Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] AATA 92
ADMINISTRATIVE APPEALS TRIBUNAL	)
	)	No 2009/3133 
GENERAL ADMINISTRATIVE DIVISION	)	
	Re	TRACEY PRICE 	
	Applicant
	And	SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS 	
	Respondent
DECISION
Tribunal	Deputy President P E Hack SC 	
Date	12 January 2010  
Place	Brisbane 
Decision	The Tribunal;
1.	sets aside the decision under review; and 
2.	substitutes a decision that the debt of $10,808.84 be waived pursuant to section 101 of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth).
  	
		........Signed....................
	Deputy President	  
CATCHWORDS
SOCIAL WELFARE – overpayments and debt recovery – waiver of debt – special circumstances – family tax benefit (FTB) means tested on basis of joint income where recipient “partnered” – husband’s failure to lodge income tax return resulting in raised FTB debt – special circumstances found to exist – decision under review set aside 
 
A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) ss 28(2), 95(4A), 101

REASONS FOR DECISION

12 January 2010 	Deputy President P E Hack SC 		

1.	Family tax benefit (FTB) is means tested, and it is means tested where the recipient is “partnered”, on the basis of the joint income of the recipient and the partner. The applicant, Ms Tracey Price, received FTB in the 2000/2001 income year on the basis of an estimate that she made of her income for that year and that of her now ex-husband for that year. The general scheme of FTB is that it is paid on the basis of those estimates and any adjustment that is necessary is made following the lodgement of income tax returns for the recipient and the partner. 
2.	The difficulty in the present case arises because Ms Price’s ex-husband did not lodge his 2001 income tax return in a timely manner, or at all. 
3.	It may assist to give some background to the matter. In 1995 Ms Price’s ex-husband acquired a business. For the first year in which the business operated a tax return was apparently lodged which involved him in making payment of a small amount of income tax. That was in respect of the year ending 30 June 1996. That, from all accounts, was the last income tax return lodged until quite recently. During the course of the marriage the husband took responsibility for the financial affairs of the business and of the family and would not discuss these matters with Ms Price. She says, and I accept, that she was aware of the fact that he had failed to lodge tax returns and that there were numerous arguments about that failure. 
4.	The husband’s failure to lodge a tax return for the year ended 30 June 2001 had the consequence that Ms Price was treated as if she were not entitled to FTB at all during that year. That is the consequence of s 28(2) of the A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act). On 27 November 2002, and in reliance upon that sub-section, Centrelink made a decision to raise and recover a FTB debt of $10,808.84, the entire amount of FTB that had been paid to Ms Price during the 2000/2001 tax year. Since then, re-payments have been made, either directly or by way of withholding, that have reduced the debt such that at present an amount of $5,043.95 is outstanding. 
5.	Ms Price and her husband separated in June 2005. She has, since separation, attempted to persuade him to lodge his tax returns but she has been told by him that he does not propose to lodge the tax return for the relevant year because he is aware that, to do so, will relieve her of the debt. Seemingly actuated by vindictiveness, he will not do so for that reason. Ms Price has, as well, made contact with the Australian Taxation Office (ATO) on numerous occasions since separation seeking to persuade that agency to take action to force her ex-husband to lodge his tax return. Those efforts have proved unsuccessful and most recently she has been told, and again I have no reason to doubt the veracity of what she says, that it is unlikely that the ATO will pursue the failure to lodge because of the time that has now elapsed, and the small amounts potentially involved, do not warrant taking action at this time. 
6.	It is also material to note that in February 2005 the ATO sent to the former husband a letter pointing out to him the non-receipt of tax returns for the income years 1997 to 2002 and threatening prosecution if that default was not remedied. Seemingly, nothing has been done to follow up on that notice because Ms Forsyth who appears for the Secretary informs me that a recent enquiry of the ATO indicates that the returns for the 2000/2001 year have not as yet been lodged. It is the fact that failure to lodge a tax return when required to do so constitutes a breach of the Taxation Administration Act 1953 (Cth) and that there is power reposed in a Magistrates Court to convict and fine a defendant, and to make an order obliging a defendant to lodge a tax return within a specified period.
