Collins and Secretary, Department of Health and Aged Care (Social services)
[2023] AATA 3733
•15 November 2023
Collins and Secretary, Department of Health and Aged Care (Social services) [2023] AATA 3733 (15 November 2023)
Division:GENERAL DIVISION
File Number(s): 2023/1583
Re:Mr Tom Collins
APPLICANT
AndSecretary, Department of Health and Aged Care
RESPONDENT
DECISION
Tribunal: Senior Member B. Pola
Date: 15 November 2023
Place: Brisbane
Pursuant to section 43(1)(a) of the Administrative Appeals Tribunal Act 1975 (Cth), the Tribunal affirms the decision of the respondent dated 13 January 2023.
.............................[SGD]...........................................
Senior Member B. Pola
Catchwords
AGED CARE – Calculation of home care fees – whether applicant income correctly calculated to
include income tested care fee – where applicant was deemed to have income from savings held
in bank account – where applicant relied on ethical and moral arguments regarding the application
of deeming provisions - statutory calculations correctly applied - Aged Care Act 1997 (Cth) applied
– decision affirmed
Legislation
Administrative Appeals Tribunal Act 1975 (Cth)
Aged Care Act 1997 (Cth)
Social Security Act 1991 (Cth)
Secondary Materials
Ministerial Determination, Aged Care (Subsidy, Fees and Payments) Determination 2014 (Cth)
Social Security Guide
REASONS FOR DECISION
Senior Member B. Pola
15 November 2023
BACKGROUND
The applicant, Mr Tom Collins, applied and was approved for an Aged Care Package under the Aged Care Act 1997 (Cth) (herein referred to as the “Aged Care Act”), which provides the legislative framework setting out funding arrangements for such packages.
The respondent in this application is the Secretary of the Department of Health and Aged Care. On 14 October 2022, the applicant contacted Services Australia (herein referred to as the “Agency”) and requested a review of his income in order to determine his home care fees[1].
[1] Exhibit TR1, T14, page 117.
On 15 October 2022, the Agency notified the applicant of the outcome of their review, informing the applicant of the maximum daily amount of home care fees he was entitled to, based on the applicant’s fortnightly income for the assessment period of 14 October 2022 to 10 February 2023[2].
[2] Exhibit TR1, T1, pages 13 to 16.
On 2 December 2022, the applicant contacted the agency to seek review of the Authorised Review Officer’s (herein referred to as an “ARO”) decision of 14 October 2022[3].
[3] Exhibit TR1, T14, pages 118 to 119.
On 13 January 2023, an ARO from the Agency affirmed the findings of the review of 14 October 2022.[4]
[4] Exhibit TR1, T2, pages 24 to 25. The Tribunal notes that the formal review letter refers to the decision as being from 14 October 2022.
On 5 March 2023, the applicant applied to the Administrative Appeals Tribunal (herein referred to as the “Tribunal”) for review of the respondent’s decision of 13 January 2023.[5]
[5] Exhibit TR1, T1, pages 1 to 9.
The Tribunal notes that on 14 April 2023, the respondent consented to an extension of time, which was granted, for the applicant to lodge an application for review with the Tribunal.
JURISDICTION
Section 85-8 of the Aged Care Act provides the Tribunal with the power to deal with reviewable decisions (as defined per section 85-1), which have been confirmed, varied or set aside pursuant to sections 85-4 or 85-5, by the Secretary upon reconsideration.
Relevant to the present application, section 85-1, Item 46 provides authority for reviewable decisions which relate to a “… determination for the purposes of working out a care recipient’s total assessable income”.
On 2 December 2022, the applicant applied for reconsideration of the determination made with respect to the ARO’s decision, which was affirmed on 13 January 2023. It follows that the decision by the ARO on 13 January 2023 to affirm the 14 October 2022 review decision is the reviewable decision for the purposes of the instant application. Therefore, the Tribunal has jurisdiction to review the application of 5 March 2023.
ISSUE
The issue for the Tribunal to determine is whether the Applicant's home care fees were correctly calculated on 14 October 2022 to include an income tested care fee of $5.22 per day with effect between 14 October 2022 and 10 February 2023.
LEGISLATIVE FRAMEWORK
Division 52D of the Aged Care Act sets out provisions relating to home care fees. Section 52D-1(1) of the Aged Care Act provides that fees charged to a care recipient for, or in connection with, home care provided to the care recipient through a home care service are home care fees.
