Arndt v Commissioner for Social Housing (Administrative Review)

[2017] ACAT 16

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

ARNDT v COMMISSIONER FOR SOCIAL HOUSING (Administrative Review) [2017] ACAT 16

AT 49/2016

Catchwords:ADMINISTRATIVE REVIEW – rent rebate – whether a stipend from a self-managed super fund is considered income even when drawn from the capital invested in the fund

Legislation cited:      ACT Civil and Administrative Tribunal Act 2008 s 68

Housing Assistance Act 2007 ss 9, 18, 19, 22

Subordinate              

Legislation:Assistance Public Rental Housing Assistance Program 2013 cl 25, 31, 32

Cases cited:Little v Commissioner for Social Housing [2017] ACAT 11

Miller v Commissioner for Social Housing [2017] ACAT 10

Tribunal:                   Senior Member Robinson

Date of Orders:  14 March 2017

Date of Reasons for Decision:         14 March 2017

AUSTRALIAN CAPITAL TERRITORY        ) 

CIVIL & ADMINISTRATIVE TRIBUNAL      )          AT 49/2016

BETWEEN:

ROBIN ARNDT

Applicant

AND:

COMMISSIONER FOR SOCIAL HOUSING

Respondent

TRIBUNAL:  Senior Member Robinson

DATE:14 March 2017

ORDER

The Tribunal orders by Consent that:

1.The decision of the respondent made on 8 June 2016 to refuse to backdate the applicant’s rebate to the expiry of her previous rebate is set aside and in substitution an order is made that the applicant is entitled to a rental rebate from 26 July 2015 to 26 September 2015.

The Tribunal further orders that:

1.Pursuant to section 68 of the ACT Civil and Administrative Tribunal Act 2008 the decision under review is set aside and the applicant’s application for a rental rebate is remitted to the respondent for re-determination.

2.In calculating the applicant’s ‘income’ for the purposes clause 11 of the Housing Assistance Public Rental Housing Assistance Program 2013 (No 1) the respondent may regard as income the annual stipend or pension the applicant has actually received from her self-managed superannuation fund.

………………………………..

Senior Member Robinson

REASONS FOR DECISION

Background

1.This was originally an application for a review of two distinct but related decisions made under the Housing Assistance Public Rental Housing Assistance Program 2013 (No 1) (the Program):

(a)first, a decision by the Commissioner to decline to backdate a rental rebate from its expiration date on 15 July 2015 to 26 September 2015, when the applicant applied for a new rebate (backdate issue); and

(b)second, a decision by the Commissioner on 15 September 2016 to rely upon Centrelink’s deeming policies when making a decision about the applicant’s entitlement to rental rebate, rather than requesting additional information (deeming decision).

2.Events have overtaken both issues.

3.First, the Tribunal handed down decisions in the matters of Miller v Commissioner for Social Housing [2017] ACAT 10 and Little v Commissioner for Social Housing [2017] ACAT 11. The parties were offered an opportunity to comment on those decisions prior to the finalisation of these reasons. Instead, they filed consent orders in relation to the backdate issue. I have made those consent orders as Order 1 of this decision.

4.Second, as part of this proceeding, the applicant filed with the Commissioner additional information that was not before the Commissioner at the date of the deeming decision. The Commissioner’s representative submitted that the deeming approach was only used because the Commissioner did not have the full information needed to make a decision without deeming, but now that the full information is available, the rebate should be assessed in light of the applicant’s actual financial position. Further to this, the parties agree that the deeming decision should be set aside, and the decision either remade or remitted having regard to the information currently before the Tribunal.

5.Unfortunately, the Parties disagree as to what the correct or preferable decision is.   In particular, they disagree about how payments made from the applicant’s self-managed superannuation fund (the Fund) should be considered when calculating her ‘income’ for the purposes of assessing her rental rebate.

Background

6.On 19 April 2011, the applicant and the Commissioner entered into a residential tenancy agreement pursuant to the Residential Tenancies Act 1997 (ACT) (RT Act) for premises in Waramanga (the property).

7.At some stage, the applicant was assessed as eligible for a rental rebate in respect of the rent to be paid at for the property. In 2014, the rebate was $253.90 per week. I do not know on what basis this assessment was made.

