Editors --- "Family tax benefit: shared care; care period" [2014] SocSecRpr 12; (2014) 16(2) Social Security Reporter, Article 4

• McMANUS and SECRETARY TO THE DSS
• Background
• Issues
• Legislation
• Consideration
• Decision

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Family tax benefit: shared care; care period

McMANUS and SECRETARY TO THE DSS

(2014/206)

Decided: 10th April 2014 by N. Isenberg

Background

McManus and Pretorious were separated and the care of their two children was determined by Family Court Orders dated 8 July 2010. The orders were very detailed and the care arrangements were worked out over a two year period. The alternate years gave McManus more care. McManus lodged a claim for family tax benefit (FTB) for the period 8 January 2012 to 13 January 2013. His salary after January 2013 precluded him from FTB. Centrelink rejected his claim because he had 27 per cent care of the children; when it was reassessed he had 29 per care (still below the required 35 per cent for FTB). McManus appealed the rejection on the basis that this was an alternate year and the actual care of the children was at least 35 per cent. Pretorius did not agree with the proposed change.

Issues

The main issues were whether there was a change in the pattern of care, and if so, the start and end date of the care period.

Legislation

The A New Tax System (Family Assistance) Act 1999 ('the FA Act') s.25 provides that if care for a child during a care period is less than 35 per cent, the child is taken not to be a child of that individual for FTB purposes for any part of the period. Where the pattern of care shows that parents share qualification for FTB for a child, then the decision-maker is required to determine the appropriate shared care percentages.

Section 35P of the FA Act states that a care percentage must be revoked if a new percentage of care is determined under ss.35A or 35B, and the new percentage would be in a different range as set out in the provision. Section 35Q of the FA Act also provides discretion to revoke a care percentage.

Section 35B states the percentage is determined on the basis of the actual care the person has or will have over the care period. The term 'care period' is definedin s.3 of the FA Act as having the meaning given by ss.35B (1) (a) or (2)(b) of the FA Act. The FA Act does not specify when a care period starts and for how long it continues.

Consideration

Pretorious argued that there was no change in the care, and that the court or-ders were being followed as they had been in the previous year. Pretorious stated that if there was a change in care it was when the youngest child started school on 27 January 2012. McManus conceded if that date was used he would have less than 35 per cent care. He had used the dated 8 January 2012 because he had the children for the second part of the school holidays.

The Family Assistance Guide (the ‘Policy') has provisions for determining the actual percentage of care and the care period. Instruction 2.1.1.45. These provisions are especially important where carers do not agree as to the pattern of care.

Instruction 2.1.1.50 of the Policy relevantly states as follows: Step 1 - Establish the pattern of care The pattern of care to be used in the shared care determination is either the pattern agreed to by all carers of the child or, if there is no such agreement, the pattern of care as established by the FAO decision maker for the assessment period. Depending on the care arrangements for the child, there may be more than one as-sessment period in an income year...

Instruction 1.1.C.100 of the Policy relevantly states as follows:

1.1.C.100 CARE PERIOD FOR FTB ASSESSMENTS

Definition

The term 'care period' is used in relation to assessing shared care for the purposes of FTB. The care period for working out the percentage of care provided by an adult: • begins on the day on which the care of a child starts to be shared between 2 or more adults, or the day on which the pattern of care (2.1.1.45) changes, and • ends when there is a subsequent change in care.

Explanation

A care period of 12 months from the commencement of the care ar-rangements will generally be used where the care arrangements are ongoing. The same care arrangements will be assumed to apply for subsequent 12 month periods, unless otherwise advised. If there is no agreed ongoing pattern of care and the care arrangements only apply to a period shorter than 12 months, a one-off shorter care period may be determined. Centrelink argued that it was misleading to calculate the care period every 12 months and that it was more accurate to use the two year cycle, or, if there was to be a change in care percentages it should be at the milestone changes, like the commencement of school for the younger child.

Centrelink argued that there was no reason to go against the policy guidelines and referred the AAT to the case of Gillson and Secretary, Department of Families, Housing, Community Services & Indigenous Affairs [2011] AATA 73 where the Tribunal stated that it is appropriate to have regard to the Policy in contested cases of shared care. The AAT found that Gillsonconcerned the tensions between the formula for entitlement to FTB on the basis of ‘hours in care’, rather than on the basis of ‘nights in care’ as set out in the Policy. However, in Gillson the AAT accepted that in some cases it may be appropriate to assess care arrangements differently than anticipated by the Policy.

The AAT found there was nothing inconsistent with the Policy if it found that the care arrangements changed on 8 January 2012 and that it was unreasonable for Centrelink to use the 2 year cycle.

Decision

The AAT set aside the SSAT decision and found that McManus was entitled to FTB for the period 8 January 2012 to 7 January 2013 because he had 35 per cent care of the children during that period. [M.R.]