Vowles; Secretary, Department of Family and Community Services an D

[2004] AATA 91

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 91

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2003/1202

GENERAL ADMINISTRATIVE  DIVISION		)
Re		SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Applicant

And KATHERINE VOWLES

Respondent

DECISION

Tribunal M.A. GRIFFIN

Date4 February 2004

PlaceSydney

Decision The Tribunal sets aside the decision under review and in substitution therefor decides that a lump sum of family tax benefit is not payable to Mrs Vowles for the 2000/2001 tax year. 

[Sgd] Mr M.A. Griffin, Member

CATCHWORDS

SOCIAL SECURITY - Family Tax Benefit - income tax return not lodged by the particular time - variation of determination - entitlement limited to amount received - no provision for 'top-up' payment – set aside

A New Tax System Family Assistance (Administration) Act 1999

Baronessa and Secretary, Department of Family and Community Services [2003] AATA 1276

Beaton and Secretary, Department of Family and Community Services [2003] AATA 809

Pamplin and Secretary, Department of Family and Community Services [2003] AATA 1248

REASONS FOR DECISION

4 February 2004 M.A. GRIFFIN       

1.      This is an application to review a decision of the Social Security Appeals Tribunal (“SSAT”) dated 27 June 2003, which set aside a decision of an Authorised Review Officer (“ARO”) dated 25 September 2002 and the Secretary, Department of Family and Community Services (“the Department”) dated 17 July 2002, that Mrs Katherine Vowles, was not entitled to a "top up" payment of Family Tax Benefit (“FTB”) for the year ended 30 June 2001. 

2. At the telephone hearing on 21 January 2004, Ms Marian Buckley, an advocate with Centrelink represented the Department and Mrs Vowles represented herself. The Tribunal received into evidence the documents lodged under section 37 of the Administrative Appeals Tribunal Act 1975 (T1-T26), a bundle of documents marked A1 for the Department and a fax marked R1 for Mrs Vowles.

BACKGROUND

3.        During the financial year of 2000-2001, Mrs Vowles received fortnightly instalments of FTB based on an estimated combined income for herself and her husband. The FTB amount was initially determined on 1 July 2001, based on income estimates of $20,000.00 for her husband and $6318.00 for herself (T16). In March 2001, Mrs Vowles commenced employment at a yearly wage of $35,000.00.

4.        On 6 May 2002 Centrelink sent a letter to Mrs Vowles informing her that payment of any arrears of FTB could be made only if she and her husband lodged tax returns for 2000/2001 by 30 June 2002 (T3).  On 7 June 2002, Centrelink sent Mrs Vowles a similar letter (T4).  Mrs Vowles’s husband’s tax return was lodged on 2 July 2002 (T10).

5.        The actual combined income of Mr and Mrs Vowles for the year ended 30 June 2001 was $11,395.00.  This would have produced an entitlement of FTB of $11,403.26. On 17 July 2002, the Department determined, that as the tax return had not been lodged by 30 June 2002, Mrs Vowles was not entitled to the difference of $1600.44 as a "top up" of FTB (T13). On 25 September 2002 an ARO affirmed that decision (T14).

EVIDENCE

6.        Mrs Vowles said she told her accountant that the tax return had to be lodged by 30 June 2002. She said she emphasised the date to the accountant. She said the accountant did not tell her that computer difficulties in the accountant’s office had delayed the lodgement of the tax return.

CONSIDERATION OF THE ISSUES

7.        Section 28 of the A New Tax System Family Assistance (Administration) Act 1999 (“the Act”) provides: 

“28(1)  This section applies if:

(a)a determination under section 16 or 17 is in force at, or was in force before, a particular time; and

(b)there are one or more days (the cancellation days) before the particular time in respect of which the following conditions are satisfied:

(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.

Consequence of section applying

28(2)If this section applies, the Secretary must vary the determination so that it has the effect that the claimant is not, and never was, entitled to family tax benefit for the cancellation days.