8.On 31 May 2015 the Commissioner wrote to the applicant advising her that her rental rebate was due to expire, and that she needed to reapply and return the relevant documentation to Housing ACT by 20 June 2015. The letter clearly stated, in bold, that:

if we do not receive a completed application you will be required to pay the full rent of $350 per week from 25 July 2015.

9.On 21 June 2015 the Commissioner again wrote to the applicant advising her that her rental rebate was to expire. This letter warned that the higher amount of rent will be deducted from her Centrelink payments if the rebate expired.

10.On or about 7 September 2015 the applicant had a discussion with a representative of ACT Housing. As a consequence of that discussion, Housing ACT sent her a further rental rebate form on that day.

11.On 26 September 2015 the applicant’s friend and representative, Mr Oppitz, emailed a rental rebate form on behalf of the applicant to an officer at ACT Housing. Unfortunately, that officer was on leave, and did not respond to Mr Oppitz until 21 October 2015.

12.Also on 21 October 2015, the housing officer sent a letter to the applicant requesting certain additional information be provided within 28 days. There were some arguable errors in the address, but these errors are of no relevance to the remaining issue before the Tribunal.

13.On 11 February 2016, Mr Oppitz wrote to the Commissioner enquiring where the rental rebate process was up to.

14.On 26 February 2016, the applicant sent to the Commissioner another copy of the rental rebate form previously submitted on 26 September 2016. There were no changes to the form and no additional information was provided.

15.On 2 March 2016, ACT Housing sent a further letter to the applicant requesting additional information within 28 days. Again, there were some errors in the address that are no longer relevant.

16.On 3 March 2016 the Housing Officer replied to Mr Oppitz’s email of 26 February 2016 and advised that she had logged the application of 26 February 2016 as a new application, as the previous one has been “...cancelled due to being incomplete, and no response to the 28 day letter sent 21 October 2015...”

17.In the meantime, the applicant had fallen behind in her rent payments, and the Commissioner lodged an application for a termination and possession order (RT 111/2016). On 4 March 2016, the Tribunal made orders in that proceeding included that:

(a)the tenant provide the Commissioner with the information necessary to complete her application by 16 March 2016; and

(b)the Commissioner determine that application by 18 March 2016; and

(c)any internal review of that decision be applied for by 22 March 2016 and completed by 24 March 2016.

18.On 18 March 2016 Mr Oppitz provided additional information to Commissioner, being:

(a)       an email setting out the payments made from the applicant’s superannuation fund for the period 11 March 2016 to 11 August 2015; and

(b)     her Centrelink payments for the period 6 March 2015 to 13 July 2015; and

(c)      an ‘Income Confirmation Authority’ and confirmation of her Centrelink payments for 5 January 2015 and 22 January 2016.

19.On 29 March 2016, the Commissioner proceeded to determine the rebate. The Commissioner concedes that it did this in the absence of full information. The opening passage of the letter to the applicant of that date reads:

Thank you for the information you recently provided to assist with your rental rebate. While the information was useful it was still insufficient to fully substantiate your income. Therefore I have processed a rebate for you based on deemed income...

....

Name	Income Type	Component	Amount Weekly	Percent Assessed:
Robin Arndt Robin Arndt	Centrelink Disability Support Financial Investments	BASIC	$394.20 $325.93	25% 25%

Your WEEKLY rent has been assessed as follows:

Weekly cost rent charged  $350.00

Less rebate allowed  $170.00

Weekly rebated rent  $180.00

The effect of this rebate processing has resulted in your rental arrears being reduced to $5,529.65 as at 29 March 2016.

20.On 19 May 2016 the applicant provided the Commissioner with additional information showing the balance of the Fund of $286,192.00 including an investment of $99,000.00 that had, according to the Commissioner, not previously been declared (the undeclared investment).

21.On 8 June 2016 the Commissioner reassessed the rental rebate on the new income information and wrote to the applicant seeking income details to undertake a full reassessment of entitlement as a consequence of the new information.

22.On 11 July 2016 the Commissioner wrote to the respondent declining to backdate the rebate to the expiry of the previous rebate. As noted above, proceedings about the backdate issue have been resolved by consent.

