Au and Repatriation Commission (Veterans' entitlements)
[2021] AATA 2166
•7 July 2021
Au and Repatriation Commission (Veterans' entitlements) [2021] AATA 2166 (7 July 2021)
Division:VETERANS APPEALS DIVISION
File Number(s): 2019/1531 and 2019/1849
Re:Xuong Au & Mai Le
APPLICANT
AndRepatriation Commission
RESPONDENT
DECISION
Tribunal:The Hon. John Pascoe AC CVO, Deputy President
Date:7 July 2021
Place:Sydney
The correct or preferable decision is to affirm the Respondent’s determination dated 10 December 2018 in relation to the delegate’s decision as to the appropriate rate of the Applicants’ service pensions from 31 October 2013 to 16 July 2018. The Tribunal does not have the power to review the determination dated 10 December 2018 in relation to overpayment under s 205 of the Veterans Entitlements Act 1986 (Cth).
.............................[SGD]...........................................
The Hon. John Pascoe AC CVO, Deputy President
CATCHWORDS
VETERANS’ AFFAIRS – service pension – recovery of overpayment – rate of payment reduced – obligation to notify Repatriation Commission of certain event or change of circumstances – jurisdiction question – whether the Tribunal has jurisdiction to review decisions in respect of overpayment under s 205 of Veterans’ Entitlements Act 1986 (Cth) – no jurisdiction found in respect of overpayment – whether correct method of calculation applied in reducing service pension rate of payment – correct method applied – decision affirmed
LEGISLATION
Social Security Act 1991 (Cth)
Veterans’ Entitlements Act 1986 (Cth), ss 56B, 57, 205
CASES
Nelson and Repatriation Commission [2007] AATA 1069; (2007) 94 ALD 418
SECONDARY MATERIALS
You and Your Pension (2020 Edition), Department of Veterans’ Affairs
REASONS FOR DECISION
The Hon. John Pascoe AC CVO, Deputy President
7 July 2021
BACKGROUND
The Applicants in this matter are a husband and wife, Mr Xuong Au and Ms Mai Le, who submitted separate applications to the Tribunal on 20 March 2018 and 2 April 2019 respectively. The subject of both applications was a determination made by the Respondent dated 10 December 2018 and the Tribunal heard both matters together.
The Applicants seek review of a determination issued by the Respondent dated 10 December 2018, which reviewed under s 57A of the Veterans’ Entitlements Act 1986 (Cth) (‘VEA’) and affirmed a decision of the delegate of the Repatriation Commission to reduce the rate of the Applicants’ service pension.
The Respondent’s determination of 10 December 2018 also found the resultant overpayment, totalling $22,029.96 ($11,014.98 each), represents an amount to which the Applicants were not entitled to receive and is recoverable under s 205 of the VEA.
The facts that gave rise to the Respondent’s determination can be summarised briefly as follows.
On 15 September 2009, the Mr Au applied for a service pension. Mr Au was determined to be an Allied Veteran.
On 4 February 2010, the Applicants were advised of their eligibility for the service pension, which was assessed on the basis of the income test, using the income and assets as listed in an attachment to that correspondence.
In the correspondence of 4 February 2010, the Applicants were advised of their obligations to tell the Respondent of changes to their circumstances, income and assets under s 54 of the VEA.
On 16 December 2017, the Applicants signed a DVA “Review of Personal & Financial Circumstances” form (‘Review Form’). The form detailed the Applicants’ responses to questions about their current income and assets.
On 13 March 2018, the Respondent advised the Applicants that their service pensions had been re-assessed and reduced in light of information provided in the Review Form, and that this would take effect (prospectively) from 27 March 2018 onwards. The rates for each of the Applicants going forward were as follows:
(a)For 29 March 2018: $577.42 per fortnight (with $516.47 being the service pension component).
(b)For 12 April 2018: $439.16 per fortnight (with $377.86 being the service pension component).
The Applicants were advised that their case had been referred for investigation of a possible overpayment, and that they would be advised further in due course.