Consequence where income tax returns are later lodged

28(3)    If:

(a)after the Secretary varies the determination under subsection (2), an assessment is made under the Income Tax Assessment Act 1936 for the cancellation income year for everyone:

(i)who was required to lodge an income tax return as mentioned in subparagraph (1)(b)(iii); and

(ii)in respect of whom an assessment had not been made before the determination was varied; and

(b)the Secretary is satisfied that the claimant was eligible for an amount of family tax benefit for the cancellation days;

the Secretary must again vary the determination so that it has the effect that, for the cancellation days, the claimant is entitled to be paid the lesser of:

(c)that amount of family tax benefit; and

(d)the amount that the claimant was entitled to be paid before the variation under subsection (2) was made.”

8.        Section 16 of the Act deals with the determination of instalment entitlement claims and section 17 of the Act deals with the determination of past period entitlement claims.

9.        On 27 June 2003, the SSAT considered these provisions and decided that “Section 28 does not apply in this case because by July 2002, when the determination under section 17 was made, Mr Vowles had lodged his tax return” (T2, f.8).  I am satisfied that this finding is incorrect.  The Centrelink records in evidence (T16) show that a determination pursuant to section 16 of the Act was made with effect 1 July 2000. There is no past period claim determination pursuant to section 17 for the relevant period. The claim for that period had already been determined in advance and instalment payments made accordingly. As a consequence, section 28 of the Act must apply.

10.      The Tribunal has considered the effect of this legislative scheme on previous occasions, see Re Beaton and Secretary, Department of Family and Community Services [2003] AATA 809, Pamplin and Secretary, Department of Family and Community Services [2003] AATA 1248. In Re Baronessa and Secretary, Department of Family and Community Services [2003] AATA 1276 at paragraph 5, Senior Member Pascoe had this to say about the relevant section:

“Section 28 of A New Tax System Family Assistance (Administration) Act 1999 (the Act) is quite clear that:

·where a person has received FTB;

·the person or their partner is required to lodge an income tax return for the year ended 30 June 2001;

·the person or their partner has not lodged such return by 30 June 2002;

·no income tax assessment has been made by the Commissioner of Taxation by 1 July 2002; and

·the return is lodged after 30 June 2002

the person is entitled to the lesser of the entitlement to FTB based on the actual taxable income for the year ended 30 June 2001 or the total instalments actually received.”

11.In reviewing the facts of that particular matter the Senior Member said at paragraph 7:

“While having considerable sympathy for the position in which Mrs Baronessa has found herself, the legislation is clear and contains no discretion to provide a "top up" payment in any circumstances, no matter how special, where an income tax return is not lodged by 30 June 2002.  The clear words of s28 of the Act result in the entitlement to FTB for the year ended 30 June 2001 being limited to the amount of $5,792.95 actually received with no entitlement to any "top up" payment.”  

12.      With respect I agree that the effect of section 28 is as described in Re Baronessa above. I have considerable sympathy for the position in which Mrs Vowles finds herself. Mrs Vowles was an impressive witness. Indeed Ms Buckley accepted that Mrs Vowles was honest and genuine and not at fault in relying upon her accountant. Nevertheless, I am satisfied there is no discretion available to this Tribunal in the interpretation of the legislation and that a payment of ‘top-up’ of FTB cannot be made to Mrs Vowles.

DECISION

13.      The Tribunal sets aside the decision under review and in substitution therefor decides that a lump sum of family tax benefit is not payable to Mrs Vowles for the 2000/2001 tax year.

I certify that the 13 preceding paragraphs are a true copy of the reasons for the decision herein of M.A. GRIFFIN

Signed:         A. Krilis  Associate

Date/s of Hearing  21 January 2004
Date of Decision  4 February 2004
Advocate for the Applicant  Ms Marian Buckley
Representative for the Respondent          Self