Flores; Department of Family and Community Services [1999] AATA 69 (5 February 1999)

Last Updated: 17 February 1999

DECISION AND REASONS FOR DECISION [1999] AATA 69

ADMINISTRATIVE APPEALS TRIBUNAL )

) No V1998/858

GENERAL ADMINISTRATIVE DIVISION )

Re SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Applicant

And ANA CECILIA FLORES

Respondent

DECISION

Tribunal Mrs H. E. Hallowes, Senior Member

Date 5 February 1999

Place Melbourne

Decision The decision under review is set aside. The matter is remitted to the Secretary for reconsideration in accordance with a direction that the rate of family payment payable to Mrs Flores during the relevant period be re-calculated in accordance with these reasons. Liberty to apply is reserved should there be any dispute with respect to the calculations.

......(Sgd) H. E. Hallowes..............

Senior Member

CATCHWORDS

SOCIAL SECURITY - family payment - whether overpayment - whether requests in writing in accordance with a form approved by the Secretary to make determinations based on estimates

Social Security Act 1991 ss. 860, 861, 1069-H13, -H14, -H18, -H19, -H21, -H22, 1223

Re Secretary, Department of Social Security and Jones (1998) 50 ALD 248

Re Stuart and Secretary, Department of Social Security [1998] AATA 12626

REASONS FOR DECISION

5 February 1999 Mrs H. E. Hallowes, Senior Member

1. On 28 July 1998 the Secretary, Department of Social Security, now the Secretary, Department of Family and Community Services, lodged an application for review of a decision of the Social Security Appeals Tribunal ("the SSAT") made on 17 June 1998. In advising the parties of its decision, the SSAT set out the decision it was reviewing as being:

"A decision made by a Centrelink delegate of the Secretary to the Department of Social Security on 20 January 1998, to raise and recover a debt of $5059.60, being family payment paid to Mrs Flores for the period 1 August 1996 to 19 June 1997. This decision was affirmed by an authorised review officer on 30 March 1998."

The SSAT set aside the decision under review and remitted the matter to the Chief Executive Officer, Centrelink for reconsideration in accordance with a direction that the debt existed only in relation to the payment made on 19 June 1997, the amount to be calculated by Centrelink.

2. The Tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("the documents") indexed as T1 - T24. At the hearing the Secretary was represented by Mr T. Coogan, an officer of Centrelink. Mrs Flores was represented by Ms F. O'Brien of counsel. The Tribunal included three further documents amongst the section 37 documents which were provided by Mr Coogan on the day of the hearing: a delegation by the Secretary of his powers under the Social Security Act 1991 ("the Act"); an approval by delegates to print form C162/9603; and an Excess Payment Calculation Sheet with respect to the calculation of the contended debt outstanding, $5,059.60. The Tribunal had asked for the calculation and now notes that it appeared, indexed as T15 of the documents. The documents also included a copy of a letter to Mrs Flores from the Authorised Review Officer ("the ARO") dated 30 March 1998 advising her that the decision dated 20 January 1998, to raise and recover a debt of $5,059.60 was correct (T21). The Tribunal's copy of the Excess Payments Calculation Sheet does not contain a signature of a delegate but presumably an authorised delegate made a decision as the documents also contain part of a letter, dated 20 January 1998, sent to Mrs Flores stating:

"is because the 1996/97 estimates of income of $28,000 and $29,500 you provided on 01.08.97 respectively, were not within 10% of your actual combined 1996/97 income of $39,010. Consequently, you were not entitled to receive any additional rate of Family Payment.

for Family Payment

1 Aug 1996 to 5 Jun 1997

..."

Mr Coogan advised the Tribunal that he was not able to provide any further evidence with respect to the delegate's decision nor the rest of the letter. Ms O'Brien said that she did not dispute that a decision had been made.

