Newman and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 99 (15 February 2011)

Last Updated: 16 February 2011

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 99

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2010/0344

GENERAL ADMINISTRATIVE DIVISION		)
	Re		RODNEY NEWMAN

Applicant

And

SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal

Mr P Wulf, Member

Date 15 February 2011

Place Brisbane

Decision

The Tribunal affirms the decision under review not to refund the whole debt.

.................[Sgd].............................
Member

CATCHWORDS

SOCIAL SECURITY – Pensions, Benefits and Entitlements – overpayment of family tax benefit in previous years – debts previously paid to the Commonwealth – whether entitled to reimbursement under special circumstances as a result of variation of original decision based on Tribunal findings - no special circumstances

Administrative Appeals Tribunal Act 1975 (Cth) ss 37, 43

A New Tax System (Family Assistance) (Administration Act) 1999 (Cth) ss 21, 22, 25, 59, 71, 95, 97, 101

Beadle v Director-General of Social Security [1984] AATA 176; (1985) 60 ALR 225

Director-General of Social Services v Hales [1997] FCA 1565; (1998) 82 FCR 154; (1998) 153 ALR 259

Fuller and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Ashenden (Other Party) [2010] AATA 822

Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541

Re Cymerman v Secretary, Department of Family and Community Services [2003] AATA 1354; (2003) 78 ALD 584

Ryde v Secretary, Department of Family and Community Services (unreported 28 June 2005)

Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190; (2003) 76 ALD 105

REASONS FOR DECISION

15 February 2011

Mr P Wulf, Member

1. Mr Rodney Newman (“the applicant”) received payments under A New Tax System (Family Assistance) Administration Act 1999 (“the Act”) in the form of family tax benefit (“FTB”) for the period 1 July 2006 to 30 June 2007 (“first period”) and for the period 1 July 2007 to 30 June 2008 (“second period”). These benefits were paid in a financial year on the basis of the recipient’s estimates of the time he had care of his three children, R, L and M.

BACKGROUND

2. The Tribunal does not believe it is necessary to restate the facts that can be found in the earlier decision;[1] however it is necessary to restate the relevant facts as to monies paid and repaid by the applicant.
3. On 24 June 2009, the applicant lodged a claim for an annual lump sum payment for FTB for the second period.[2] On 29 June 2009, the applicant lodged a claim for an annual lump sum payment for FTB for the first period.[3]
4. On 20 July 2009, Centrelink paid the applicant a lump sum payment of $2,070.89 for care of the children during the second period and on 22 July 2009, Centrelink paid the applicant a lump sum payment of $434.35 for care of the children during the first period.
5. On 5 August 2009, the decision to pay the applicant was reversed and Centrelink raised debts against the applicant for those amounts.
6. The applicant sought review from the Social Security Appeals Tribunal (“SSAT”). On 10 December 2009, the SSAT varied Centrelink’s decision, finding that the applicant was eligible for FTB for the first period but he was not eligible for the second in the period. Based on those findings, Centrelink determined that the applicant was entitled to FTB for the first period and therefore no longer had a debt of $434.35. Centrelink further determined, based on the SSAT decision, that the applicant was owed $697.15 for the second period. This amount was used to offset the debt for the second period of $2,070.89. That amount has since been recovered from the applicant.
7. On 15 January 2010, the applicant appealed against the decision of the SSAT.[4] On 1 November 2010, this Tribunal reviewed the time periods when the applicant had care of the three children during the first and second periods and determined that:
   • (a) for the first period, the applicant had care of the three children for 38 nights, this being 10.41% of the year; and
   • (b) for the second period, the applicant had care of L and M for 39 days (10.65% of the year) and care of R for 34 days (9.29% of the year).
8. The parties were requested to provide written submissions as to whether any debt that might be owing should be waived (it should be noted the applicant has repaid the original debt and therefore the applicant submits that the whole amount should be refunded).[5]
9. As a result of the Tribunal’s decision, Centrelink recalculated that the applicant was overpaid $76.65 for the first period and $1,273.68 for the second period. As a result of the Tribunal’s decision, and the amount repaid by the applicant, Centrelink determined that the applicant was owed $779.12 less the amount owing from the first period ($76.65). This resulted in Centrelink paying the applicant $702.47.[6]
10. On 14 December 2010, the respondent advised the Tribunal and the applicant that Centrelink had further recalculated the applicant’s entitlements and found that the debt for the second period was in fact only $701.25, and accordingly, paid the applicant an additional amount of $572.43.

