XQLW; Secretary, Department of Social Services and (Social services second review)

[2018] AATA 647

XQLW; Secretary, Department of Social Services and (Social services second review) [2018] AATA 647 (23 March 2018)

Division:GENERAL DIVISION

File Number:           2017/3367

Re:Secretary, Department of Social Services

APPLICANT

AndXQLW               

RESPONDENT

DECISION

Tribunal:Dr L Bygrave, Member

Date:23 March 2018

Place:Sydney

The decision under review is set aside and in substitution, the Tribunal decides that XQLW is not entitled to receive family tax benefit supplements for the 2013-2014 financial year.

........................[sgd]................................................

Dr L Bygrave, Member

CATCHWORDS

SOCIAL SECURITY – family tax benefit – whether respondent entitled to family tax benefit supplement payments – failure to lodge income tax return by statutory date – whether respondent lodged income tax return by the statutory date – whether special circumstances prevented lodgment by statutory date – decision set aside and substituted

LEGISLATION

A New Tax System (Family Assistance) Act 1999

A New Tax System (Family Assistance) (Administration) Act 1999, ss 32A, 32B, 32C

CASES

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25

Dranichnikov v Centrelink [2003] FCAFC 133

Hooker and Secretary, Department of Social Services [2015] AATA 732

REASONS FOR DECISION

Dr L Bygrave, Member

INTRODUCTION

1. The respondent was in receipt of family tax benefit (FTB) payments during the 2013-2014 financial year. These payments were based on an estimated adjusted taxable income of $44,500 from 1 July 2013.

2. On 23 June 2016, the Department of Human Services (Centrelink) made a decision that the respondent was not entitled to FTB supplement payments in the amount of $1,812.22 for the 2013-2014 financial year because she had not lodged her tax return by 30 June 2015.

3. The respondent sought an internal review of this decision and on 8 October 2016, an authorised review officer of Centrelink affirmed the decision.

4. The respondent then applied to the Social Services and Child Support Division (SSCSD) of the Administrative Appeals Tribunal (the Tribunal) for review. The SSCSD set aside the decision of Centrelink and found the respondent is to be paid FTB supplements for the 2013-2014 financial year.

5. On 8 June 2017, the Secretary of the Department of Social Services (the Secretary) applied to the General Division of the Tribunal for a review of the SSCSD decision.

6. The matter was heard in Sydney on 7 March 2018. The respondent attended the hearing in person and did not have legal representation.

   RELEVANT LEGISLATION

7. The legislation relevant to the qualification for and calculation of FTB is set out in the A New Tax System (Family Assistance) Act 1999 (the Act) and the A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act).

8. FTB is means tested; a person’s rate of FTB is calculated as an annual entitlement and paid on the basis of their estimate of their adjusted taxable income for the coming financial year. A person can elect to receive FTB by way of fortnightly instalments based on income estimates.

9. At the end of each financial year, Centrelink reconciles a person’s estimated taxable income with the actual taxable income as assessed by the Australian Taxation Office. If the income estimates were too low, the person may incur a debt. If the income estimates were too high, the person may receive arrears.

10. It is fundamental to the FTB scheme to understand that the rate of payment is based on adjusted taxable income over a whole financial year. Every recipient has their rate of FTB reconciled against their combined actual verified income.

11. Sections 32A-32B of the Administration Act provide that FTB ‘supplements’ and ‘top-ups’ may be paid when a person satisfies the FTB reconciliation conditions that apply to the relevant period. Section 32C(3) of the Administration Act states:

    The relevant reconciliation time is the time when an assessment is made under the Income Tax Assessment Act 1936 of the first individual’s taxable income for the relevant income year, so long as the first individual’s income tax return for the relevant income year was lodged before the end of:

    (a) the first income year after the relevant income year; or

    (b) such further period (if any) as the Secretary allows, if the Secretary is satisfied that there are special circumstances that prevented the first individual from lodging the return before the end of that first income year.

    ISSUES

12. The issues for determination by the Tribunal are:

    ·whether the respondent lodged her income tax return for the 2013-2014 financial year by 30 June 2015; and

    ·if not, whether there are special circumstances that prevented the respondent from doing so.

