A New Tax System (Family Assistance) (Administration) Act 1999 - s 10(2)(b)(ii) - s 28(a), (b), (ba), (c), (d) - s 32C - s 32D - s 224(3)

Acts Interpretation Act 1901 - s 29(1)

Social Security Act 1991 - s 1237AAD

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

Beadle and Director- General of Social Security (1984) 6 ALD 1

Dranichnikov v Centrelink [2003] FCAFC 133

Groth and Secretary Department of Social Security (1995) FCA 1708

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

Hollis and Secretary, Department of Social Services [2015] AATA 941

Re Ivovic and Director General of Social Services [1981] AATA 57

Timothy Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114

1. Ms Di Bisceglie seeks a review of a decision of the Social Security Appeals Tribunal (SSAT), dated 8 April 2015, that Ms Di Bisceglie was not entitled to be paid a family tax benefit (FTB) "top up" payment (totalling $5062.55) for the 2012/2013 financial year under the A New Tax System (Family Assistance) (Administration) Act 1999 (Family Assistance Administration Act) as her and her husband's income tax returns for the 2012/2013 year were not lodged with the Australian Taxation Office (ATO) by the due date (being 30 June 2014).

1. On 18 June 2012, Centrelink sent Ms Di Bisceglie a notice regarding her rate of FTB for the 2012/2013 financial year. Among other things, that notice recorded that Ms Di Bisceglie's rate of FTB for the 2012/2013 year was based on her estimated combined income for the 2012/2013 year of $60,000.
2. On 18 March 2014, Centrelink sent Ms Di Bisceglie a notice advising that she and her husband needed to lodge their income tax returns for the 2012/2013 financial year by 30 June 2014 to ensure they received their full FTB entitlements (18 March 2014 Letter). The 18 March 2014 Letter states:

Dear Mrs Di Bisceglie

Family Tax Benefit - Important action required by 30 June 2014

You now only have one year instead of two years to lodge a tax return in order to receive your full Family Tax Benefit entitlements. For more information on this change, go to humanservices.gov.au/taxtime and select 'Changes to the time period for lodging lump sum claims and confirming income'. To make sure you receive your full Family Tax Benefit entitlement, you and your partner need to lodge a 2012-2013 tax return, or tell us if you and/or your partner are not required to lodge a tax return, by 30 June 2014. These include: Top up payment - if you were underpaid Family Tax Benefit, you may receive any payment owing as a lump sum. Family Tax benefit supplements - depending on your circumstances, you may be entitled to an additional lump sum Family Tax Benefit supplement after the end of the financial year.

..........

..........If you and your partner have not lodged a tax return or you have not advised us that you and your partner are not required to lodge tax return/s by 30 June 2014: you will not be eligible for any further Family Tax Benefit, including the Family Tax Benefit supplements, for the 2012-2013 financial year you will have to pay back all the Family Tax Benefit you received for the 2012-2013 financial year, and you will no longer be able to receive Family Tax Benefit payments fortnightly. What you and your partner need to do 1. Lodge your 2012-2013 tax return/s with the Australian Taxation Office before 30 June 2014. The Australian Taxation Office will then advise us of your income. Please note that supplying details to your accountant or tax agent does not mean that your tax returns have been lodged with the Australian Taxation Office. OR. 2. Tell us that you and/or your partner are not required to lodge a tax return for 2012-2013. You need to tell us and confirm your income before 30 June 2014.

1. On 10 September 2014, Ms Di Bisceglie and her husband lodged their income tax returns for the 2012/2013 financial year with a combined taxable income of $11,006.
2. On 1 October 2014, Centrelink wrote to Ms Di Bisceglie advising her of the following:

You were paid Family Tax Benefit during the 2012-2013 financial year based on your estimated family income [i.e. $60,000]. We have now checked your entitlement using your actual family income [i.e. $11,006].

Information about your family's assessment for 2012-2013.

