Tillman and Secretary, Department of Social Services (Social services second review)
[2016] AATA 274
•29 April 2016
Tillman and Secretary, Department of Social Services (Social services second review) [2016] AATA 274 (29 April 2016)
Division
GENERAL DIVISION
File Number(s)
2015/4308
Re
Mr David Tillman
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
And
Ms Karleen Phillips
OTHER PARTY
DECISION
Tribunal Dr T Nicoletti, Senior Member
Date 29 April 2016 Place Sydney The Tribunal affirms the decisions under review.
....................[sgd]....................................................
Dr T Nicoletti, Senior Member
CATCHWORDS
SOCIAL SECURITY – Family Tax Benefit – School Kids Bonus – whether child in applicant’s care for relevant period – overpayment of FTB and debt incurred – relevance of evidence that FTB used to child’s benefit – no evidence of special circumstances to waive the debt – decisions affirmed
LEGISLATION
A New Tax System (Family Assistance) Act 1999, ss 22, 25
A New Tax System (Family Assistance)(Administration) Act 1999, ss 71, 95, 101
CASES
Beadle and Director-General of Social Security (1984) 6 ALD 1
Groth and Secretary, Department of Social Security (1995) 37 ALD 797
Green and Secretary, Department of Social Security (1990) 21 ALD 772REASONS FOR DECISION
Dr T Nicoletti, Senior Member
29 April 2016
FACTS
Mr Tillman received family tax benefit (FTB) in respect of his son (the Child) for various periods from 27 April 2001.
On 16 January 2015, Mr Tillman attended a Centrelink office of the Department of Human Services (Department) and advised them that he had ceased providing care to the Child from 12 January 2015, but had provided 100% care up until that date.
On 16 January 2015, the Department decided that Mr Tillman was not entitled to the FTB because he was not providing care to the Child. On this basis, Mr Tillman’s FTB was cancelled with effect from 12 January 2015.
Mr Tillman requested a review of this decision by an Authorised Review Officer (ARO) of the Department.
On 13 April 2015, the ARO changed the decision to cancel Mr Tillman’s FTB from 12 January 2015. The ARO found that the Child left Mr Tillman’s care on 18 October 2014 and, as a result, Mr Tillman had received more than his correct entitlement of FTB for the period from 18 October 2014 to 12 January 2015. On this basis, the ARO determined that Mr Tillman had incurred debts to the Commonwealth of:
(a)$2,885.30 for the overpayment of FTB for the period from 18 October 2014 to 12 January 2015; and
(b)$421 for the overpayment of the Schoolkids Bonus on 9 January 2015.
Invoices requiring payment of the debts in paragraphs 5(a) and 5(b) above were issued to Mr Tillman by the Department on 24 April 2015.
On 28 April 2015, Mr Tillman applied to the Social Security Appeals Tribunal (SSAT) for a review of the ARO’s decision.
On 1 July 2015, the SSAT amalgamated with the Administrative Appeals Tribunal (AAT) and became the Social Services and Child Support Division of the AAT. Under the transitional provisions set out in the Tribunals Amalgamation Act 2015, the application to the SSAT was taken to be an application for first review by the AAT. This means that the decision was formally considered a decision of the AAT on first review (AAT1).
On 16 July 2015, the AAT1 affirmed the decision to cancel Mr Tillman’s FTB from 18 October 2014, the date that the Child had left the Applicant's care, and affirmed the decision to raise the two debts for the overpayment of the FTB and Schoolkids Bonus.
On 21 August 2015, the Applicant applied to this Tribunal for a review of the AAT1 decision.
LEGISLATION
The following legislation is relevant to determinations regarding the FTB:
(a)A New Tax System (Family Assistance) Act 1999 (Act)
(b)A New Tax System (Family Assistance) (Administration) Act 1999 (Administration Act)
Section 22 of the Act sets out the criteria to determine when a child, at any age, will be considered an FTB child of another individual for the purposes of the Act. There are some provisions which apply only to children of the specified age; however the legal responsibility and percentage of care provisions apply to children of all ages:
22 When an individual is an FTB child of another individual
(1) An individual is an FTB child of another individual (the adult) in any of the cases set out in this section.
Individual aged under 16
(2) An individual is an FTB child of the adult if:
(a) the individual is aged under 16; and
(b) the individual is in the adult’s care; and
(c) the individual is an Australian resident, is a special category visa holder residing in Australia or is living with the adult; and
(d) the circumstances surrounding legal responsibility for the care of the individual are those mentioned in paragraph (5)(a), (b) or (c).
