d)who was required to lodge an income tax return in respect of that year;

    on the basis of the return lodged by each person in accordance with subsection (3AA).”

21. Section 107(3AA), to which s 107(3) refers, was inserted by the 2014 Amendment Act as was s 107(3AB).[34]  They provided that:

    [34] 2014 Amendment Act; s 3 and Schedule 12, Item 19

    “(3AA) For the purposes of subsection (3), the income tax return of a person in respect of a particular income year (the base year) must be lodged before the end of:

    (a)       the first income year after the base year; or

    (b)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 return before the end of that first income year.

    (3AB)The further period under paragraph (3AA)(b) must end no later than the end of the second income year after the base year.”

    RE DE JAGER and SECRETARY, DEPARTMENT OF SOCIAL SERVICES: consideration of legislative provisions relating to FTB and the 2012/2013 income year before 2016 amendments 

22. The effect of s 107(1) before its amendment by the SSLAMM Act and the Alignment Act was considered by a differently constituted Tribunal in De Jager in 2015. Mr De Jager had not lodged an income tax return for the 2012/2013 income year but the Tribunal decided that the relevant reconciliation time was 14 November 2014. It selected that date on the basis that it was on that date that the Secretary addressed the question of Mr De Jager’s adjusted taxable income. In light of s 32J(2) of the FA Administration Act, which was the relevant reconciliation condition, I understand the Tribunal to be saying this was the time at which the Secretary first became satisfied of Mr De Jager’s adjusted taxable income.

23. The Tribunal found that the review had been conducted under s 105 and not under s 105A. The role of s 105A was to “… mandate a review under s 105 that would otherwise be discretionary.”[35] In conducting that review, however, the Tribunal did not accept that it was subject to any limitation imposed by s 107(1)(f) as being applicable to discretionary reviews under s 105.

    [35] [2015] AATA 828 at [28]

24. The Tribunal noted that s 107 referred to reviews conducted under s 105 without distinguishing between discretionary reviews and those mandated under s 105A. It then pointed to the addition of Subdivision D to Division 1 of Part 3 of the FA Administration Act by the Family Assistance Legislation Amendment (More Help for Families – Increased Payments) Act 2004. Subdivision D contemplated reconciliation times occurring a significant time after the end of the income year in which FTB was paid and outside the 52 week “window” contemplated by s 107. It pointed particularly to s 32D(3), which allowed the Secretary to extend the time within which the partner of an individual might lodge a tax return to a date no later than the end of the second income year after the relevant income year. It would be odd, the Tribunal said, if Parliament were to facilitate entitlement by means of a discretion given by a provision such as s 32D so that a claimant would have the benefit of an additional lump sum and yet deprive that facilitation of any practical effect by a blanket application of s 107(1).[36] 

    [36] [2015] AATA 828 at [36]-[37]

1. The Tribunal also considered the issue by reference to the ordinary meanings of the provisions saying:

   “38. However, assuming we are in error in that regard we also conclude that the ordinary grammatical meaning of the text of sections 107 and 105 is inconsistent with the outcome for which the Secretary contends for the operation of s 107(1)(f) in the limited class of matters when a review under s 105 is undertaken as mandated by s 105A.

   39.In such a case the Secretary must conduct the review as prescribed by s 105A. In such a review the Secretary is directed by s 105A(2)(f) that she must take into account each of the matters set out in s 105A(2)(a) that previously she had been directed to disregard. The self-evident purpose of that statutory command is to establish the quantum of any supplement(s) that are to be paid as a lump sum to a person who had claimed family tax benefits. If needed, confirmation of that purpose can be discerned in the Second Reading Speech of the Honourable Lawrence Anthony when introducing the Family Assistance Legislation Amendment (More Help for Families—Increased Payments) Bill 2004.  The Minister refers to the benefits due to an applicant so calculated as payable as a lump sum unless any part of that lump sum is required to be withheld and offset against any earlier overpayment—see also Llewellyn and Secretary, Department of Families, Community Services and Indigenous Affairs (2007) 99 ALD 129.

