Editors --- "Family tax benefit debt: special circumstances waiver" [2006] SocSecRpr 44; (2006) 8(4) Social Security Reporter, Article 1

• KENDALL and SECRETARY TO THE DFaCSIA
• Background
• Special circumstances
• Formal decision

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Family tax benefit debt: special circumstances waiver

KENDALL and SECRETARY TO THE DFaCSIA

(2006/807)

Decided: 21st September 2006 by E. Fice

Background

Kendall was the mother of two children each of whom was a ‘FTB child’ pursuant to A New Tax System (Family Assistance) Act 1999 (the Act). Kendall sought dissolution of her marriage and Orders were made by the Family Court of Australia on 4 March 2003 which included shared access to the children. Although Kendall provided a Centrelink Officer with a copy of the Orders, her FTB was not reassessed to take into account her shared care status until September 2005. Centrelink raised a debt in respect of the overpayment of $1,589.25 and had, at the time of hearing, recovered the full amount by way of deduction from Kendall’s ongoing FTB payments. The only issue for the Tribunal’s consideration was waiver pursuant to s.101 of theFamily Assistance (Administration) Act 1999 (the Administration Act).

It was found by the Tribunal that the debt arose solely by Centrelink administrative error and the Secretary conceded that Kendall had received the payments in good faith. Kendall for her part admitted that she would not suffer severe financial hardship if the debt were not waived; it having been repaid already by withholdings. Kendall nevertheless claimed special circumstances existed and that waiver should be considered.

Special circumstances

The Tribunal accepted that Kendall’s financial situation was dependent upon continuing receipt of child support payments and she must be careful of her expenses. She was under considerable stress as a consequence of a protracted Family Court battle and her children were experiencing behavioural problems. These were regrettable consequences of the marital breakdown but would not justify a departure from the general rule.

However, there was one further matter raised by Kendall as constituting special circumstances. Her former husband whilst having care of the children for approximately 27 per cent of the time, had not and did not intend to claim the FTB for that proportion of shared care. Furthermore, he was not prepared to waive his right to claim a proportion of FTB. Given that Kendall’s former husband had care of the children for more than 10 per cent of the time, but less than 30 per cent of the time, and were he to make a claim for the FTB, the Secretary would be satisfied that he was eligible, he could, by written declaration given to the Secretary, waive his eligibility for FTB. The consequence would be that the children then would not be taken to be FTB children as far as he was concerned and Kendall would be entitled to 100 per cent of the entitlement to FTB. Kendall said by not waiving his eligibility rights, the children were being deprived of approximately $150 per fortnight, which could be spent for their benefit.

The Tribunal found Mr Kendall’s refusal to waive his eligibility for the FTB, despite the fact that he had no intention of making such a claim, was highly unusual and did give rise to hardship and unfairness as far as the children were concerned. The problem was that although Mr Kendall no doubt believed he was depriving Kendall of those monies, the reality was that it was the children who were in Kendall’s care for 73 per cent of the time, who were likely to suffer.

Although the overpayment arose as a consequence of Kendall having less than 100 per cent of the shared care of the children, no claim had been made by Mr Kendall for the remaining percentage of shared care FTB.

The Tribunal reasoned it was not as if, in relation to Kendall’s two children, there had been an overpayment of FTB. The entire payment was directed to Kendall on behalf of the children rather than having a proportion of that money directed to Mr Kendall on their behalf.

Under s.59(1) of the Act, if the Secretary is satisfied that:

(a) an individual is an FTB child of an individual (person A); and

(b) the FTB child is also an FTB child of another individual who is not person A’s partner;

the Secretary may determine the percentage that is to be person A’s percentage of family tax benefit for the child.

In circumstances such as those, where it is the children that ultimately suffer from the consequences of an individual who refuses to grant a waiver, while at the same time having no intention of claiming a proportion of FTB, the Secretary ought not make a determination under s.59(1) of the Family Assistance Act.

The Tribunal was satisfied that the special circumstances provided for in s.101 of the Administration Act did apply to Kendall’s situation making it desirable to waive the debt raised by the Secretary. Because Kendall had repaid the debt of $1,589.25, the Secretary was required to remit the sum in total.

Formal decision

The Tribunal set aside the decision under review and determined that the debt of $1,589.25 be waived pursuant to s.101 of the Act.

[I.T.]