Individual aged 16‑17
(3) An individual is an FTB child of the adult if:
(a) the individual has turned 16 but is aged under 18; and
(b) the individual is in the adult’s care; and
(c) the individual is an Australian resident, is a special category visa holder residing in Australia or is living with the adult; and
(d) the circumstances surrounding legal responsibility for the care of the individual are those mentioned in paragraph (5)(a), (b) or (c); and
(e) the individual is a senior secondary school child.
Individual aged 18‑19
(4) An individual is an FTB child of the adult if:
(a) the individual is aged 18 or is aged 19 and the calendar year in which the individual turned 19 has not ended; and
(b) the individual is in the adult’s care; and
(c) the individual is an Australian resident, is a special category visa holder residing in Australia or is living with the adult; and
(d) the individual is a senior secondary school child.
Legal responsibility for the individual
(5) The circumstances surrounding legal responsibility for the care of the individual are:
(a) the adult is legally responsible (whether alone or jointly with someone else) for the day‑to‑day care, welfare and development of the individual; or
(b) under a family law order, registered parenting plan or parenting plan in force in relation to the individual, the adult is someone with whom the individual is supposed to live or spend time; or
(c) the individual is not in the care of anyone with the legal responsibility for the day‑to‑day care, welfare and development of the individual.
Percentage of care at least 35%
(7) If an individual’s percentage of care for a child during a care period is at least 35%, the child is taken to be an FTB child of that individual for the purposes of this section on each day in that period, whether or not the child was in that individual’s care on that day.
Note: If an individual’s percentage of care for a child during a care period is less than 35%, the child is taken not to be an FTB child (see section 25).
Section 25 of the Act provides that in order for the child to be considered an FTB child for the purposes of the Act, no less than 35% of care for a child can be provided at any time throughout the period of care:
25 Effect of an individual’s percentage of care for a child being less than 35%
If an individual’s percentage of care for a child during a care period is less than 35%, the child is taken, despite section 22, not to be an FTB child of that individual for any part of the period.
Section 71 of the Administration Act provides that a debt to the Commonwealth will arise where the payment of certain benefits is paid to a person who is not entitled to receive the payment, or where a payment exceeds the entitled amount to be received:
71 Debts arising in respect of family assistance other than child care benefit, child care rebate and family tax benefit advance
No entitlement to amount
(1) If:
(a) an amount has been paid to a person by way of family tax benefit, stillborn baby payment, single income family supplement or schoolkids bonus (the assistance) in respect of a period or event; and
(b) the person was not entitled to the assistance in respect of that period or event;
the amount so paid is a debt due to the Commonwealth by the person.
Overpayment
(2) If:
(a) an amount (the received amount) has been paid to a person by way of assistance; and
(b) the received amount is greater than the amount (the correct amount) of assistance that should have been paid to the person under the family assistance law;
the difference between the received amount and the correct amount is a debt due to the Commonwealth by the person.
Section 95 of the Administration Act sets out the circumstances in which the Secretary may write off a debt to the Commonwealth:
95 Secretary may write off debt
(1) The Secretary may, on behalf of the Commonwealth, decide to write off a debt for a stated period or otherwise, but only if subsection (2), (4A) or (4B) applies.
Secretary may write off debt if debt irrecoverable or debt will not be repaid etc.
(2) The Secretary may decide to write off a debt under subsection (1) if:
(a) the debt is irrecoverable at law; or
(b) the debtor has no capacity to repay the debt; or
(c) the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d) it is not cost effective for the Commonwealth to take action to recover the debt.
(3) For the purposes of paragraph (2)(a), a debt is taken to be irrecoverable at law if, and only if:
(a) the debt cannot be recovered by means of:
(i) deductions under section 84; or
(iaa) deductions under section 1231 of the Social Security Act 1991; or
(ia) setting off under section 84A family assistance; or
(ii) application of an income tax refund under section 87; or
(iia) setting off under section 87A against a payment referred to in paragraph 82(2)(a); or
(iii) legal proceedings under section 88; or
(iv) garnishee notice under section 89;
because the relevant time limit for recovery action under that section has elapsed; or
(b) there is no proof of the debt capable of sustaining legal proceedings for its recovery; or
(c) the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or
(d) the debtor has died leaving no estate or insufficient funds in the debtor’s estate to repay the debt.
(4) For the purposes of paragraph (2)(b), if a debt is recoverable by means of:
(a) deductions under section 84; or
(aa) deductions under section 1231 of the Social Security Act 1991; or
(b) setting off under section 84A family assistance; or
(c) application of an income tax refund under section 87; or
(d) setting off under section 87A against a payment referred to in paragraph 82(2)(a);
the person is taken to have a capacity to repay the debt unless recovery by those means would cause the person severe financial hardship.
