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

Synnes and Secretary, Department of Social Services (Social services second review) [2019] AATA 338 (6 March 2019)
Division:GENERAL DIVISION
File Number(s): 2017/4327
Re:Michelle Synnes
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Member K Parker
Date:6 March 2019
Place:Melbourne

The Tribunal affirms the decision under review.
[sgd]........................................................................
Member K Parker
Catchwords – family tax benefits – whether reconciliation conditions were met – late lodgement of applicant’s partner’s tax returns – whether special circumstances prevented timely lodgement – whether time for lodgement should be extended – applicant’s partner experienced mental health issues – martial issues also a factor – decision affirmed
Legislation
A New Tax System (Family Assistance) Act 1999 (Cth)
A New Tax System (Family Assistance)(Administration) Act 1999 (Cth)
Cases
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Dranichnikov v Centrelink [2003] FCAFC 133
Groth v Secretary Department of Social Security [1995] FCA 1708
REASONS FOR DECISION
Member K Parker
6 March 2019

On 8 November 2016 an authorised review officer (ARO) of Centrelink, the service delivery agency for the Department of Human Services (Department), affirmed a decision made by Centrelink the effect of which was not to pay family tax benefit (FTB) supplements and top up payments to Michelle Synnes of $10,592.30 for the 2013/2014 financial year; and not to pay FTB for the period from 3 September 2014 to 30 June 2015 (i.e. her FTB was cancelled as from 3 September 2014).[1] Ms Synnes sought review of this decision by the Social Services & Child Support Division of the Administrative Appeals Tribunal (AAT1).
[1] Refer T-Documents T15 – see paragraph [4].
On 12 June 2017 AAT1 affirmed the decision of the ARO. Ms Synnes sought review of this decision by the General Division of the Administrative Appeals Tribunal (this Tribunal).[2]
[2] Refer T-Documents T2.
Ms Synnes’s application requires a consideration of whether she has received the correct amount of FTB for the 2013/2014 and 2014/2105 financial years, and whether her FTB payments should have been cancelled as from 3 September 2014.
On 16 August 2017 the Secretary of the Department lodged with the Tribunal a set of documents pursuant to section 37 of the Administration Appeals Tribunal Act 1975 (Cth) (T-Documents). On 20 February 2018 the Secretary wrote to Ms Synnes to invite her to provide evidence that her daughter was a “senior secondary school child” during the period from 3 September 2014 to 24 September 2014. She did not provide such evidence.
The Secretary lodged with the Tribunal a Statement of Facts, Issues and Contentions (Secretary’s SFIC) dated 23 February 2018, and a further set of documents (Supplementary T-Documents). On 5 March 2018, after the hearing, the Secretary lodged a further document at the request of the Tribunal; namely, a Centrelink online record in relation to contact made by Ms Synnes to “DRP Processing” on 17 May 2017.
Ms Synnes did not lodge any documents or submissions in this application. The Tribunal has considered the evidence given by her at the hearing of this application and the further oral submissions made by both parties. For the reasons given below, the Tribunal affirms the decision under review.
BACKGROUND
On 1 August 2013 Ms Synnes submitted to Centrelink a claim form seeking FTB payments.[3] On this form, Ms Synnes stated that her partner’s name was Mark O’Donohue.[4] Ms Synnes was asked to indicate her current relationship status.[5] She stated that she was partnered and that she had commenced living with her partner on 8 November 1986.
[3] Refer T-Documents T3. Ms Synnes signed this form on 31 July 2013 – refer T3/37.
[4] Refer T-Documents T3/15.
[5] Refer T-Documents T3/17.
Ms Synnes was asked to provide details for “any child(ren) who are already born and who have already entered your care and for whom you want to claim…[FBT]…”. She provided details of a daughter (whom the Tribunal will refer to as Daughter), born in September 1996 (i.e. she was 16 years old at the time this form was submitted) and indicated that she and Mr O’Donohue are the parents of Daughter.[6] When asked whether Ms Synnes expected Daughter to be in her care for the next 26 weeks, Ms Synnes answered in the affirmative.[7] Ms Synnes stated that Daughter was studying (full-time secondary study) and that she had started studying at that level in February 2009.[8] Ms Synnes stated on this form that Daughter would complete VCE on 30 November 2014.[9] Ms Synnes stated that her daughter was not receiving Youth Allowance, or a number of other specified payments or education allowances.[10]
[6] Refer T-Documents T3/19.
[7] Refer T-Documents T3/20.
[8] Refer T-Documents T3/21.
[9] Refer T-Documents T3/22.
[10] Refer T-Documents T3/22.
