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

[2006] AATA 463

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 463

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No T2006/13

GENERAL ADMINISTRATIVE  DIVISION		)
Re		CHRISTINE SUTHERLAND

Applicant

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

Respondent

DECISION

Tribunal Associate Professor B W Davis AM, Part-time Member

Date26 May 2006

PlaceHobart

Decision The decision under review is affirmed.

[Sgd B W Davis]

Part-Time Member

CATCHWORDS

Welfare payments - family tax benefit (FTB) - child support payments - arrears - estimated taxable income - estimated maintenance income - reconciliation amount - overpayment - debt - payment of debt

Family Assistance Act 1999, Section 58 and Schedule 1, Benefit Rate Calculator and Income Test

Family Assistance Administration Act 1999, Sections 7, 20, 71, 97, 101, 105, 224

Acts Interpretation Act 1901, Sections 15AA and 15AB

Family Assistance Guide

Re Beadle and Director-General of Social Security (1984) 6 ALD

Krzywak and SDSS (1988) 15 ALD 690

Gilbert and SDFCS (2004) AATA 418 (19 April 2004)

Coyne and SDFCS (2002) 70 ALD 741

Dranichnikov v Centrelink FCAFC 133, 19 June 2003

REASONS FOR DECISION

26 May 2006 Associate Professor B W Davis AM, Part-time Member   

Decision under Review

1.      The decision under review is a decision of the Social Security Appeals Tribunal (SSAT) on 13 December 2005 that Mrs Christine Sutherland has a Family Tax Benefit (FTB) debt of $638.17 in respect of the year 2004/05 that must be repaid.

Issue

2.      Was Mrs Sutherland paid more FTB than her correct entitlement for the year 2004/05 and if the answer is yes, must the debt be repaid?

Legislation

3.      The relevant legislation is various sections of the Family Assistance Act 1999 and the Family Assistance Administration Act 1999, together with the Family Assistance Guide.

Standard of Proof

4.      The standard of proof is on the balance of probabilities and to the reasonable satisfaction of the Tribunal.

Background

5.      Christine Sutherland and George Simpson are the parents of Hamish Sutherland, now nearly 16 years of age.  The parents do not appear to have been in a relationship since 1990 and Mrs Sutherland does not have any other children.

6.      Mrs Sutherland has been in receipt of Family Tax Benefit (FTB) for Hamish since July 2000 and prior to that she was receiving similar family related benefits.  Centrelink records indicate that Mrs Sutherland has been receiving child maintenance payments from Mr Simpson since at least June 2000.

7.      On 24 January 2005 she received an arrears payment of Child Support amounting to $3844.52 and from 1 February 2005 she received $21.67 each month, totalling $3952.87 maintenance for the year 2004.2005.

8.      Centrelink informed Mrs Sutherland by letter dated 26 January 2005 that because of the large maintenance arrears payment she had received, she may have been overpaid $826.36 FTB and she could contact Centrelink to have her FTB rate adjusted to reduce the overpayment.  Similar letters were despatched on 25 February, 30 March, 28 April and 15 May 20905, quoting increased amounts of potential overpayment each time.  At the time she was receiving FTB Part A, FTB Part B, rent assistance and parenting payment.

9.      Mrs Sutherland claims not to have received the letter of 26 January 2005, but later told the SSAT she visited Centrelink after the receipt of subsequent letters.  Centrelink records do not confirm this, but it is clear she attended Centrelink on 5 May and 17 May 2005 to discuss the overpayment situation.  She was advised it was the late lump-sum arrears of maintenance payment which had caused FTB overpayment and that any debt owing could be repaid via withholdings from her fortnightly benefits.  It is clear from the record of interview at the time she was content to leave it at that and chose not to explore detailed options for reducing debt.

10.     On 27 July 2005 Mrs Sutherland’s FTB payments for 2004-2005 were reconciled by comparing her estimated adjusted taxable income and estimated maintenance income against the actual adjusted taxable income and actual maintenance income for 2004-2005.  In this case Mrs Sutherland’s adjusted taxable income was below the limit to affect her rate of FTB and only the maintenance income played a part in the calculation of a reduced rate of FTB Part A.

11.     The overall outcome of the reconciliation was that Mrs Sutherland was entitled to receive a total of $8821.97 FTB for the 2004-2005 year, but had actually received $9460.14, an overpayment of $638.17, the latter being raised as a debt under Section 71 of the Family Assistance Administration Act.

