Bernard Hansell v Repatriation Commission

[2007] AATA 28

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 28

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No  V2006/583

VETERANS’       APPEALS      DIVISION		)
Re		BERNARD HANSELL

Applicant

And REPATRIATION COMMISSION

Respondent

DECISION

Tribunal Mr John Handley, Senior Member

Date19 January 2007

PlaceMelbourne

Decision The decision under review is affirmed.

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

John Handley
Senior Member

  

VETERANS’ AFFAIRS – age service pension – applicant is over 60, working fully time and a member of a couple – monies invested in a superannuation fund – income from fund not actually being received – deemed income from fund taken into account when assessing pension rate – decision affirmed

Veterans’ Entitlements Act 1986 (Cth) s5H, s5J, s5J(1B), s5J(1C), s5J(1D), s5QA, s5U, s36, s36N, s46D to s46L, and Schedule 6 Part 2 Module E

Clyne v Deputy Commissioner of Taxation (1981) 35 ALR 567

McQuarie Bank Ltd v Fociri Pty Ltd (1992) 27 NSWLR 203

Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634

Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67

REASONS FOR DECISION

19 January 2006   Mr John Handley, Senior Member

1.      Mr Hansell (the applicant) receives the age service pension (ASP).  When calculating the rate of pension, the respondent deemed that he receives income from a superannuation fund.  He does not receive income from the fund.  The decision to deem income has given rise to these proceedings.

2.      The legislative basis for the decision that has been made by the respondent – which for reasons which will follow I have found should be affirmed – requires a journey through the Veterans’ Entitlements Act 1986 (the Act).

3. Section 36 of the Act is concerned with eligibility of veterans to receive the age service pension. Section 36N directs attention to the Rate Calculator when calculating the rate of pension.  The Rate Calculator is found at Schedule 6 Part 2 Module E.  That provision contains six steps to guide the calculation of pension by regard to a veteran’s ordinary income.  Ordinary income is defined at s5H as income that is not maintenance income or an exempt lump sum. Income is also defined at s5H as either income earned, derived or received for the person’s own use or benefit, or a periodical payment or benefit by way of gift or allowance.

4.      It was the applicant’s case that he did not receive any income within the meaning of this definition, or at all, from his superannuation fund.  In those circumstances he submitted it was wrong to deem income from his superannuation fund.

5.      Mr Douglass on behalf of the respondent, pointed to the Notes which followed the definition of income and ordinary income in s5H. The Notes referred to the provisions of s46D to s46L of the Act which are concerned with the income deemed from financial assets. Authority to have regard to the Notes which follow sections in the Act is found at s5U which provides that Notes are taken to be part of a preceding section.

6.      Section 46E of the Act relevantly applies because the applicant is a member of a couple.  This section provides that if one or both members of a couple have financial assets they are taken to receive ordinary income on those assets.  The remainder of this section is concerned with the method of calculating the ordinary income that the couple is taken to receive.  The methodology of calculation also refers to a deeming threshold which is found elsewhere in the Act.

7.      A financial asset is defined at s5J as meaning a financial investment.  A financial investment is defined at s5J as including a managed investment.  (The monies invested by the applicant, constituting his superannuation fund are a managed investment).  A managed investment is defined at s5J and by application of s5J(1B), a managed investment includes a superannuation fund. Unfortunately for the applicant, s5J(1C) does not apply because it provides that an investment in a superannuation fund is not a managed investment for the purposes of the Act if the investor (the veteran) has not yet turned pension age.  The applicant has turned pension age (s5J(1D)) because he is over 60 years of age (s5QA).