Ms Synnes also claimed on this form that she was seeking FTB in relation to her son, born in June 1998 (the Tribunal will refer to him as Son).[11] Ms Synnes stated that Son started full-time secondary study in February 2011.
[11] Refer T-Documents T3/27.
Ms Synnes stated on this form that her estimated taxable income from salary and wages for the 2013/2014 financial year was $35,000; and Mr O’Dohonue’s taxable income from business or self-employment was $65,000.[12] Ms Synnes elected to be paid her FTB as a lump sum payment after the end of the financial year.[13]
[12] Refer T-Documents T3/32.
[13] Refer T-Documents T3/36.
Centrelink sent a letter dated 3 January 2014 to Ms Synnes.[14] This letter stated that, based on Ms Synnes’ circumstances (based on a combined income of $100,000 and 100% care of Daughter and Son), her “regular payment from payment date 15 January 2014” was $0 and that her FTB entitlement including supplements was $217.28. At the bottom of this letter Ms Synnes was requested to inform Centrelink (among other things) if she separated from her partner or if either of her children received a “social security pension or benefit” or “ceases secondary study”.[15]
[14] Refer T-Documents T4.
[15] Refer T-Documents T4/40.
Centrelink sent a letter dated 6 May 2014 to Ms Synnes.[16] This letter advised Ms Synnes that the combined income recorded for her would be increased (indexed) to $103,000. This letter provided Ms Synnes with an option of providing an alternative estimate to Centrelink by 14 June 2014.
[16] Refer Supplementary T-Documents ST1.
Centrelink sent a letter dated 3 September 2014 to Ms Synnes.[17] This letter notified Ms Synnes that she would not be paid FTB “for (Daughter) because she has claimed or intends to claim a payment in her own right”. This letter also advised Ms Synnes as follows:
We cannot pay your Family Tax Benefit because you and/or your partner’s income is too high. You should check your entitlement with us at the end of the income year when your family’s actual income is known.
[17] Refer T-Documents T5.
On 14 October 2014, Daughter contacted Centrelink. The Centrelink created by Centrelink stated that Daughter submitted a claim for Youth Allowance on 25 September 2014. The contact record also stated:
Cust has been granted UTLAH independence criteria non homeowner; cust is currently residing with a friend however has secured a rental property which they are due to sign a lease for and move into in the coming weeks. Cust will notify CLK when they have confirmation and a date they will move it.
…
Cust has been granted UTLAH effect from the 25/09/14. Cust previously employed however employment was termination due to shortage of work in June 2014. SU01 provided. Cust is aware that they have only completed y11 and not a cert 2. Cust did confirm they were part way through an admin cert 3 which they will look into taking back up to finalise and obtain certificate. Cust has until 30/11/14 to secure some form of education.
On 12 November 2014 Ms Synnes lodged her individual income tax return for the 2013/2014 financial year.
Centrelink sent a letter dated 23 March 2015 to Ms Synnes.[18] This letter was headed in bold print and large font, “Family Tax Benefit – Important action required by 30 June 2015”. This letter stated as follows:
[18] Refer T-Documents T6.
To make sure you receive your Family Tax Benefit entitlement, you and your partner need to lodge a 2013-2014 tax return, or tell us if you and/or your partner are not required to lodge a tax return, by 30 June 2015.
There are benefits to lodging your 2013-2014 tax return or telling us if you are not required to lodge a tax return before 30 June 2015. 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)
2013-2014 $726.35 $354.05
If you and your partner do not take action by 30 June 2015
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 tax return/s by 30 June 2015:
·you will not be eligible for any further Family Tax Benefit, including the Family Tax Benefit supplements, for the 2013-2014 year
·you will have to pay back all of the Family Tax Benefit you received for the 2013-2014 financial year, and
·you will no longer be able to receive Family Tax Benefit payments fortnightly.
The first page of the letter had a note at the bottom in large font prompting Ms Synnes to read the back of the letter. The back of this letter contained detailed instructions under the heading, “What you and your partner need to do”. The back of this letter also informed Ms Synnes as follows:
Information you should know
If there are special circumstances that prevent you from lodging your tax return, or telling us you are not require to lodge a tax return, please call us on 136 150 to discuss.
…
If you need to lodge a tax return
If you and/or your partner need to lodge a tax return for the 2013-2014 financial year and you do not use a Tax Agent, you need to lodge now. If you use a Tax Agent, you should make sure you give them all necessary documentation early enough to help them lodge your tax return on time.