12.      Mrs Sutherland appealed the decision and on 29 September 2005 an Authorised Review Officer (ARO) affirmed raising of the debt was correct.  This decision was further affirmed by the Social Security Appeals Tribunal on 13 December 2005.  Mrs Sutherland then appealed to the AAT on 16 January 2006.

13.      As at April 2005 the outstanding debt balance was $298.17 and the applicant repaying $20.00 per fortnight off the debt by withholdings from her FTB.

The AAT Hearing

14.      The AAT hearing was conducted in Hobart on 3 May 2006.  Mrs Christine Sutherland (the applicant) was self-represented and did not call witnesses, but was permitted clarification of her evidence by a friend at a point in the proceedings.  The respondent Secretary, DFCS&IA, was represented by Mr Brian Sparkes.

15.      Mrs Sutherland was affirmed and invited to present her case.  She stated she was an honest woman and if a debt was owing it would be met, but she was angered and confused by the inability of Centrelink to explain precisely how the debt had arisen and what options existed, during a number of visits to Centrelink between February and June 2005.

16.      The applicant said she was surprised to find a substantial amount in her bank balance in January 2005, but when she queried Centrelink about it, they told her to contact the Child Support Agency, as it was arrears of maintenance money.  She was disturbed that later letters from Centrelink indicated the money would be treated as income and in February 2005 that ‘she might owe $826.00’, but could opt to have deductions made from her FTB payments.  She was informed the total sum owing would be known at the end of the 2004-2005 financial year, but nobody seemed able to inform her precisely what sum was involved and what her options were.

17.      Mrs Sutherland then asked the Tribunal whether a friend in the hearing could make a brief comment about her situation.   Counsel for the respondent had no objection, so Mr Jeff Clark was affirmed and made a brief statement.    He indicated he had been involved in social welfare for the past 20 years, including 2 years as a Centrelink agent in NSW.    Mr Clark said Mrs Sutherland’s case was similar to many others where two departments (Centrelink and the Child Support Agency) failed to communicate effectively with each other and the FTB legislation was complex and little understood by laymen.    It required people to estimate their income and avoid falling into debt, but there was no guidance or assistance as what individual options existed.    It all relied on end-of-year calculations.   Perhaps Mrs Sutherland could have avoided her situation if she had set up a separate bank account for Hamish, so that child maintenance payments were not treated as her income, but he was not sure this was feasible.

18.      Mrs Sutherland was recalled as witness and a number of questions were put to her in cross-examination.    She said there was no error on her part, but some contradicting statements by Centrelink.   She agreed she was initially advised debt for 2004-2005 could amount to $826 or more, but in reality it was $638.   She was unaware the Act contained special circumstances waiver provisions; not that she would have attempted to use such let-outs.   She had presented her case as she saw it and did not wish to make any closing submission, apart from voicing concern about a system which penalised people for not understanding its complexities.

19.      Counsel for the respondent admitted the legislation was complex, but the reality was Mrs Sutherland was paid FTB on the basis of an honest income assessment by Centrelink, affected later by a substantial lump-sum maintenance payment, which was bound to affect her reconciliation income assessment for 2005-2005.    She was advised she could have deductions made from her FTB payments, given they represented overpayments in the circumstances, but elected not to do so at the time.

20.      There was no administrative error by Centrelink, but perhaps Mrs Sutherland should have been directed to further advisory services provided by the agency.   She sought certainty in early-mid 2005, but Centrelink could not provide this, given the need for end-of-year reconciliation.    It was unfortunate, but this is how the legislation works.   He commended Mrs Sutherland on her honesty in the circumstances.

21.      The Tribunal agreed with this comment, but said it would have to decide what weight, if any, might be given to Mr Clark’s intervention in the matter.

Analysis

22.      The Tribunal is required to consider all evidence anew, bearing in mind statutory and policy provisions, as well as any relevant prior case determinations.

23.      It is a fundamental principle of Australian social security law that in assessing welfare benefits, it is the total income from all sources of an individual with is taken into account (Social Security Act 1991 section 8), thus Mrs Sutherland could not escape consideration of all child maintenance support received.