   40.In Mr De Jager’s case the Secretary’s task was to calculate the lump sum due to him by applying the mandatory rules pursuant to s 105A. On the facts applying to Mr De Jager, assuming we are wrong in our primary conclusion, s 107(1)(f) then applies to require the date of effect of that review decision to be 1 July 2013.  Giving effect to the review decision as at that date does not require any alteration of the sum so calculated or change its character as a lump-sum due to the applicant under the scheme established by Subdivision D.  It simply requires the Secretary’s decision to operate from a later date. Given the ordinary grammatical meaning of the words ‘the date of effect of the decision is’ we are not persuaded that s 107(1)(f) has any further work to do.  Those words do not suggest they authorise the Secretary to deny Mr De Jager his entitlement once she has so determined it.  Whichever date applies Mr De Jager is therefore entitled to have the SSAT’s decision on review, albeit made for reasons all parties and the Tribunal now accept to have been erroneous, affirmed.

   41.Nothing in the language of s 107 speaks of overriding the operation of s 105A by denying entitlement to payment of the amount determined by the Secretary as due on a review mandated in accordance with its terms.  That is unsurprising. Section 107(1)(f) was contained in the Act before Subdivision D was inserted. Its language simply does not mesh with those later provisions so as to require the outcome now contended for by the Secretary.

   42.We do not contest the common assumption of counsel that if the Secretary conducts an ordinary own-motion review under s 105 different considerations would apply.

   43.Our reasons are limited to our conclusion that it would strain the language of s 107(1)(f) beyond the permissible limits of the rules of statutory construction for this Tribunal to construe a provision that on its face simply operates to determine the date of effect of a decision, so as to read into those word additional language requiring the outcome submitted for by Mr Johnson on behalf of the Secretary in the specific instance of a review decision made under s 105 when that review is required to be conducted in accordance with s 105A.

   44.Thus, assuming we are in error in respect of our primary conclusion, applying s 107(1)(f) to the decision the Secretary made on 14 November 2014 has no practical consequence adverse to Mr De Jager’s entitlement to the lump sum the Secretary determined was due to him. That decision has effect as from 1 July 2013.”

   CONSIDERATION: legislative provisions relating to FTB and the 2012/2013 income year before 2016 amendments 

2. I have considered the provisions as they were enacted before the amendments made in 2016 because I have reached the view that the path that the FA Administration Act requires to be trodden is broadly the same after the 2016 amendments as it was before. All that the 2016 amendments have done is to change the reconciliation condition in s 32J that applied in the De Jager case but not in this and to reinforce what was provided for before they were made.  Therefore, I need to set out my understanding of the framework as it existed beforehand in order to explain those reinforcements. 

3. Working a clear passage through the provisions of the FA Act and the FA Administration Act is not the easiest task that can be undertaken.  They are provisions that are better understood when viewed as a whole rather than from a position in the detail of the legislative provisions.  That is not to say that the detail is not necessary for the family assistance law makes provision for income maintenance for persons who find themselves in a wide and diverse range of circumstances and who may find that those circumstances change.  It is to say that the detail, which makes the pattern of the legislation, can also obfuscate that pattern unless the pattern itself is kept in mind.

4. Putting aside for the moment the date of effect provisions, I have set out the pattern of the family assistance law as it applies to the payment of FTB in Mr and Mrs Smith’s circumstances.  First, I will set out Mrs Smith’s circumstances in table form:

Year of income	Date	Action by Mr or Mrs Smith	Determination	Review of determination
2012/2013	Unknown	Claim for FTB by instalment based on an estimate of adjusted taxable income
29 June 2012	Determination of rate based on combined income of Mr and Mrs Smith
2013/2014	17 March 2014	DHS’s letter to Mrs Smith notifying her that she had one instead of two years in which to lodge a taxation return in order to receive full FTB entitlements i.e. 30 June 2014.
2014/2015	3 March 2015	Mr Smith lodged his income tax return for the 2012/2013 year.
6 May 2015	Mrs Smith notified DHS that she was not required to lodge an income tax return.
6 May 2015	Determination that Mr and Mrs Smith not entitled to additional payment because they had not confirmed their income before 30 June 2014.

