De facto relationship or not?

The Working for Families Tax Credit (WFFTC) is a notoriously complex scheme when it comes to determining eligibility and quantifying entitlement. This leads you to wonder how well the scheme is policed, and whether fraud is able to ‘fly under the radar’. Accordingly, it was reassuring to see a case brought before the Taxation Review Authority in October of last year regarding a taxpayer making false claims about their de facto relationship.
The Disputant had claimed $39,740 of WFFTC’s for the years 2015 to 2018 on the basis that she was a single parent. However, at the time she was living with a Mr X, with whom the Commissioner considered the taxpayer to be in a de facto relationship.
Support was given by the woman, her sister, and Mr X claiming that no de facto relationship existed. However, evidence to the contrary was extensive. They lived together; evidenced by Mr [X] recording their address as his home address with various third parties. They went on holidays together, had social media profiles that indicated they were a couple, attended work functions as a ‘couple’ and were financially interdependent. As a result, the income of Mr X was deemed to be included in the WFFTC calculation and the Disputant’s actual entitlement for the four years was reduced to nil.
If the Disputant was not satisfied with this, the Commissioner went on further to say that regardless of whether a de facto relationship existed or not, her entitlement would have been reduced anyway due to the Disputant stealing from her workplace. The stolen money would count as income towards the calculation of their WFFTC and her entitlements should have been reduced in 2016 and 2018, and no entitlement would have existed in 2017.
The woman claimed that the Commissioner should exercise their discretion to not collect tax, given that the stolen money was used to fund a gambling addiction, and that she had already been convicted of theft, lost her job, lost the stolen money gambling, and had to repay some of the stolen money.
In considering whether the Disputants gambling addiction should, on a discretionary basis, allow her to retain the WFFTC, if she had in fact been entitled to it, the Commissioner held that the Disputant’s circumstances were “far from justifying the exercise of such a discretion. A taxpayer who has stolen money to gamble cannot expect to be relieved of tax consequences that would apply to another taxpayer in otherwise identical circumstances.”
Although this case demonstrates some absurd circumstances, it is good to know that schemes such as WFFTC are policed and that their exploitation is met with appropriate action.