Willoughby and Secretary, Department of Family and Community Services
[2004] AATA 372
•13 April 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 372
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W2003/7
GENERAL ADMINISTRATIVE DIVISION ) Re CHARMAINE WILLOUGHBY Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Associate Professor G Barton, Member Date13 April 2004
PlacePerth
Decision The Tribunal affirms the decision under review.
…..........(sgd G Barton)..................
Member
CATCHWORDS
SOCIAL SECURITY – Family Tax Benefit – overpayment of Family Tax Benefit payments giving rise to a debt due to the Commonwealth – no special circumstances – decision under review affirmed
A New Tax System (Family Assistance) Act 1999 (Cth) s 58(1)
A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) ss 97, 101
Secretary, Department of Social Security v Hales [1998] 219 FCA; (1998) 82 FCR 154
Re Stephen Maurice White and Secretary, Department of Family and Community Services [2002] AATA 462
REASONS FOR DECISION
13 April 2004 Associate Professor G Barton, Member 1. This is an application by Mrs Charmaine Willoughby for review of a decision of the Social Security Appeals Tribunal (“SSAT”) of 3 December 2002, affirming a decision of the respondent’s delegate of 17 January 2002 (“ARO decision”) that she was overpaid Family Tax Benefit (“FTB”) in the amount of $3,694.47 in the 2000/2001 year and that $2,694.47 of that amount be recovered from her as a debt due to the Commonwealth (“FTB debt”).
2. The Tribunal had before it the ‘T documents’ (T1 – T21) lodged by the respondent pursuant to s 37 of the Administrative Appeals Tribunal Act 1975, including the reasons for the decision under review. The applicant, who was not present at the hearing, was represented by her husband Mr Ben Willoughby. The respondent was represented by Mr Ward, a Centrelink officer.
3. Mr Willoughby testified that he personally dealt with all the applicant’s correspondence with the respondent. He did not dispute that the overpayment of FTB had been made to the applicant but contended that it arose in circumstances that precluded its recovery as a debt due to the Commonwealth.
4. Section 58(1) of A New Tax System (Family Assistance) Act 1999 (“the Act”) provides that an individual’s annual rate of FTB is to be calculated in accordance with the Rate Calendar in Schedule 1. An individual’s and his or her partner’s, adjusted taxable income (“ATI”) is relevant to the rate of FTB. Clause 2(1) of Schedule 3 of the Act defines an individual’s ATI for a particular income year as the sum of the following amounts:
(a)the individual’s taxable income for that year;
(b)the individual’s adjusted fringe benefits total for that year;
(c)the individual’s target income for that year;
(d)the individual’s net rental property loss for that year; and
(e)the individual’s tax free pension or benefit for that year;
less the amount of the individual’s deductible child maintenance expenditure for that year.
The issue in contention between the parties was how it came about that Mr Willoughby’s adjusted fringe benefits and net rental property loss were understated for the 2000/2001 year.
5. The applicant made a claim for Family Allowance that was received by the respondent on 16 May 2000 (T18). In it the Willoughbys disclosed an estimated net loss from rental property of $2,500 each for the 1999/2000 year (T18). They also indicated that they had received employer provided benefits and they were directed in the application form to complete a separate Employer Provided Benefits form (T18). The applicant was not successful in her claim for Family Allowance. What happened next is in dispute between the parties.
6. The ARO decision (T15), under the heading “Findings of fact”, commences as follows:
“On 6th June 2002 (sic) you requested details of the Family Tax Benefit payment that would be commencing on 1st July 2000. You were sent an information package that included a claim form for you to complete to tell the Family Assistance Office about your expected 2000/01 combined taxable income, including your expected Net Rental property Losses and Adjusted Fringe Benefits and other information about the payment.”
At the start of Mr Willoughby’s testimony the Tribunal asked the parties whether the applicant had completed and lodged the claim form for Family Tax Benefit referred to by the authorised review officer. The respondent said that she had but the form was lost whereas Mr Willoughby testified to a different version of events.
7. He said that to his surprise, and that of the applicant, the respondent contacted the applicant by telephone seeking information about their expected income for 2000/2001 because the applicant may qualify for FTB. She referred the respondent to him and he provided the information he was asked for. The gist of his evidence in this regard was that he was in the hands of the respondent, so to speak, and that any overpayment of FTB was entirely attributable to the respondent’s failure to ask for all the relevant details such as those of his fringe benefits and net rental property loss. This information was not provided when the respondent later wrote to the applicant about changes to their income because their position in relation to the questions asked of Mr Willoughby by telephone had not changed.