If you need help to lodge a tax return
Don’t miss out on your entitlement. Contact the Australian Taxation Office on 132 861 and get advice on what assistance is available to help you lodge your tax return.
Centrelink sent a letter dated 24 March 2016 to Ms Synnes.[19] This letter was headed in bold print and large font, “Family Tax Benefit – Important action required by 30 June 2016”. This letter contained the same (or virtually the same) information as the letter referred to in paragraph [16] and [17].
[19] Refer T-Documents T7.
On 9 June 2016 Mr O’Donohue lodged his individual income tax return for the 2013/2014 financial year.[20]
[20] Refer T-Documents T12/58.
Centrelink sent a letter dated 10 June 2016 to Ms Synnes.[21] This letter stated:
[21] Refer T-Documents T8.
You were paid Family Tax Benefit during the 2013-2014 financial year based on your estimated family income. We have now checked your entitlement using your actual family income and we owe you $2,383.45.
Information about your family’s assessment for 2013-14
--------------------------------------------------------------------------------------------------------------
Total Family Tax Benefit you are entitled to   $12,975.75
Less what you have already received  $0.00
Sub Total   $12,975.75
Adjustments made
Less adjustments  $2,383.45
--------------------------------------------------------------------------------------------------------------
Balance the Australian Government will pay you  $2,383.45
IMPORTANT INFORMATION
…
We are unable to pay your full Family Tax Benefit entitlement, including the Family Tax Benefit supplement because your partner did not confirm their income for the 2013-14 financial year by 30 June 2015.
If there were special circumstances that prevented your partner from confirming their income by 30 June 2015, please call us on 136 150.
Centrelink sent a letter dated 17 June 2016 to Ms Synnes.[22] This letter was in similar terms to the one referred to in the above paragraph. It related to the 2014-2015 financial year, and advised Ms Synnes that she was entitled to FTB for this year of $1,468.16 (comprising $1,213.44 standard FTB and $254.72 FTB Part A Supplement).
[22] Refer T-Documents T9.
Centrelink’s records indicated that Ms Synnes contacted Centrelink on 21 June 2016 and requested a review of the decision that had been made in relation to her FTB entitlement. This record stated:
Cust requested to have extension to lodge a tax return for partner for 13/14 fin year as he was self employed and was not able to complete return on time due to severe depression, having a bike accident through the year and cust stated they separated for approx. 6 months and she normally assists in completing BAS statements. Cust did not notify Centrelink of separation however partner was still able to run the business day to day. Extension was not granted to cust as did not meet exceptional circumstances as he still would have been able to complete tax return on time, cust requested appeal option as believes she should not be held to ransom by her partner not completing tax return on time.
…
An ARO spoke to Ms Synnes on 8 November 2016 about the circumstances of Mr O’Donohue in respect of the lodgement years ending on 30 June 2015 and 30 June 2016. The file note of their conversation on this date records that Ms Synnes said that Mr O’Donohue had suffered from depression for a long time.[23] She told the ARO he was not on a regular medication regime and that Mr O’Donohue would attend a GP when “things start to get on top of him”.
[23] Refer T-Documents T12.
Ms Synnes told the ARO that Mr O’Donohue was self-employed in an engineering business and that their son had completed an apprenticeship with Mr O’Donohue and assisted in the operation of the business. She told the ARO that Mr O’Donohue was unable to address the income tax returns in a timely manner because he avoided doing them because of an outstanding tax bill. She said that he had an accountant to lodge the returns. However, she said that Mr O’Donohue did not do anything as far as preparation went and that his record keeping “was not good”. Ms Synnes told the ARO that “avoiding issues like this” was Mr Donohue’s “way of dealing with the problem”. Ms Synnes told the ARO that she “did not really think anything about the FTB until she got a letter saying she had missed out of $10,000”.
The Tribunal notes in the ARO’s record of this conversation that Mr O’Donohue’s records included a reference to medical certificates having been tendered in 2002. Those medical certificates were not before this Tribunal. The ARO stated, “Despite the longstanding nature of this condition, her partner continued to operate his business in the lodgement year. This is reflected in his 2014-15 income as verified by the ATO”. The ARO affirmed the original decision made by the Department regarding Ms Synnes’s entitlement to FBT for the 2013/2014 financial year as referred to in paragraph [1].