23.On 15 September 2016, following the discovery of an error in the rebate calculation, a further assessment was undertaken, being the deeming decision. The relevant part of that decision provides:

Name	Income Type	Component	Amount Weekly	Percent Assessed:
Robin Arndt Robin Arndt	Centrelink Disability Support Financial Investments (deemed)	BASIC	$394.20 $164.85	25% 25%

Your WEEKLY rent has been assessed as follows:

Weekly cost rent charged  $350.00

Less rebate allowed  $210.25

Weekly rebated rent  $139.75

24.The ‘financial investments’ (deemed) refer to a deemed return on the basis of the value of the Fund, calculated using an approach adopted from Centrelink.   The Commissioner concedes that the use of a ‘deemed’ investment return is no longer appropriate, given the submissions of actual account information. I therefore no longer need to decide whether the approach was appropriate.

25.The question is now whether a stipend paid from the Fund should be, in all cases, be treated as income.

The Proceedings

26.By way of application dated 5 August 2016 the applicant applied to the ACT Civil and Administrative Tribunal (the Tribunal) for administrative review of the reviewable decisions set out in paragraph 1 of these reasons.  

27.The Tribunal made directions on 19 September 2016 and 28 November 2016. The matter was ultimately set down for hearing on 2 December 2016. At the hearing, the Applicant was represented by Mr Christensen, a solicitor.  The Commissioner was represented by Mr Adkins, a senior manager within Housing ACT.

28.The applicant filed the following documents:

(a)Statement of Mr Rudi Oppitz dated 20 April 2016.

(b)Statement of facts and contentions dated 28 October 2016.

(c)Statement of Arthur Pascoe dated 28 October 2016.

29.Each of these documents had a series of attachments, considered further below.   

30.The respondent filed the following documents:

(a)      Statement of reasons filed 19 September 2016.

(b)     Tribunal documents filed 19 September 2016.

31.     At the hearing, the applicant was represented by a solicitor, Mr Peter Christensen, and the Commissioner by Mr Adkins. Mr Oppoitz and Mr Pascoe gave oral evidence and were cross examined. Only Mr Pascose’s evidence is relevant to the remaining issue before Tribunal.

32.     The Commissioner, having filed no witness statements, called no witnesses and relied upon the documentation and Mr Adkin’s cross examination of Mr Pascoe.

Relevant legislative provisions

33.The ACT social housing scheme is established under the Housing Assistance Act 2007 (HA Act). The Commissioner for Social Housing is established under section 9 of the HA Act. Part 4 of that Act deals with “housing assistance programs”.

34.Section 19 of the HA Act provides that the Minister has the power to approve a housing assistance program. Section 18 of the HA Act provides that a housing assistance program includes the kind of assistance that may be provided under the program, the eligibility criteria for assistance under the program how decisions of the Commissioner under the program may be reviewed.

35.Subsection 22(2) of the HA Act provides that:

(2) ... an approved housing assistance program may provide for a rebate of rent in accordance with the program.

36.The Commissioner has approved the Housing Assistance Public Rental Housing Assistance Program 2013 (No 1) (the Program) pursuant to section 19 of the HA Act.

37.Subclause 25(1) of the Program states that the Commissioner may provide the tenant of a public housing dwelling a rent rebate provided that the tenant satisfies the eligibility criteria in clause 9(4) and clause 25 of the Program.

38.Clause 25(2) of the Program sets out the calculation for that rent as follows:

The rent rebate for a tenant is calculated as the amount by which the weekly rent payable by the tenant under the tenancy agreement is more than the total of the following (the basic rent) –

(a) 25% of the weekly income of the household, other than—

(i) the weekly income of all members of the household (other than the tenant) who are under 18 years old; and

(ii) dependent child payments;

(b) 10% of the weekly income (other than dependent child payments) of all members of the household (other than the tenant) who are independent people under 18 years old;

(c) 10% of dependent child payments payable to any member of the household;

(d) any component of the rent that is—

(i) in relation to water consumption charges, central heating, garages or other facilities; and

(ii) decided by the housing commissioner to form part of the basic rent.

