Editors --- "Family tax benefit: meaning of 'reasonable action' to obtain maintenance" [2010] SocSecRpr 10; (2010) 12(1) Social Security Reporter, Article 10

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Family tax benefit: meaning of 'reasonable action' to obtain maintenance

BADGE and SECRETARY TO THE DFHCSIA

(2009/911)

Decided: 26th November 2009 by R.W. Dunne

Background

Badge had nine children. On 11 April 2002, she lodged a claim for family tax benefit (‘FTB’) in respect of her daughter Jillian, who was born on 13 March 2002. She was paid the maximum rate of the FTB for Jillian until 21 May 2002, when Centrelink reduced her rate of payment to the base rate because she had not lodged an Application for Child Support Assessment form (‘Assessment Form’) sent to her on 11 April 2002.

In 2006, Badge became aware of the need to claim child support to receive more FTB and subsequently lodged a claim with the Child Support Agency. Centrelink commenced paying Badge the maximum rate of the FTB in respect for Jillian from 22 June 2006, but refused to pay her any arrears.

The law

Section 21(1) of the A New Tax System (Family Assistance) Act 1999 (the Family Assistance Act) provides for an individual’s entitlement to the FTB, which requires amongst other things the individual to have at least one FTB child and the individual to be an Australian resident.

Section 58(1) of the Family Assistance Act provides t h a t the rate of the FTB payable to a person is to be calculated in accordance with the Rate Calculator in Schedule 1 of the same Act. Clause 10 of the Schedule provides that the amount of the FTB paid in respect of a child shall be the base rate if the person does not take reasonable steps to claim maintenance on behalf of the child. Section 32 of the A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act), requires that a person receiving FTB be given notice of a variation of a determination, such as a reduction in the rate of FTB.

Section 224 of the Administration Act provides that if notice of a decision is sent by prepaid post to the last known postal address of the person, it is deemed to have been given to the person, unless the contrary is proved.

Section 29 of the Acts Interpretation Act 1901 provides that a letter is deemed to have been received by a person if it is sent to the correct address of the person known to the sender, unless the contrary is proved.

Sections 109A, 109D and 109E of the Administration Act deal with the time limits to review Family Assistance law decisions and the date of effect of decisions.

Discussion

Badge claimed that she did not receive the letter from Centrelink dated 11 April 2002 which included a Child Support Assessment Form. The Tribunal did not find any reason to doubt the accuracy of her evidence. The Tribunal noted that at that same time, Badge was being investigated about her parenting payment single (PPS) entitlement and had received a number of letters from Centrelink regarding her PPS and single status, and the barrage of correspondences may have been cause for confusion.

Badge also gave evidence that the letter which followed dated 22 May 2002 did not make it clear what needed to be done regarding her rate of the FTB payment, and said that it was difficult to work out because there were many children in her care turning certain ages and the father of a previous marriage, to whom she had five children, had a history of paying an unpredictable amount of child support which ultimately affected her FTB rate.

The Tribunal noted that the term ‘reasonable action’ is not defined in the Family Assistance Act and referred to the case of McAdam v DFCS [2004] AATA 148, where Member Allen had observed, at [27]:

I accept as a general proposition that a person cannot fail to act unless he or she is aware that he or she is expected to act and what steps are expected to be taken. I do not consider that clause 10 requires any particular type of formality in terms of notification, but I consider that it must be made clear to the person that there is an expectation of action and what that action involves.

The Tribunal examined the statements in the letters that were sent to Badge in the relevant period concerning her FTB and concluded that the notices were not sufficient to advise her of Centrelink’s decision to reduce her FTB and why that was the case. The Tribunal further noted that between 2002 and 2006 when Badge corresponded with Centrelink about her social security entitlements that the opportunity would have arisen for the FTB base rate to be raised by Centrelink officers but that never occurred. The Tribunal decided Badge’s delayed action to obtain maintenance for Jillian was reasonable under the circumstances.

Formal decision

The Tribunal set aside the decision under review and substituted a decision that Badge was entitled to receive arrears of FTB in respect of Jillian for the period from 22 May 2002 to 21 June 2006.

[C.W.]