LEGISLATIVE FRAMEWORK
There was no dispute that Ms Synnes qualified for the FTB under s 21 of A New Tax System (Family Assistance) Act 1999(Cth) (Act) because she had a least one “FTB child” during the 2013/2014 financial year and 2014/2015 financial year.
Section 58(1) of the Act provides that an individual’s annual rate of FTB is to be calculated in accordance with the Rate Calculator in Schedule 1 to the Act.
Part 1 of Schedule 1 sets out the overall rate calculation process which takes into account the individual’s adjusted taxable income. For a person who is a member of a couple, the person’s income and their partner’s income will be taken into account. Accordingly, individuals claiming FTB are requested to provide an estimate of their income and their partner’s income, upon which the individual’s estimated FTB entitlement is calculated.
Subject to certain “reconciliation conditions”, when an individual claiming FTB and their partner’s tax returns are lodged and the actual income is known, a process known as a “reconciliation” takes place to calculate the actual FTB entitlement of the individual. This entitlement amount is then reconciled against the amount (if any) already paid to the individual in advance, based on the estimates of income provided. FTB supplements may also be added to an individual’s rate of FTB provided the “reconciliation conditions” of both partners of a couple have been met.[24]
[24] Refer s 32A of the A New Tax System (Family Assistance)(Administration) Act 1999 (Administration Act)(Cth).
The reconciliation conditions are set out in s 32C to s 32Q of A New Tax System (Family Assistance)(Administration) Act 1999 (Administration Act).
CONSIDERATION
The reconciliation conditions required Ms Synnes and Mr O’Donohue to submit their tax returns by the end of the financial year to follow the relevant period (financial year) for which the FBT was claimed. If either of them failed to do so, Centrelink has discretion to extend the time for lodgment if it was satisfied that there are “special circumstances” that prevented the lodgment of the tax return within the required time.
Ms Synnes contends, in effect, that there were special circumstances that prevented Mr O’Donohue from lodging his 2013/2014 financial year tax return before the end of the 2014/2015 financial year, and that an extension should be granted for him to lodge it in June 2016, when he did so.
At the hearing, Ms Synnes expressed frustration because she considered that the law held her responsible for doing Mr O’Donohue’s tax returns, but there was nothing she could do about it.
Ms Synnes said that Mr O’Donohue had mental health problems which she described as depression. She said he had a bicycle accident. She said that he had seen a GP and was on medication at the time. She said she only knew that he was on medication because she had found a box of it. She said she did not know what type of medication it was. She said they lived at different ends of the house. She said that as far as she was aware, Mr O’Donohue had not experienced suicidal thoughts or attempted suicide.
The Tribunal asked Ms Synnes whether Mr O’Donohue was still attending at the business in the first half of 2015. She said that sometimes he did; and that he would have “highs and lows”. She said she had not really taken notice as to how frequently he attended the business.
When asked why Mr O’Donohue, or her son who worked in the business with him, had not attended the Tribunal to give evidence, Mr Synnes said that it would be “all too confronting for him” and that “he would not do it for me”. Ms Synnes said she did not want to involve her son, who was 25 years old. The Tribunal asked Ms Synnes whether she would like the hearing to be adjourned (to allow her to arrange this). Ms Synnes indicated that she did not want the hearing to be adjourned.
Ms Synnes said that Mr O’Donohue’s condition was having an impact on the family and that it had “messed us all around”. She said it was “upsetting to everyone” and that “keeping things afloat was difficult”. Ms Synnes said they were experiencing “marital issues” and that Mr O’Donohue was “not going to do anything that would benefit her”. Ms Synnes explained that after she had argued with Mr O’Donohue, she would not see him for a while.
Ms Synnes said she asked Mr O’Donohue to submit his tax return and that “he refused” and said “he could not do it”. Ms Synnes said she went to Centrelink about this and Centrelink told her that “the ball was in her court”. Ms Synnes said that when Mr O’Donohue was experiencing a high point, she asked him to submit the tax return and he did it. Ms Synnes gave evidence that Mr O’Donohue used his accountant from the business as his personal accountant.