THE ISSUE FOR THE TRIBUNAL’S DETERMINATION

11. The issue for the Tribunal’s determination is whether the applicant should be repaid all monies paid to him for FTB pursuant to ss 21, 22, 25 and 59 of the Act, during the first and second periods because he had care of the three children as per this Tribunal’s decision.

THE RELEVANT LEGISLATION

12. The relevant legislative provisions are contained within ss 71, 95, 97 and 101 of the Act. Section 71 of the Act provides for overpayments of FTB being debts due to the Commonwealth. However, ss 95, 97 and 101 of the Act each provide for circumstances in which such a debt may be waived or written off or, as is argued in this case by the applicant, should be fully refunded in that any debt that is raised based on the recalculations should be written off.
13. Section 95 of the Act provides for the writing off of a debt and reads as follows:

Secretary may write off debt
(1) The Secretary may, on behalf of the Commonwealth, decide to write off a debt for a stated period or otherwise, but only if subsection (2), (4A) or (4B) applies.
Secretary may write off debt if debt irrecoverable or debt will not be repaid etc.
(2) The Secretary may decide to write off a debt under subsection (1) if:
(a) the debt is irrecoverable at law; or
(b) the debtor has no capacity to repay the debt; or
(c) the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d) it is not cost effective for the Commonwealth to take action to recover the debt.
(3) For the purposes of paragraph (2)(a), a debt is taken to be irrecoverable at law if, and only if:
(a) the debt cannot be recovered by means of:
(i) deductions under section 84; or
(iaa) deductions under section 1231 of the Social Security Act 1991; or
(ia) setting off under section 84A family assistance; or
(ii) application of an income tax refund under section 87; or
(iia) setting off under section 87A against enrolment advances; or
(iib) setting off under section 87B against payments in respect of fee reduction; or
(iii) legal proceedings under section 88; or
(iv) garnishee notice under section 89;
because the relevant time limit for recovery action under that section has elapsed; or
(b) there is no proof of the debt capable of sustaining legal proceedings for its recovery; or
(c) the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or
(d) the debtor has died leaving no estate or insufficient funds in the debtor’s estate to repay the debt.
(4) For the purposes of paragraph (2)(b), if a debt is recoverable by means of:
(a) deductions under section 84; or
(aa) deductions under section 1231 of the Social Security Act 1991; or
(b) setting off under section 84A family assistance; or
(c) application of an income tax refund under section 87; or
(d) setting off under section 87A against enrolment advances; or
(e) setting off under section 87B against payments in respect of fee reduction;
the person is taken to have a capacity to repay the debt unless recovery by those means would cause the person severe financial hardship.
Secretary may write off subsection 28(2) or (6) debt if claimant and partner separate
(4A) The Secretary may, under subsection (1), decide to write off a debt arising because of subsection 28(2) or (6) (which deal with when income tax returns have not been lodged) if the following conditions are met:
(a) the claimant and the partner mentioned in subparagraph 28(1)(b)(iii) (the ex-partner) ceased to be members of the same couple after the end of the income year (the later income year) that began 2 years after the beginning of the cancellation income year mentioned in subsection 28(1);
(b) if the claimant was required to lodge an income tax return for the cancellation income year—an assessment is or has been made under the Income Tax Assessment Act 1936 of the claimant’s taxable income for the cancellation income year;
(c) in any case—the ex-partner was required to lodge an income tax return for the cancellation income year but still had not done so by the time when the claimant and the ex-partner ceased to be members of the same couple.
Secretary may write off subsection 60D(2) debt if claimant and partner separate
(4B) The Secretary may, under subsection (1), decide to write off a debt arising because of subsection 60D(2) (which deals with when income tax returns have not been lodged) if the following conditions are met:
(a) the claimant and the partner mentioned in paragraph 60D(1)(b) (the ex-partner) ceased to be members of the same couple after the end of the second income year following the particular income year mentioned in paragraph 60D(1)(a);
(b) if the claimant was required to lodge an income tax return for the particular income year—an assessment is or has been made under the Income Tax Assessment Act 1936 of the claimant’s taxable income for the particular income year;
(c) in any case—the ex-partner was required to lodge an income tax return for the particular income year but still had not done so by the time when the claimant and the ex-partner ceased to be members of the same couple.
When decision under subsection (1) takes effect
(5) A decision made under subsection (1) takes effect:
(a) if no day is specified in the decision—on the day on which the decision is made; or
(b) if a day is specified in the decision—on the day so specified (whether that day is before, after or on the day on which the decision is made).
Debt that has been written off may be recovered
(6) Nothing in this section prevents anything being done at any time to recover a debt that has been written off under this section.