On 1 August 2018, the Applicants were notified of the assessment of an overpayment for the period of 31 October 2013 to 16 July 2018. The letter explained:
… your Service Pension was reduced on 13 March 2018 from $520.81 each per fortnight to $377.86 each per fortnight with effect from 27 March 2018. You were notified of this reduction to your pension by our letter dated 13 March 2018.
Your file was then referred to the Debt Management Unit to establish when the increase in business income had occurred. Historical financial records have now been obtained from financial institutions and the ATO, and it has been confirmed that your account balances and business income were higher than you had previously advised the Department.
The overpayment in respect of each Applicant was calculated as being $11,014.98.
On 31 August 2018, Mr Au wrote to the Respondent and asked about the method used to calculate the overpayment. He stated he disagreed with the calculations of the overpayment in the calculation sheet.
On 29 November 2018, the Respondent accepted the email from Mr Au above as a request for review.
On 10 December 2018, the Respondent issued a determination which relevantly reviewed under s 57A of the VEA and affirmed a decision of the delegate of the Repatriation Commission to reduce the rate of the Applicant’s service pension.
It additionally found the resultant overpayment totalling $22,029.96 ($11,014.98 per Applicant) represents an amount to which the Applicants were not entitled to receive and is recoverable under s 205 of the VEA.
On 20 March 2019, an Application for Review of Decision was lodged with the Tribunal. Mr Au stated:
There are 3 parts in the calculation data sheet that are miscalculated:
1) There should not be deduction of asset test deemed value to add to income for income test
2) Correction of asset total on 20/3/2015 of $185,576 to $137,351.00
3) Recalculation of over payment from $22,029.96 to $10,603.26
The Applicants’ Tribunal Application proceeded to a hearing on 25 September 2019 and 19 December 2019.
On 30 June 2020, the Tribunal found it did not have jurisdiction to deal with the matter and dismissed the application for review.
The Applicants appealed to the Federal Court, and by consent of the parties, the appeal was allowed, and the matter was remitted to the Tribunal to be re-determined according to law.
The consent orders filed in the Federal Court noted:
The Second Respondent erred in determining that it did not have jurisdiction to review the Reviewable Decision by failing to characterise, and correctly characterise, the nature of the decision under review as including a determination as to the appropriate rate of the service pension over the period specified, but rather as being only a decision as to “overpayments”. The First Respondent maintains to the extent that the Second Respondent found that it did not have jurisdiction in relation to the question of the overpayment, including as to the raising and recovery of the overpayment, there was no error.
The relevant authorities emphasise the need to properly characterise the decision under review and the relevant power being exercised. While a decision to recover an overpayment under s 205 of the VEA may not be reviewable, the antecedent decision to reduce the rate of a service pension over a particular period of time is a decision made under the power impliedly conferred by s 56B of the VEA and does fall within the jurisdiction of the Tribunal: see, for. Example, Nelson and Repatriation Commission [2007] AATA 1069; (2007) 94 ALD 418 at [3], [33], [36], [62], [67], [70]-[73]; Moretti and Repatriation Commission [2008] AATA 1067; (2008) 49 AAR 315 at [9]-[11], [16]; Rayfield and Repatriation Commission [2014] AATA 772 at [3], [4], [8]; and Gault and Repatriation Commission [2016] AATA 622 at [42], [43] and [47].
Both the Reviewable Decision and the matters agitated by the Applicants concerned the reduced rates at which the service pensions were assessed over the period of 31 October 2013 to 16 July 2018.
In summary, the First Respondent accepts that, in erring in the manner described in paragraph [2] above, the Second Respondent failed to exercise its jurisdiction to review the Reviewable Decision, insofar as that decision comprised as an element of it, a decision to reduce the rate of the service pension payable to the Applicants for the period of 31 October 2013 to 16 July 2018 pursuant to and in connection with s 56B of the VEA, being a reviewable decision in light of ss 57(2)(c), 57B and 175(2) of the VEA.
ISSUES FOR DETERMINATION
Whether the Tribunal should affirm the determination of 10 December 2018 as to the appropriate rate of the Applicants’ service pension for the period 31 October 2013 to 26 July 2018 or remit the matter to the Respondent for recalculation.
A further issue raised is whether the Tribunal has jurisdiction to review the determination dated 10 December 2018, insofar as it relates to the recovery of an overpayment under s 205 of the VEA.