At the hearing, Ms Synnes was asked whether her daughter was still at school in September 2014; to which she said, “I don’t recall that – don’t know when she left. I think she left at the end of 2014. She moved out of home after she finished”.
Based on the oral evidence given by Ms Synnes at the hearing, the Tribunal is satisfied that Ms Synnes certainly faced some significant challenges in getting Mr O’Donohue to submit his tax return within the time required so as to satisfy the reconciliation conditions. The Tribunal does not envy the position that Ms Synnes was in and can understand her frustration.
However, there was no medical evidence before this Tribunal which shed light on the precise nature of, or the extent of, Mr Donohue’s mental health issues during the 2014/2015 financial year or between 1 July 2015 and 9 June 2016, a period totalling 23 months. It was not clear as to the level of impairment that those mental health issues might have caused to Mr O’Donohue during this period. Ms Synnes could not explain why he was able to continue operating and working in his business during the relevant period or how Mr O’Donohue was prevented from assisting his accountant to attend to his tax affairs on his behalf in a timely manner.
The reference to “special circumstances” in the relevant provisions is not defined. The case authorities often cite the need for there to be circumstances which are unusual, uncommon or exceptional; or that “there must be something that distinguishes the case from the ordinary or unusual case”.[25] The second limb of the test also requires that the special circumstances have “prevented” the lodgement of the tax returns within the required time frame. The Tribunal considers this is an onerous requirement, as it is not enough for an individual to merely show that the special circumstances made it difficult or challenging for the tax returns to be lodged within the required time frame. The special circumstances must have been such that they acted as an insurmountable block or impediment to prevent the lodgement from taking place within that time.
[25] Refer Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25; Dranichnikov v Centrelink [2003] FCAFC 133; Groth v Secretary Department of Social Security (1995) FCA 1708.
Based on the evidence presented to it, the Tribunal is not satisfied that there were special circumstances in this case. The conclusion of the Tribunal may have been different if it had heard oral evidence from Mr O’Donohue and/or his son (who worked in the business with Mr O’Donohue), about the degree of Mr O’Donohue’s impairment arising from his mental health issues during the relevant time. Or evidence which enabled it to understand with clarity precisely what had prevented Mr O’Donohue from lodging his tax return for 23 months following the end of the 2013/2014 financial year.
Even if the Tribunal was to accept that the circumstances were special, it is not satisfied that those circumstances prevented the lodgement of Mr O’Donohue’s tax return within the required time frame. Mr O’Donohue engaged an accountant to assist him with his personal tax affairs, being the same accountant who was engaged as the accountant for Mr O’Donohue’s business. On the present evidence, the Tribunal is not satisfied that that there was an insurmountable impediment to Mr O’Donohue providing his accountant with the necessary information to allow the accountant to undertake this task for him and to prepare and lodge the return by 30 June 2015.