    CONSIDERATION

    Issue 1 – Did the respondent lodge her income tax return for the 2013-2014 financial year by 30 June 2015?

13. Pursuant to section 32C(3) of the Administration Act, the respondent was required to lodge her income tax return for the 2013-2014 financial year by 30 June 2015. The parties do not dispute that the respondent did not lodge her income tax return for the 2013-2014 financial year within the required statutory timeframe; Centrelink records show the respondent lodged her income tax return for 2013-2014 financial year on 13 June 2016.[1]

    [1] Exhibit T16.

14. The Tribunal is satisfied that the respondent did not lodge her income tax return for 2013-2014 financial year by 30 June 2015.

    Issue 2 – Were there special circumstances that prevented the respondent from lodging her income tax return for the 2013-2014 financial year by 30 June 2015?

15. The term ‘special circumstances’ is not defined in the legislation. However, the Federal Court and the Tribunal have considered the issue of special circumstances on a number of occasions. In every case, the individual circumstances of the case were examined to determine whether the circumstances were such that it would be unjust, unreasonable or inappropriate for the debt to be recovered. In particular, the Full Court of the Federal Court in the matter of Dranichnikov v Centrelink [2003] FCAFC 133 determined that whether there are special circumstances in a particular case is dependent on whether there are circumstances that would distinguish the case from the usual case. The Federal Court in Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 emphasised that it is not the intention of Parliament that the exercise of this discretion be confined to the ‘exceptional’ case but rather that there is something that distinguishes the case from the ordinary or usual case. Further, for special circumstances to exist there must be some factors apart from financial hardship alone, which distinguish the case and set it apart from other similar cases.

16. The Tribunal decision in Hooker and Secretary, Department of Social Services relevantly observed:

    In order for the time for making a claim to be extended, the Secretary (and so the Tribunal) must be satisfied, firstly, that circumstances existed that were special and, secondly, that those special circumstances prevented the claimant from making his or her claim within time…

    In the case of a late claim for FTB, the special circumstances must prevent a person from making a claim on time. That is a more stringent, two-part test.[2] [emphasis added]

    [2] [2015] AATA 732, at 14 and 19.

17. The evidence before the Tribunal shows Centrelink wrote to the respondent on 25 March 2015 regarding her FTB. This letter included the following information:

    Family Tax Benefit – Important action required by 30 June 2015

    To make sure you receive your full Family Tax Benefit entitlement, you need to lodge a 2013-2014 tax return, or tell us if you are not required to lodge a tax return, by 30 June 2015. [3] [emphasis in original]

    [3] Exhibit T7, page 25.

18. At the Tribunal hearing, the respondent accepted that she received this notice but submitted that special circumstances prevented her from lodging her 2013-2014 income tax return by 30 June 2015. In particular, the respondent stated that her family situation was extremely stressful, and included health issues for herself and her children.

19. In relation to her family situation, the respondent told the Tribunal that her marriage to her former husband ended in 2011. Court orders dating from 2012 show the respondent has sole parental responsibility for their two children born in 2001 and 2004, and her former husband has allocated periods to care for their children. In a written statement dated 28 December 2016, the respondent noted that she attended court on 4 June 2013, 14 August 2013 and 20 June 2014.[4] At the Tribunal hearing, the respondent explained that these court proceedings related to custody and care of her children, and settlement of the property she resides in, which is owned by herself, her former husband and other family members. She contended that her former husband provides limited financial support for their children and does not meet the court orders regarding his care responsibilities for their children.

    [4] Exhibit T12, page 46.

20. The respondent also noted on-going health issues with her children. She provided extensive medical evidence to the Tribunal, which shows:

    ·her older child, aged 13-14 years in the period from 1 July 2014 to 30 June 2015, had language difficulties and attended speech therapy from December 2011 to January 2014;[5]

    ·her younger child, aged 10-11 years in the period from 1 July 2014 to 30 June 2015, had language difficulties and attended speech therapy from September 2011 to September 2014, and has been diagnosed with auditory processing disorder and ADHD.[6]

    [5] Exhibit R2.