39.‘Income’ is defined in clauses 11 an 12 as follows:

11 Meaning of income
 (1) For this program, income, for a person—
(a) means personal earnings, valuable consideration, profits or any other amounts the person has earned, derived, received or become entitled to, for the person’s own use or benefit, by any means from any source; and
(b) includes a periodical payment or benefit by way of gift or allowance to the person; and
(c) includes an amount taken to be earned, derived or received by the person under subclause (3); and
(d) includes an entitlement forgone as part of a salary packaging arrangement or any arrangement which has the effect of reducing the person’s taxable income.
Example for par (d) Where a person forgoes part of their income by salary sacrificing the payments on the lease of a motor vehicle or computer the amounts sacrificed are part of the income of that person.
(2) However, income, for a person—
(a) does not include income that the housing commissioner determines is not income for the person for this program; and
(b) does not include an amount expended by the person for a purpose determined by the housing commissioner for this program.
 (3) For subclause (1) (c), a person may be taken to have earned, derived, received or become entitled to an amount in the following circumstances—
(a) the housing commissioner considers that the person might have earned, derived, received or become entitled to the amount if the person had taken reasonable action to secure the amount and the action is or was reasonably available to the person; or
Examples for par (a) 1 a pension or other benefit to which the person might have been entitled if the person had applied for it (unless the person provides documentary evidence to the contrary). 2 interest or return on moneys at a reasonable rate available to the person if the person took steps to recover it. Note An example is part of this instrument, is not exhaustive and may extend, but does not limit, the meaning of the provision in which it appears (see Legislation Act, s 126 and s 132).
(b) the person receives a lump sum payment (by compensation or otherwise)—the housing commissioner considers the payment to be wholly or partly on account of income lost or foregone by the person during a period (before or after the person receives the payment, or both); or

(c)  where the person is a self-employed person, the housing commissioner may deem the person to be receiving an amount equivalent to a relevant pension or benefit where the person’s stated income is less than the relevant pension or benefit. Example for par (c) The housing commissioner may deem the person to be receiving the equivalent of the Newstart Allowance where the person’s stated income is less than that allowance notwithstanding that the person may not actually be eligible for the Newstart Allowance.

(4) For subclause (3) (b), the amount the person is taken to have earned, derived, received or become entitled to is not more than the amount of the lump sum, or the part of it that the housing commissioner considers to be income lost or foregone in the period, distributed in equal weekly payments over the period.

(5) Despite any other provision of this program, any income of a person (other than an applicant, a tenant or a domestic partner of a tenant) whose weekly income is less than $100 is not income for this program.

Right of Review

40.Clause 31(4)(a) of the Program provides:

31 Review of decision
...
(4) If the housing commissioner receives a request, the housing commissioner may –

(a) review the decision; or

...

41.Clause 32 of the Program provides for review by the tribunal. It states:

32. ACAT review

Application may be made to the ACT Civil and Administrative Tribunal for review of a decision under clause 31(4)(a) ...

42.Section 68 of the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act) applies when the tribunal reviews a decision by an entity. It provides:

68. Review of decisions

(1)  This section applies if the tribunal reviews a decision by an entity.
 (2)  The tribunal may exercise any function given by an Act to the entity for making the decision.
(3)  The tribunal must, by order—
  (a)  confirm the decision; or
  (b)  vary the decision; or
  (c)  set aside the decision and—
    (i)  make a substitute decision; or
  (ii)  remit the matter that is the subject of the decision for reconsideration by the decision-maker in accordance with any direction or recommendation of the tribunal.

The deeming provision

43.The applicant suggests that there is is no warrant under the Program for applying the Centrelink deeming rates. Given the Commissioner has conceded that the decision should be remade in light of the new information, it is not necessary for the Tribunal to make any finding on this issue.

What is the appropriate characterisation of income from the superannuation trust?

44.The framework for the regulation of self-managed superannuation funds (SMSFs) is complicated and highly technical, and neither party provided detailed submissions on how the various pieces of governing Commonwealth legislation operate. I accept the evidence of Mr Pascoe on how SMSFs operate, and I have relied on his evidence. However, I have also reviewed the information on self-managed superannuation funds that is available on the Australian Tax Office website and had regard to the relevant provisions of the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations).