7.	Ms Price accepts that the debt exists by operation of the statute and does not question its amount. She says however that it ought to be waived pursuant to the provisions in the Administration Act which permit that course to be taken. 
8.	Before considering those sections I ought to briefly refer to the provision for writing off debts. The effect of s 95(4A) of the Administration Act is that, in circumstances such as that of Ms Price, the Secretary may write off a debt i.e. suspend a recovery action, whilst the obligation of an ex-partner to lodge a tax return is not complied with. That is the present position. The debt which presently exists has been written off until 2012 and Ms Forsyth informs me is likely to be written off again for a further period of 6 years after that. 
9.	There are various sections in the Administration Act which entitle the Secretary, or this Tribunal in her stead, to waive the right to recover a debt. That which is relevant here is contained in s 101 which permits the Secretary to waive the right to recover all or part of the debt if satisfied that:
“(a)	the debt did not result wholly or partly from the debtor or another person knowingly:
(i)	making a false statement or a false representation; or
(ii)	failing or omitting to comply with a provision of the family assistance law; and
(b)	there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c)	it is more appropriate to waive than to write off the debt or part of the debt.”
10.	Paragraph (a) is satisfied here. There is no suggestion here that the debt arose from any wrong conduct on the part of Ms Price. It is desirable to consider first the question of the appropriateness of waiving rather than writing off. The debt as I have said is presently written off and is likely to be written off into the foreseeable future however that is, as it seems to me, unsatisfactory from the point of view of Ms Price. She is entitled, in my view, to some greater degree of certainty in her life than she is presently provided, with the potential for a significant debt sought to be recovered in the future. 
11.	There are, in my view, five circumstances that collectively warrant the description special circumstances being given to the present case. The first, and perhaps the most significant, is the persistent failure on the part of one agency of the executive branch of government, the ATO, to take steps to ensure the lodgement of tax returns. It is plain that the ex-husband is a serial non-lodger of tax returns and that the ATO have been aware of this at least as long ago as February 2005. That is almost five years. That office has been, on Ms Price’s account, frequently reminded of the default and the consequences to her of that default. Yet no action has been taken. There is a degree of absurdity that one agency of the executive branch of government has not taken action to enforce the statutory duty owed to it, while another agency of the same government resists the waiver of a debt which has arisen from that failure to prosecute the obligation. 
12.	The second feature, which I would identify are Ms Price’s various attempts both within and after the marriage to have her ex-husband comply with his obligations. As she said, what more could she do? 
13.	Third, it seems to me that there is an inference readily able to be drawn from the evidence that the ex-husband’s failure to lodge is occasioned by vindictiveness, in itself perhaps not an uncommon feature of the end of a relationship, but found at least here in an unusual setting.
14.	Next, it seems to me to be relevant, and a proper conclusion to draw from the evidence, that the likelihood is that the 2000/2001 income tax return if lodged would expose a level of taxable income such as would entitle Ms Price to the entirety of the FTB that she was paid during that year.
15.	Finally, and without wishing to embarrass Ms Price unnecessarily, it is enough to say that her financial circumstances, as disclosed in her evidence, demonstrate that she is under some degree of financial pressure from debts and has three children to raise which she does at least at present from parenting payment and child support payment from her former husband. 
16.	These circumstances collectively, in my view, warrant the description of special circumstances as that phrase is used in the legislation. It is unnecessary to essay the great number of cases that have commented about what the phrase means. It is sufficient to note that I regard the circumstances of Ms Price as being out of the ordinary and quite different from the usual case of this type. 
17.	In those circumstances I will set aside the decision under review and substitute a decision that the debt of $10,808.84 be waived pursuant to s 101 of the Administration Act.     

I certify that the 17 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC

Signed: 	.............Signed.....................................................
		Associate

Date of Hearing	12 January 2010 
Date of Decision	12 January 2010
The Applicant appeared in person	  
Solicitor for the Respondent	Legal Services and Procurement Branch Advocate