Section 52D-2 of the Aged Care Act sets out steps used to calculate the maximum daily amount of home care fees, which the Tribunal transposes:
“… Home care fee calculator
Step 1. Work out the basic daily care fee using section 52D-3.
Step 2. Add the compensation payment fee (if any) for the care recipient for the day in question (see subsection (2)).
Step 3. Add the income tested care fee (if any) for the care recipient for the day in question (see subsection (3)).
Step 4. Subtract the amount of any hardship supplement applicable to the care recipient for the day in question under section 48-10.
Step 5. Add any other amounts agreed between the care recipient and the approved provider in accordance with the Fees and Payments Principles.
The result is the maximum daily amount of home care fees for the care recipient…”
Section 52D-3 of the Aged Care Act sets out the basic daily care fee for a care recipient. It provides:
“… The basic daily care fee for a care recipient is:
(a) the amount determined by the Minister by legislative instrument; or
(b) if no amount is determined under paragraph (a) for the care recipient—the amount obtained by rounding down to the nearest cent the amount equal to 17.5% of the *basic age pension amount (worked out on a per day basis)”
[Schedule 1 of the Aged Care Act defines basic age pension amount as, “the annual maximum basic rate under point 1064-B1 of the Social Security Act 1991 (herein referred to as the “Social Security Act”) that applies to a person who is not a member of a couple within the meaning of that section”.]
With respect to this application, the income tested care fee (ITCF) is defined in section 52D-2(3) of the Aged Care Act, and provides, “… for a care recipient for a particular day is the amount equal to the care subsidy reduction applicable to the care recipient on that day (see sections 48-7 and 48-8).”
Relevantly, section 48-7 of the Aged Care Act sets out the relevant steps when calculating the care subsidy reduction, and provides:
“… Care subsidy reduction calculator
Step 1. Work out the care recipient’s total assessable income on a yearly basis using section 44-24.
Step 2. Work out the care recipient’s total assessable income free area using section 44-26.
Step 3. If the care recipient’s total assessable income does not exceed the care recipient’s total assessable income free area, the care subsidy reduction is zero.
Step 4. If the care recipient’s total assessable income exceeds the care recipient’s total assessable income free area but not the income threshold, the care subsidy reduction is equal to the lowest of the following:
(a) the sum of the basic subsidy amount for the care recipient and all primary supplements for the care recipient;
(b) 50% of the amount by which the care recipient’s total assessable income exceeds the income free area (worked out on a per day basis);
(c) the amount (the first cap) determined by the Minister by legislative instrument for the purposes of this paragraph.
Step 5. If the care recipient’s total assessable income exceeds the income threshold, the care subsidy reduction is equal to the lowest of the following:
(a) the sum of the basic subsidy amount for the care recipient and all primary supplements for the care recipient;
(b) 50% of the amount by which the care recipient’s total assessable income exceeds the income threshold (worked out on a per day basis) plus the amount specified in paragraph (c) of step 4;
(c) the amount (the second cap) determined by the Minister by legislative instrument for the purposes of this paragraph.”
CONSIDERATION
This application was heard in Brisbane on 17 October 2023, with all parties appearing by video conference, as permitted by section 33A of the Administrative Appeals Tribunal Act 1975 (Cth). The applicant was represented by his carer, Mr Peter Watts (a lay representative). The respondent was represented by Ms Claire Campbell of HWL Ebsworth Lawyers, and had an observer present, Ms Claudia Crawley also of HWL Ebsworth Lawyers and whom was a non-participant in the hearing.
The Tribunal heard oral submissions from the applicant, the applicant’s representative, and the respondent’s representative. Additionally, the Tribunal considered submitted evidence outlined in the Exhibit Register, in “Annexure 1” of these reasons. Following the conclusion of the hearing, the Tribunal requested further breakdown of some figures provided by the respondent in submissions to the Tribunal, and on 8 November 2023 this was received by the Tribunal. The Tribunal exhibited this information, per the Exhibit Register in Annexure 1 of these reasons.
At the heart of this matter, the applicant is aggrieved with respect to the application of legislation as it applies to the assessment of his income and the calculation of his home care fees. In submissions before the Tribunal, the applicant has made numerous arguments with respect to other considerations of an “ethical, moral, socio-economic and social welfare” nature regarding the application of legislation and the financial impact it has on the applicant[6].
[6] Exhibit A1, page 1, paragraph 1.2.