Total Family Tax Benefit you are entitled to $14,129.15

Less what you have already received $9,066.60

Sub-total $5,062.55 Adjustments made Less adjustments - $5,062.55

Balance $0.00

IMPORTANT INFORMATION

We are unable to pay your full Family Tax Benefit entitlement, including the Family Tax Benefit supplement because you and your partner did not confirm your income for the 2012-2013 financial year by 30 June 2014. If there were any special circumstances that prevented you and your partner from confirming your income by 30 June 2014, please call us on 136-150.... [Emphasis added] (Original Decision)

1. On 1 October 2014, Ms Di Bisceglie requested a review of the Original Decision and, on 18 February 2015, a Centrelink ARO affirmed the Original Decision (ARO Decision).
2. On 23 February 2015, Ms Di Bisceglie applied to the SSAT for review of the ARO Decision and, on 8 April 2015, the SSAT affirmed the ARO Decision (SSAT Decision).
3. On 29 April 2015, Ms Di Bisceglie applied to the Administrative Appeals Tribunal (Tribunal) for review of the SSAT Decision.

Was the decision to refuse payment of the FTB "top up" payment (totalling $5,062.55) to Ms Di Bisceglie correct?

1. Broadly, s 28(a), (b) and (ba) of the Family Assistance Administration Act provide that where a person lodges his or her income tax return for a financial year with the ATO before the end of the following financial year, that person's FTB entitlement in respect of the previous financial year will be recalculated and an adjustment amount paid to the if the amount already paid to the person is less than the recalculated amount.
2. However, s 28(c) and (d) of the Family Assistance Administration Act specify that where an income tax return for a financial year is lodged with the ATO after the end of the following financial year, then the person is only entitled to the lesser of the recalculated amount or the amount already paid to the person, unless a "further period" is allowed.
3. A "further period" of up to one more financial year is provided for in s 32C and s 32D of the Family Assistance Administration Act, if there are "special circumstances that prevented" the person from lodging their income tax return before the end of the first financial year.
4. Section 32C of the Family Assistance Administration Act states:

Relevant reconciliation time - first individual must lodge tax return

(1) This section applies to the first individual for a same-rate benefit period if:

(a) the first individual is or was required to lodge an income tax return for the relevant income year; and

.........

(3) 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.

(4) The further period under paragraph (3)(b) must end no later than the end of the second income year after the relevant income year. [Emphasis added]

1. Section 32D of the Family Assistance Administration Act states:

Relevant reconciliation time - no separation of couple and partner must lodge tax return

(1) This section applies to the first individual for a same-rate benefit period if:

(a) the first individual was a member of a couple throughout that period; and

(b) the other member of the couple (the partner) is or was required to lodge an income tax return for the relevant income year; and

(c) the first individual continues to be a member of the couple until the end of:

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

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

(2) The relevant reconciliation time is the time when an assessment is made under the Income Tax Assessment Act 1936 of the partner's taxable income for the relevant income year, so long as the partner'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 under subparagraph (1)(c)(ii).

(3) The further period under subparagraph (1)(c)(ii) must end no later than the end of the second income year after the relevant income year. [Emphasis added]

1. The following facts are not in dispute in this case:
   • Ms Di Bisceglie was eligible to receive FTB during the 2012/2013 year;
   • Ms Di Bisceglie received fortnightly payments of FTB totalling $9,066.60 during the 2012/2013 year;
   • These fortnightly payments were based on a combined estimated income for Ms Di Bisceglie and her husband of $60,000 for the 2012/2013 year;
   • The actual combined taxable income of Ms Di Bisceglie and her husband for the 2012/2013 year was $11,006;
   • Based on the actual combined taxable income of Ms Di Bisceglie and her husband (of $11,006), Ms Di Bisceglie was entitled to receive FTB payments totalling $14,129.15 for the 2012/2013 year; and
   • Ms Di Bisceglie and her husband lodged their respective income tax returns for the 2012/2013 year on 10 September 2014 (over ten weeks late) such that they were not lodged within the period required by the Family Assistance Administration Act (being 30 June 2014).
2. Ultimately, this application turns on whether the Tribunal is satisfied that there are "special circumstances" that prevented Ms Di Bisceglie and her husband from lodging their income tax returns for the 2012/2013 year with the ATO by the due date for lodgement (being 30 June 2014) for the purpose of s 32C of the Family Assistance Administration Act.
3. In Hooker and Secretary, Department of Social Services [2015] AATA 732, in considering s 10(2)(b)(ii) of the Family Assistance Administration Act (late lodged lump sum claim for family tax benefit), that has the same time limits and "special circumstances" provision as s 32C of the Family Assistance Administration Act, SM Toohey stated:
   1. 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.