14. Section 97 provides for a debt to be waived if it has been caused solely by administrative error.

Waiver of debt arising from error
(1) The Secretary must waive the right to recover the proportion (the administrative error proportion) of a debt that is attributable solely to an administrative error made by the Commonwealth if subsection (2) or (3) applies to that proportion of the debt.
(2) The Secretary must waive the administrative error proportion of a debt if:
(a) the debtor received in good faith the payment or payments that gave rise to the administrative error proportion of the debt; and
(b) the person would suffer severe financial hardship if it were not waived.
(3) The Secretary must waive the administrative error proportion of a debt if:
(a) the payment or payments were made in respect of the debtor’s eligibility for family assistance for a period or event (the eligibility period or event) that occurs in an income year; and
(b) the debt is raised after the end of:
(i) the debtor’s next income year after the one in which the eligibility period or event occurs; or
(ii) the period of 13 weeks starting on the day on which the payment that gave rise to the debt was made;
whichever ends last; and
(c) the debtor received in good faith the payment or payments that gave rise to the administrative error proportion of the debt.
(4) For the purposes of this section, the administrative error proportion of the debt may be 100% of the debt.

15. Section 101 of the Act provides for a waiver of a debt if there are special circumstances:

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.

ANALYSIS

16. Section 101 of the Act provides for a waiver of a debt if there are special circumstances.
17. The Tribunal writes this decision based on the position that the applicant has not repaid the original amount of $2,070.89 and is requesting that this amount be waived under either ss 97 or 101 of the Act.
18. The respondent argued that s 97 is not relevant as there has not been any administrative error. Moreover, the respondent emphasised the importance of the words “attributed solely to” contained within s 97(1).[7] The applicant concedes this argument within their submissions.[8]
19. The Tribunal must then consider whether there are special circumstances that would make it appropriate to waive the debt pursuant to s 101 of the Act. Whilst the term “special circumstances” is not defined in the Act, it has been held by the Tribunal and by the Federal Court that the term refers to circumstances which distinguish this case from the usual case.[9]
20. In considering whether to exercise the discretion to waive the right to recover a debt due to the Commonwealth, the Tribunal must consider all of the relevant circumstances, including the fact that the applicant has received monies to which he was not entitled, the reasons for the overpayment, the prospects of recovery in the context of the applicant’s overall financial circumstances and the taxpayer’s expectation that overpaid moneys will be recovered.[10]
21. The Tribunal takes the view based on previous decisions that “special circumstances” are those that can be significantly distinguished from the ordinary and in this matter, while as the applicant argues, there has been a protracted dispute as to the amount of time that the three children were under the care of the applicant, there appears to the Tribunal that there are no particular special circumstances that would require the Tribunal to enact ss 97 or 101 to waive the debt.

DECISION
22. The debt owing is not waived. The decision not to refund the whole debt is affirmed.

I certify that the 22 preceding paragraphs are a true copy of the reasons for the decision herein of Mr P Wulf, Member

Signed: ....................[Sgd].........................................................

Associate

Date/s of Hearing 2 July 2010

Date of Decision 15 February 2011

Date of final submissions 16 December 2010

Solicitor for the Applicant Jacqueline McCormack, Hoy & McCormack

Solicitor for the Respondent Rick McQuinlan, departmental advocate

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[1] Newman and Anor and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 849 (1 November 2010)

[2] Exhibit 1, T5/62-69.

[3] Exhibit 1, T7/71-83.

[4] Exhibit 1, T1/1-14.

[5] Respondent’s written submissions dated 11 November 2010 and 14 December 2010, Applicant’s written submissions dated 7 December 2010.

[6] Respondent’s written submissions – 11 November 2010.

[7] See Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190; (2003) 132 FCR 126; (2003) 76 ALD 105, Re Cymerman v Secretary, Department of Family and Community Services [2003] AATA 1354; (2003) 78 ALD 584.

[8] Applicant’s written submissions 7 December 2010, para 11.

[9] Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541; Beadle v Director-General of Social Security [1984] AATA 176; (1985) 60 ALR 225, Ryde v Secretary, Department of Family and Community Services (unreported 28 June 2005), Fuller and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Ashenden (Other Party) [2010] AATA 822.

[10] Director-General of Social Services v Hales [1997] FCA 1565; (1998) 82 FCR 154; (1998) 153 ALR 259 at [266].