As was explained to the applicant at the hearing, the Tribunal confirms that it does not have unfettered discretion when considering the application of legislation. The Tribunal must apply the law as it exists.
As set out in earlier reasons, in order to calculate the applicant’s income tested care fee for the period of 14 October 2022 through to 10 February 2023, the first step is set out in section 52D-2(3) of the Aged Care Act, which provides, “… for a care recipient for a particular day is the amount equal to the care subsidy reduction applicable to the care recipient on that day (see sections 48-7 and 48-8)”.
In calculating the applicant’s care subsidy reduction pursuant to section 48-7(2) of the Aged Care Act, the Tribunal follows the following steps (which were transposed in earlier reasons):
Step 1. Work out the care recipient’s total assessable income on a yearly basis using section 44-24 of the Aged Care Act.
Section 44-24 of the Aged Care Act provides that total assessable income is the amount that would be worked out as the care recipient’s ordinary income for the purpose of applying Module E of Pension Rate Calculator A at the end of section 1064 of the Social Security Act. The relevant definition of ordinary income is set out in sections 8(1) and 8(2)(b) of the Social Security Act, which provides:
“8 Income test definitions
(1)… income, in relation to a person, means:
(a)an income amount earned, derived or received by the person for the person’s own use or benefit; or
(b) a periodical payment by way of gift or allowance; or
(c) a periodical benefit by way of gift or allowance;
but does not include an amount that is excluded under subsection (4), (5) or (8).
Note 1:See also sections 1074 and 1075 (business income), Division 1B of Part 3.10 (income from financial assets (including income streams (short term) and certain income streams (long term)), Division 1C of Part 3.10 (income from income streams not covered by Division 1B of Part 3.10), section 1099F (exempt bond amount does not count as income) and section 1099K (refunded amount does not count as income).
Note 2:Where a person or a person’s partner has disposed of income, the person’s income may be taken to include the amount which has been disposed of—see sections 1106‑1112.
Note 3: Income is equivalent to ordinary income plus maintenance income...
…
(2)(b) A reference in this Act to an income amount earned, derived or received is a reference to:
…
(b)an income amount earned, derived or received from any source (whether within or outside Australia)…”
With respect to the application before the Tribunal, during the period of 14 October 2022 to 10 February 2023, the applicant had three sources of ordinary income:
(a)Income from a foreign pension;
(b)Income from the Aged Pension; and
(c)Deemed income from savings held in a bank account.
During the course of the hearing, the applicant’s representative explained that the applicant held savings in a non-interest-bearing bank account and objected to the automatic deeming of interest on this amount held by the applicant.
Section 1076(2) of the Social Security Act provides that, “… A person who has financial assets is taken, for the purposes of this Act, to receive ordinary income on those assets in accordance with this section…”. Although the applicant may not actually be receiving interest on the savings deposit held in his bank account, the effect of the legislation is such that the applicant is deemed to have received interest on a financial asset in his control, which in this case, is savings held in a bank account.
The purpose and intent of the deeming rules within the social security system is explained in the Social Security Guide, to which the Tribunal refers[7]:
“… The deeming rules are a central part of the social security income test. They are used to assess income from financial investments for social security and Veterans' Affairs pension/allowance purposes. Deeming assumes that financial investments are earning a certain rate of income, regardless of the amount of income they are actually earning. If income support recipients earn more than these rates, the extra income is not assessed.
The deeming rates reflect the returns available in the market to pensioners for a range of financial investments. By treating all financial investments in the same way the deeming rules encourage people to choose investments on their merit rather than on the effect the investment income may have on the person's pension entitlement.
To calculate the income assessed, deeming rates are applied to the total market value of an income support recipient's financial investments. The actual returns from the income support recipient's investments, whether in the form of capital growth, dividends or interest, are not used for income assessment, even if the investment returns are above the deeming rates…”
[7] 4.4.1.10 Overview of deeming | Social Security Guide (dss.gov.au).
With respect to calculating the applicant’s deemed income on savings held as at 14 October 2022, the Tribunal determines the following:
$3,528[8] x 0.25%[9] = $8.82
[8] Exhibit TR1, T13, page 106.
[9] Exhibit R1, Annexure A, page 2.
With respect to the applicant’s ordinary income as at 14 October 2022, the Tribunal determines the following:
Ordinary income source Amount Foreign Pension income $12,528.17[10] Income from Aged Pension $21,466.64[11] Deemed income from savings held in a bank account $8.82 Total ordinary income per annum $34,003.63 Total ordinary income per fortnight $1,307.84[12] [10] Exhibit TR1, T13, page 113.