    [6] Exhibit R1, R5 and ST7.

21. A medical report dated 26 July 2013 described the younger child as having ‘extremely difficult, volatile and aggressive’ behaviour.[7]

    [7] Exhibit ST7.

22. The respondent also provided medical evidence about her own health issues.  A report by the respondent’s general practitioner dated 31 October 2017 stated that she was suffering from depression and anxiety in the period preceding the 2013-2014 taxation lodgement time, and she was dealing with significant stress due to her marital breakdown, her mental illness and her children’s daily behavioural and learning issues.[8] This was further verified by reports from the respondent’s psychologist dated 23 November 2016 and 11 January 2017.[9]

    [8] Exhibit ST19.

    [9] Exhibits T12 and T13.

23. At the Tribunal hearing, the respondent provided information about her extended family’s behaviour since her marriage ended. This included sending her abusive and threatening text messages, coming to her property uninvited and interfering with her property, and initiating court proceedings in relation to the custody of her children. Some of this information was substantiated by a NSW Police Force incident report dated 25 October 2014 and court orders.[10]

    [10] Exhibit ST13 and ST4.

24. Despite her family situation and health issues, the respondent gave evidence to the Tribunal that she remained employed three days (approximately 24 to 30 hours) a week and did not take personal leave in the period between 1 July 2014 and 30 June 2015. The respondent explained that she is employed as a sales manager, which requires her to travel about 100 kilometres per day to visit up to 12 customers. She described her responsibilities as selling product, taking orders, achieving sales and growing product; she also attends sales meetings several times per year, and occasionally goes to trade shows and travels interstate. She has been employed with the same company for the past 12 years.

25. The respondent also explained to the Tribunal that preparing her income tax return is not simple. Her employment requires that she uses her own vehicle and receives a vehicle allowance; she keeps a driving log book to record the kilometres she drives for work/tax purposes and personal reasons. The respondent said that she prepares the paperwork for income tax return purposes herself and then provides a spreadsheet to her accountant to lodge her tax return forms.

26. At the Tribunal hearing, the respondent said that due to her circumstances, she prioritised her employment and her children’s health over the completion of her income tax return for the 2013-2014 financial year. She also wrote in her statement dated 28 December 2016 that:

    I was working, had sole parental responsibility of the two children, my ex only saw the kids four hours on a saturday [sic] and five hours on a sunday [sic], that totals 1% of care per annum in hours. I have the children every day and night which totals 99% of care per annum in hours. I also drove the children to all the extra-curricular activities of swimming, Soccer and little Athletics [sic], with no family support.[11]

    [11] Exhibit T12, page 47.

27. The evidence before the Tribunal shows the respondent was dealing with extremely difficult personal circumstances during period of 1 July 2014 to 30 June 2015, the period in which she was required to lodge her income tax return for the 2013-2014 financial year in order to receive FTB supplement payments. However, while I accept that these circumstances required the respondent to prioritise her commitments, I find that she was able to maintain employment and take her children to extra-curricular activities in addition to their medical appointments during this 12 months period. I am also satisfied that the respondent’s evidence shows there were discrete periods of time – for example, when her former husband cared for their children on the weekend or when the children were at school and she was not at work – that were available for her to complete her income tax return.

    CONCLUSION

28. Unfortunately for the respondent, there is nothing that distinguishes her circumstances from the ordinary or usual for the whole of the period from 1 July 2014 to 30 June 2015. For these reasons, I am not satisfied that the respondent’s circumstances prevented her from lodging her income tax return for the 2013-2014 financial year by 30 June 2015.

    DECISION

29. The decision under review is set aside and in substitution, the Tribunal decides that XQLW is not entitled to receive FTB supplements for the 2013-2014 financial year.

I certify that the preceding 29 (twenty-nine) paragraphs are a true copy of the reasons for the decision herein of Dr L Bygrave

.........................[sgd]...............................................

Associate

Dated: 23 March 2018

Date(s) of hearing:	7 March 2018
Applicant:	In person
Advocate for the Respondent:	Biljana Salaji
Solicitors for the Respondent:	Department of Human Services