Brunner and Secretary, Department of Family and Community Services

[2005] AATA 838

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 838

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2005/255

GENERAL ADMINISTRATIVE DIVISION

Re:         PETER BRUNNER

Applicant

And:       SECRETARY,
  DEPARTMENT OF FAMILY AND

COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       G.D. Friedman, Senior Member

Date:             31 August 2005

Place:            Melbourne

Decision:The Tribunal affirms the decision under review. 

(sgd) G.D. Friedman
  Senior Member

SOCIAL SECURITY - claim for age pension - assets of private companies - whether assets exceeded allowable limit

Administrative Appeals Tribunal Act 1975 ss 34J, 37

Social Security Act 1991 ss 11(1), 55, 1064, 1122, 1207, 1207N, 1207Q, 1207X

REASONS FOR DECISION

31 August 2005  G.D. Friedman, Senior Member

1.      This is an application by Peter Brunner (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 20 January 2004.  The SSAT affirmed a decision of an authorised review officer of Centrelink dated 19 November 2003 to refuse the applicant’s claim for age pension on the basis that his combined assets exceeded the allowable limit.

2. Under s 34J of the Administrative Appeals Tribunal Act1975 (the AAT Act) and with the consent of the parties, the Tribunal decided to review the decision by considering the documents or other material lodged with the Tribunal and without holding a hearing.

3. The Tribunal received into evidence the documents lodged under s 37 of the AAT Act (T1-T23).

BACKGROUND

4.      On 26 June 2003 the applicant advised Centrelink of an intention to claim age pension.  On 30 June 2003 he lodged a claim for himself and his wife.  During the assessment period the applicant and his wife had majority shareholdings in several private companies and loans in respect of the companies.

5.      On 9 October 2003 Centrelink refused the applicant's claim.  On 19 November 2003 an authorised review officer affirmed the decision.  On 4 October 2004 the applicant sought review by the SSAT.  The SSAT affirmed Centrelink's decision on 20 January 2005.  On 30 March 2005 the applicant lodged an application with the Tribunal for review of the SSAT decision.

6.      The issue before the Tribunal is whether the applicant’s combined assets exceeded the allowable limit for payment of age pension.

EVIDENCE

7.      The applicant listed his involvement in the following companies, as set out in the T documents:

·Specialty Tours International (Australia) (STI Australia)

·Specialty Tours International (USA) (STI USA)

·Specialty Tours International (Japan) KK (STI Japan)

8.      The Tribunal was provided with a copy of the applicant's Centrelink file, including copies of e-mails between the applicant and various Centrelink officers, computer entries and copies of various records of the applicant's companies.  The applicant also corresponded with the Tribunal by e‑mail.  In the numerous items of correspondence to Centrelink, the SSAT and the Tribunal the applicant stated that Centrelink had confused the original financial details provided by him and that its calculations were incorrect, particularly regarding loans by him to the respective companies.  

CONSIDERATION OF THE ISSUES

9. Section 55 of the Social Security Act 1991 (the Act) provides that the rate of age pension is calculated in accordance with the rate calculator in s 1064 of the Act, using the lower of the income and assets tests. Section 11(1) of the Act provides that assets includes money and property. Section 1122 of the Act provides that loans which have been made by a person, but not repaid, must be included in the person’s assets.

10. Section 1207 of the Act sets out the circumstances in which the assets of a company can be attributed to a person. Section 1207N provides:

1207N.(1)   For the purposes of this Part, a company is a designated private company at a particular time if:

(a)the company satisfies at least 2 of the following conditions in relation to the last financial year that ended before that time:

(i)the consolidated gross operating revenue for the financial year of the company and its subsidiaries is less than $10 million;

(ii)the value of the consolidated gross assets at the end of the financial year of the company and its subsidiaries is less than $5 million;

(iii)the company and its subsidiaries have fewer than 50 employees at the end of the financial year; or

(b)the company came into existence after the end of the last financial year that ended before that time; or

(c)the company is a declared private company (see subsection (2));

and the company is not an excluded company (see subsection (5)).

Section 1207Q of the Act sets out the control test to be applied to a private company. Section 1207X of the Act sets out the asset attribution percentage in relation to a controlled private company.

11.     In its statement of facts and contentions dated 2 August 2005 the respondent submitted that during the assessment period (June to September 2003) the applicant had a low income but substantial assets.  Therefore, the assets test was the appropriate method to be used.   The respondent stated that the allowable asset limit for a person who is partnered and is a non-homeowner was $567,500.  The respondent said that the applicant and his wife had combined loans to STI (Australia) valued at $282,286 and to STI (USA) valued at $277,371.

12.     In reaching its decision the Tribunal takes into account the written material, including the submissions made by the parties.

13.     The Tribunal accepts the respondent’s submission that at the relevant time the applicant was a partnered non-homeowner, and that the loans to STI Australia and to STI USA were assets to be taken into account in the applicant’s total assets.  The Tribunal finds that STI (Japan) is a designated private company (s 1207N of the Act) and a controlled private company (s 1207Q of the Act), in that the applicant satisfies the control test.  The Tribunal also finds that the applicant is an attributable stakeholder with an asset attribution percentage of 90 per cent (s1207X of the Act).

14.     The Tribunal has examined the financial details provided by the applicant, including amounts listed for the companies, and finds that the assets of the companies include:

·STI (Australia):  assets valued at $282,286.03 (loans of $278,017 from the applicant and $4296.03 from the applicant’s wife);

·STI (USA):  (applicant is the sole shareholder): assets valued at $277,371.00 (loans of $227,606.00 from the applicant and $49,765.00 from the applicant’s wife);

·STI (Japan):  (applicant is 90 per cent shareholder and owns 18,000 shares; wife is 10 per cent shareholder and owns 2000 shares): assets valued as follows:

Assets:  $223,490      loan to applicant

$75,000      value of ski lodge

Total assets:                   $298,490

Liabilities:  $91,040      loans owed by Y. Nishidera

$97,253      loans owed by Mr McMartin

Total liabilities:                 $188,293

Assets less liabilities:      $298,490 - $188,293 = $110,197

90% of $110,197 = $99,177.30

15.     The Tribunal (mentioned in para 13) finds that the applicant’s combined assets at the relevant time were:

$99,177.30(90% of $110,197: STI Japan)

$282,286.00(loans from the applicant and his wife to STI Australia)

$277,371.00    (loans from the applicant and his wife to STI USA)

Total assets:                   $658,834.30

16.     The Tribunal finds that the calculations made by Centrelink were correct and that the total assets exceeded the allowable limit for age pension.

DECISION

17.     The Tribunal affirms the decision under review.

I certify that the seventeen [17] preceding paragraphs are a true copy of the reasons for the decision of:

G.D.Friedman, Senior Member

(sgd)       Catherine Thomas

Clerk

Date of hearing:  Nil: decision on the papers 
Date of decision:  31 August 2005
Advocate for the applicant:          Self-represented
Advocate for the respondent:       Ms E. King, Centrelink