Secretary may write off subsection 28(2) or (6) debt if claimant and partner separate
(4A) The Secretary may, under subsection (1), decide to write off a debt arising because of subsection 28(2) or (6) (which deal with when income tax returns have not been lodged) if the following conditions are met:
(a) the claimant and the partner mentioned in subparagraph 28(1)(b)(iii) (the ex‑partner) ceased to be members of the same couple after the end of the income year after the cancellation income year mentioned in subsection 28(1);
(b) if the claimant was required to lodge an income tax return for the cancellation income year—an assessment is or has been made under the Income Tax Assessment Act 1936 of the claimant’s taxable income for the cancellation income year;
(c) in any case—the ex‑partner was required to lodge an income tax return for the cancellation income year but still had not done so by the time when the claimant and the ex‑partner ceased to be members of the same couple.
Secretary may write off subsection 60D(2) debt if claimant and partner separate
(4B) The Secretary may, under subsection (1), decide to write off a debt arising because of subsection 60D(2) (which deals with when income tax returns have not been lodged) if the following conditions are met:
(a) the claimant and the partner mentioned in paragraph 60D(1)(b) (the ex‑partner) ceased to be members of the same couple after the end of the second income year following the particular income year mentioned in paragraph 60D(1)(a);
(b) if the claimant was required to lodge an income tax return for the particular income year—an assessment is or has been made under the Income Tax Assessment Act 1936 of the claimant’s taxable income for the particular income year;
(c) in any case—the ex‑partner was required to lodge an income tax return for the particular income year but still had not done so by the time when the claimant and the ex‑partner ceased to be members of the same couple.
When decision under subsection (1) takes effect
(5) A decision made under subsection (1) takes effect:
(a) if no day is specified in the decision—on the day on which the decision is made; or
(b) if a day is specified in the decision—on the day so specified (whether that day is before, after or on the day on which the decision is made).
Debt that has been written off may be recovered
(6) Nothing in this section prevents anything being done at any time to recover a debt that has been written off under this section.
Section 101 of the Administration Act sets out the special circumstances in which the Secretary may waive the right of the Commonwealth to recover all or part of a debt:
101 Waiver in special circumstances
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false statement or a false representation; or
(ii) failing or omitting to comply with a provision of the family assistance law; and
(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c) it is more appropriate to waive than to write off the debt or part of the debt.
Government policy set out in the Guide to Social Security Law is also relevant, and should be applied in the absence of cogent reasons to not follow such policy.
CONSIDERATION
Section 22 of the Act requires a person receiving FTB to have the care of a “family tax benefit child”. Further, subsection 22(2) of the Act sets out the following requirements for a child to be considered an FTB child of the Applicant:
(a)The individual is under 16 years of age; and
(b)The individual is in the applicant's care; and
(c)The individual is an Australian resident; and
(d)The circumstances surrounding legal responsibility for the care of the individual are those described in paragraphs (5)(a), (b) or (c)
The Child was under 16 years old during the relevant period and is an Australian resident.
The relevant paragraph under subsection 22(5) relating to legal responsibility is paragraph (a), which states that "the adult is legally responsible (whether alone or jointly with someone else) for the day-to-day care, welfare and development of the individual". Thus, it is to be determined whether the Child was, or was not, in the care of and the legal responsibility of the Applicant.
Subsection 22(7) of the Act states that a child is taken to be an FTB child of the applicant if the applicant's percentage of care for that child is at least 35%. Section 25 confirms that "if an individual’s percentage of care for a child during a care period is less than 35%, the child is taken, despite section 22, not to be an FTB child of that individual for any part of the period."
Mr Tillman advised Centrelink on 16 January 2015 that the Child ceased to be in his full-time care from 12 January 2015. He did not dispute this date at the AAT1 hearing. It is also undisputed that prior to 18 October 2014, the Child was in the sole care of Mr Tillman.
However, Mr Tillman gave evidence before the AAT1 and this Tribunal that during the relevant period, the Child moved between a number of homes, including Mr Tillman's, Ms Phillips’, the Child’s brother’s and brother-in-law’s homes. Mr Tillman also gave evidence that during this period, there were difficulties with the Child’s behaviour and his attendance at school declined. The decline in the Child’s school attendance is confirmed in a letter from the school counsellor which stated that the Child’s attendance had dropped to 52% in Term 4 of 2014.
Mr Tillman stated at the AAT1 hearing that during the relevant period he attended school meetings and was the school contact person for the Child. This was confirmed by the school counsellor, who confirmed that Mr Tillman attended school meetings in 2014 and was available for meetings in 2015. Correspondence from the school attendance officer states that Mr Tillman and Ms Phillips were both the contact persons for the Child.