THE LAW
Jurisdiction and Overpayment Issue
Division 16 of Part IIIB of the VEA concerns “Review of Decision” and provides for claimants to seek internal review of certain decisions. Within this division, s 57(2) addresses the question of internal review by the Commission and relevantly provides:
s57(2) A person who is dissatisfied with a decision of the Commission:
(a) cancelling or suspending a service pension, income support supplement or
a veteran payment; or
(b) terminating the suspension of a service pension, income support
supplement or a veteran payment; or
(c) reducing or increasing the rate of a service pension, income support
supplement or a veteran payment; or
(d) refusing a request for an increase in the rate of a service pension, income
support supplement or a veteran payment; or
(e) in relation to a request under section 52Y (financial hardship);
may request the Commission to review the decision.
Section 57B of the VEA deals with the Commission’s powers on internal review and provides:
(1) If the Commission reviews a decision under this Division, the Commission must affirm the decision or set it aside.
(2) If the Commission sets the decision aside it must, subject to subsection (3),
substitute a new decision in accordance with this Act.
(3) If the decision set aside is:
(a) a decision to cancel, suspend or reduce the rate of a service pension, income support supplement or a veteran payment under section 56D or 56E; or
(b) a decision to increase the rate of a service pension, income support
supplement or a veteran payment under section 56C; the Commission need not substitute another decision.
Part X of the VEA concerns “Review of Decisions by Administrative Appeals Tribunal” and s 175 governs the kinds of decisions that can be reviewed by the Tribunal. Subsection 175(2) provides:
(2) Where the Commission, under section 57B, affirms a decision of the Commission referred to in section 57 or sets it aside and substitutes another decision for it, a person may apply to the Administrative Appeals Tribunal for a review of the decision so affirmed or substituted.
Section 205 is concerned with the recovery of overpayments and it relevantly provides in s 205(1)(a):
(1) This section applies where:
(a) in consequence of a false statement or representation, or of a failure or omission to comply with this Act, the regulations or any other legislative instrument made under this Act, an amount has been paid by way of pension, allowance or other pecuniary benefit under this Act that would not have been paid but for the false statement or representation or but for the failure or omission; …
Reduction of pension issue
The VEA provides for the grant of service pensions to certain veterans and their spouses or partners.
Section 36 of the VEA provides a person is eligible for an age service pension if the person is a veteran, has rendered qualifying service and has reached pension age.
Section 36N of the VEA provides that a veteran’s age service pension rate is worked out in accordance with the Rate Calculator. It provides:
A veteran's age service pension rate is worked out in accordance with the Rate Calculator.
Note 1: Module A of the Rate Calculator establishes the overall rate calculation process and the remaining Modules provide for the calculation of the component amounts used in the overall rate calculation process.
Note 2: The rate obtained by applying the Rate Calculator may be reduced because of the receipt of payments under the New Enterprise Incentive Scheme (see Division 9 of Part IIIB).
The Rate Calculator is defined under section 5Q to mean the Rate Calculator in Part 2 of Schedule 6 of the VEA.
The Rate Calculator provides a method for working out the service pension rate. In basic terms, it relevantly provides the following process:
(a)calculate the ‘maximum payment rate’ for a service pension pursuant to steps 1 to 4 of the Method Statement 1 in Module A1 of Schedule 6;
(b)subtract from the maximum payment rate an amount derived by applying the income test in Module E of Schedule 6, the ‘reduction for ordinary/adjusted income’. The resulting amount is the ‘income reduced rate’;
(c)subtract from the maximum payment rate an amount derived by applying the assets test in Module F of Schedule 6, the ‘reduction for assets’. The resulting amount is ‘the assets reduced rate’;
(d)compare the income reduced rate and the assets reduced rate. The lower of the two rates is the ‘provisional payment rate’; and
(e)the provisional payment rate ordinarily becomes the rate of service pension.
Module E of schedule 6 outlines the ordinary/adjusted income test (income test).
Module F of schedule 6 outlines the asset test (asset test).
When applying the Rate Calculator to the Applicants’ claim the income test provided the lower rate, as opposed to the asset test.
