Pedlar; Department of Family and Community Services [2000] AATA 42 (28 January 2000)

Last Updated: 4 February 2000

DECISION AND REASONS FOR DECISION [2000] AATA 42

ADMINISTRATIVE APPEALS TRIBUNAL )

) No W1998/520

General Administrative DIVISION )

Re SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Applicant

And JACQUELINE PEDLAR

Respondent

DECISION

Tribunal Deputy President, TE Barnett

Date 28 January 2000

Place Perth

Decision The decision of the SSAT dated 11 November 1998 is affirmed. The Tribunal remits the matter back to the applicant in order to recalculate the overpayment on the following basis: That there is no overpayment for the period 1 January 1997 to 10 March 1997. That the overpayment for the periods 11 March 1997 to 6 November 1997 and 4 November 1996 to 31 December 1996 be recalculated using the correct figure supplied by the respondent at the time.

......(Sgd) TE Barnett..............................

Deputy President

CATCHWORDS

Social Security - Overpayment of family payments - administrative error by applicant in calculating level of family payments - sent back for re-calculation based on correct estimates/actual income of respondent- special circumstances not found.

Administrative Appeals Tribunal Act 1975 - s.37

Social Security Act 1991 - ss. 885, 1069H, 1237AAD

REASONS FOR DECISION

28 January 2000 Deputy President, TE Barnett

1. This is an application by the applicant for a review of a decision of the Social Security Appeals Tribunal ("SSAT") dated 11 November 1998 which set aside a decision by the Department to raise and recover an overpayment of Family Payment for the period 1 August 1996 to 6 November 1997 amounting to $ 4,189.35. The SSAT sent the matter back to the Department for re-calculation with the direction that there was no debt until 1 October 1997 and from that date the debt was to be recalculated on the basis of using the (then) applicant's entitlement using a base tax year of 1995/1996. This meant that the (then) applicant's application had been partly successful.

2. Mr S Ellis represented the applicant and the respondent was represented by her husband, Mr D Pedlar via the telephone. The Tribunal heard evidence from the respondent's husband and had before it the T documents produced by the applicant in accordance with section 37 of the Administrative Appeals Tribunal Act 1975. In addition to this, the following exhibit was tendered in evidence:

* A1 Bundle of computer printout letters number 1 to 20.

factual background

3. The respondent was receiving family payments, when on 29 July 1996, she provided to the applicant (Centrelink) in the Review Form an estimate of her and her husband's combined income for the financial year 1996/97. This figure given by the respondent was $28,028.

4. On or about 4 November 1996, the respondent lodged an end of year review form showing an estimated combined taxable income for the 1996/97 financial year of $29,229. It is at this point that the applicant's error commences. Instead of inserting the new figure of $29,229, Centrelink continued using the old estimate of $28,028 in all their calculations. A letter dated 8 March 1997 clearly indicates that the old figure of $28,028 was still being used at that point and continued as the basis for calculation until 6 November 1997.

5. On or about 6 November 1997, the respondent, as part of her review of Family Payment, advised Centrelink that there had been a change in the family's circumstances and made a further estimate for the next tax year 1997/98. This estimate was $24,986. In that same form, the respondent indicated that the family's actual income for the year 1996/97 was $34,032.

6. On 27 March 1998, the applicant cross-matched the respondent's Centrelink records with those of the Australian Tax Office. This exercise indicated that there was more than a 10% variation between the respondent's estimate given on 29 July 1996 for the 1996/97-tax year and the actual income earned. As such, the applicant advised the respondent by letter that there was a debt of $ 4,189.35 owing. An Authorised Review Officer confirmed this situation on 15 September 1998. The respondent then appealed to the SSAT which, on 11 November 1998, set aside the decision on the grounds that Centrelink had not had regard to the respondent's estimates provided in July and October 1996 in working out the rate of Family Payment to the respondent from 1 August 1996 to 6 November 1997. The SSAT then remitted the matter back to Centrelink for reconsideration. Centrelink seeks review from this Tribunal of that decision.

the legislation

7. Section 885 of the Social Security Act states that:

" If:

(a) in working out the rate of family payment payable to a person, regard is had to the person's income for a tax year; and

(b) the income to which regard was had consisted of an amount estimated by the person; and

(c) the person's income for that tax year is more than 110% of the amount of the income on which the determination of the rate of family payment was based;

the person's rate of family payment is to be recalculated on the basis of that income".