1. In light of those circumstances, it seems to be that the applicable provisions prior to their amendment by the SSLAMM Act and Alignment Act would have led to the following outcome:

   (1)Mr and Mrs Smith’s eligibility to be paid FTB is determined under the FA Act.[37]

   [37] See [19] above

   (2)In order to be paid FTB, an individual must make a claim for FTB that complies with the relevant requirements of Division 1 of Part 3 of the FA Administration Act.[38]

   [38] See [19] above

   (a)An individual may choose whether to make a claim to be paid FTB by instalment or in a lump sum at a later time.[39] 

   [39] See [20] above

   (b)The case of De Jager and Mrs Smith’s are both concerned with a claim to be paid FTB by instalment in the 2012/2013 income year.[40]

   [40] See [6] and [45] above

   (3)In both cases, the individual made an estimate of his, in the case of De Jager, or her, in the case of Mrs Smith, adjusted taxable income for the 2012/2013 year of income.

   (4)There must be a reconciliation of the FTB that has actually been paid in an income year (the 2012/2013 income year in this instance) having regard to the individual’s estimated adjusted taxable income with the FTB that would have been paid had his or her actual adjusted taxable income been known at that time. 

   (a)The provisions relating to that reconciliation are set out in ss 32A to 32J. Which of those sections is relevant is determined by reference to the individual’s circumstances and those of his or her partner. If a person’s circumstances fit within more than one of those described in those sections, the section that would lead to a reconciliation at the latest time is to be selected: FA Administration Act; s 32B.

   (b)The relevant reconciliation provision in De Jager was s 32J which, at the time the case was decided, simply stated that the relevant reconciliation time was the earlier of two times it prescribed. If the Secretary was satisfied that special circumstances prevented notification of the first individual’s adjusted taxable income before the end of first income year after the relevant year (i.e. 2013/2014), then such further period as the Secretary allowed. Section 32J(3), which would have limited that period to the end of the 2014/2015 income year had yet to be enacted and inserted by the SSLAMM Act.

   (c)The relevant time at which reconciliation would have been taken for a person in Mrs Smith’s circumstances would have been determined by reference either to s 32C as her partner was required to lodge an income tax return or to s 32J on the basis that she was not required to lodge an income tax return.

   (i)Section 32C(2) determined the reconciliation time by reference to the time when the assessment was made under ITAA36 provided that Mr Smith had lodged his income tax return by the end of the first income year after the relevant year (i.e. by the end of 2013/2014 being the income year after the 2012/2013 income year) or such further time was allowed by special circumstances preventing lodgement within that time.

   žSection 32C was clearly intended to ensure that, unless certain special circumstances apply an individual will only be entitled to the full entitlement of FTB payments, including the FTB Part A Supplement and FTB Part B Supplement, if that income tax return was lodged, as a general rule, by the end of the income year following the income year in which the instalments were made.

   žUnder taxation law, the individual or the individual’s partner will generally have been required to lodge that taxation return either by 31 October or 31 May of that following income year and so, in this case, by the end of the 2013/2014 income year.

   žAn assessment of his or her adjusted taxable income might be made in that following income year or it might have been made in a later income year. 

   (ii)Applying s 32J, the first time that the Secretary became aware of Mrs Smith’s adjusted taxable income would have been when she received notice of Mr Smith’s adjusted taxable income. I take that to be some time after 3 March 2015 when he lodged his income tax return. That would have been in the 2014/2015 income year and so outside the reconciliation time provided for by s 32J(2)(b). That would mean that, unless the Secretary found that special circumstances prevented Mrs Smith from making the notification before the end of the 2013/2014 income year, the reconciliation time is 30 June 2014 i.e. the first income year after the relevant year being 2012/2013 income year.

   (iii)Applying s 32B, the reconciliation time would have been the later of the two times determined under ss 32C and 32J.

   ·If special circumstances were found to have prevented Mrs Smith from giving notice that she was not required to lodge an income tax return before 6 May 2015, s 32J(2)(a)(ii) would have determined that as the reconciliation time. There was nothing in s 32J as then enacted that limited the time to a date no later than the end of the second income year after the relevant year i.e. the end of the 2014/2015 income year. A reconciliation time without end would have been a later reconciliation time than that determined under s 32C for, even if special circumstances were found to have prevented his lodging his income tax return, the reconciliation time would have been the 2014/2015 income year for it was limited by s 32C(4).

   ·If special circumstances were not found to have prevented her from doing so, the reconciliation time would have been the first income year after the relevant year i.e. 2013/2014.