The income test is outlined at Module E of schedule 6 in a method statement. It requires at step 1 to ‘work out the annual rate of the person’s ordinary/adjusted income’. It provides the following:
Note 2: The application of the ordinary/adjusted income test is affected by provisions about the following:
(a) the general concept of ordinary income (sections 46 and 46A);
(aa) the work bonus (section 46AA);
(b) business income (sections 46B and 46C);
(c) income from financial assets (including income streams (short term) and certain income streams (long term)) (Division 3 of Part IIIB);
(d) income from income streams not covered by Division 3 of Part IIIB (Division 4 of Part IIIB);
(e) disposal of income (sections 48- 48E).
Section 46 of the VEA provides in relation to the general meaning of ordinary income:
A reference in this Act to a person's ordinary income for a period is a reference to the person's gross ordinary income from all sources for the period calculated without any reduction, other than a reduction under Division 2.
Note 1: For ordinary income see subsection 5H(1).
Note 2: For other provisions affecting the amount of a person's ordinary income see section 46AA (work bonus), sections 46B and 46C (business income), Division 3 (income from financial assets (including income streams (short term) and certain income streams (long term)) and Division 4 (income from income streams not covered by Division 3).
Section 5H of the VEA provides the following income test definitions:
(1) In this Act, unless the contrary intention appears:
“adjusted income” in relation to a person for the purpose of assessment of the rate of income support supplement, means the sum of:
(a) the person's ordinary income; and
(b) a payment that is disability pension under paragraph (d) of the definition of disability pension in section 5Q payable to the person;
(c) any instalment of pension payable to the person under subsection 30(1); and
(ca) if compensation under section 233 of the MRCA is payable to the person and the person has not made a choice under section 236 of the MRCA--any payment of the weekly amount mentioned in paragraph 234(1)(b) of the MRCA; and
(cb) if compensation under section 233 of the MRCA is payable to the person and the person has made a choice under section 236 of the MRCA—any weekly amount mentioned in paragraph 234(1)(b) of the MRCA that the person would have been paid if the person had not made that choice; and
(d) any instalment of pension that is payable to the person under the law of a foreign country and is, in the opinion of the Commission, similar in character to the pension referred to in paragraph (c).
Section 46E provides the following in relation to deemed income from financial assets (members of a couple):
(1) This section applies to the members of a couple.
(2) If one or both of the members of a couple have financial assets, the members of the couple are taken, for the purposes of this Act, to receive together ordinary income on those assets in accordance with this section.
(3) This is how to work out the ordinary income that the couple is taken to receive:
Method statement
Step 1. Calculate the total value of the couple's financial assets and compare it with the couple's deeming threshold.
Note 1: For financial assets see subsection 5J(1).
Note 2: For deeming threshold see subsection 46H(2).
Step 2. This step applies only if the total value of the couple's financial assets is equal to or less than the couple's deeming threshold. Multiply the total value of the financial assets by the below threshold rate. The result represents the ordinary income that the couple is taken to receive per year on their financial assets.
Note: For below threshold rate see subsection 46J(1).
Step 3. This step applies only if the total value of the couple's financial assets is higher than the couple's deeming threshold. Work out the couple's deemed income as follows:
(a) multiply the deeming threshold by the below threshold rate;
(b) subtract the deeming threshold from the total value of the couple's assets;
(c) multiply the remainder by the above threshold rate;
Note: For above threshold rate see subsection 46J(2).
(d) add up the amounts worked out at paragraph (a) and (c): the result represents the ordinary income that the couple is taken to receive per year on their financial assets.
Section 5J(1) provides:
financial asset means:
(a) a financial investment; or
(b) a deprived asset.
Note: For deprived asset see subsection 5J(2B).
financial investment means:
(a) available money; or
(b) deposit money; or
(c) a managed investment; or
(d) a listed security; or
(e) a loan that has not been repaid in full; or
(f) an unlisted public security; or
(g) gold, silver or platinum bullion; or
(h) an asset-tested income stream (short term); or
(i) an asset-tested income stream (long term) that is an account-based pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994; or
(j) an asset-tested income stream (long term) that is an annuity (within the meaning of the Superannuation Industry (Supervision) Act 1993) provided under a contract that meets the requirements determined in an instrument under subsection (1G);
but does not include an investment in an FHSA (within the meaning of the First Home Saver Accounts Act 2008) or a designated NDIS amount.