24.      The relevant legislation in this case involves various sections of the Family Assistance Act 1999 (“the Act”) and the Family Assistance (Administration) Act 1999 

(“the Administration Act”).    The Family Assistance Guide to the Act also provides clarification:

“Family Assistance Act

·Section 58 – Rate of Family Tax Benefit

·Schedule 1 – Family Tax Benefit Rate calculator

·Schedule 1 Division 5 – Maintenance Income Test

oClause 19B – Application of maintenance income test to certain pension and benefit recipients and their partners

oClause 20 – Effect of maintenance income on family tax benefit rate

oClause 20A – Annualised amount of maintenance income

Family Assistance Administration Act

·     Section 7 – FTB can be claimed in instalments

·     Section 20 – Determination of rate may be based on estimate [in particular s20(3) which relates to estimates of maintenance income]

·     Section 105 – Secretary may review certain decisions on own initiative

·     Section 71 – Debts arising in respect of family assistance other than child care benefit and family tax benefit advance

·     Section 97 – Waiver of debt arising from error

·     Section 101 – Waiver in special circumstances

·     Section 224 – Notice of decisions

Acts Interpretation Act 1901

·     Section 15AA – Regard to be had to purpose or object of Act

·     Section 15AB – Use of extrinsic material in the interpretation of an Act

Family Assistance Guide

·     3.1.7.21 Routine Assessment Method of maintenance

·     3.1.7.22 Actual Assessment Method of maintenance

25.      FTB consists of two parts:   Part A and Part B.   Only Part A is subject to a maintenance income test; there is no maintenance calculator for FTB part B.

26.      Sub-section 58(1) of the Family Assistance Act provides for the annual tax family benefit to be calculated in accordance with a rate calculator contained in Schedule 1, Part 2, Clause 20 of the Act.    As the correct annual rate entitlement can only be determined when all the relevant information for the period is know,  the Administration Act also provides for the reconciliation of all payments with entitlements at the end of each financial year.

27.      As indicated, the effect of maintenance payments on a person’s FTB is worked out according to a method set out in Schedule 1, Part 2, Clause 20 of the Act.    A single parent has a maintenance income free of $1,149.75; if the person receives a higher amount of maintenance, then half of the excess may reduce the amount of FTB payable.   It is uncontested that Mrs Sutherland received maintenance payments totalling $3,952.87 in 2004-2005; this exceeded her maintenance free area and half of the excess reduced her permitted FTB for that year.    The overall FTB she received in 20042005 was $9,460.14, while her entitlements (including child supplement of $763.43) totalled $8,821.97.   There was an overpayment of $638.176, not solely due to any administrative error by Centrelink, and this was lawfully raised as a debt, which is now being met by deductions from her benefits payments.

28.      The Tribunal recognises that Mrs Sutherland’s financial circumstances are rather right and she lacks some home comforts others might view as the norm, however she does receive several kinds of welfare payments and cannot be described as destitute.   The Tribunal is aware that section 96 of the Administration Act permits the Secretary to waive the right to recover the whole or part of the debt in some circumstances.  The term “special circumstances” is not defined in the Administration Act, however the Full Federal Court determined in Dranichnikov v Centrelink FCA FC 133 [19 June 2005], that such circumstances must be unusual or exceptional and involve factors other than financial hardship alone.

In Summary

29.      The Tribunal accepts that Mrs Sutherland was surprised to receive a large lump-sum payment of maintenance arrears in January 2005 and sought clarification as to its implications for FTB.   Centrelink was not in a position to determine the actual outcome, given the need for end-of-year reconciliation.   Mrs Sutherland was informed of the debt situation and told she could adjust her rate of benefits to reduce the potential debt, but given the uncertainties about quantum chose not to do so.   The circumstances are unfortunate, but the Tribunal does not regard recovery of the debt as unreasonable or unjust.   It is certainly lawful.

Decision

30.      The decision under review is affirmed i.e. the FTB debt of $638.17 in respect of the year 2004-2005 must be repaid.

I certify that the 30 preceding paragraphs are a true copy of the reasons for the decision herein of Associate Professor B W Davis AM, Part-time Member

Signed:  K L Miller (Administrative Assistant)

Date/s of Hearing  3 May 2006
Date of Decision  26 May 2006
Counsel for the Applicant         Applicant appeared in person
Solicitor for the Applicant           
Counsel for the Respondent     Mr Brian Sparkes
Solicitor for the Respondent     Advocate - Centrelink