The letter from the school counsellor states that the school records show that from 18 October 2014, the address for the Child was listed as Ms Phillips’ residence. It is the uncontested evidence of Ms Phillips that she did not change this address until 30 January 2015.
At the AAT1, Ms Phillips gave evidence that from mid-October 2014, the Child started staying with her. However, she gave inconsistent evidence in that first she stated that some nights during the relevant period the Child stayed at his brother's house, and then later stated that he spent every night at her house. Adam Cook, Ms Phillips’ son, produced a statement dated 15 July 2015 which states that the Child stayed at his house some nights of the week during the relevant period, that the Child spent "every other night” at the Applicant's house, and stayed at Ms Phillips’ house "some weekends."
The AAT1 gave this statement little weight on the basis of the estrangement between Mr Cook and Ms Phillips, but the Respondent contended that the statement could be relied upon to at least corroborate the evidence that the Child spent varying amounts of time at different houses.
Mr Tillman’s evidence before the AAT1 was that during the relevant period the Child stayed with him between five and seven days a month, which the Respondent notes would have amounted to no more than 21 days during the relevant period, or approximately 24% of the time during that period.
Mr Tillman further stated at the AAT1 that during the relevant period, he continued to meet all costs associated with the care of the Child. On the other hand, Ms Phillips gave evidence that she met all of the costs during the relevant period. However, bank records verify that during the relevant period, Mr Tillman transferred money into Ms Phillips’ bank account, which Ms Phillips confirmed in evidence before this Tribunal were used for the Child’s benefit.
During the relevant period, Mr Tillman received approximately $470 a fortnight in FTB payments. The bank records indicate that eight payments were made to Ms Phillips’ bank account between October 2014 and January 2015 in amounts between $100 and $400.
The Respondent contends that the amounts transferred to Ms Phillips’ bank account reflected the level of care that Ms Phillips provided to the Child during the relevant period, and noted that five of the eight payments comprised more than half of the total FTB received for that fortnight. The total amount transferred to Ms Phillips during the relevant period was $2,300. This did not include the Schoolkids Bonus paid to Mr Tillman on 9 January 2015.
I agree with the Respondent that the balance of the evidence, particularly the school records and the transfer of money from Mr Tillman to Ms Phillips during the relevant period, indicates that the Child was no longer in Mr Tillman’s full-time care from 18 October 2014 and was predominantly in the care of Ms Phillips. What is not clear, however, is the percentage of the Child’s care that can be properly attributable to Mr Tillman and Ms Phillips during the period.
The Secretary contends that by Mr Tillman’s own evidence before the AAT1, he only had 24% care of the Child during the relevant period. However, in evidence before this Tribunal, it was clear that Mr Tillman was not able to say with any certainty how much time the Child spent in his care or how much time he spent in Ms Phillips’ care or the care of others. I am satisfied that the predominant care was with Ms Phillips during the relevant period, and that the Child appears to dictate which parent he will reside with, depending on his relationship with that parent at the time.
I note that pursuant to section 25 of the Act, if a person has less than 35% care of an FTB child, then the child is taken not to be an FTB child for any part of that period. However, there is no evidence before me which establishes with any certainty the percentage of care that either Mr Tillman or Ms Phillips had in respect of the Child. However, what is clear to me from the evidence of both Mr Tillman and Ms Phillips is that they both attended to the care to the Child, in circumstances that were at times clearly very difficult. Further, it was not disputed by either the Respondent or Mr Tillman and Ms Phillips that the FTB that was paid to Mr Tillman was substantially applied for the benefit of the Child.
Section 71 of the Administration Act provides that if FTB or Schoolkids Bonus (amongst other things) is paid to a person who was not entitled to it, then the amount is a debt due to the Commonwealth. The Respondent contends that because Mr Tillman was not entitled to FTB between 18 October 2014 and 11 January 2015 inclusive, the amounts paid to Mr Tillman during that period, which amounted to $2,885.30 for the overpayment of FTB and $421.00 for the payment of a Schoolkids Bonus, are debts owed to the Commonwealth and should be recovered.
Pursuant to section 95 of the Administration Act, the Secretary may decide to write off a debt if the relevant circumstances exist. To write off a debt means that the debt remains, it will not be recovered at the present time, but may be recovered at a later date. However, none of the circumstances prescribed in section 95 apply in the present case to justify writing off the debt.