Operation of the Fund

45.Having regard to the evidence before the Tribunal, I am satisfied that:

(a)Mr Pascoe is the owner and operator of Gateway Financial Services (GFS), and in this role he has the responsibility for advising the applicant on the management of the Fund. The Applicant plays little, if any, role in the day to day management of the Fund.

(b)the fund was established in 2008 after the applicant “came into some money”. The applicant sought advice and determined that the most economical approach to the management of her money was to establish a self-managed superannuation fund and invest the money in that;

(c)the fund is established pursuant to a trust deed. The trustee for the fund is a company of which the applicant is the sole director;

(d)all SMSFs are subject to the same set of rules. Monies are invested in an ‘accumulation phase’, and may be withdrawn as a pension or stipend during the ‘pension phase’. The funds and earnings of the SMSF are taxed concessionally at 15%, with some non-taxable components;

(e)once a super member determines to receive an entitlement from a SMSF, the fund enters in pension phase, the value of the fund is calculated at that date (annual value);

(f)each year, by 30 June, the fund must distribute to the beneficiary a minimum pension, calculated by reference to a percentage of the annual value, with that percentage being determined by reference to the beneficiary’s age. If the minimum distribution is not paid, the fund may lose its concessional tax status and instead be taxed at the corporate rate of 47% for that year;

(g)in the applicant’s case, the minimum annual withdrawal is 5% of the annual value;

(h)how the minimum pension is withdrawn is discretionary. It could be paid by a monthly stipend, or by a lump sum, but the minimum must be withdrawn by 30 June each year in order to meet the rules;

(i)the requirement that the beneficiary of the trust withdraw a minimum pension each year may mean that the capital of the fund is diminished over time. For example, if the annual return on the fund is 4% and the minimum pension is 5%, then monies must be withdrawn from the capital of the fund;

(j)the annual value is re-determined each year to take account of both earnings and withdrawals over the previous year;

(k)in the present case, the returns on the investments made by the Fund have been variable. For the 2014 financial year they were slightly positive, for the 2015 financial year, slightly negative;

(l)a beneficiary may also be entitled to a ‘commutation’ – these are lump sum withdrawals; and

(m)notwithstanding that the Fund had been regularly audited, Mr Pascoe identified some errors with past accounting practices, including that a property that was worth $99,301 and some cash that was not referenced in previous years annual statements. This explained the previously undeclared capital. The fund was being audited as at the date of the hearing.

What is the Applicant’s ‘income’ from the Fund?

46.As I understand the applicant’s contention, it is that when assessing ‘income’ for the purposes of clause 11 of the HA Program, it is not reasonable for the Commissioner to look only to the amount of the ‘stipend’ dispersed from the Fund each year, because in some years, where the return in less than 5%, the stipend will involve a dispersal of Fund’s capital, rather than its income. Instead, the applicant contends, where the annual return on the Fund’s investments are less than 5%, the ‘income’ taken into account for the purposes of clause 11 of the HA Program should be the actual income earned by the Fund.

47.The Commissioner’s position is that it should take into account as income the 5% minimum required to be withdrawn, as this is the minimum amount that must actually be distributed.

48.The question, therefore, is whether the full amount of the minimum stipend that is paid from the Fund each year should, in all circumstances, be considered ‘income’ for the purposes of the clause 11 of the HA Program, even where it is drawn from the capital invested in the Fund.

49.The starting point is the definition of ‘income’ in clause 11(1) of the Program.  This definition includes:

... personal earnings, valuable consideration, profits or any other amounts the person has earned, derived, received or become entitled to, for the person’s own use or benefit, by any means from any source.

50.The Explanatory Statement to the Housing Assistance Public Rental Housing Assistance Program 2007 (No 1)[1], describes this definition as “broad”, and I agree.  The definition is clearly intended to encompass a very broad range of payments from any source, where the person concerned received them for their personal use or benefit. The explanatory goes on to note that “the housing commissioner may determine particular types of income or amounts expended by persons for particular purposes do not constitute income for the program.” The intention is clear: the definition is intended to capture a very broad range of payments, but the Commissioner has a discretion to make exceptions and ameliorate any injustice that may arise because of the broad definition. The Commissioner has not, to my knowledge, been asked to make an exception in this case.

