Barron and Secretary, Department of Social Services (Social services second review)

[2017] AATA 1039

Barron and Secretary, Department of Social Services (Social services second review) [2017] AATA 1039 (8 June 2017)

Division:GENERAL DIVISION

File Number:           2016/6820

Re:Ronald Barron

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:N Gaudion, Member

Date:8 June 2017

Date of written reasons:        6 July 2017

Place:Sydney

The decision under review is affirmed. 

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

N Gaudion, Member

CATCHWORDS

SOCIAL SECURITY – asset-test exempt income stream – provision of actuarial certificate out of time – application of guidelines – whether actuarial certificate was certified no later than 26 weeks after the beginning of the relevant financial year – whether actuarial certificate was provided to the Respondent no later than 29 weeks after the beginning of the relevant financial year - whether to apply discretion to depart from guidelines – decision affirmed

LEGISLATION

Social Security Act 1991 (Cth) s 9A

SECONDARY MATERIALS

Social Security (Actuarial Certificate – Lifetime Income Stream Guidelines) Determination 2012

Social Security (Actuarial Certificate – Lifetime Income Stream Guidelines) Determination 2012, Explanatory Statement

WRITTEN REASONS FOR ORAL DECISION

N Gaudion, Member

6 July 2017

1. At the conclusion of the hearing of this matter heard on 8 June 2017, the terms of the decision intended to be made and the reasons for that decision were given orally. The Tribunal served both parties with a copy of the order outlining the decision that was made shortly after. On 8 June 2017 the Respondent, pursuant to section 43(2A) of the Administrative Appeals Tribunal Act1975 (Cth), requested the Tribunal provide written reasons for its decision. The written reasons are set out below.

   INTRODUCTION

2. The applicant seeks review of a decision of the Social Services and Child Support Division of the Administrative Appeals Tribunal (“SSCSD”) made on 8 November 2015. The SSCSD affirmed a decision made by the Department of Social Services (“the Secretary”) on 10 February 2016, affirmed by an Authorised Review Officer on 5 April 2016, that the applicant had not satisfied the conditions in section 9A(1)(b) of the Social Security Act 1991 (Cth) (“the Act”) with the result that the applicant’s income stream lost its asset-test exempt status from 1 January 2016.

3. The facts in this matter are largely agreed.  The relevant facts are that the applicant was a member of a self-managed super fund.  The self-managed super fund held an asset-test exempt income stream.  In order to maintain the asset-test exempt status the fund must obtain and provide to the Secretary an actuarial certificate within certain time limits.  The fund obtained an actuarial certificate.  The actuarial certificate was dated 7 January 2016 and was provided to the Secretary on 9 January 2016.

   ISSUE

4. The issue in this matter is whether or not the actuarial certificate dated 7 January 2016 is sufficient to satisfy the Secretary that the income stream should remain an asset-test exempt income stream. The relevant basis for doing so can be found under section 9A(1A) of the Act or, alternatively, under section 9A(5).

5. Relevantly, the Secretary has made a determination that provides guidelines, namely the Social Security (Actuarial Certificate – Lifetime Income Stream Guidelines) Determination 2012 (“the Guidelines”). The Secretary has the power to determine the Guidelines under sections 9A(1B) and 9A(6) of the Act. The Secretary has determined the Guidelines under both 9A(1B) and 9A(6) of the Act.

6. In respect of the Guidelines the relevant parts are parts 2.1(2) and 2.3(2).

7. Part 2.1(2) of the Guidelines states:

   …

   (2)The actuarial certificate required to be provided to the Department of Human Services by the person or the trustee of the fund under subsection (1) must:

   …

   (b)  be certified no later than 26 weeks after the start of the financial year to which it applies and [emphasis added] be provided to the Department of Human Services no later than three weeks after the end of that 26 week period;

8. It was submitted on behalf of the applicant that there were two separate tests.  The first test being that certification is to occur within 26 weeks and the second test being that the certificate is to be provided to the Secretary within 29 weeks (being three weeks after the 26 week period).  Whilst it was submitted that either of those tests could be satisfied, the Tribunal does not accept this as the Guidelines clearly state “and” not “or” and, accordingly, the certificate must comply with both of the requirements in part 2.1(2)(b) of the Guidelines.

9. Part 2.3(2) of the Guidelines, in reference to an actuarial certificate provided or provided late, states:

   …

   (2)Despite subsection 2.3(1) if an actuarial certificate in relation to a financial year is not: [emphasis added]

   (a)certified under section 1.2(1) or subsection 2.2(1) within 26 weeks beginning on 1 July of that financial year, or [emphasis added]

   (b)provided to the Department of Human Services by the person or the trustee of the fund under subsection 2.1(1) or subsection 2.2(1) within 29 weeks beginning on 1 July of that financial year,   

   then paragraph 9A(1)(b) of the Act is considered to be not satisfied and the income stream is to be determined to be an asset tested income stream (long term).

10. It was submitted on behalf of the applicant that the certificate would only not meet the requirements of the Guidelines if both of those tests could not be satisfied. This is not accepted as the Guidelines clearly state “or” not “and” meaning that if either test was not satisfied, the Guidelines would not be satisfied. Therefore section 9A(1)(b) of the Act is not satisfied and that the income stream is not an asset-test exempt income stream.