1. 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. [Emphasis added]
2. The above extract was cited with approval by DP Humphries in Hollis and Secretary, Department of Social Services [2015] AATA 941 at [30]- [31]. DP Humphries concluded:
   1. Thus, in order for the time for making a claim to be extended, the Secretary (and in turn the Tribunal) must be satisfied of two things: first, that circumstances existed that were special and, secondly, that those special circumstances prevented the claimant from making her claim within time.
3. The expression "special circumstances" is not defined in the Family Assistance Administration Act. However, it has been extensively considered by the Federal Court and the Tribunal in the social security and family assistance law context. The most frequently cited cases are:
   • (i) Dranichnikov v Centrelink [2003] FCAFC 133, in which the Full Federal Court stated (at [66]):

... what is required will be circumstances which distinguish the case in consideration from the usual case. There will be a requirement that the circumstances are such that takes the case out of the ordinary....[Emphasis added]

(ii) Beadle and Director- General of Social Security (1984) 6 ALD 1 (p3 at [2]) where the Administrative Appeals Tribunal stated (at 3[2]):

...An expression such as "special circumstances" is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.....[Emphasis added]

(iii) Groth and Secretary Department of Social Security (1995) FCA 1708 where the Federal Court stated (at [12]):

...The phrase special circumstances, it has been said, although imprecise is sufficiently understood not to require judicial gloss...it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary. The enquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied. [Emphasis added]

(iv) Re Ivovic and Director General of Social Services [1981] AATA 57 where the Tribunal stated (at [45]):

...The reference to special circumstances "by reason of which" a person liable "should be released" requires, in our view, that there must exist in the circumstances of the case, a factor or factors which justify the making of an exception in whole or in part to the principle of liability which the Act otherwise establishes...Thus whilst keeping the dominant principle of [recovery of debt] in mind, [the decision maker] must nevertheless be prepared to respond to the special circumstances of any particular case by reason of which strict enforcement of the liability created by the section would be unjust, unreasonable or otherwise...

(v) Angelakos and Secretary Department of Employment and Workplace Relations [2007] FCA 25 where the Federal Court stated (at 33):

...There is less risk of overstatement if the words "unusual" or "uncommon" are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case.....[Emphasis added]

(vi) Timothy Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1,114 where DP Forgie stated (at [80]):

..."special circumstances" are not merely directed to the person's own circumstances. Rather, they are directed to those that are "special circumstances...that make it desirable to waive". That necessarily requires a consideration of the person's individual circumstances but also a consideration of the general administration of the social security system. Waiver of the debt would mean that Mr Davy would have had the benefit of part of his DSP in circumstances in which he was not entitled to it...He has had the benefit of the money and there is no injustice in requiring him to repay the money of which he has had the benefit but not the entitlement...The system of administration of the Social Security Act does not visit any injustice for many if not all social security recipients but it did not lead to any injustice or unfairness on Mr Davy that is not visited, or potentially visited, upon all other recipients of social security payments under the Act. Therefore, I am not satisfied that there are special circumstances that make it desirable to waive the debt under s 1237AAD of the Act...

1. Ms Di Bisceglie's evidence before the SSAT concerning her "special circumstances" may be summarised as follows:
   • She did not read the 18 March 2014 Letter "closely and so did not investigate the matter any further, relying instead on her understanding that a taxpayer has seven years in which to lodge a tax return: SSAT Decision at [14];
   • She over-estimated her and her husband's income at $60,000 to avoid an overpayment but their business was not as profitable as envisaged: SSAT Decision at [18];
   • The delay in lodging the tax returns was due to dealing with many problems in managing the business "starting with the need to re-program a new cash register because the previous one failed to discriminate between those items which attract the GST and those, such as water and orange juice, which do not": SSAT Decision at [16];
   • She and her husband were trying to run their business on their own and dealing with other tax documents to lodge, such as Business Activity Statements, and paying penalties for late lodgements: SSAT Decision at [14] and [17];
   • It was a difficult time for them in running a small business (she was working from 7am to 4.30pm, six days a week) and looking after two school-age children: SSAT Decision at [17];
   • Her father was also diagnosed with Alzheimer's disease around the same time: SSAT Decision at [17]; and
   • She acknowledged she was "partly at fault" for not lodging her and her husband's tax returns for the 2012/2013 with the ATO on time (by 30 June 2014), but she and her husband were both learning as they went along in the business and had little spare time to attend to "paperwork that appeared to be non-urgent": SSAT Decision at [18].
2. As noted above, to succeed Ms Di Bisceglie must show that "special circumstances" exist in her case and that those special circumstances "prevented" her and her husband from lodging their 2012/2013 income tax returns on time (by 30 June 2014). The existence of "special circumstances", alone, is not enough.
3. The 18 March 2014 Letter was clear in requesting that Ms Di Bisceglie and her husband lodge their tax returns for the 2012/2013 year by 30 June 2014 and expressly stated that there were benefits to lodging the tax returns by the deadline: refer to paragraph 3 above. As the letter was sent in March 2014, it also allowed Ms Di Bisceglie more than three months to comply. That is, the 18 March 2014 Letter was quite explicit in its terms and gave Ms Di Bisceglie more than sufficient time to take note and respond to it.
4. Further, information about the reduced time limit to lodge the tax return for the 2012/2013 income year by 30 June 2014 was also publicly available. On 26 September 2013, Centrelink published on its website the document "Changes to the time period for lodging lump sum claims and confirming income" that stated as follows:

From 1 July 2013, the amount of time you have to confirm your income changed. You have one year instead of two years to: ...confirm your income for Family Tax Benefit - this means that you and your partner (if you have one) need to lodge a tax return with the Australian Taxation Office... [by] 30 June 2014.

1. It was Ms Di Bisceglie's evidence before the SSAT that she did not read the 18 March 2014 Letter carefully and instead relied on an assumption that she had seven years to lodge a tax return: see paragraph 19 above. However, Ms Di Bisceglie's evidence before this Tribunal was that "really didn't recall ever receiving" the 18 March 2014 Letter.
2. In relation to this issue, the Tribunal notes s 29(1) of the Acts Interpretation Act 1901 which states:

Meaning of service by post

Where an Act authorises or requires any document to be served by post.....then the service shall be deemed to be effected by properly addressing, prepaying and posting the document as a letter and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.

and, s 224(3) of the Family Assistance Administration Act, which states:

Notice of decisions

.........

(3) If notice of a decision is given in accordance with subsection (2), notice of the decision is taken to have been given to the person at the time at which the notice would be delivered in the ordinary course of the post, unless the contrary is proved.

1. The effect of these provisions is that if Ms Di Bisceglie does not recall receiving the 18 March 2014 Letter, she is deemed to have received it. No evidence has been provided to prove that the 18 March 2014 Letter was not delivered to Ms Di Bisceglie.
2. The Tribunal notes that Ms Di Bisceglie did not engage an accountant until September 2014 and did not complete her 2012/2013 income tax return until 10 September 2014. In these circumstances, there was nothing "unusual, uncommon or exceptional" in the fact that the tax return was lodged after the 30 June 2014 deadline. Any unfairness or injustice was the result of Ms Di Bisceglie's delay in taking the steps necessary to ensure her tax return was lodged within the required period. These were not circumstances which prevented Ms Di Bisceglie from lodging her tax returns.
3. Whilst the Tribunal acknowledges that the circumstances in which Ms Di Bisceglie found herself in the relevant period may have been challenging, including juggling running a business, dealing with "many problems" in managing the business (including the need to re-program a new cash register, delays in lodging the quarterly BASs to the ATO), working long hours (i.e. 7am to 4.30pm, six days a week), dealing with associated paperwork, having family health issues (i.e. helping care for her father who was diagnosed with Alzheimer's disease) and caring for small school-age children, the Tribunal finds that none of those circumstances are so "unusual" or "uncommon" so as to make them "out of the ordinary" or "special".
4. For the above reasons, the Tribunal finds that no "special circumstances" existed in Ms Di Bisceglie's case and, further, that there were no _"_special circumstances" that "prevented" Ms Di Bisceglie and her husband from lodging their 2012/2013 income tax returns with the ATO by the statutory deadline of 30 June 2014. As such, Ms Di Bisceglie is not entitled to FTB "top up" payment for the 2012/2013 income year.

1. For the above reasons, the Tribunal affirms the SSAT Decision.

I certify that the preceding 29 (twenty nine) paragraphs are a true copy of the reasons for the decision herein of Senior Member CR Walsh

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