[11] Exhibit R1, page 5, paragraph 4.7; and Exhibit R1 Annexure A.
[12] Total ordinary income per annum divided by 26 (being the number of fortnights per annum), or
$34,003.63 ÷ 26 = $1,307.84.
Therefore, the Tribunal determines that the applicant’s total assessable income calculated in accordance with the care subsidy reduction pursuant to section 48-7(2) of the Aged Care Act is $1,307.84 per fortnight.
Step 2. Work out the care recipient’s total assessable income free area using section 44-26 of the Aged Care Act.
Section 44-26 of the Aged Care Act provides that a care recipient’s total assessable income free area is calculated as follows:
“… 44-26 The care recipient’s total assessable income free area
The total assessable income free area for a care recipient is the sum of:
(a) the amount worked out by applying point 1064-B1 of Pension Rate Calculator A at the end of section 1064 of the Social Security Act 1991; and
(b) the amount worked out under point 1064-BA4 of Pension Rate Calculator A at the end of section 1064 of the Social Security Act 1991; and
(c) the amount worked out by applying point 1064-E4 of Pension Rate Calculator A at the end of section 1064 of the Social Security Act 1991…”
With respect to calculating a care recipient’s total assessable income free area, the Tribunal notes:
(a)Section 1064-B1 of the Social Security Act provides that the maximum basic rate of a person who is not a member of a couple is $24,356.80 per annum[13].
(b)Section 1064-BA4 of the Social Security Act provides that:
“…a person’s pension supplement amount is the amount worked out as follows:
(a) work out the amount for the person under point 1064‑BA3 as if the election were not in force;
(b) from that amount, subtract the person’s minimum pension supplement amount…”
With respect to determining the pension supplement amount, this is the result of calculating the pension supplement amount from the minimum pension supplement amount. That is, $1,965.60 - $1,058.20 = $907.40 per annum[14].
(c)Section 1064-E4 of the Social Security Act provides that the maximum basic rate of a person who is not a member of a couple is $4,940.00 per annum[15].
[13] With reference to Table 2 (20/09/2022) 5.2.2.10 Maximum basic rates of pension - July 1909 to present date | Social Security Guide (dss.gov.au).
[14] With reference to (20 September 2022) 5.2.8.10 Pension supplement - historical rates | Social Security Guide (dss.gov.au).
[15] With reference to Table 6 (1 July 2022) 4.10.3 Historical age & invalid (disability support) pension income & assets limits | Social Security Guide (dss.gov.au).
The Tribunal therefore determines that the applicant’s total assessable income free area as at 14 October 2022 was $30,204.20[16] per annum, or $1161.70 per fortnight, calculated in accordance with the care subsidy reduction pursuant to section 48-7(2) of the Aged Care Act.
Step 3. If the care recipient’s total assessable income does not exceed the care recipient’s total assessable income free area, the care subsidy reduction is zero.
[16] $24,356.80 + $907.40 + $4,940.00 = $30,204.20.
In the present application, as at 14 October 2022, the Tribunal has determined the applicant’s total assessable income was $1,307.84 per fortnight, which is $146.14 greater than the applicant’s total assessable income free area which was calculated at $1,161.70 per fortnight.
In turn, the Tribunal determines the applicant’s care subsidy reduction can not be zero, and therefore Step 3 does not apply to the applicant, in accordance with the care subsidy reduction pursuant to section 48-7(2) of the Aged Care Act.
Step 4. If the care recipient’s total assessable income exceeds the care recipient’s total assessable income free area but not the income threshold, the care subsidy reduction is equal to the lowest of the following:
(a) the sum of the basic subsidy amount for the care recipient and all primary supplements for the care recipient;
(b) 50% of the amount by which the care recipient’s total assessable income exceeds the income free area (worked out on a per day basis);
(c) the amount (the first cap) determined by the Minister by legislative instrument for the purposes of this paragraph.
The Tribunal has already determined that as at 14 October 2022 the applicant’s total assessable income of $1,307.84 exceeded the applicant’s total assessable income free area of $1,161.70 per fortnight.
The relevant income threshold with respect to the application of Step 4 was $58,318.00[17] per annum, or $2,243.00 per fortnight.