11. It was also asserted on behalf of the applicant that the 29 week rule should be the more important of the two requirements. In this respect I refer to the Explanatory Statement for the Guidelines where it states,

    The determination replaces the Social Security (Actuarial Certificate - Lifetime Income Stream Guidelines) Determination 2003 (the 2003 Determination).  The Determination includes a number of changes to the 2003 Determination, generally to simplify and consolidate the form of the Determination but also include:

    ·     New provisions requiring that the actuarial certificates be certified no later than 26 weeks after the start of the relevant financial year;

    ... [original emphasis]

12. The Explanatory Statement clearly states that the Guidelines includes a number of changes to the 2003 Determination, and specifically notes that there are new provisions requiring that the actuarial certificates be certified no later than 26 weeks after the start of the relevant financial year. As a highlighted change to the 2003 guidelines, the date of the certification should be seen as an important consideration.

13. Therefore, in considering the Guidelines and the Explanatory Statement, the need to have the actuarial certificate certified no later than 26 weeks after the start of the financial year to which it applies is of critical importance. In respect to this matter, the actuarial certificate is dated 7 January 2016. The date of the certificate is considered to be the date the income stream is certified. As the certificate is dated more than 26 weeks from 1 July 2015 it does not satisfy the requirements of the Guidelines. Therefore, the relevant income stream would not be an asset-test exempt income stream.

    APPLICANT’S SUBMISSIONS

14. The applicant made five separate submissions and I will deal with each of those.

    First Submission: compliance with legislation

15. The First Submission is that section 9A(1)(b) of the Act requires the Secretary to be satisfied that there is in force a current actuarial certificate and that, at all relevant times the Department were concerned to consider the Applicants circumstances, the actuarial certificate was in effect.

16. Section 9A(1)(b) of the Act is subject to section 9A(1B) which allows the Secretary to determine guidelines, therefore the Guidelines should be considered. The Guidelines specify the date certified as a relevant consideration.

17. The certificate dated 7 January 2016 does not meet the requirements of the Guidelines and therefore the Secretary cannot be satisfied that there was a current actuarial certificate in force at any date after 26 weeks from 1 July 2015.

    Second Submission: compliance with the Guidelines

18. The applicant’s Second Submission is that the Guidelines have been complied with. As stated previously, the Guidelines have not been complied with because the actuarial certificate was dated later than 26 weeks after 1 July 2015.

    Third Submission: a certificate was in effect at all relevant times

19. The Third Submission is that the applicant had complied with section 9A(1)(b) of the Act because at all times the certificate was in effect. It is the applicant’s submission that as the period of the certificate is from 1 July 2015 and, together with actuarial certificates of previous years, there was no period in which the pension was not covered by a certificate.

20. As stated above in respect to the First Submission, section 9A(1)(b) of the Act is subject to section 9A(1B) which allows the Secretary to determine guidelines, therefore the Guidelines should be considered. The Guidelines specify that the date certified as a relevant consideration.

21. The certificate dated 7 January 2016 does not meet the requirements of the Guidelines and therefore the Secretary cannot be satisfied that there was a current actuarial certificate in force at any date after 26 weeks from 1 July 2015.

    Fourth Submission: discretion to accept the actuarial certificate

22. The Fourth Submission is that, even though there are guidelines in place, the Secretary can consider another method by which to satisfy him or herself or otherwise apply a discretion to determine there is in force a current actuarial certificate.

23. Whilst it is not accepted that that is the appropriate course, in the event that there is the ability to depart from the Guidelines or to apply an exercise of discretion, in the circumstances of this matter there are not sufficient grounds to depart from the Guidelines or to exercise a discretion. The reasons for this will be set out shortly.

24. The first four submissions all relate to section 9A(1b) of the Act.

    Fifth Submission: further discretion of the Secretary

25. The Fifth Submission relates to section 9A(5) of the Act. The applicant asserts that section 9A(5) of the Act expressly provides for a discretion within the Department and all that need be done to exercise that discretion is that the Secretary do so in writing.

26. Section 9A(5) of the Act states:

    (5)The Secretary may determine, in writing, that an income stream is an asset-test exempt income stream for the purposes of this Act.  In making the determination, the Secretary is to have regard to the guidelines (if any) determined under subsection (6).

27. Therefore, regard must be had to any guidelines and, as the Guidelines have been determined under section 9A(6), the Guidelines must be considered. As previously stated, the certificate did not meet the requirements of the Guidelines.

28. It was asserted as part of the applicant’s Fifth Submission that the Secretary has a discretion that is independent of the Guidelines. The Tribunal does not accept that section 9A(5) allows for the Secretary to apply its discretion independently to the Guidelines. However, as with the Fourth Submission, in the event that there is the scope for the Secretary to apply discretion, there would need to be a departure from the Guidelines and a separate exercise of discretion.

29. The key reasons submitted by the applicant for a departure from the Guidelines or exercise of discretion that had not been raised as part of the earlier submissions were effectively that:

    ·the fund had previously complied with the requirements of the Guidelines and the relevant legislation; and

    ·the fund and/or the applicant were not fully aware of its obligations and no professional advisor had advised the Applicant and/or the trustees of the superannuation fund that actuarial certification was required within 26 weeks of 1 July 2015.

30. The Tribunal does not consider a lack of awareness or reliance on professional advisors as sufficient grounds to depart from the Guidelines or to exercise any discretion in the circumstances of this matter.

31. Therefore the decision under review is affirmed.

I certify that the preceding 31 (thirty-one) paragraphs are a true copy of the reasons for the decision herein of N Gaudion, Member

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Associate

Dated: 6 July 2017

Date of hearing:	8 June 2017
Counsel for the Applicant:	Mr M Bennett
Solicitors for the Applicant:	Ms E Munro, Munro Lawyers
Solicitors for the Respondent:	Dr S Thompson, Department of Human Services