Editors --- "Family tax benefit: maintenance income test; capitalised maintenance income" [2007] SocSecRpr 50; (2007) 9(4) Social Security Reporter, Article 8

• TELFORD and SECRETARY TO THE DFaCS
• The issue
• Background
• The law
• Formal decision

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Family tax benefit: maintenance income test; capitalised maintenance income

TELFORD and SECRETARY TO THE DFaCS

(2007/1818)

Decided: 1st October 2007 by P. McDermott

The issue

In this matter the issue was whether the value of a property transferred to Telford should be regarded as capitalised maintenance income under the A New Tax System (Family Assistance) Act 1999 (the Act).

Background

In 2000 a Cow Bay (Queensland) property valued at $72,000was transferred to Telford by her ex partner, in lieu of child maintenance for their son. Centrelink advised her that the value of the property would be treated as capitalised maintenance income for the period October 2000 to July 2017, the effect of which was to reduce Telford’s rate of family tax benefit payments. This decision was affirmed by the SSAT in January 2007. Telford sought to attribute a lower value for the property transferred to her, but did not provide any evidence to support a valuation lower than the unimproved value of the property. She further argued that the costs associated with acquiring the property ($5000) reduced the value of the benefit to her and so should be taken into account, although she provided no receipts to verify this amount apart from a duty receipt for $975, and further argued that the property should be regarded as an unrealisable asset.

The law

Section 3 of the Act defines the term ‘maintenance income’ to include ‘...the amount of a payment or the value of a benefit that is received by the individual for the maintenance of a FTB child’. As Telford had herself advised Centrelink that the transfer of the property to her was in lieu of maintenance, the Tribunal concluded that the value of this benefit was ‘child maintenance’ for the purposes of the Act.

The Tribunal similarly concluded that, as the value transferred to Telford was neither a periodic payment nor a benefit provided on a periodic basis, and as its value exceeded$1500, it was ‘capitalised maintenance income’ as defined in s.3(1) of the Act. As no evidence was provided to support a lower value for the property, the Tribunal was not prepared to consider a value less than its unimproved value, and further determined that the actual value of the property transferred should be used in determining the ‘value of the benefit’ to the recipient. The Tribunal noted that no evidence to support the contention that the property was unrealisable was presented, but in any case concluded that s.3 of the Act requires the benefit to be valued at the time it is received rather than at any later time.

A suggestion by Telford that Centrelink lodge a caveat over the property was considered to not be a workable solution to Telford’s financial difficulties, and the Tribunal doubted whether Centrelink had an ‘interest’ in the property to support a caveat.

The Tribunal also noted that Cl. 24(5) of Schedule 1 of the Act provides that ‘the capitalisation period is such period as the Secretary considers appropriate in the circumstances of the case’, and concurred with the Centrelink view that the capitalisation period should coincide with the period when Telford’s child was a minor, and so that it should conclude on the day before his 18th birthday.

Formal decision

The Tribunal determined that the value of the property($72,000) should be treated as capitalised maintenance income for the period October 2000 to July 2017.

[P.A.S.]