[1] which predated the HA Program but used the same language in relation to ‘income’

51.It is apparent that money distributed to the applicant from the Fund is an ‘amount’ that the applicant has ‘received’ from a ‘source’. The ‘source’ is always the Fund, although where the Fund has obtained the money may vary.  In some years it may be the profits earned by the Fund over the course of the year, and in other years it may amount to drawing down of the original capital. While in some years the withdrawal of the stipend may the diminish the annual value of the fund, when compared to the year before, it does not change the fact that the Applicant has received an amount of money from a source.

52.But what of the requirement in the definition that the monies be received by the Applicant ‘for her benefit or use’?

53.In one sense, the withdrawal of the minimum stipend is a choice – the Fund is not compelled to distribute funds to a beneficiary and the Applicant is not compelled to claim any funds from it.  However, the ‘choice’ not to withdraw the minimum stipend carries with it the heavy consequence, in terms of a loss of taxation benefits.  It may well be said that the Applicant does not really choose to withdraw or receive the money in any real sense.  

54.Nonetheless, it is certainly the case that she receives the monies, and that when she receives the monies, she has the use of them. She may choose to spend the money, or reinvest it, or distribute it however she wishes.  As such, the stipend appears to meet the definition of ‘income’ is section 10(1) of the Program.

55.The applicant’s solicitor pointed to a degree of unfairness if the stipend is treated as income when it is drawn from the capital, and not the profit. The principal amount deposited in the superannuation fund is, he submitted, the “applicant’s money”, that she has already earned. Treating a withdrawal from that capital as income, he submitted, is like treating a withdrawal from a bank account treated as ‘income’, rather than considering how much the account has earned. I do not accept this analogy, because I do not accept that investing monies in a SMSF is the equivalent of saving money in a personal bank account.

56.It is quite apparent that the purpose of the establishment of a SMSF is the establishment of an ‘income stream’ that provides financial support in the form of a ‘stipend’ or pension during retirement. A SMSF is a statutory device. Money is held on trust by a third party corporate entity, who invests that fund on the beneficiary’s behalf and (in the pension phase) and pays the beneficiary income in the pension phase (amongst other possible distributions). Investment in such a fund attracts taxation concessions, but attached to those concessions are a variety of statutory obligations, including a requirement that there be a minimum distribution of income from the fund each year, even in years when the fund has not made sufficient earnings to cover that distribution.

57.I accept that the SMSF arrangement may result that there is a degree of unfairness in some circumstances. The applicant is perhaps in a somewhat different position than many other persons who have a SMSF, in that the money invested in the account was derived from a compensation payment, and not from salary, and it is therefore possible, that she has not benefited from the same level of taxation concessions that would otherwise apply to the monies during the accumulation stage. However, I have little evidence on this, and it is in any case not a matter that would go to the characterisation of the stipend for the purposes of clause 11 of the HA Program.  

58.The reality is, the applicant has used a capital fund to effectively guarantee herself an income stream. That income stream must be considered when determining her eligibility for a rental rebate (subject to any determination by the Commissioner that it be excluded).

59.Accordingly, I am satisfied that the appropriate approach is to characterise the stipend or income derived from the Fund as ‘income’ for the purposes of clause 11 of the HA Program.

60.The parties acknowledged at hearing that there was insufficient information before the Tribunal for the Tribunal to recalculate the rebate. Accordingly, the matter is remitted to the Commissioner to recalculate the applicant’s rebate in accordance with this determination.

........................................

Senior Member H Robinson

HEARING DETAILS

FILE NUMBER:	AT 49/2016
PARTIES, APPLICANT:	Robin Arndt
PARTIES, RESPONDENT:	Commissioner for Social Housing
COUNSEL APPEARING, APPLICANT	N/A
COUNSEL APPEARING, RESPONDENT	N/A
SOLICITORS FOR APPLICANT	Mr Christensen
SOLICITORS FOR RESPONDENT	N/A
TRIBUNAL MEMBERS:	Senior Member H Robinson
DATES OF HEARING:	2 December 2016