8.      Accordingly, the legislation provides that a financial asset is a financial investment, which includes managed investments which, in turn, include superannuation funds for male persons over the age of 60.  The Act also provides that ordinary income is deemed to be received from the financial asset.

conclusion and reasons for decision

9.      One of the concerns expressed by the applicant was the meaning given to some provisions of the Act which were not consistently applied.  For example, the definition of income at s5H was said to be differently interpreted in the application of s46E. The confusion with respect to differing interpretations of the same word or words within the same Act is not difficult to understand. It has been the subject of discussion in a number of decisions particularly that of Clyne v Deputy Commissioner of Taxation (1981) 35 ALR 567 where at 576 Mason J acknowledged that the appellants had argued that a word appearing in the Income Tax Assessment Act should be accorded the same meaning . . . on the footing that there is a presumption that in a statute the same word is always used with the same meaning, especially when it is used more than once in the same section.  However it is now settled that presumption readily yields to the context.  Later, with respect to the same word, His Honour decided The meaning which the word has in the first paragraph is very much the product of the special context which it is there found.  There is no similar context in paragraph (i). . . .

10.     Interpreting the words income and ordinary income outside context will lead to a misunderstanding of the deeming provisions of the Act.  It is true, as a fact, that the applicant has not received income or ordinary income from his superannuation fund.  He is prohibited from receiving such monies because he continues to work on a full‑time basis.  But s46E is not concerned with the reality of his circumstances.  It is concerned with deeming persons, in his circumstances, as receiving ordinary income for the purposes of calculating the rate of ASP.

11.     It is true, as the applicant also submitted that the word deemed is not defined by the Act.  He sought comfort from a reference to the word in the Macquarie dictionary.  The interpretation in that source was not helpful.  Some persons refer to deeming provisions as legal status being given to a fiction.  More eloquently, Kiefel J in Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67 at paragraph 24 decided Unlike a presumption which may be rebutted by evidence the purpose and effect of a deeming provision is to prevent any attempt by either party to prove the truth.  Her Honour also drew comfort from a decision of Kirby J in the High Court where His Honour decided A deeming provision was a facility to put to rest the disputes which would otherwise arise concerning the facts.  (Refer McQuarie Bank Ltd v Fociri Pty Ltd (1992) 27 NSWLR 203 at 227).

12.     The definition of income and ordinary income within s5H are not applicable with respect to s46E. The context (refer Clyne) of the latter section is the deeming of income, consistent with the heading of the section.  The language of the section records that members of a couple are taken . . . to receive . . . ordinary income . . . . in accordance with this section.  That is to say, the applicant is prevented from proving or relying on the truth of his circumstances because he is deemed (taken) to receive such income (refer Chamberlain).

13.     This review however cannot conclude without some indication from the Parliament as to why as a matter of policy it introduced the deeming provisions.  The Minister for Veterans’ Affairs in a 2^nd Reading Speech to the House of Representatives on 18 September 1996 (when the Veterans’ Affairs Legislation Amendment (Budget Measures) Bill 1996 was being debated said:

Some of the other income support changes in this Bill reflect similar changes being made by Social Security.  The deeming rules will be changed to make them less complex.  The money held as cash or on deposit a deemed interest rate currently five per cent will be applied to the first $2000 for single pensioners and $4000 for couples.  This change will simplify pensioner notification requirements because individuals will no longer need to advise about small interest fluctuations.  This is being perceived as intrusive.  For some pensioners the change will provide an opportunity to increase their overall income.

14.     The provisions with respect to deeming were the subject of debate by both sides of the Parliament in both Chambers.  The Parliament ultimately decided that the amendments would pass.  This review however is not concerned with the policy of the Government or the motivation giving rise to the policy.  That can be the subject of debate elsewhere.  Brennan J, when he was previously the President of this Tribunal, decided in Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 that lawful ministerial policy should be adopted unless there were cogent reasons to the contrary, for example, if the policy would work an injustice in a particular case.  His Honour earlier decided however that it would be manifestly imprudent for the Tribunal to override a ministerial policy . . .

15.     The ministerial policy is clearly reflected by the legislation.  The legislation in the circumstance of this case deems that income from the superannuation fund held by the applicant is to be taken into account in assessing his income for the purposes of calculating the rate of ASP.

16.     The decision under review is affirmed.

I certify that the 16 preceding paragraphs are a true copy of the reasons for the decision herein of:
Mr John Handley, Senior Member

Signed:         .....................................................................................
  Personal Assistant

Date of Hearing  16 January 2007
Date of Decision  19 January 2007
Solicitor for the Applicant          Self Represented
Departmental Advocate            Mr R Douglass