   (5)Applying the date of effect provisions in s 107 before the 2016 amendments would have led to the following outcome for an individual in Mrs Smith’s circumstances:

   (a)Assuming that the Secretary was not satisfied that there were special circumstances preventing Mr Smith from lodging his income tax return before the end of the 2013/2014 income year:

   (i)Sections 107(1), (3), (3A) and (3B) would have led to the conclusion that the Secretary’s determination (review decision) made after receiving Mrs Smith’s advice that she was not required to lodge an income tax return would have taken effect from 6 May 2015 i.e. 52 weeks after she was given notice of the original decision; and

   (ii)Mrs Smith would have been prevented from being paid any additional FTB Part A Supplement and FTB Part B Supplement.

   (b)That result would have mirrored the reconciliation condition in s 32C and not led to an anomalous result.

   (i)That is to be contrasted with the anomalous result identified in De Jager in the context of the operation of s 32J and 107. That anomaly arose out of the fact that, unlike s 32C, s 32J did not contain a provision limiting the period in which the Secretary might allow the prescribed action to be undertaken if satisfied that there were special circumstances preventing its being undertaken by the end of the first income year after the relevant income year.

   (c)If, in this hypothetical situation, the Secretary had been satisfied that there were special circumstances preventing Mr Smith from lodging his income tax return before the end of the 2013/2014 income year, the reconciliation time prescribed by s 32C(3) would have been the end of 2014/2015 income year being the end of the second income year after the relevant income year of 2012/2013.

   (i)Sections 107(3), (3AA) and (3AB) would then have ameliorated the 52 week period prescribed by s 107(1) as Mr Smith had lodged his income tax return before the end of 2014/2015. Therefore, the date of effect of the review decision could extend to a date no later than, in this example, 30 June 2015.

   (ii)Those provisions would not in fact have applied to Mr De Jager’s circumstances as the Commissioner had not made an assessment of his taxable income as he had not lodged an income tax return.

   CONSIDERATION: relevant legislation relating to FTB and the 2012/2013 income year after 2016 amendments

   A.        FTB reconciliation conditions

2. Section 32J has been amended by both the SSLAMM Act, with effect on and after 6 May 2016, and the Alignment Act, with effect from 1 December 2016.[41] In this period, s 32J(1) remained unamended. It continued to provide that s 32J applied to the first individual for a same-rate benefit period if either that individual or any other individual whose adjusted taxable income is relevant in working out that individual’s entitlement to, or rate of, FTB for the same-rate benefit period is not required to lodge an income tax return for the relevant income year. Following its amendment by the SSLAMM Act, s 32J(2) had been amended and s 32J(3) added.[42]  They provide:

   [41] Alignment Act; s 2, Item 2

   [42] SSLAMM Act; s 3 and Schedule 2; Items 4, 5 and 6

   “(2)      The relevant reconciliation time is whichever is the earlier of the following times:

   (a)the time after the end of the relevant income year when the first individual notifies the Secretary of the amount of the first individual’s adjusted taxable income for the relevant income year, so long as the notification occurs before the end of:

   (i)the first income year after the relevant 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 first individual from making that notification before the end of that first income year.

   (b)the time after the end of the relevant income year when the Secretary becomes satisfied that the first individual’s adjusted taxable income for the relevant income year can be worked out without receiving a notification from the first individual, so long as the Secretary becomes so satisfied before the end of the first income year after the relevant income year. 

   (3)The further period under subparagraph (2)(a)(ii) must end no later than the end of the second income year after the relevant income year.”

3. The amendments to s 32J were made in Schedule 2 of the SSLAMM Act. It applied:

   “…  in relation to a decision referred to in subsection 32A(1) of the A New Tax System (Family Assistance) (Administration) Act 1999 made before, on or after the commencement of this Schedule, where the same-rate benefit period consists of, or is included in, the income year in which this Schedule commences or in a later income year.”[43]

   Schedule 2 commenced on 6 May 2016. Therefore, the amendment applies to a decision made at any time under one or other of the reconciliation conditions set out in ss 32C to 32Q (being a decision referred to in s 32A(1)) of the FA Administration Act provided it relates to a same-rate benefit period falling in the 2015/2016 income year or in a later income year.

