Tyrie and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2008] AATA 216

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 216

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2007/4096

GENERAL ADMINISTRATIVE DIVISION		)
Re		KIM TYRIE

Applicant

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

Respondent

DECISION

Tribunal Dr M Denovan, Member

Date19 March 2008

PlaceBrisbane

Decision The decision under review is affirmed.

................[Sgd]...........................

DISTRICT REGISTRAR

CATCHWORDS

SOCIAL SECURITY – Pensions, Benefits and Allowances – family tax benefit – whether debt can be written off – total combined family income under $100,000 – not suffering severe financial hardship – whether debt can be waivered - no special circumstances – decision affirmed.     

A New Tax System (Family Assistance) Act 1999 (Cth) A New Tax System (Family Assistance)(Administration) Act 1999 (Cth).

Feneley v Secretary, Department of Family and Community Services [2003] AATA 496 Re Beadle v Director-General of Social Security (1984) 6 ALD 1 Dranichnikov v Centrelink [2003] FCAFC 133; (2003) 75 ALD 134

REASONS FOR DECISION

19  March 2008 Dr M Denovan, Member    

Decision under review

1.        Mrs Tyrie has applied for review of a decision made by the Family Assistance Office on 1 March 2007, to raise and recover a FTB debt in the amount of $1,284.80 for the 2005/2006 income tax year.

Issue

2.        That Mrs Tyrie received an overpayment of FTB in the amount of $1,284.80 during the 2005/2006 income year is not the subject of dispute, and in view of this and on the material before me I am satisfied that his is a debt due to the Commonwealth by Mrs Tyrie.

3.        The issue is whether the debt can be written off or waived.

Background

4.        During the 2005/2006 financial year Mrs Tyrie was paid FTB based on estimates of combined family income for herself and her husband of $85,000[1].  On 2 April 2006 Mrs Tyrie updated her estimate to reflect a combined income of $89,000 for the 2005/2006 financial year[2].

[1]Folio 58; T 6

[2] Folio 46; T 11

5.        Mrs Tyrie’s actual combined income for the 2005/2006 tax year was $98,105[3].

[3] Folio 68; T 21

6.        Centrelink reconciled the actual family income with the FTB payments, and in a decision dated 1 March 2007 determined that Mrs Tyrie had been paid $2,474.99 in FTB, but she was only entitled to $1,190.19 for the 2005/2006 financial year, and the difference, a sum of $1,284.80, was an overpayment that needed to be repaid[4].

[4] Folio 53; T 14

7.        Mrs Tyrie was dissatisfied with that decision and requested a review[5].

[5] Folio 55; T15

8.        On 10 April 2007 an original decision maker affirmed the decision to raise and recover Mrs Tyrie’s debt[6]. An Authorised Review Officer affirmed the original decision on 23 April 2007.

[6] Folio 58; T 16

9.        Mrs Tyrie applied to the Social Security Appeals Tribunal for a review of the decision on 12 June 2007. The Social Security Tribunal affirmed the decision on 10 July 2007.

10.      On 3 September 2007 Mrs Tyrie applied to this Tribunal for a review of the decision[7].

[7] Folio 4; T 1

Legislative Framework

11.      The relevant legislation is contained in the A New Tax System (Family Assistance) Act 1999 (the Act) and A New Tax System (Family Assistance)(Administration) Act 1999 (the Administration Act).

12.      There are two mechanisms available under the Administration Act, which permit a debt of FTB not to be recovered. That is write off and waiver.

13.      Section 95 of the Administration Act provides the criteria under which a determination can be made to write off a debt.

14.      It provides that a debt can be written off if:

(a)The debt is irrecoverable at law;  or

(b)The debtor has no capacity to repay the debt.

15.      Section 95(4) provides that a person is taken to have capacity to repay the debt unless recovery would cause the person severe financial hardship.

16.      Section 97 of the Administration Act requires the Secretary to waive that part of the debt if it is attributable solely to administrative error, if the debtor received in good faith the payment, and the person would suffer financial hardship if the debt were not waived.

17.      Section 101 of the Administration Act provides an alternative way that a debt can be waived, that is if there are special circumstances.

Applicant’s evidence and submissions

18.      In her application for an Authorised Review Officer to review the decision, Mrs Tyrie stated that each year she and her husband have taken on a lot of overtime and have not known at the start of the year what their total income would be. She said that when her oldest daughter finished school she was not entitled to any Centrelink benefits and so Mrs Tyrie had to take on extra work to cover her[8].

[8] Folio 55; T 15

19.      In her oral evidence Mrs Tyrie explained her family’s circumstances at the end of the 2005/2006 financial year. She said that after her oldest daughter was injured in a motor vehicle accident in May 2005, she took on extra work to cover her daughter’s personal expenses, principally mobile phone expenses that her daughter was unable to pay, as she was too unwell to undertake part time employment.