8. The applicant lodged a claim for FTB on 7 December 2000 after the birth of her child, Joel, on 29 November 2000 (T21). At question 12 she replied ‘no’ when asked whether she wanted to update her income estimate for 2000-2001. So questions 14 and 15, which relate to employer provided fringe benefits and net rental property losses were left blank. Mr Willoughby explained that the form was completed in this way because the original estimate he provided over the telephone, limited by the questions asked of him, had not changed.
9. Mr Willoughby testified that the applicant was no longer receiving FTB and was in the process of repaying the FTB debt apart from $1,000 waived by the respondent.
10. Sections 97 and 101 of A New Tax System (Family Assistance) (Administration) Act 1999 (“the Administration Act”) prescribe the circumstances in which the respondent must waive a debt for administrative error or may waive a debt in special circumstances.
11. Section 97(2) of the Administration Act provides that the respondent must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received the payment in good faith and would suffer severe financial hardship if it were not waived. The administrative error proportion of a debt may be 100% of the debt; s 97(4). The Tribunal finds that the respondent is not obliged to waive the FTB debt under this provision because the applicant will not suffer severe financial hardship if it is not waived. Indeed Mr Willoughby’s evidence was quite to the contrary when he testified that the applicant had unilaterally increased the amount of the repayments in order to clear the FTB debt sooner. It is therefore unnecessary for the Tribunal to consider whether the FTB debt was attributable to administrative error, as alleged by Mr Willoughby, and whether the applicant received the FTB overpayments in good faith.
12. Section 101 of the Administration Act creates a discretion in the respondent to waive the right to recover all or part of the FTB debt if the respondent is satisfied as to certain matters which include the existence of special circumstances (other than financial hardship alone) that make it desirable to waive. In Secretary, Department of Social Security v Hales [1998] 219 FCA; (1998) 82 FCR 154, the Federal Court of Australia (French J) said in relation to s 1237AAD(b) of the Social Security Act 1991 (at 162):
“The concept of special circumstances is broad. A constellation of factors, including financial circumstances, may fall within it. The express exclusion of financial hardship alone as a special circumstance is an indicator that it would otherwise be included. This gives some measure of the range of circumstances which will qualify as special. But as a matter of grammar and ordinary logic, the exclusion of financial hardship alone as a special circumstance does not mandate its inclusion in the range of matters constituting such circumstances for the purpose of enlivening the Secretary’s discretion.
…
The evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application for a requirement for recovery of debt. It is in appropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words. It may be that there will be few cases in which the Secretary will be satisfied that there are special circumstances in the absence of financial hardship. It may be that there are few cases in which having found special circumstances to exist, the Secretary would exercise the discretion to waive in the absence of financial hardship. But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose.”
13. There was no evidence of real financial hardship in this matter and at no stage did the applicant contend to the contrary. The Tribunal has given careful consideration to the question of whether there is anything else in the evidence or documents before it that would make recovery of the FTB debt unfair, unreasonable or inappropriate and which would warrant the exercise of the discretionary power under s 101 to waive the Commonwealth’s right to recover it; Re Stephen Maurice White and Secretary, Department of Family and Community Services [2002] AATA 462, at paragraph 34. Looking at all the circumstances surrounding the FTB debt, there is no circumstance, or combination of circumstances, among them that would engender a sense of injustice or hardship if the respondent were to recover all or part of the debt. So the Tribunal finds, for the purpose of s 101(b) of the Administration Act, that there are no special circumstances that make it desirable to waive the debt or part of the debt. In the light of this finding it is unnecessary for the Tribunal to consider whether the requirements of s 101(a) and (c) are satisfied in this matter.
14. There remains the question whether the FTB debt should be written off pursuant to s 95 of the Administration Act. Although the applicant no longer receives FTB, none of the requirements for a write off in paragraphs (a)-(d) of s 95(2) is satisfied on the evidence before the Tribunal. So the FTB debt cannot be written off under s 95(1).
15. For the above reasons the Tribunal affirms the decision under review.
I certify that the 15 preceding paragraphs are a true copy of the reasons for the decision herein of Associate Professor G Barton, Member
Signed: ...............(sgd V Wong)..............................................
AssociateDate of Hearing 19 March 2004
Date of Decision 13 April 2004
Solicitor for the Applicant Mr B Willoughby (husband)
Counsel for the Respondent Mr C Ward
Solicitor for the Respondent Service Recovery Team, Centrelink
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