   [43] SSLAMM Act; s 3; Schedule 2, Item 21(2)

   B.Date of effect of decisions made on review of determinations under s 105

4. Section 107(1) was amended by the SSLAMM Act so that the opening words read “Subject to subsections (1A), (3A), (3B), (3C) and (3D) …” and s 107(1)(a) referred to reviews by the Secretary “under section 105 (including because of the operation of section 105A)” but the remainder of the provision was unaffected. The amendment to s 107(1)(a) had effect according to Item 21(4) of Schedule 2 to the SLAMM Act. Only (b) is relevant and it provides that the amendment applies in relation to:

   “a review decision made on or after the commencement of Schedule 1 to the Social Services Legislation Amendment (Miscellaneous Measures) Act 2016, where the original decision related to the payment of family tax benefit by instalment for a same-rate benefit period that consists of, or is included in, the 2012-2013 income year or a later income year.”[44]

   [44] SSLAMM Act; s 3; Schedule 2, Item 21(4)

5. The SSLAMM Act also inserted a new s 107(1A) which provided:

   “Subsection (1) does not limit the date of effect of a review decision, in respect of an original decision that relates to the payment to a person of family tax benefit by instalment, if the review was undertaken under section 105 because of the operation of section 105A.”[45]

   [45] SSLAMM Act; s 3 and Schedule 2; Item 15

6. Section 107(1A), and the amendment to include it in the opening words to s 107(1) applied in relation to a review decision:

   “…made, on or after the commencement of this Schedule, where the original decision related to the payment of family tax benefit by instalment for a same-rate benefit period that consists of, or is included in, the income year in which this Schedule commences or in a later income year.”[46]

   [46] SSLAMM Act; s 3; Schedule 2, Item 21(3)

7. Under the Alignment Act, s 107 was further amended so that s 107(1AA) was added and ss 107(1) and 107(1A) were amended. They now read:

   “(1)     Subject to subsection (1AA), if:

   (a)the Secretary reviews, under section 105 (including because of the operation of section 105A), a decision (the original decision) relating to the payment to a person of family tax benefit by instalment; and

   (b)the Secretary decides (the review decision) to vary the original decision or set aside the original decision and substitute a new decision; and

   (c)the review decision will have the effect of creating or increasing an entitlement to be paid family tax benefit by instalment; and

   (d)the review decision is made more than 52 weeks after the person concerned was given notice of the original decision;

   the date of effect of the review decision is the first day of the period to which the original decision relates.

   (1AA)  If:

   (a)       paragraphs (1)(a), (b), (c) and (d) apply; and

   (b)  the first day of the period to which the original decision relates is earlier than the first day (thecut‑off day) of the income year before the income year in which the review decision was made;

   then, despite subsection (1), the person cannot be paid any entitlement created or increased as mentioned in paragraph (1)(c) (including as a result of taking into account the FTB Part A supplement or the FTB Part B supplement) in relation to any day earlier than the cut‑off day.

   (1A)  Subsection (1AA) does not apply if the review was undertaken under section 105 because of the operation of section 105A.”

1. Putting aside the amendment made to s 107(1A), the amendments:

   “… apply in relation to a review decision made on or after the commencement of this Schedule, where the original decision (referred to in paragraph 107(1)(a) of the A New Tax System (Family Assistance) (Administration) Act 1999) related to the payment of family tax benefit by instalment for a period that consists of, or is included in, the 2012-13 income year or a later income year.”[47]

   [47] Alignment Act; s 3; Schedule 1, Item 13(1)

2. The amendment to s 107(1A) applied where the original decision referred to in s 107(1)(a) related to payment of FTB by instalment for a same-rate benefit period that consists of, or is included in, the 2015/2016 income year or a later income year.[48]

   CONSIDERATION: legislative provisions relating to FTB and the 2012/2013 income year after 2016 amendments 

   [48] Alignment Act; s 3; Schedule 1, Item 13(2)

   A.        Removal of anomaly in reconciliation conditions

3. In practical terms, the amendments made by the SSLAMM Act and by the Alignment Act have led to the removal of the anomaly in s 32J so that it now prescribes particular times within which an individual must act. Like anomalies were removed in ss 32M and 32N. The amendment did not affect the same rate-benefit period that was examined by the Tribunal in the context of Mr De Jager’s circumstances as it related to the 2012/2013 income year being an income year before the amendment came into operation.