3. The Tribunal was advised that there was no dispute between the parties with respect to the findings of fact made by the SSAT but they agreed that an error had occurred in (x), the date 19 June 1996 being 19 June 1997. The SSAT found:

"(i) Mrs Flores reconciled with her husband on 25 June 1996;

(ii) Mrs Flores notified Centrelink of this event as she was required to do;

(iii) Mr and Mrs Flores' combined taxable income for the 1994/95 tax year was $27,598 and for the 1995/96 tax year was $29,511;

(iv) on 24 July 1996 Mrs Flores lodged a form with Centerlink in which she estimated that her and her husband's combined taxable income for the 1996/97 tax year would be $28,000;

(v) at that time, the estimate provided was consistent with the amount of their income received in the 1996/97 tax year to date;

(vi) Centrelink calculated Mrs Flores' rate of family payment from 1 August 1996 on the basis of that estimate;

(vii) from 1 January 1997 Centrelink continued to assess Mrs Flores' family payment rate having regard the same estimate;

(viii) on 1 May 1997 Mrs Flores commenced work and notified Centrelink of this;

(ix) on 29 May 1997 Mrs Flores lodged a form with Centrelink in which she estimated that her and her husband's combined taxable income for the 1996/97 tax year would be $29,500;

(x) Mrs Flores was paid family payment on the basis of that estimate from payday 19 June 1996 [1997];

(xi) Mrs Flores' actual combined taxable income for the 1996/97 tax year was $39,010."

The Tribunal, with respect, makes the same findings of fact.

4. Mr Coogan put to the Tribunal that the delegation of powers signed by the Secretary on 10 January 1996 included delegations with respect to sections 1069-H21 and H22 of the Act which provided:

"1069-H21. If:

(a) family payment:

(i) is not payable to a person because of this Module; or

(ii) is payable at a reduced rate because of this Module; and

(b) the person gives the Secretary an estimate of the person's income for a tax year; and

(c) the person requests the Secretary to make a determination under this point; and

(d) the person agrees that the person's rate of family payment for that tax year is to be recalculated if the person's actual income for that tax year exceeds 110% of the amount estimated by the person;

the Secretary must determine that the appropriate tax year, for the purpose of applying this Module to the person for a family payment payday on or after the day on which the request is made, is the tax year in which the request is made.

Note 1: for 'income' see point 1069-H2.

Note 2: for 'the consequences of underestimating income' see section 885.

1069-H22. A request under point 1069-H21 must be made in writing in accordance with a form approved by the Secretary."

Section 861 provided that the rate of family payment was worked out using The Family Payment Rate Calculator at the end of section 1069, being Module H and following. The Act has now been amended. Family payment has been replaced by family allowance.

5. The documents disclose that Mrs Flores had been in receipt of a sole parent pension under the Act. As found by the SSAT, a matter which was not in dispute, she reconciled with her husband on 25 June 1996. This was a "notifiable event", section 1069-H18 then providing:

"1069-H18. If:

(a) a notifiable event occurs in relation to a person; and

(b) the person's income for the tax year in which the notifiable event occurs exceeds:

(i) 110% of the person's income for the base tax year; and

(ii) 110% of the person's income free area;

the appropriate tax year, for the purpose of applying this Module to the person for the remainder of the family payment period, is the tax year in which the notifiable event occurs.

Note 1: For 'notifiable event' see point 1069-H6

Note 2: For 'income' see point 1069-H2."

The tax year in which the notifiable event occurred was the tax year ending 30 June 1996. It was not in dispute that Mrs Flores complied with the relevant provisions of the Act in notifying her change of circumstances. She was asked by the Secretary to complete an Income and Assets form (SC162/9603)(T8) which she lodged with the Secretary on 24 July 1996. The form includes the following instructions:

* You must fill in this form if your Income or Assets have changed.

* The information on this form will be used to calculate the rate of your Family Payment and/or Childcare Assistance.

* You must fill in and send back this form to Social Security within 14 days to make sure that your Family Payment and Childcare Assistance are correct.

