Wafaa Gendy and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2012] AATA 124
•28 February 2012
[2012] AATA 124
Division GENERAL ADMINISTRATIVE DIVISION File Number
2011/1820
Re
Wafaa Gendy
APPLICANT
And
Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
RESPONDENT
DECISION
Tribunal Ms N Bell, Senior Member
Date 28 February 2012 Place Sydney The Tribunal affirms the decision under review.
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Ms N Bell, Senior Member
CATCHWORDS
SOCIAL SECURITY - Family Tax Benefit - Child Care Benefit - raise and recovery of a debt - waiver of debt - write off - special circumstances - taxable income - overpayments - decision under review is affirmed
LEGISLATION
A New Tax System (Family Assistance) (Administration) Act 1999 (Cth), s 101
CASES
Re Tawdrous and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 53
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REASONS FOR DECISION
Ms N Bell, Senior Member
28 February 2012
This application has a long history. Essentially, it concerns the recovery of a debt of overpayment of Child Care Benefit in excess of $18,000.00. The debt arises out of overpayments made from 2001 to 2005. The bulk of the debt was discharged by the withholding of Ms Gendy’s 2010 lump sum family tax benefit, with some $3000.00 remaining. Ms Gendy, through her husband, Mr Tawdrous, does not dispute the debt or its amount but she contends it should not be recovered because of her and her family’s special circumstances.
ISSUE
Section 101 of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) provides:
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.
The raising of the debt and the issue of its recovery have been considered before by the Tribunal. In 2008, the Tribunal decided that no special circumstances existed that made it appropriate to waive the debt. However, the Tribunal decided to write off the debt for a period of two years.
Ms Gendy, through Mr Tawdrous, urged me to waive recovery of the debt. The Secretary, while contending that the raising of the debt may not be reviewed again, submitted that there was no bar to the question of waiver or write off being revisited by the Tribunal now that the period of write off imposed by the Tribunal in 2008 was exhausted and, with the passage of time, Ms Gendy’s circumstances might have changed. I agree.
The issue for me to consider then is whether recovery of all or a part of the debt should be waived.
SHOULD THE DEBT BE WAIVED?
Ms Gendy and Mr Tawdrous have a business. Mr Tawdrous would not tell me the nature of that business. He said it is “linked” to Centrelink and that if Centrelink knew his business it would take some action to disadvantage him. Nor was Mr Tawdrous willing to provide financial or tax returns for the business. Mr Tawdrous said he would provide these details and documents to the Tribunal only if they were kept secret from Centrelink. I declined to make such an order.
Ms Gendy and Mr Tawdrous also own two houses. Until November 2011, they owned three houses. They live, with their three children, in one house and in the other they conduct their business. The house they sold last November was, until 2010, rented. The houses are each mortgaged. Mr Tawdrous provided correspondence, statements and e-mails from the Commonwealth Bank, Bankwest and Westpac, detailing the amount of the loans but not the current balances. Mr Tawdrous maintained that the remaining loans are interest only. At my request he provided a copy of an email from an officer of the Commonwealth Bank dated 18 January 2012, confirming that a loan with an original loan amount of $500,000.00 had a current balance of $465,169.00 and, as of 1 September 2011, is an interest only loan. The same email confirms that a loan with an original loan amount of $130,000 and a current balance of $87,386 is, as of 1 September 2011, an interest only loan.
I note that Ms Gendy and Mr Tawdrous also have an investment loan of $300,000.00 from Westpac, with a balance as at October 2011, of $289,787.04.
I asked Mr Tawdrous to provide further information to allow me to determine the amount of his equity in the properties, including the property sold last year. He provided a copy of a letter to him and Ms Gendy from his solicitor dated 7 December 2011 showing that, after payment of disbursements and discharge of the mortgage to Bankwest, he and Ms Gendy received $80,514.79 from the sale of the house at Castle Hill. He said that amount was applied to one of his loans from the Commonwealth Bank.
Mr Tawdrous provided valuations of each of the properties made by a real estate agent. The Secretary provided roadside valuations by the Australian Valuation Office. There is considerable discrepancy between the two sets of valuations and Mr Tawdrous urged me to disregard the Australian Valuation Office valuations as inflated. Mr Tawdrous’ real estate agent valued the properties as follows:
Castle Hill Property $510,000 - $540,000 (now sold)
Chester Hill Property $380,000 - $400,000
Merrylands Property $330,000 - $350,000
The Australian Valuation Office valued the properties as follows:
Castle Hill Property $685,000 (sold for $682,000)
Chester Hill Property $480,000
Merrylands Property $400,000
I prefer the valuations of the Australian Valuation Office because of that office’s greater expertise and independence. I am also mindful that the Australian Valuation Office’s valuation of the Castle Hill property was much closer to the actual sale price of the property.
Mr Tawdrous said he and his wife had no income in 2010/2011. When I asked him how he pays the mortgage on his home and on the business premises and how his family is fed, he said the mortgage on his home is paid by the business and so are his medical and medication costs. He said he and his wife rely on the lump sum family tax benefit usually received by them and on charity from the Church. He would not mention the name of the church.
Mr Tawdrous described himself and his family as being in hardship. Mr Tawdrous said the business has been doing poorly and the family has suffered as a result. He complained that the car he has is a 1993 BMW, that his three daughters can no longer attend private schools and that it is embarrassing and saddening not to be able to buy them the things they want. He said his wife is sick with stress and is taking pain medication. He also said he pays for a large amount of medication each week for himself and his wife and also for his youngest daughter who suffers from asthma and requires a nebuliser.
However, I note Mr Tawdrous’ evidence that the business, for some reason, pays for his medication.
In the absence of any information about the financial, or indeed any other, aspects of Ms Gendy’s and Mr Tawdrous’ business, I cannot be satisfied that Ms Gendy’s circumstances are special so as to make it desirable to waive the debt. Mr Tawdrous’ assertion that he and Ms Gendy had no income in 2010/2011 is meaningless without details of the business’s finances, including what expenses, both personal and commercial, were met by the business.
On the basis of the Australian Valuation Office’s valuations, and given the sale of a property in 2011, Ms Gendy and Mr Tawdrous appear to have some equity in their remaining properties.
The other matters raised by Mr Tawdrous, including the need to send his daughters to public schools and Ms Gendy’s stress, do not make the family’s circumstances special. The majority of children and students living in Australia attend public schools and, unfortunately, stress is common.
Nor is it appropriate to write off the debt again. It has been substantially repaid already from the withholding of Ms Gendy’s 2010 lump sum family tax benefit. The remaining amount could be repaid from future family payment lump sums.
DECISION
The Tribunal affirms the decision under review.
I certify that the preceding 20 (twenty) paragraphs are a true copy of the reasons for the decision herein of Ms N Bell, Senior Member.
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Associate
Dated 28 February 2012
Date of hearing 16 January 2012 Date final submissions received 19 January 2012 Applicant In person Solicitor for the Respondent Jennifer Maclean
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