ALAN JARMAN and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

[2009] AATA 153

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 153

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/4892

GENERAL ADMINISTRATIVE  DIVISION		)
Re		ALAN JARMAN

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Senior Member M D Allen

Date19 February 2009

PlaceSydney

Decision For the reasons given orally at the conclusion of the Hearing on 19 February 2009, the decision under review is AFFIRMED.

...................[sgd]...........................

M D Allen
  Senior Member

CATCHWORDS

SOCIAL SECURITY: Refusal to pay age pension - teacher working part-time - calculation of annual income - Act requires calculation of ordinary income to be made on a yearly basis – so calculated, income threshold exceeded.

LEGISLATION

Social Security Act 1991: s8, s106(4) – E1

CASE LAW

Re Provan and Secretary, Department of Families, Community Services and Indigenous Affairs [2006] AATA 831

REASONS FOR DECISION

19 February 2009 Senior Member M D Allen

1. At the conclusion of the hearing of this application for review, I stated orally the decision intended to be made. After service upon the Applicant and Respondent of the decision that was in fact made, the Respondent requested pursuant to section 43(2A) of the Administrative Appeals Tribunal Act 1975 that the Tribunal furnish in writing the reasons for the said decision. Those reasons are stated below and will be furnished to the Applicant and to the Respondent.

2.      By application made the 20^th October 2008, the Applicant sought review of a decision by a Social Security Appeals Tribunal (“SSAT”) that affirmed a prior determination rejecting the Applicant’s claim for an age pension.

3.      The Applicant first applied for age pension on 18 July 2007, which claim was rejected on the basis that his assets exceeded the allowable asset level as at the date of the claim.

4.      Having reorganised his investments, the Applicant again applied for age pension on 21 December 2007. This claim was also rejected this time on the basis that the Applicants earnings exceeded the income limit for age pension as at the claim date.

5.      At all relevant times, the Applicant was engaged in part-time employment as a teacher. Part of the Applicant’s complaint against Centrelink relates to mathematical errors in the calculation of his total income. Notwithstanding these errors, I understand the Applicant to concede that the calculations led to a finding that his ordinary income exceeded the rate at which age pension would be payable.

6.      The Applicant did not dispute that his combined income at the relevant date comprised in part as:

(a)$1,639.22 per fortnight ($42,619.72) from his wife

(b)$8,496.00 from rental properties per annum

(c)$938.02 from shares per annum

This would give an annual income of $52,053.74.

7.      At the time of the Applicant’s claim for age pension, namely 21 December 2007, the applicable income limit for the period 20 September 2007 to 31 December 2007 was $2,492.00 per fortnight plus $24.60 per child. The Applicant had two dependant children at the relevant time therefore the applicable income limit was $2,541.20 per fortnight or $66,071.20 per annum.

8.      The crux of this matter is whether the Applicant’s ordinary income is to be calculated on an annual basis or some other period, for example monthly, as submitted by the Applicant.

9. The term “ordinary income” is defined in section 8 of the Social Security Act 1991 (“SS Act”) as:

“ Ordinary income means income that is not maintenance income or an exempt lump sum”

Whereas “income” is defined inter alia as:

“ an income amount earned, derived or received by the person for the person’s own use or benefit.”

10.     Clearly monies paid to the Applicant for his work as a teacher would be income in his hands, and is to be categorised as “ordinary income”.

11. Section 1064(1) of the SS Act states, inter alia:

“The rate of :

(a)       age pension…

subject to subsection (2), to be calculated in accordance with the Rate Calculator at the end of this section.”

12.     The exception in Ss 1064(2) does not apply to the Applicant.

13. Section 1064-E1 SS Act sets out how to work out the effect of a person’s ordinary income on the person’s maximum payment rate for age pension. Step 1 in the calculations reads:

“ Work out the amount of the person’s ordinary income on a yearly basis.”

14. To me, section 1064-E1 makes it clear that the Applicants income from teaching is to be calculated on an annual basis.

15. The application of section 1064-E1 was well explained by Tribunal Member Mr Webb in Re Provan and Secretary, Department of Families, Community Services and Indigenous Affairs [2006] AATA 831 at paragraphs 6 and 7, namely:

“A persons rate of age pension is to be calculated using the rate calculator set out at s1064 of the Social Security Act 1991. An income test applies pursuant to module E of that section. Effectively, the annual rate of a person’s age pension is affected by his or her ordinary income on a yearly basis. The term “ordinary income on a yearly basis” may be taken to mean the annual rate of a person’s ordinary income. The conceptual framework underlying this construction is essentially the same as that applying under the Social Services Act 1947 that was considered by the High Court in Harris v Director-General of Social Security (1985) 57 ALR 729. Thus, it is necessary to identify each source of income that was obtained during the year in question. The character of payments received from each source must be evaluated and a decision made whether such payments should be treated as one-off payments or as recurring income from which an annual rate may be extrapolated for the ensuing year. In the case of a person earning variable amounts from week to week in employment during a period, an averaging principle may be applied. Alternatively, the annual rate of income is to be calculated from the time of the variation of income and on the basis of the new level of income from that source. In such cases the annual rate of income will continue until the assumptions on which it is based changed.

7. For primary decision maker’s determining the annual rate of a person’s ordinary income is a prospective exercise based on present information. When considering such matters the Tribunal may consider the matters in issue with the benefit of hindsight and the knowledge of what actually occurred. Nonetheless, it is still necessary to distinguish between actual income earned and the annual rate of income. If the annual rate of income is to be worked out on the basis of actual income then it would be necessary to specify the commencing date of the income year and to conduct a retrospective examination of earnings to quantify the actual income received in that year in order to calculate the correct annual rate of pension payable during that period. While the Act does not specify the particular methodology to be applied, that approach is not consistent with the authorities. It is well understood that the annual rate of income may vary from time to time within any year. It is an expression of present earnings in annual terms.”

16.     It was not disputed in these proceedings that the Applicant’s income from teaching in the calendar year 2007 amounted to $24,002.50. This, together with other income as previously calculated in the sum of $52,053.74, clearly exceeded the income threshold of $66,071.20 per year applicable to the Applicant. Therefore, age pension was not payable.

17.     The decision under review is affirmed.

I certify that the 17 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member M D Allen

Signed: M.Corcoran...............................................................................
  Associate

Date of Hearing  19 February 2009
Date of Decision  19 February 2009
Solicitor for the Applicant          Appeared on own behalf
Solicitor for the Respondent     H. Schuster, Centrelink Legal Services