Editors --- "Family tax benefit and baby bonus: meaning of 'living with' for resident of Australia and child born overseas" [2014] SocSecRpr 3; (2014) 16(1) Social Security Reporter, Article 3

• SECRETARY to the DSS and McGEE
• Background
• Issues
• Legislation
• Submissions
• Discussion
• Formal decision

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Family tax benefit and baby bonus: meaning of 'living with' for resident of Australia and child born overseas

SECRETARY to the DSS and McGEE

(2014/53)

Decided: 4th February 2014 by R.P. Handley

Background

McGee aged 59, an Australian citizen and resident, had a small mechanical repair business and worked casual hours as a security guard. He met a lady in Cambodia in 2008, he kept in contact, and by 2011 the couple decided to marry. It is against the law in Cambodia for a foreign man over 50 to marry a Cambodian woman. So they became engaged in Cambodia in July 2011 and flew to Australia the next day. Mrs McGee became pregnant in Australia but had to return to Cambodia when her 3 month visa expired. McGee flew to Cambodia in January 2012 to arrange accommodation for Mrs McGee and the expected baby. McGee also applied for a prospective spouse visa at this time. McGee returned to Australia for employment reasons and when the chosen apartment in Cambodia became vacant Mrs McGee signed the lease.

McGee’s daughter was born in early April and McGee flew to Cambodia on 18 April 2012. McGee applied for Australian citizenship for his daughter on 26 April 2012 and he returned to Australia the next day. McGee paid for his niece to visit Mrs McGee and his daughter in July 2012 and his niece helped Mrs McGee with her visa application. In October 2012 McGee was able to travel to Cambodia and bring Mrs McGee and his daughter to Australia. They were married in February 2013. Mrs McGee was granted a subclass 300 visa on 24 May 2013.

McGee said he was advised by Centrelink that the ‘Baby Bonus claim must be lodged within 52 weeks of the child’s birth’. McGee lodged a claim for Baby Bonus and family tax benefit (FTB) on 28 November 2012. Centrelink rejected the Baby Bonus claim because McGee’s daughter was not his FTB child within 26 weeks of her birth. McGee was granted FTB from the date his child arrived in Australia.

Issues

The AAT needed to decide whether McGee was eligible to receive the Baby Bonus in respect of his daughter and whether he was eligible to receive FTB for the period prior to his daughter’s arrival in Australia on 19 October 2012.

Legislation

Eligibility for the Baby Bonus and FTB is governed by the A New Tax System (Family Assistance) Act 1999 (Cth) (the Family Assistance Act). Eligibility for the Baby Bonus is linked to an individual’s eligibility for the FTB. At the relevant time, s.36(2)(aa) required that the child be ‘an FTB child of the individual’ to be eligible for Baby Bonus, and s.36(2)(b)(i) required that the individual was ‘eligible for family tax benefit in respect of the FTB child at any time within the period of 26 weeks starting on the day of the child’s birth’.

Eligibility for FTB is determined by s.21 of the Family Assistance Act. Section 21(1)(b)(i) states that to be eligible for FTB the individual must be ‘an Australian resident’. McGee qualified as a resident but to be eligible for the Baby Bonus and FTB in respect of his daughter she was required to be an ‘FTB child’. An ‘FTB child’ is defined as:

22 (1) An individual is an FTB child of another individual (the adult) in any of the cases set out in this section.

Individual aged under 16

(2) An individual is an FTB child of the adult if:

(a) the individual is aged under 16; and

(b) the individual is in the adult’s care; and

(c) the individual is an Australian resident, is a special category visa holder residing in Australia or is living with the adult; and

(d) the circumstances surrounding legal responsibility for the care of the individual are those mentioned in paragraph (5)(a), (b) or (c).

The AAT referred to the FA Guide for guidance as to the ‘living with’ requirement at 2.1.2.10 and at 2.1.2.30.

2.1.2.10. ...