There were some references in documents before the Tribunal suggesting that Ms Synnes had been separated from Mr O’Donohue at certain times. These contentions were not pressed with any force by Ms Synnes at the hearing. The evidence suggested there may have been periods during which there were marital issues between them, or there was very little communication between them, or that they were living at different ends of the house, according to Ms Synnes. However, there was no other evidence tendered by Ms Synnes to indicate that any formal separation had taken place between them.
Ms Synnes and Mr O’Donohue have been together for a long time (about 33 years) and have had four children together. Some of their children were still living at home at the relevant time (the 23 month period to follow the end of the 2013/2014 financial year). The Tribunal is satisfied, in the absence of further evidence, that Ms Synnes and Mr O’Donohue had, during that period, continued to live together as a family with their dependent children and that they remained as members of a couple, albeit an unhappy couple, according to the evidence. The Tribunal also notes that Ms Synnes had not notified Centrelink at any time prior to these issues arising, that she had separated from her partner, as she had been informed to do in the letter referred to in paragraph [11].
The Tribunal considers that there was no basis upon which to exercise discretion under s 32D(2)(b) of the Administration Act to extend the period for lodgement of Mr O’Donohue’s 2013/2014 tax return to 9 June 2015. For this reason, the reconciliation conditions have not been met.
Accordingly, the Tribunal affirms the first aspect of the AAT1 decision; namely, that Ms Synnes is not entitled to receive the FBT supplements and top up payments for the 2013/2014 financial year.
The Tribunal is also satisfied that as at 3 September 2014 Ms Synnes no longer had an entitlement to FBT because Daughter had turned 18 years old on this day, was no longer engaging in secondary full-time studies, nor likely to have been living at home with Ms Synnes and Mr O’Donohue. This meant that Ms Synnes only had one FTB child living at home, being Son. The legislation as at that date provided that FTB Part A was not payable to an individual in respect of a single FBT child if the (combined) adjusted taxable income for the 2014/2015 financial year was more than $101,787. The legislation also provided that FTB Part B was not payable in Ms Synnes circumstances, with her dependant son being between the age of five and 18, if the income of the lower income earner was more than $21,043. The recorded income exceeded both of those thresholds.
In those circumstances, the Tribunal is satisfied that section 31C of the Administration Act allowed for the instalment entitlement determination made under s 16 to be varied such that the FTB rate for Ms Synnes as from 3 September 2014 was nil.
Accordingly, the Tribunal affirms the second aspect of the decision under review, namely, that the decision to cancel Ms Synnes’s FBT as from 3 September 2014 was correct.
CONCLUSION
Based on the conclusions reached in paragraphs [48] and [51], this Tribunal affirms the decision under review.

I certify that the preceding fifty two (52) paragraphs are a true copy of the reasons for the decision herein of Member K Parker.

[sgd]........................................................................
Associate
Date of hearing:  2 March 2018
Date final submissions lodged:         5 March 2018
Advocate for Applicant:  Self-represented
Advocate for Respondent:                 Mr Tim Noonan, FOI and Litigation Branch, Department of Human Services

[2019] AATA 338

6 March 2019

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Appeal

Judicial Review

Procedural Fairness

Statutory Construction

Standing