Note: For loan see subsections (2) and (2A).
Section 46H of the VEA states in relation to the deeming threshold:
(1) The deeming threshold for a person who is not a member of a couple is $30,000.
(2) The deeming threshold for a couple is $50,000.
Note: The amounts fixed by subsections (1) and (2) are indexed every 1 July. See sections 59A to 59C.
Section 46 of the VEA states:
46J Below threshold rate, above threshold rate
(1) For the purposes of this Division, the below threshold rate is the rate that is the below threshold rate for the purposes of Division 1B of Part 3.10 of the Social Security Act.
(2) For the purposes of this Division, the above threshold rate is the rate that is the above threshold rate for the purposes of Division 1B of Part 3.10 of the Social Security Act.
46K Actual return on financial assets not treated as ordinary income
(1) Subject to subsection (2), any return on a financial asset that a person actually earns, derives or receives is taken, for the purposes of this Act, not to be ordinary income of the person.
(2) If, because of:
(a) a determination under subsection 46L(1); or
(b) the operation of subsection 46L(1A);
a financial investment is not to be regarded as a financial asset for the purposes of section 46D or 46E, subsection (1) of this section does not apply to any return on the investment that the person actually earns, derives or receives.
Division 1B of Part 3.10 of the Social Security Act 1991 (Cth) provides as follows:
1077 Deemed income from financial assets—members of pensioner couples
(1) This section applies to the members of a pensioner couple.
(2) If one or both of the members of a couple have financial assets, the members of the couple are taken, for the purposes of this Act, to receive together ordinary income on those assets in accordance with this section.
(3) If the total value of the couple’s financial assets is equal to or less than the couple’s deeming threshold, the ordinary income the couple is taken to receive per year on the financial assets is the amount worked out by multiplying the value of those assets by the below threshold rate.
(3A) If the total value of the couple’s financial assets exceeds the couple’s deeming threshold, the ordinary income that the couple is taken to receive is worked out as follows:
Method statement
Step 1. Multiply the couple’s deeming threshold by the below threshold rate.
Note 1: For deeming threshold see subsection 1081(2).
Note 2: For below threshold rate see subsection 1082(1).
Step 2. Subtract the deeming threshold from the total value of the couple’s financial assets.
Note: For deeming threshold see subsection 1081(2).
Step 3. Multiply the remainder worked out at Step 2 by the above threshold rate.
Note: For above threshold rate see subsection 1082(2).
Step 4. The total of the amounts worked out at Steps 1 and 3 represents the ordinary income the couple is taken to receive per year on the financial assets.
(4) Each member of the couple is taken, for the purposes of this Act, to receive, as ordinary income during each week, an amount worked out under the following formula:
Amount calculated under subsection (3) or (3A) x 0.5
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The Department of Veteran’s Affairs has published a booklet entitled “You and Your Pension” (2020 Edition), which sets out in detail how the rate of a service pension is to be determined.
EVIDENCE
A number of documents were put into evidence including the following:
(a)The Review Form dated 16 December 2017 (T7);
(b)2017 Income Tax return from Mr Xuong Au, Mrs Mai Thai Le and Letter from TIF accounting service (T10);
(c)Letter from Australian Super dated 29 March 2018 (T14);
(d)Response from Commonwealth Bank Account Summary for Mai Le (T16);
(e)Response from Commonwealth Bank Account Summary for Xuong Au (T17);
(f)Response from ATO: Tax return 2014, 2015 & 2016 for Xuong Au (T18);
(g)Response from ATO: Tax return 2014, 2015 & 2016 for Mai Le (T19);
(h)AMP Retirement Savings Account Statement for years 1 July 2011 to 30 June 2012, 1 July 2012 to 30 June 2013 and 1 July 2013 to 30 June 2014;
(i)Booklet, “You and Your Pension” (2020 Edition) Department of Veterans’ Affairs;
(j)Applicants’ Summary Statement dated 19 September 2019 with annexures;
(k)Applicants’ Statement dated 18 December 2019 with annexures;
(l)Account-based Income Streams, Social Security Guide; and
(m)Age Pension - Rate Estimation - Summary Report, 20 March 2021 (yourpension.com.au).