20.      Mrs Tyrie admitted that she had not informed Centrelink of her increased family income although she had increased her hours of work as a cleaner at the end of the 2005/2006 financial year.

21.      Mrs Tyrie explained the reasons as to why she did not change her estimated family income. Firstly, she said that she was under considerable stress following her daughter sustaining injuries in the motor vehicle accident. Mrs Tyrie has been very concerned about her daughter’s well being. She said that her daughter suffered crushed vertebra and she has been told that she will never be able to work full time. Mrs Tyrie said that her daughter’s participation in life in general and in part time employment has been further impeded by the depression she suffered as a result of her injury.

22.      Secondly, Mrs Tyrie said that she thought that she was entitled to FTB until she crossed a threshold level of $100,000 income. Mrs Tyrie admitted that she had not kept up with changes in the legislation.

23.      Thirdly, Mrs Tyrie said that prior to her daughter’s accident, she and her husband invested in property as part of their retirement plans, and as a result accurately estimating their overall income was impossible, until an accountant had prepared their tax returns.

24.      In respect to why she should not have to repay the debt, Mrs Tyrie referred to the unfortunate circumstances that she found herself in, having to financially support her injured daughter who was not entitled to any financial assistance from Centrelink. Additionally, Mrs Tyrie said that she felt that she should not have to repay the debt because she was aware that many other people, who did not make the effort to work as she and her husband did, were in receipt of the dole and their children were also entitled to Centrelink benefits. Had she and her husband not been so hard working, no debt would have occurred and Centrelink would have had to pay her family much more by way of benefits.

25.      In 2007, according to Mrs Tyrie her daughter received a financial payout as a result of the car accident. Mrs Tyrie and her husband invested that money on their daughter’s behalf, and did not recover any of their own personal expenses. Mrs Tyrie feels that she is therefore still out of pocket due to the expenses that she paid on her daughter’s behalf.

Consideration

Can the debt be written off?

26.      Mrs Tyrie is repaying the debt by way of periodic payments. Mrs Tyrie’s combined family income is in the vicinity of $100,000 per annum. The Secretary contends that the debt is recoverable as Mrs Tyrie is not in severe financial hardship, as she is employed and capable of making repayments toward the debt, so there is no basis to write this debt off pursuant to s 95 of the Administration Act. I agree.

27.      Mrs Tyrie’s financial circumstances, as detailed in the financial statement provided by her[9] indicate that her family’s financial circumstances are far from strained. In the present case, Mrs Tyrie according to her own evidence, is maintaining her own home, including mortgage payments, maintaining two cars and a bike, paying gym fees of $45 a week, entertainment expenses of $50 per week and paying reasonable general household and other ordinary expenses[10]. In these circumstances it cannot be said that recovery of the debt would cause financial hardship. I therefore find that the debt is recoverable at law and Mrs Tyrie has capacity to repay the debt, so there is no reason under s 95 of the Administration Act to write off Mrs Tyrie’s debt.

Can the debt be waived?

[9] Folio 82; T 24

[10] Folio 82; T 24

28.      For a debt to be waived pursuant to s 97 of the Administration Act it must be due solely to administrative error. There is no suggestion that any part of the debt owed by Mrs Tyrie is attributed in any way to an administration error. The debt is attributable to the fact that Mrs Tyrie’s estimate of her and her husband’s income was less than the actual taxable income they received.

29.      The Family Assistance Office in writing that she must advise of changes to her combined family income notified Mrs Tyrie of her obligation to report any changes in her combined family income. Those letters which explain what might happen if estimates are too high or too low, are used to calculate a person’s family tax entitlement.

30.      There are of course inherent difficulties in providing accurate estimates of combined family income. Mrs Tyrie and her husband were in a situation in which their annual income depended on the availability of overtime and the outcome of their modest financial investments. It is understandable that Mrs Tyrie could not provide a precise estimate of her income given her circumstances.

31.      These difficulties and the resultant error in the estimation are the result of Mrs Tyrie’s personal situation and are not in anyway related to administrative error on the Commonwealth’s behalf.

32.      The legislation anticipates this situation and for that reason provides for a process of reconciliation to adjust for any under or over estimation of annual income without financial penalty. Mrs Tyrie has not been financially penalised for the fact that she underestimated her family’s financial annual income. At this time she is required only to repay that amount of FTB which she received but in fact was not entitled to.

33.      Mrs Tyrie had ample information from Centrelink that informed her of the fact that should her estimate be less than the income her family received, she would be obliged to repay any overpayment she might receive. That Mrs Tyrie did not read that information and take it into account is an instrumental reason as to why she did not anticipate the debt raised in the decision under review.

34.      As I am satisfied that no proportion of the debt is solely due to an administrative error made by the Commonwealth, I find that the discretion contained in s97 of the Administration Act cannot be applied.