   B.       Application of 2016 amendments to review provisions

4. In so far as the amendments to s 107 are concerned, all of the amendments but that made to s 107(1A) by the Alignment Act apply to Mrs Smith’s circumstances. The amendment made to s 107(1A) applies only to an original decision related to the payment of FTB by instalment for a same-rate benefit period that consists of, or is included in, the 2015/2016 income year. Therefore, in considering an original decision relating to the payment of FTB by instalment for a same-rate benefit period that consists of, or is included in, the 2012/2013 income year, s 107(1A) must be read in the form in which it applied before the Alignment Act amendment was made. In that form, its effect will be that the limitations imposed by s 107(1) on the date of effect of the review will not have effect if the review was undertaken under s 105 by virtue of the operation of s 105A rather than under s 105 in its own right.

5. Whether it was conducted under s 105 alone or by virtue of s 105A depends upon whether Mrs Smith satisfied the relevant reconciliation condition for the same-rate benefit period being, in her case, s 32C. Whether she would have satisfied it would have depended in turn on whether special circumstances had prevented Mr Smith from lodging his income tax return by the end of the 2013/2014 income year. If they had, Mrs Smith would satisfy the reconciliation condition and the review would be made under s 105 by virtue of s 105A. That would mean that s 107(1) would not alter the date of effect of the review decision. If special circumstances had not prevented the lodgement of the income tax return, Mrs Smith would not satisfy the reconciliation condition and the review would be made under s 105 as the determination would not be a decision excluded from review by s 104. That would mean that s 107(1) would apply to limit the date of effect of the review decision.

6. For all practical purposes, that means that when the criteria in ss 107(1)(a) to (d) are met, including the review decision being made more than 52 weeks after notice was given of the original decision, the person would not be paid any additional entitlement determined to be payable by the review including the FTB Part A supplement or the FTB Part B supplement. It is also consistent with the provisions of s 107(1A). Remembering that the review is being undertaken under s 105, and not under s 105 by virtue of s 105A,[49] the outcome is consistent with that intended by the reconciliation conditions themselves, had they applied. If the reconciliation conditions have been met, the limitations on the date of effect by s 107(1) and s 107(1A) do not apply although there are inherent limitations in each of the reconciliation considerations.

   [49] The review is not conducted under s 105 by virtue of s 105A because neither of the criteria expressed in s 105A(2)(c) has been met i.e. the first individual has not satisfied the FTB reconciliation condition for the same-rate benefit period or periods.

   C.       What is the “review decision”?

7. The Secretary has made a submission to the effect that the reference to “review decision” in s 107(1) is a reference to the review decision made in the first instance by the Secretary or by review in the form of either AAT1 or AAT2 review. The foundation of that submission is that the Tribunal, whether acting at the AAT1 or AAT2 level, is standing in the shoes of the Secretary when exercising the Secretary’s power of review under s 105. Therefore, as AAT1 stood in the Secretary’s shoes when making its decision under s 105, it is the date of its decision that becomes the operative date when working out the date of effect of the decision under s 107(1). As AAT1 made its review decision more than 52 weeks after the 29 June 2012 when the original decision was made about Mrs Smith’s entitlement to FTB and the AAT2 decision will be made at a later time again, the date of effect of the original decision would be 1 July 2012 i.e. the first day of the period to which the original decision relates.

8. I agree with the ultimate result but I do not agree with the path of getting there. The path I would adopt starts, as does the Secretary, with s 43(1) of the Administrative Appeals Tribunal Act 1975 (AAT Act), which provides:

   “For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision and shall make a decision in writing:

   (a)       affirming the decision under review;

   (b)       varying the decision under review; or

   (c)       setting aside the decision under review and:

   (i)        making a decision in substitution for the decision so set aside; or

   (ii)remitting the matter for reconsideration in accordance with any directions or recommendations of the Tribunal.”

9. I also accept the proposition as commonly put that the Tribunal stands in the shoes of the decision-maker being, in this case, the Secretary.  Unless Parliament provides to the contrary, and it has not done so in this case, that means that the Tribunal stands in the shoes of the decision-maker and makes the decision over again.  Often it will have evidentiary material that was not available to the original decision-maker so that its decision may be different.  That a decision on review may be different from the decision being reviewed is a consequence of the review process and not a criticism of the decision being reviewed. 

