Editors --- "Family tax bene?t debt:reportable superannuation contributions; special circumstances waiver" [2012] SocSecRpr 4; (2012) 14(1) Social Security Reporter, Article 4

• JONES and SECRETARY TO THE DFHCSIA
• Background
• Issues
• Discussion
• Formal decision

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Family tax benefit debt: reportable superannuation contributions; special circumstances waiver

JONES and SECRETARY TO THE DFHCSIA

(2012/77)

Decided: 20th February 2012 by M.D.Allen

Background

Following the passing of the Tax Laws Amendment (2009 Measures No 1) Act 2009,from 1 July 2009, the definition of ‘adjustable taxable income’ in the A New Tax System (Family Assistance) Act 1999(the Act) was amended to, relevantly, include ‘reportable superannuation contributions’.

On 19 May 2009,Centrelink wrote to Jones advising her of these changes. However, Jones did not adjust her calculation of the estimate of income for family tax benefit (FTB) purposes to take into account the amendments to the Act.

During the 2009/10 financial year, Jones’s husband contributed an amount of $45,950 into a superannuation fund. He later withdrew this amount and it was declared as income to the Commissioner of Taxation. The net result of this, plus wages paid to the husband from his company, resulted in a taxable income of $87,112.

On 10 December 2010, a reconciliation was undertaken and Centrelink determined that Jones had been overpaid $6,069.15 in FTB in the 2009/10 year. In assessing Jones’s entitlement to FTB, Centrelink had relied on the husband’s taxable income of $87,112 and had added into his income the reportable superannuation contribution of $45,950, as required by section sub-clause 2-1 of Schedule 3 to the Act. This resulted in an adjustable taxable income for Jones of$137,157.

Jones sought review of this decision, arguing that the $45,950 had been ‘double-counted’, in that it was already included in the taxable income of $87,112, and was then included again as a reportable superannuation contribution. The decision was reviewed and affirmed by an Authorised Review Officer and the Social Security Appeals Tribunal. Jones then applied to the AAT for a review of the decision.

Issues

The AAT accepted that the debt had been properly raised and calculated and that the strict application of the legislative provisions had the effect that the amount of $45,950 was ‘double-counted’ for the purposes of establishing Jones’s ‘adjustable taxable income’. Therefore the real issue for the AAT to determine was whether there were special circumstances in this case that warranted the waiver of the right to recover the overpayment under section 101 of the A New Tax System (Family Assistance) (Administration) Act 1999(the Administration Act).

Discussion

The AAT reviewed a line of authorities and concluded that unfairness and injustice by the strict application of legislative provisions can qualify as a special circumstance for the purposes of section 101 of the Administration Act.

The AAT concluded that Jones had suffered unfairness in this case, in that her husband’s superannuation contribution had been counted twice in the assessment of her income for FTB purposes. The AAT considered that the operation of the legislation in the present case had enabled ‘double-dipping’ on the part of the Secretary, and that this unfairness qualified as special circumstances.

Formal decision

The AAT set aside the decision under review and remitted the matter to the Secretary for recalculation of the FTB for the period 1 July 2009 to 30 June 2010 on the basis that the sum of $45,950 did not form part of that calculation.

[S.O.]