Pursuant to section 101 of the Administration Act, the Secretary may decide to waive the debt, so that it does not need to be paid at any point, on the basis of special circumstances. In order for the debt to be waived, the Secretary must be satisfied of the following:
(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false statement or a false representation; or
(ii) failing or omitting to comply with a provision of the family assistance law; and
(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c) it is more appropriate to waive than to write off the debt or part of the debt.
The Respondent contends that section 101 of the Administration Act does not apply because Mr Tillman and Ms Phillips knowingly did not comply with a provision of the family assistance law. The Respondent contends that Mr Tillman received notices setting out his responsibility to report a change in circumstances to Centrelink, but he did not do so.
In addition to this, the Respondent contends that Mr Tillman did not identify any special circumstances that made it desirable to waive the debt. In this regard, the nature of 'special circumstances' has been extensively considered by this Tribunal. The circumstances must be 'different from the usual run of cases'[1] such that they take the present case out of the ordinary case.[2] The Tribunal must have regard to whether or not the exercise of its discretion achieves or frustrates the objects of the Act and whether strict enforcement of the liability to pay the debt would be unjust, unreasonable or otherwise inappropriate.[3]
[1] Beadle and Director-General of Social Security (1984) 6 ALD 1.
[2] Groth and Secretary, Department of Social Security (1995) 37 ALD 797.
[3] Green and Secretary, Department of Social Security (1990) 21 ALD 772.
It is undisputed that Mr Tillman transferred $2,300 of the FTB he received to Ms Phillips during the relevant period. However, the Respondent contends that this is insufficient to constitute special circumstances and argues that if Mr Tillman wanted Ms Phillips to receive FTB in recognition of the care that she was providing to the Child during the relevant period, reporting the change in care to Centrelink would have achieved that end. The Respondent therefore contends that there are no special circumstances in the present case which would justify the Tribunal’s exercise of the discretion under section 101 of the Administration Act.
In its deliberations as to whether there were any special circumstances justifying the exercise of the discretion under section 101 of the Administration Act, the Tribunal asked the Respondent to make enquiries as to whether Ms Phillips had received the FTB, or any other social security payment, during the relevant period. On 2 March 2016, the Respondent provided the Tribunal with a copy of correspondence to Ms Phillips dated 8 April 2015 from an ARO of the Department. The correspondence notified Ms Phillips of the outcome of a review, requested by Ms Phillips, of a decision made on 26 January 2015 to pay Ms Phillips FTB from 12 January 2015 and no earlier. The ARO stated that Ms Phillips claimed that the Child was in her care from 18 October 2014 and that there was sufficient evidence to support that this was the case. On that basis, the ARO decided to pay FTB to Ms Phillips from 18 October 2014 to 11 January 2015 in arrears.
The correspondence from the Respondent also included a copy of the Centrelink Customer Record for Ms Phillips, which indicates that on 13 April 2015, a payment in the amount of $2,518.54 was made to Ms Phillips, comprising $2,097.54 in FTB payments and $421 for the Schoolkids Bonus.
It concerns me that neither Mr Tillman nor Ms Phillips disclosed the correspondence referred to in paragraph 42 above either to the AAT1 or this Tribunal. The only reason this correspondence came to light is because the Tribunal requested that the Respondent make appropriate enquiries to confirm whether or not Ms Phillips had received any FTB or other social security payments during the relevant period.
Noting the payment made to Ms Phillips in paragraph 42 above, I am satisfied that pursuant to section 101(b) of the Administration Act, there are no special circumstances that would make it desirable to waive the debts of $2,885.30 for the overpayment of FTB and $421 for the payment of a Schoolkids Bonus.
In this regard, I consider that the decision to raise debts against Mr Tillman of $2,885.30 for the overpayment of FTB and $421.00 for the payment of a Schoolkids Bonus is correct. It is not appropriate for Mr Tillman and Ms Phillips to obtain twice the benefit of the FTB and Schoolkids Bonus that is payable in respect of the care of the Child.
DECISION
The Tribunal decides that the decisions to cancel Mr Tillman’s FTB from 18 October 2014 and to raise debts of $2,885.30 for the overpayment of FTB and $421.00 for the payment of a Schoolkids Bonus are correct.
The decisions under review are affirmed.
I certify that the preceding 47 (forty -eight) paragraphs are a true copy of the reasons for the decision herein of Dr T Nicoletti, Senior Member
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Associate
Dated 29 April 2016
Date(s) of hearing 24 February 2016 Date final submissions received 2 March 2016 Applicant In person Solicitors for the Respondent Department of Human Services Other Party In person
Key Legal Topics
Areas of Law
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Administrative Law
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Statutory Interpretation
Legal Concepts
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Judicial Review
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Jurisdiction
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Standing
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Statutory Construction
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Remedies
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