10. The starting point will always be to identify the decision that is under review.  In the case of AAT1 review, the decision will be the original decision made by the delegate of the Secretary as affirmed on internal review, or as varied on internal review or, if set aside on internal review, the decision that is substituted on internal review.[50]  That is to say, it is the operative decision, or the decision that actually affects an individual’s rights, entitlements and, in the case of an overpayment, obligations, that is under review.  Once the AAT1 review has been completed and an application has been lodged for AAT2 review, the decision under review becomes original decision made by the delegate of the Secretary as affirmed on AAT1 review, or as varied on AAT1 review or, if set aside on AAT1 review, the decision that is substituted on AAT1 review.[51]  Again, it is the operative decision that is under review.

    [50] FA Administration Act; s 111(1)

    [51] FA Administration Act; s 131(1)

11. Unless Parliament has provided to the contrary, the decision is reviewed at each stage of the review process against the same applicable legislative provisions. In that way, the evidentiary material is considered and assessed against a standard that remains constant and consistent. In the case of s 107 of the FA Administration Act, Parliament has provided to the contrary. It has prescribed the date of effect of a decision made by the Secretary on internal review under s 105, or s 105 by virtue of s 105A when the decision is made more than 52 weeks after the person was given notice of the original decision. That must be seen as a similar limitation on the powers of the Tribunal, whether at AAT1 review of AAT2 review as, at either level, the Tribunal not only has the power to exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision but, unless Parliament has provided to the contrary, is limited to those powers.

12. In this case, the date on which the internal review was conducted by the Secretary, and so generally by her delegates, under s 105 or under s 105 by virtue of s 105A will be crucial for the powers she had at that time are clearly intended to limit those of the Tribunal. The principle underlying s 107 is that, if the decision on internal review is made more than 52 weeks after the original decision was made, the date of effect will be restricted to a date no earlier than the first day of the income year before the income year in which the internal review decision was made. Its date of effect is not determined by reference to the date on which AAT1 decided to set aside or vary the Secretary’s determination made under s 105 either directly or by virtue of s 105 but by reference to the date on which the Secretary made that determination. That is the date that sits consistently with the pattern of provisions that I have identified and that ties the reconciliation conditions with the date of effect of the review decision provisions.

    CONSIDERATION: special circumstances

    A.        What are special considerations?

13. From time to time, Parliament will predicate the exercise of a discretionary power upon there being “special circumstances”.  What amounts to “special circumstances” has been considered in a number of cases concerned with a variety of discretionary powers.  They must be considered in light of the broad statement of principle set out by the Full Court of the Federal Court in Riddell v Secretary, Department of Social Security[52](Riddell) held, at 450:

    “          The Court was invited to give general guidance to the Administrative Appeals Tribunal as to the circumstances relevant to be taken into account in exercising the discretion conferred by s.1237(1) [of the Social Security Act 1991].  Each particular case must be considered on its merits.  It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other.”[53]

    [52] [1993] FCA 261; (1993) 42 FCR 443; 114 ALR 340; 17 AAR 340; 30 ALD 31; Neaves, Burchett and O’Loughlin JJ

    [53] [1993] FCA 261; (1993) 42 FCR 443; 114 ALR 340; 17 AAR 340; 30 ALD 31 at [23]; 450; 347; 38

14. Two years later, Kiefel J considered the expression in Groth v Secretary, Department of Social Security.[54]  That was a case that concerned the application of the preclusion provisions to a compensation payment made to Mr Groth.  Her Honour did so again in the context of the Social Security Act 1991 saying:

    “          The phrase ‘special circumstances’, it has been said, although imprecise is sufficiently understood not to require judicial gloss: Beadle’s case (229), 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.  The enquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied. … That may not be the only question which will arise in determining, in a particular case, whether special circumstances exist.  In the context of some discretionary provisions, for example one which provides for a longer period of time to be fixed in ‘special circumstances’ as in Beadle’s case, it may be relevant to look to how a person comes to require the exercise of the discretion and therefore to the events preceding the arbitrary provision coming into effect.  This is not such a case, for all that the background facts tell us is that the Act applies to Mr Groth.  In that sense the Tribunal was correct in concluding that what here has taken place under the two legislative schemes was irrelevant.  Whilst the means by which persons become qualified to compensation payments, the amount they receive and the legislation pursuant to which they become so entitled will vary, what they will all have in common is that s.1168 will then apply to them.  Absent some other feature, the only question which can be said to arise in this case is that posed by the Tribunal namely: what then would be the effect of applying s.1168 to a person in Mr Groth’s position?”[55]