8. Section 885 tells us that when the actual income for the family is known and if it varies by more than 110% from the estimate provided, the secretary must recalculate the figures based on the actual income.

9. Section 1069H13 and 14 indicates that for Centrelink purposes, the base tax year for recipients commences on 1 January for the preceding financial year. For example, the base tax year commences on 1 January 1996 for the financial year ending on 30 June 1995.

10. However, when the respondent went to the office in November 1996 to give a new estimate, this became a notifiable event which meant that s.1069H18 applied.

11. Section 1069H18 states:

"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 even 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 purposes 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."

12. By coming into the office on 4 November 1996 to give a new estimate, there was an alteration to the respondent's base tax year on which the calculations were to be based. The base tax year was no longer the 1994/95 financial year, but now the 1996/97 financial year.

13. The base tax year commencing 1 January 1997 was the financial year 1995/96. An error was made by the Department in respect to calculating the correct amount of family payments. Family payments should have been calculated using the actual financial income on the 1995/96-tax year, not on the estimated figure. The actual income for the household for the 1995/96 financial year was $ 36,110. This means, in effect, that there was NO overpayment in the period 1January 1997 to 10 March 1997. The applicant conceded this during the hearing.

14. It would appear that for the period 11 March 1997 to 6 November 1997, the Department was using the wrong figure in estimating the amount of family payments payable to the respondent. That is the figure $28,028 continued to be used in the calculation process rather than the correct estimate of $29,229. Due to this error, there is a likelihood the overpayment figure may have been slightly lower. The same applies to the period 4 November 1996 to 31 December 1996. Had the correct figure of $29,229 been used, the overpayment figure is likely to have been lower.

special circumstances

15. Section 1237AAD of the Act enables waiver of a debt in "special circumstances". The section states:

" 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 this Act or the 1947 Act; 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".

16. The respondent's spouse gave evidence that the cost of living in Exmouth is very high. As a result of this and the need to attract people to the region, an allowance is paid as part of some employee's wages. This allowance is typically paid to employee's who live above the North 26 parallel. For the respondent's spouse, these allowance amounts to $43.40 per week or $2,256.80 per annum. The respondent felt it was inappropriate for the applicant to take this allowance into account when undertaking their calculations as the allowance is meant to act as "compensation" for living in an area which has a high cost of living.

17. The respondent's spouse also advised that due to cyclone damage and damage to his house and shed (amounting to around $36,000), the family's insurance premiums have risen from $366 last year to $1216 this year.

18. Other extraordinary expenses include the cost of dental care for the respondent's children. The respondent's daughter has to be flown to the nearest dental specialist in Karratha every 6 weeks at a cost of $ 140 - 240 for airfares and accounts of around $ 330 per visit. The respondent has used up the free part of their health insurance coverage and now must pay the entire account herself. The other two children will be due for braces next year, which will set to double or treble the costs of dental care.

19. The respondent spouse also asked the Tribunal to take into account the nature of the respondent's casual work. This work is seasonal as Exmouth is reliant on tourism and it is extremely difficult for her to estimate how much her income will be for the forthcoming year.

20. The Tribunal finds that the remote area component of the respondent's salary is to be taken into account as part of the respondent's income and that the rise in the cost of insurance and the high cost of dental care do not amount to special circumstances which would justify waiver pursuant to s.1237AAD. Nor is write off appropriate in this case.

decision

21. The decision of the SSAT dated 11 November 1998 is affirmed. The Tribunal remits the matter back to the applicant in order to recalculate the overpayment on the following basis:

* That there is no overpayment for the period 1 January 1997 to 10 March 1997.

* That the overpayment for the periods 11 March 1997 to 6 November 1997 and 4 November 1996 to 31 December 1996 be recalculated using the correct figure supplied by the respondent at the time.

I certify that the 21 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President, TE Barnett

Signed: ...................(Sgd) C O'Hara.......................

Associate

Date/s of Hearing 19 November 1999

Date of Decision 28 January 2000

Counsel for the Applicant Mr S Ellis

Solicitor for Applicant Admin Law Section, Centrelink

Counsel for the Respondent Mr D Pedlar (via telephone)

Solicitor for the Respondent