* The authority to request this information for Family Payment is contained in sections 873 and 1304 of the Social Security Act 1991.

* Information on this form for Childcare Assistance recipients is collected on behalf of the Department of Human Services and Health under the Children's Services Program.

Question 6 asks:

"Have any of these changes happened to you (or your partner) since 30 June 1995?

Married, reconciled or started to live in a de facto relationship with your partner

..."

Mrs Flores ticked the relevant box providing the date 25 June 1996. The form also includes a heading:

"Estimated Income for the current financial year

Because of the change in circumstances that you told us about at Question 6, we need more recent details about your estimated taxable income for the current financial year (1 July to 30 June)."

As the current financial year was now the year ended 30 June 1997 when Mrs Flores completed the form on 24 July 1996, she crossed out the box heading 1995/96 and gave an estimate that her taxable income would be zero for the financial year ending 30 June 1997 but she estimated that her partner would have a taxable income of $28,000. The form then advises:

"If your estimate is not within 10% of your actual income, you may have to repay any overpayment of Family Payment and/or Childcare Assistance."

Above the space provided on the form for the claimant's signature, the following is stated:

"I/We will tell Social Security if my/our estimate changes.

I/We agree that my/our Family Payment and/or Childcare Assistance is to be recalculated if my/our actual income is more than 110% of my/our estimate and that I/we may have to repay any overpayment that results."

In lodging her Income and Assets form Mrs Flores also provided the Secretary with a copy of Mr Flores' Notice of Assessment under the Income Tax Assessment Act 1936 for the financial year ending 30 June 1995 disclosing taxable income of $27,958.00 and his pay slips for the periods ending 30 June 1996, 7 July 1996 and 14 July 1996.

6. By letter dated 26 July 1996 Mrs Flores was advised that she would be paid Family Payment of $256.45 every second Thursday starting on 1 August 1996. It was stated that "Because your yearly income is less than it was last year, we can pay you more Family Payment." (T9 page 63). The letter also stated that the income used to work out her rate was $28,000. The letter did not state that an estimate was being used to calculate the rate of family payment Mrs Flores was entitled to. As Mrs Flores' family payment was calculated following a notifiable event, section 1069-H18 provided that it was the taxable income for the taxation year ending 30 June 1996, and not her estimate for the taxation year ending 30 June 1996, which should have been used to calculate the rate of family payment payable for the remainder of the family payment period.

7. The next document amongst the documents is a further letter to Mrs Flores dated 4 January 1997 (T10 page 65) in which she was advised that she would be paid $280.40 every second Thursday starting from 16 January 1997. She was advised that information she had given on a review form had been used to work out how much she could be paid. She was again advised that the income used to work out her rate was $28,000. A Data-matching Program Review form (T11) notes "Clt being paid on 97 EST from 1/1/97". There is a copy of Mr Flores' Notice of Assessment pursuant to the Income Tax Assessment Tax Act for the year ended 30 June 1996 amongst the documents, his taxable income being $29,511 (T11 page 69).

8. On 29 May 1997 Mrs Flores lodged a further Income and Assets form with the Secretary (T12). She advised a change in circumstances, that she had commenced work on 1 May 1997. She stated that for the taxation year ending 30 June 1997 her income would be $2,500 and her partner's income would be $27,000 with similar figures provided for the year 1997/98. Beneath these details is a box on the form advising: "If your actual income is 10% more than you estimate, you may have to repay an overpayment of Family Payment and/or Childcare Assistance." There is also a similar statement above Mrs Flores' signature as appeared on the earlier form she had completed (T8) but the statement is now prefaced by the words (T12 page 77):

"If I/we have provided an estimate of my/our income, I/we agree that my Childcare Assistance and/or Family Payment is to be recalculated if my/our actual income is more than 110% of my/our estimate and that I/we may have to repay any overpayment that results.

..."