    [54] [1995] FCA 1708; (1995) 40 ALD 541

    [55] [1995] FCA 1708; (1995) 40 ALD 541 at [12]; 545

15. In this case, the events preceding the exercise of the discretion are relevant for they are the events that trigger the need to consider whether to exercise the discretion at all.  The particular events are those that led to Mr Smith’s not lodging his income tax return before the end of the 2013/2014 income year and to Mrs Smith’s not advising the Secretary by the end of the same year that she was not required to lodge an income tax return.  May the circumstances that led to Mr and Mrs Smith’s not doing so be described as “special circumstances”? The immediate context in which that question is asked is that of the reconciliation conditions of which s 32C is one and the broader scheme of the FTB scheme of payments. That scheme is clearly intended to confine a claimant’s ongoing entitlement to the payment of FTB entitlements in respect of a particular period that, unless it would be unjust or unfair (i.e. there are “special circumstances”), does not extend beyond the year following the income year to which they relate.  If there are special circumstances, the payment of entitlements in respect of a particular income year will not extend beyond a point ending two income years after the income year.  In broader budgetary terms, that means that the Commonwealth knows with certainty the level of its liability at a time more closely related to the income year in which that liability was incurred.

    B.       Mr and Mrs Smith’s circumstances

16. I am not satisfied that the circumstances that prevented Mrs Smith from notifying the Secretary that she was not required to lodge an income tax return and those that prevented Mr Smith from lodging his income tax return are special circumstances within the meaning of ss 32C and 32J. Both relied on Mrs Smith’s illness. On the basis of Dr Irimia’s letters and the letter from the Belmont Hospital and the oral evidence of Mr and Mrs Smith, I am satisfied that Mrs Smith has been suffering from a mental illness from at least 2011 or 2012. That is a date before Mrs Smith first saw Dr Irimia but I am satisfied that she consulted Dr Lawson before that.

17. Clearly, Mrs Smith has been suffering from the debilitating symptoms of her condition for, as she says, about eight years.  It was a firmly established condition when she received the letter dated 17 March 2014 advising her that she needed to lodge an income tax return or advise that she would not be doing so by 30 June 2014.  She and her husband had worked out their strategies for managing her health and the limitation it imposed on their lives.  Mr Smith maintained his records to ensure that they met their GST obligations.  Although I can understand that he did not want to take responsibilities from his wife as it would affect her sense of well-being, his failing to do so had the consequence that he did not meet his obligations as a taxpayer to lodge his income tax return by the due dates.  That was quite apart from the consequences that failure might have on the payment of FTB Part A Supplement and FTB Part B Supplement.  Mrs Smith had some capacity to deal with daily living on certain days and to extend care to her mother.  As difficult as their circumstances were, they made choices about their priorities and the activities on which they would focus their energies.  They were not circumstances that took them out of the broad spectrum of circumstances that are faced by recipients of FTB.  I am not satisfied that they are special circumstances.

    CONSIDERATION: outcome

18. My conclusion regarding special circumstances means that the reconciliation conditions specified in s 32C and s 32J are not met. No other reconciliation conditions are relevant. That means that FTB Part A Supplement and FTB Part B Supplement are not payable to Mrs Smith. It follows from this that I set aside the decision of the AAT1 review and substitute a decision affirming the decision made by the Secretary. The Secretary’s decision as affirmed is the operative decision with effect from 6 May 2015.

19. As Mrs Smith has not satisfied the reconciliation conditions, s 105A(2)(c) is not met and the Secretary was not obliged to undertake a review by virtue of s 105A. That means that the review was conducted under s 105. The date of effect provisions of s 107 are of no consequence as the decision of the Secretary under s 105 that I have affirmed does not have the effect of creating or increasing an entitlement to FTB by instalment.

I certify that the preceding 77 (seventy seven) paragraphs are a true copy of the reasons for the decision herein of Deputy President Forgie

.............[sgd].......................................................

Associate

Dated: 19 May 2017

Date(s) of hearing:	24 March 2017
Advocate for the Applicant:	Mr Tim Noonan
Respondent:	In person