Australian Government employees have a duty of care to the public when performing their duties. This extends to any advice given and/or any actions performed.
A breach of duty of care can result from negligent advice and/or a negligent action.
Payment of compensation as a result of negligence can only be considered if DSS, Department of Education, DHS or the ATO have breached its duty to exercise reasonable care. The payment is made under Financial Management and Accountability Regulations 1997 (FMAR) regulation 9.
The majority of decisions made under family assistance law are decisions that are subject to a right of review and these are determined by this legislative mechanism, rather than being settled under FMAR regulation 9. Therefore, if negligent advice is given and/or a negligent action occurs, it will rarely result in a common law duty of care and settlement under FMAR regulation 9.
Contributory negligence occurs when the person affected by the negligence or a third party contributed to the negligence. In such a case, if DHS gave negligent advice and/or acted negligently, any compensation may be reduced to reflect the contributory actions of the person affected and/or the third party.
Under the Taxation Laws Amendment Act 1988, measures were introduced to allow a 'lump sum payment in arrears' tax offset (formerly called a rebate) on arrears of income payable to a recipient for previous financial years. The tax offset applies retrospectively to payments made on or after 1 July 1986 and includes assessable pensions, benefits and allowances under the Social Security Act 1991 (1.1.S.80), the Veterans' Entitlement Act 1986, and PLP under the Paid Parental Leave Act 2010.
The tax offset is designed to alleviate the problem of more tax being payable in the year in which the lump sum is received than would have been payable if the lump sum had been taxed in each of the years in which it had accrued.
If a person seeks compensation for a loss in these circumstances, they should first be referred to the ATO for clarification of their entitlement to this tax offset. It may be that after application of the tax offset, no economic loss may exist.
If the tax offset does not apply, or does not relieve the person of the additional taxation liability in full, the claim should be considered under FMAR regulation 9. If it can be accepted that the taxation liability in question arose from DHS negligence, then the claim may be settled under that direction. If no negligence occurred, the matter may still be considered under the CDDA.
Act reference: Financial Management and Accountability Act 1997, refer to Regulation 9
Last reviewed: 11 November 2013