General residence requirements

In deciding whether a child is ‘living with’ the individual for the purposes of the residence requirements, the ordinary meaning of ‘living’ should be used, that is, residing, dwelling or occupying a place as a domicile. The period of time that the child has been staying with the individual may also be considered. A short period of staying with the child or visiting the child while the child is still residing overseas is not likely to constitute living with the individual.

...

2.1.2.30. ...

Child born overseas

A person can claim FTB and/or baby bonus for a child who is born overseas while they are outside Australia, subject to other eligibility criteria. The claim must however be lodged within the allowable claim period. The residence requirements for FTB and baby bonus are satisfied as long as at least one parent is an Australian resident who is temporarily absent from Australia.

If a person returns to Australia without the child, they may still be eligible for a payment if the child was living with them at any time after the birth. They may als be entitled to FTB and/or baby bonus if the child is an Australian resident or SCV holder residing in Australia as long as the child is still in their care.

Example 1: Sarah and Kate are a couple who leave Australia temporarily for 18 months. Four months after departure, Sarah has a baby and lodges a claim for FTB and baby bonus after the birth. As Sarah and the baby are only temporarily absent from Australia, they may be eligible for FTB and baby bonus. Note: Sarah need not wait until her return to Australia to lodge the claim as the baby bonus claim must be lodged within 52 weeks of the child’s birth.

Example 2: Jeffrey leaves Australia temporarily to travel overseas. While overseas he meets and marries a non- Australian resident who subsequently has his child. As the birth parent is not residentially qualified for payment, Jeffrey may lodge a claim for FTB and baby bonus within the applicable time limits.

Submissions

The Department argued that McGee did not satisfy the requirement in s.22(2) (c). McGee contended that his daughter was living with him during the relevant period. The Department contended that a 10 day visit to Cambodia after the child was born did not constitute living (synonymous with dwell or reside) with the child within the first 26 weeks after birth. The Department argued that McGee had not intended to treat the apartment in Cambodia as his home and referred the Tribunal to the decision in Sheehan and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 611 (Sheehan), a case with similar facts.

McGee argued that Sheehan was different in that Sheehan had not intended to marry the mother of his child and make a family. McGee had always intended to marry but the Cambodian law and the migration process had been a barrier. It was argued that even a short period of time with the child overseas could qualify as ‘living with’. McGee gave evidence that he had paid for all of the expenses for his daughter and the Baby Bonus was to assist with the expenses associated with a baby’s birth.

McGee stated that he was confused about the rules of 26 weeks and 52 weeks. Although his daughter had remained in Cambodia to complete her immunisation program, McGee stated that he might have been able to bring the program forward if Centrelink had said the time limit was 26 weeks.

Discussion

The AAT found that this decision turned on the meaning of the term ‘living with’ in s.22(2)(c) of the Family Assistance Act. McGee was required to be ‘living with’ his daughter during the relevant period of 26 weeks. The term is not defined in the legislation, unlike the word ‘resides’, which is explained in section 7(3) of the Social Security Act 1991. To interpret undefined words it is usual to look at ‘the ordinary and grammatical meaning of the words of the provision having regard to their context and legislative purpose’; Australian Education Union v Department of Education and Children’s Services [2012] HCA 3, at [26].

The AAT found that the words ‘abide’ and ‘dwell’ had a temporal element suggesting a degree of permanence which was reflected in the ‘Guide’ stating a short period of time is not likely to constitute living with the individual; although a short time was not precluded. In Sheehan, the AAT found the 33 days spent by Sheehan with his child and the child’s mother in the Philippines was a temporary arrangement, and Sheehan had no entitlement to Baby Bonus. In this case, the AAT found the facts were different but the dwelling arrangement was similar. The AAT found that McGee’s daughter was not an FTB child even though they had 9 or 10 days together in April 2012.

The AAT noted the confusion about the 52 weeks and suggested that he could make a claim under the Compensation for Detriment Caused by Defective Administration Scheme.

Formal decision

The AAT set aside the decision of the SSAT and decided that McGee was not eligible for the Baby Bonus in respect of his daughter, nor was he eligible for the FTB prior to 19 October 2012.

[M.R.]