35.      In making this finding I am mindful that even if all or a proportion of the debt can be attributed solely to an administrative error made by the Commonwealth, for the provisions of s 97(1) to apply, Mrs Tyrie would have to demonstrate that she would suffer severe financial hardship if the debt were not waived.

36.      The meaning of severe financial hardship has not been defined in the Administration Act. Its meaning was addressed in Feneley v Secretary, Department of Family and Community Services[11] in which it was noted that the meaning of the term

“…while not implying destitution goes beyond straightened financial circumstances and imports a need for the particular circumstances of a person to include suffering of a severe or extreme nature”.

[11] [2003] AATA 496

37.      Whilst I accept that the illness of her daughter has caused some unanticipated financial expenses, Mrs Tyrie and her husband were fortunately able to obtain additional income by way of overtime, and have a combined income of approximately $100,000. I have referred already to the fact that as well as coping with the mortgage and ordinary household expenses, Mrs Tyrie and her husband budget for an additional $95 per week for gym and entertainment. Whilst this is by no means lavish spending, it does indicate that the family has sufficient cash flow to cope and pay for more than the basic necessities of life.

38.      Further, her daughter has now received approximately $300,000 in compensation for the motor vehicle accident. Whilst I appreciate that that money will have to provide for her daughter’s future medical expenses and has been wisely invested for her, that Mrs Tyrie did not seek repayment of the expenses she paid for on her daughter’s behalf suggests that Mrs Tyrie’s financial situation is not one that could be described as severe financial hardship.

39.      I am satisfied that it cannot be said that Mrs Tyrie would suffer severe financial hardship if her debt were not waived.

40.      Turning to the waiver in special circumstances provided for by s101 of the Administration Act, Mrs Tyrie feels she found herself under special circumstances given her daughter’s unfortunate injury suffered in a motor vehicle accident.

41.      Whilst special circumstances are not defined in the Administration Act, the approach to be taken in interpretation and application of the discretionary provisions has been dealt with by the Tribunal and the Federal Court in numerous circumstances.

42.      In Re Beadle v Director-General of Social Security[12] it was said,

“The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context, which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special”.

[12] (1984) 6 ALD 1 at 3

43.      In Dranichnikov v Centrelink[13] the Full Federal Court when considering the meaning of special circumstances observed:

“….what is required will be circumstances which distinguish the case in consideration from the usual case. There will be a requirement that the circumstances are such that takes the case out of the ordinary…”

[13] (2003) 75 ALD 134 at 148

44.      Mrs Tyrie’s daughters turned 18 and 15 years old in the 2005/2006 financial year. There is nothing exceptional or unusual about a family financially supporting an 18-year-old child as well as other younger children; in fact it is commonplace for parents to support children of this age. Many 18 year olds are at university or other forms of continued education, or unemployed for various reasons, and not in receipt of any Centrelink benefits.

45.      Whilst I do not doubt that Mrs Tyrie found herself faced with additional unanticipated bills due to her daughter’s unfortunate car accident, these expenses were not exceptionally high or unusual. Regretfully most families from time to time face unanticipated illness or injury of one or more family members, and the resultant stress and financial burden that Mrs Tyrie faced, whilst difficult, do not take her case out of the ordinary.

46.      It was Mrs Tyrie’s evidence that at the time of the accident her daughter was not working even in a part time capacity. Whilst it was the family’s expectation that her daughter would have obtained part time employment had she not been injured in the car accident, that she indeed would have is by no means certain. Many of the expenses Mrs Tyrie complains of having to pay were incurred whilst her daughter was unemployed and before she sustained her injuries. Most people, and in particular parents, have to deal with unanticipated expenses from time to time due to all sorts of reasons. Unfortunately overspending on mobile telephones by teenagers, far from being exceptional, is quite common.

47.      Whilst I accept that as a result of her daughter’s car accident Mrs Tyrie and her husband were faced with unanticipated emotional stress and financial expenses that they did not expect to have to pay, I am satisfied that Mrs Tyrie’s circumstances were not such that her case was out of the ordinary such to justify a finding of special circumstances.

48.      I am satisfied that there are no other circumstances which are so unusual, uncommon or exceptional as to justify a finding of special circumstances in this case.

49.      That being so I find that it is not possible to exercise discretion to waive Mrs Tyrie’s debt pursuant to s101 of the Administration Act. The debt due to the Commonwealth cannot be written off or waived under the discretionary provisions of the Administration Act, and I affirm the decision under review.

I certify that the 49 preceding paragraphs are a true copy of the reasons for the decision herein of Dr M Denovan, Member

Signed:         ......................[Sgd]..........................................................
  Research Associate

Date/s of Hearing  5 February 2008
Date of Decision  19 March 2008
Applicant  Mrs Tyrie, herself
Respondent  Mr M Black, departmental advocate