9. Mr Coogan put to the Tribunal that Mrs Flores, in lodging the form indexed as T8 (see paragraph 5 above), had requested the Secretary under section 1069-H21 to use her estimate of income for the income tax year ending 30 June 1997 in order to calculate the rate of family payment payable until the end of the calendar year 1996, rather than the taxation year in which the notifiable event occurred, 1995/96. The Tribunal accepts that the form indexed at T8 was a form approved by the Secretary but the issue remains for the Tribunal as to whether the form was a request by Mrs Flores that the estimate she had given be used to calculate the rate of family payment payable to her even if the Secretary did use the estimate and advised her of that fact? Mr Coogan said that it was now the Secretary's position that, from the beginning of 1997, the rate of family payment payable to Mrs Flores should have been recalculated on the "new base year of 1995/96 taxation year" until the event notified by Mrs Flores on 28 May 1997 as having occurred on 1 May 1997 when she returned to work (T12) and provided estimates for both the income tax years ending 30 June 1997 and 30 June 1998 of a combined taxable income of $29,500.00. Mr Coogan said:

"The next point is that having made that estimate in our submission the Secretary was entitled to rely on it for the remainder of the calendar year because the Family Payment year relies on calendar years based on and turn on tax years. So that the Secretary was entitled to rely on that until the end of that calendar year, namely 1996. When a new calendar year began in January '97 it is now our position that although the Department continued to rely on the estimate it was incorrect to do so because there was no new estimate and the calculation should have reverted to the new base year of '95/96 tax year."

Mr Coogan said that in light of his contention the figure of $5,059.60 debt owing to the Commonwealth may not be correct and, were the Tribunal to set aside the decision of the SSAT, he asked that the matter be remitted to the Secretary with directions that the debt be recalculated. Following the hearing, Mr Coogan provided the Tribunal and the respondent's representative with further calculations, in particular, with respect to amounts paid to Mrs Flores after 1 May 1997, the amount of the debt now being calculated by the Secretary as $2,957.60. The figures with respect to the payment made on 19 June 1997 remained the same.

10. Ms O'Brien put to the Tribunal that the foremost issue for it was whether Mrs Flores had made requests to the Secretary to use her estimate to calculate a rate of family payment and secondly, whether the forms indexed at T8 and T12 of the documents fell under section 1069-H22. They are both headed "Changes to Your Income and Assets". Having considered the delegations and the approvals, the Tribunal finds that the form completed by Mrs Flores, SC162/9603 (T8) was a form approved by the Secretary under section 1069-H22 as the documentation provided by Mr Coogan satisfies the Tribunal on that point. Ms O'Brien noted the requirement that a client complete one of the boxes under Question 6 (T8) with respect to changes in circumstances which included a box to tick if no changes had occurred. If no change had occurred, clients were advised on the form that they did not need to complete any more questions. However, if there had been a change of circumstances, Question 8 asked for more recent details about estimated taxable income for the current financial year, the form covering both the financial years ending 30 June 1996 and 30 June 1997. Ms O'Brien suggested that the wording on the form suggested that it was compulsory to answer the questions rather than the wording being a request under section 1069-H22. She put to the Tribunal that the questions on the form were directed towards notifiable events rather than the form being a request by Mrs Flores that an estimate be used to calculate her rate.

11. Ms O'Brien invited the Tribunal to apply what was said by Deputy President Forgie in Re Stuart and Secretary, Department of Social Security [1998] AATA 12626. In that matter a decision had been made to raise overpayments of family payment for periods up to 29 February 1996. At paragraph 36 of her reasons for decision Deputy President Forgie said that following a fresh application for family payment, the rate of family payment was a matter to be considered afresh. She later noted that Ms Stuart was asked to estimate her income for the tax year 1994/95. At paragraph 62 of her reasons for decision, Deputy President Forgie found that, in the absence of evidence, the questions on the form had been approved by the Secretary but that Ms Stuart did not request that the appropriate tax year be changed. At paragraph 64 and following, Deputy President Forgie said:

"64. What is a "request"? The word is defined in the Shorter Oxford English Dictionary to mean, in so far as it is relevant in this case:

"... To express a wish or desire to have, etc.; to beg the favour or permission to be allowed to do something 1565. 2. trans. To ask, or ask for (something) 1594. 3. To ask (a person) to do something 1533. ..."