[17] With reference to section 48-7(6) of the Aged Care Act, section 79(c) of the Ministerial Determination, Aged Care (Subsidy, Fees and Payments) Determination 2014, registered on 8 October 2022.
The applicant’s total assessable income of $1,307.84 is less than the relevant income threshold of $2,243.00 per fortnight. Therefore, Step 4 is the requisite step (as opposed to Step 5), as the final step in determining the applicant’s income tested care fee.
The applicant’s income tested care fee is the lowest of the following tests set out in Step 4 of the care subsidy reduction calculations, as set out in section 48-7(2) of the Aged Care Act:
i.The sum of the basic subsidy amount for the care recipient and all primary supplements for the care recipient. The Tribunal notes the maximum basic daily fee for a Level 1 package is $10.49 per day[18].
ii.Half of the amount by which the care recipient’s total assessable income exceeds the income free area (worked out on a per day basis). The Tribunal has determined the applicant's total assessable income of $1,307.84 per fortnight, and the applicant’s total assessable income free area which was calculated at $1,161.70 per fortnight. The difference of these amounts is $146.14, and half of this amounts to $73.07 per fortnight, or $5.22 per day.
iii.The amount (the first cap) determined by the Minister by legislative instrument for the purposes of this paragraph. The Tribunal notes the cap set out in the legislative instrument is $16.79 per day[19].
[18] Exhibit R1, Annexure A, page 1.
[19] Exhibit R1, Annexure A, page 2.
Therefore, the lowest of the above tests apply, and the Tribunal determines the applicant’s income tested care fee as at 14 October 2022 is $5.22 per day. The Tribunal notes that in both submissions to the Tribunal, and in evidence during cross-examination, the applicant did not contest the figures arrived at by the respondent[20].
[20] Exhibit A1, page 9.
The Tribunal observes there are provisions within the Aged Care Act with respect to individuals experiencing financial hardship and notes that the applicant in submissions to the Tribunal stated they did not apply for such consideration, as they were of the view that was not the operative issue, despite raising concerns with respect to cost of living and the impost of the daily fee. Rather, the applicant’s main contention was other relevant considerations of an “ethical, moral, socio-economic and social welfare” nature regarding the application of legislation and the financial impact it has on the applicant[21].
[21] Exhibit A1, page 1, paragraph 1.2.
As the Tribunal has already stated in earlier reasons of this decision, it does not have unfettered discretion when considering the application of legislation, and the Tribunal must apply the law as it is in place. This equally applies to the applicant’s submissions asking the Tribunal to waive the income tested care fee, in circumstances where the applicant stated that his drawing on a foreign pension provides fiscal relief to the Australian Government (by not receiving a full aged pension). The Tribunal observes no such relief exists within the Aged Care Act.
Summary
The Tribunal has found the applicant’s income tested care fee was correctly calculated by the Respondent at $5.22 per day, with respect to the applicant’s home care fees which had effect during the period of 14 October 2022 to 10 February 2023.
DECISION
Pursuant to section 43(1)(a) of the Administrative Appeals Tribunal Act 1975 (Cth), the Tribunal affirms the decision of the respondent dated 13 January 2023.
I certify that the preceding 44 (forty-four) paragraphs are a true copy of the reasons for the decision herein of Senior Member B. Pola
……………[SGD]….……………
Associate
Dated: 15 November 2023
Date of hearing: 17 October 2023
Applicant:Mr Tom Collins
Applicant’s representative: Mr Peter Watts (non-legal representative)
Solicitor for Respondent: Ms Claire Campbell (HWL Ebsworth Lawyers)
Observer for Respondent: Ms Claudia Crawley (non-participant) (HWL Ebsworth Lawyers)
Annexure 1 – Exhibit Register
EXHIBIT
DESCRIPTION OF EVIDENCE
PARTY
DATE OF DOCUMENT
DATE RECEIVED
TR1.
Section 37 T-Documents (T1-T14, pp 1-123)
-
-
24.05.2023
R1.
Respondent Statement of Facts, Issues and Contentions (including Annexure A and Annexure B)
R
25.08.2023
R2.
Respondent correspondence
R
08.11.2023
A1.
Applicant Statement of Facts, Issues and Contentions (including Annexure A)
A
01.10.2023
03.10.2023
Key Legal Topics
Areas of Law
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Administrative Law
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Statutory Interpretation
Legal Concepts
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Judicial Review
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Statutory Construction
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Remedies
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Jurisdiction
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