DISCUSSION
Mr Xuong Au appeared on behalf of both himself and his wife, Ms Mai Le, at the hearing and will be referred to as “the Applicant” for the purposes of the discussion. The Applicant said at the hearing that he wanted to be treated “fairly”. He said that he had not wanted to come to the AAT but he felt that his entitlements had been incorrectly calculated, and that although he had made contact with a person at the Department and expected the issues to be dealt with, they were not.
In particular, the Applicant could not understand why the DVA calculation was different to the figures he calculated using the Centrelink calculator which was available on the internet.
The Applicant wanted an explanation from the Department as to why it did not accept his calculation. It is perhaps not surprising that the Applicant was seeking clarification given the complexity of the legislation.
During the hearing, it became clear that the documentary evidence detailed above does not provide any support for the Applicant’s contention that his assets were overstated when calculating the service pension.
In particular, it became clear that the Applicant was confused as to the test to be applied in calculating his pension entitlement. Put simply, there are two alternative tests, namely an income test, or, an assets test. It is not possible to “cherry-pick” parts of each test in order to reach a conclusion.
It is clear from the legislation that benefits must be calculated strictly in accordance with the requirements of either the income test or the assets test. It is not possible to use parts of each test in making a calculation. The test to be used is that which results in payment of the lower rate to the recipient.
In the Applicant’s case, that was, correctly at the time, the income test. All of the items to be included in the income test are set out in the provisions of Part 2 of Schedule 6 of the Act and Schedule E of Schedule 6 of the Act. Income for the purposes of the test includes deemed income from financial assets as specified in Schedule E of Schedule 6 of the Act. Financial assets include cash, bonds and moneys held in superannuation accounts. The family home is not included. Neither the Tribunal nor the Department has the power to alter any element of the test, including deeming provisions or deeming rates, in an individual case. But each is bound by the terms of the legislation, even if the result appears to be unfair in particular cases or circumstances.
The Applicant’s argument as to fairness was very much based around the value of his family home, the mortgage on the home and his superannuation assets. He seemed to argue that the application of the assets test would yield a different result for him. Unfortunately for the Applicant, the Tribunal is only able to review the decision that was made by the delegate on 10 December 2018. Those items particularly referred to as unfair, including the value of the Applicant’s house and mortgage and deeming rates on his superannuation account are clearly within the required elements for calculation of his pension under the income test. The Tribunal has no power to vary the basis upon which the calculations under the relevant test, in this case the income test, are made.
The Tribunal has no power in relation to recovery of an overpayment under section 205 of the Act (see Nelson and Repatriation Commission [2007] AATA 1069; (2007) 94 ALD 418). The task of the Tribunal is to be satisfied that the correct test has been properly applied.
To summarise, it is not the Tribunal’s task to calculate the Applicant’s pension and it has no power to vary the criteria set out in the relevant test in order to arrive at a conclusion the Applicant might see as fair, even though the Tribunal may have some sympathy for the Applicant’s position.
If the Applicant believes that his circumstances have changed, subsequent to the decision under review, he may be able to apply for assessment under the assets test, however this is not a matter for the Tribunal.
DECISION
The correct or preferable decision is to affirm the Respondent’s determination dated 10 December 2018 in relation to the delegate’s decision regarding the appropriate rate of the Applicants’ service pensions from 31 October 2013 to 16 July 2018.
The Tribunal does not have the power to review the determination dated 10 December 2018 in relation to the recovery of overpayment under s 205 of the VEA.
I certify that the preceding 58 (fifty -eight) paragraphs are a true copy of the reasons for the decision herein of The Hon. John Pascoe AC CVO, Deputy President
............................[SGD]............................................
Associate
Dated: 7 July 2021
Date of hearing: 22 April 2021 Date final submissions received: 22 April 2021 Applicant: In person (by Microsoft Teams) Solicitors for the Respondent: Bianca Audsley, Australian Government Solicitor
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