65. A similar meaning is given in Black's Law Dictionary (revised 4th edition, 1968):

"To ask for something or for permission or authority to do, see, hear, etc., something; to solicit; and is synonymous with beg, entreat, and beseech ..."

66. Questions 10 and 11 are not formulated in terms of a request. There is no sense to be gained from those questions that Ms Stuart is asking the Secretary that he change her appropriate tax year or even that she is expressing a desire that he do so. The questions are formulated in terms more of an invitation. The invitation is directed to a claimant and is an invitation to provide more information on the basis that the additional information may lead to his or her being paid a greater amount. There is no sense to be gained from those questions that Ms Stuart would consider that she had a choice whether or not to give the information. There is no sense that she could have known that she was choosing either to rely on the tax year 1993/94 as her appropriate tax year or on the 1994/95 tax year. While there is an indication that Ms Stuart was being told that she could possibly receive more family payment if she gave an estimate, there is no sense from the evidence that she could have known what she was choosing between (i.e. between possibly a lesser (even nil amount), but more certain, family payment or possibly a greater amount which was based on an estimate for the financial year 1994/95 but which could lead to recalculation of her family payment during the whole of 1995 if she incorrectly estimated that income (section 885))."

12. In his statement of facts and contentions, Mr Coogan had referred the Tribunal to the decision of Secretary, Department of Social Security and Jones (1998) 50 ALD 248 and asked the Tribunal to apply what was said by Senior Member Muller who held in that matter that, although there was not a form specifically designed for the purpose of allowing a recipient of family payment to request that the family payment be calculated by reference to an estimate of income, it was appropriate for the Secretary to treat the information supplied by a client as such a request as Ms Jones was sufficiently conversant with the system of social security to realise when she filled in relevant forms that she would be paid on the basis of her estimate.

13. The Tribunal, in the circumstances of this application, is satisfied that, although the form completed by Mrs Flores on 24 July 1996 (T8) is a form approved by the Secretary (section 1069-H22) and Mrs Flores gave the Secretary an estimate of her income for a tax year, she did not request the Secretary to make a determination under this point. No request is made by her in response to the questions she answered at the end of the form. She agreed that she would "tell Social Security" if her estimate changed and if her actual income was more than 110% of her estimate that she would repay any overpayment resulting. However, she made no request on the form for the estimate she provided on the form (T8) to be used to calculate her rate of payment at that time. The Tribunal makes the same findings with respect to the document indexed at T12 of the documents. It is a similar situation as found by Deputy President Forgie in Re Stuart.

14. The Tribunal agrees with the findings of the SSAT, made at paragraph 32 and 33 of its reasons for decision and its reasons at paragraph 35 where the SSAT found:

"35 In Mrs Flores' case, the notifiable event occurred on 25 June 1996, that is, close to the end of the 1995/96 tax year. Her taxable income for 1995/96 was $29,511. This was not more than 110% of her taxable income for the base tax year, 1994/95, which was $27, 598. Her taxable income would have needed to be at least $30,357 ($27,589 + $2,759) in order to be 110% of her taxable income of the base tax year. As Mrs Flores' situation did not meet the conditions in section 1969-H18, her appropriate tax year remained the base tax year."

15. The SSAT went on to consider section 1969-H19 of the Act and said:

36 Section 1069-H19 of the Act states that if section 1069-H18 does not make the year in which the event occurs (the event tax year) the appropriate tax year, and the person's income for the tax year that follows the event tax year is likely to exceed 110% of the person's income for the base tax year and 110% of the person's income free area, the appropriate tax year is the year that follows the event tax year. In Mrs Flores' case, that is the 1996/97 tax year.

[37 ...] in the tax year to date according to Mr Flores' payslips. At that time Mr Flores had done little overtime and Mrs Flores was not employed and there was no basis for saying that their taxable income for 1996/97 was likely to be any more than the amount estimated.

38 As this amount, $28,000, was not more than 110% of their taxable income for the 1994/95 base year, $27,598, it was not likely that Mrs Flores' income for the tax year that followed the event tax year was likely to exceed 110% of her income for the base tax year and, as Mrs Flores' situation did not meet the conditions in section 1069-H19, her appropriate tax year remained the base tax year. It follows from this that the decision to change her appropriate tax year and to calculate her rate of family payment on the basis of her estimated income for 1996/97 of $28,000, was not authorised by the legislation."

The Tribunal asked Mr Coogan to provide a complete copy of the SSAT's reasons for decision including all of paragraph 37 but he was unable to do so. He presented no arguments with respect to section 1069-H19 to the Tribunal. The Tribunal finds that until the end of 1996 Mrs Flores' base tax year remained the tax year for calculating her rate of family payment ending 30 June 1995.

16. A rate of family payment is struck for a calendar year unless a notifiable event occurs or a person requests that an estimate be used to calculate a rate (section 860). As submitted by Mr Coogan at the hearing, the rate of family payment payable should have been calculated at the beginning of the calendar year 1997 using the new base tax year ending 30 June 1996 (see paragraph 12 above and section 1069-H13 and H14) until the further notifiable event that Mrs Flores had commenced work on 1 May 1997 when a further rate was required to be struck under section 860.

17. Turning to the family payment paid to Mrs Flores on 19 June 1997 for the following fortnight, the Tribunal with respect, would adopt what was said by the SSAT at paragraphs 40, 41 and 42 of its reasons for decision:

"40 ...A second notifiable event occurred on 1 May 1997 when Mrs Flores commenced work and, under section 860(a) of the Act, her rate of family payment had to be worked out again. This time, section 1069H-18 (referred to at paragraph 34 above) did apply to Mrs Flores as her taxable income for the 'event tax year', $39,010 for 1996/97, did exceed 110% of both her income for the base tax year of 1995/96, $29,511, and her income free area which for 3 children was $24,598. As a result, her 'appropriate tax year' changed to the 'event tax year' of 1996/97.

41 On 29 May 1997 Mrs Flores estimated that her taxable income for 1996/97 would be $29,000 and her family payment rate was assessed having regard to this estimate with effect from 19 June 1997. As Mrs Flores' actual taxable income for 1996/97, $39,010 was more than 110% of the estimate, section 885(1) and 981 apply and her rate had to be recalculated on the basis of her actual taxable income from the date she was paid on the estimate, 19 June 1997. Under section 1223(3) of the Act, the difference between the amount paid and the amount which would have been paid, taking into account her actual taxable income, is a debt to the Commonwealth.

42 At this stage the debt raised has ended with the payment made on 19 June 1997 as that was the final payment in the 1996/97 tax year. Under section 1223(4), any debt in respect of payments made in the 1997/98 tax year are precluded from being raised until after the tax year has finished. It is likely that a further debt exists in respect of the family payments made to Mrs Flores from July 1997 until her rate was changed after 5 November 1997 when she advised of her actual 1996/97 taxable income. It is not within the jurisdiction of this Tribunal to consider any such further debt at this time as a decision has not yet been made about it."

18. It is for these reasons that the Tribunal will set aside the decision of the SSAT and remit the matter to the Secretary with directions.

I certify that this and the eleven (11) preceding pages are a true copy of the decision and reasons for decision herein of

Mrs H. E. Hallowes, Senior Member

Signed: .........Lou Coffey....................................

Personal Assistant

Date/s of Hearing 30 November 1998

Date of Decision 5 February 1999

Solicitor for Applicant Mr T. Coogan, Centrelink

Counsel for the Respondent Ms F. O'Brien

Solicitor for the Respondent Brimbank Community Centre