Creamer and Secretary, Department of Families, Community Services and Indigenous Affairs
[2006] AATA 519
•14 June 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 519
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W2005/197 & W2005/198
GENERAL ADMINISTRATIVE DIVISION ) Re WRAY CREAMER & JEAN CREAMER Applicant
And
SECRETARY, DEPARTMENT OF FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Mr A Sweidan, Senior Member Date14 June 2006
PlacePerth
Decision The decision of the Social Security Appeals Tribunal dated 20 May 2005 is affirmed. .............[Sgd. Mr A Sweidan]....................
Senior Member
CATCHWORDS
Social Security Act 1991 ss1073(1)and 1973(2) – whether s1073(2) exhaustive or exclusive
REASONS FOR DECISION
14 June 2006 Mr A Sweidan, Senior Member 1. This is an appeal against a decision of the Social Security Appeals Tribunal dated 20 May 2005.
2. At the hearing of this matter Mr & Mrs Creamer, the applicants appeared on their own behalf and Mr Creamer addressed the Tribunal.
3. The respondent was represented by Ms Conlon one of the respondent’s officers.
4. The facts and issues in the matter are not in dispute. They are set out in the respondent’s Statement of Facts and Contentions which it is convenient to set out in full as follows:
“DECISION UNDER REVIEW
1.1The decision of the Social Security Appeals Tribunal dated 20 May 2005 which (a) affirmed Centrelink’s decision of 30 September 2004 to take into account the applicant’s distributions from the Baby Born Doll Trust and so reduce the applicants’ rates of Age Pension for the period 19 February 2004 to 20 August 2004, but varied the amount of the distributions from $2,879 each to $2,373 each: and
1.2(b) affirmed Centrelink’s decisions dated 1 October 2004 and 11 November 2004 to take into account that each of the applicant received distributions of $11,608 and $2,850 from the proceeds of the sale of the rights in Bay Born Doll Trust, which reduced their rates of Age Pension for a period of 12 months from 13 September 2004 and 15 October 2004, respectively.
ISSUES
2.1Should the amount of the applicants’ distributions be held as income for a period of 12 months from the dates they were entitled to receive them?
NOTE: The applicants have informed the respondent that they no longer wish to have the original decision dated 20 May 2005, as varied by the SSAT, reviewed by the AAT.
FACTS
3.1 Mr and Mrs Creamer have been in receipt of Age Pension since 3 May 2002.
3.2 Mr and Mrs Creamer owned units in the Baby Born Doll Trust.
3.3Merredin Holdings Pty Ltd is the Trustee of the Baby Born Doll Trust (T80.P260).
3.4The applicants periodically received distributions from the Baby Born Doll Trust until the Trust was wound up on 15 February 2005. The income from the Trust was usually made up of the royalties remitted by ZAPF Creation, who manufactured and sold the dolls. (T19.PP68-73; T51.P147-148; T16PP 239-248).
3.5A Social Security Appeals Tribunal (SSAT) decision on 19 July 2004 decided that the distributions were to be treated as income for 12 months from the date they were actually paid to Mr and Mrs Creamer (T76.P226-230).
3.6The rights to the Baby Born Doll were sold by the Trust to ZAPF around September 2004 (T19.P68-73).
3.7On 13 September 2004, the applicants were paid a distribution of $11,608 each which represented their share of the Trust income generated by the sale of the intellectual property to ZAPF (T19 P71-para (d); T28.P94).
3.8On 30 September 2004 Centrelink recorded this amount as being income for 12 months from 13 September 2004, which resulted in a reduction of the applicants’ rates of Pension. Mr and Mrs Creamer were notified of this decision by letter dated 1 October 2004 (T31.P102-103) (Addit docs A1.P1-16).
3.9Mr and Mrs Creamer asked for a review of this decision on 11 October 2004 (T34.P107-109).
3.10On 15 October 2004 the applicants were paid a distribution of 2.850 each, which represented the repurchase of their unit holding in the Baby Born Doll Trust by Merredin Holdings Pty Ltd (the Trustee for the Baby Born Doll Trust) (T40.P116-117).
3.11On 11 November 2004 Centrelink recorded this amount as income for 12 months from 13 September 2004 (the date of the payments were despatched to the applicants), which reduced their rate of Pension. Mr and Mrs Creamer were notified of this decision by letter dated 11 November 2004 (T46.P136-137)(Additional docs A1.P1-16).
3.12Mr and Mrs Creamer asked for a review of this decision on 26 October 2004 (T.38.P113).
3.13On 27 January 2005, a Centrelink Authorised Review Officer (ARO) affirmed the decisions to include the gross amount of the distributions received by Mr Creamer in August 2003, September 2004 and October 2004 as income for 12 months from the date he received them, when calculating Mr Creamer’s rate of Pension (T61.171-178).
3.14On 10 March 2005, a Centrelink Authorised Review Officer (ARO) affirmed the decisions to include the gross amount of the distributions received by Mrs Creamer in August 2003, September 2004 and October 2004 as income for 12 months from the date he received them, when calculating Mrs Creamer’s rate of Pension (T69.201-208).
3.15On 20 May 2005 the SSAT decided that a reduced amount of $2,373 should be regarded as being income when calculating the applicants’ rates of Pension for the period 20 August 2003 to 19 August 2003 and that the amounts of $11,608 and $2.850 be held for a period of 12 months from 13 September 2004 and 15 October 2004, respectively (T2.P3-15).
3.16On 3 June 2005 the applicants applied for the SSAT decision be reviewed by the AAT (T1.P1-2).”
RESPONDENT’S CONTENTIONS
The Respondent contended that:-
“4.1 Section 1064 of the Social Security Act 1991 (the Act) sets out how the rate of Age Pension is calculated and how a person’s and their partner’s income reduces their rates of Age Pension. (T81.P309-318)
4.2Section 1072 of the Act states that it is the gross amount of income that is to be used when calculating a person’s rate of payment. (T81.P318)
4.3Section 1073 of the Act provides that if a person receives income that is not:
· Deemed income from financial assets; or
· Income from income streams; or
· Periodic compensation payments; or
· Income from paid employment; or
· An exempt lump sum.
The person is taken to receive one fifty second of that amount as ordinary income of the person during each week in the 12 months commencing on the day on which the person becomes entitled to receive that amount. (T81.P318)
4.4It is the applicants’ contention that subsection 1073(1) of the Act does not apply to Age Pension because it is not specified in section 1073(2) of the Act.
1073(2) Subsection (1) applies to a person who has claimed on of the following allowances:
(a) newstart allowance;
(b) sickness allowance;
(c) youth allowance;
(d) widow allowance;
(e) partner allowance;
(f) mature age allowance under Part 2.12B;
even if the person:
(g) has to serve an ordinary waiting period or a liquid assets waiting period in respect of the allowance claimed; or
(h) is subject to an income maintenance period in respect of the allowance claimed; or
(j)is subject to a seasonal work preclusion period;
during the period of 12 months referred to in subsection (1).
4.5The respondent disagrees with this contention. Section 1073(2) was inserted into the Act in 1998 (Bill No 93, 1998) to ensure consistency in the treatment of lump sums received by both pensioners and allowees and to ensure that lump sums that fall within the ambit of section 1073 are apportioned in accordance with section 1073(1), even if the lump sum is received while the person is serving an ordinary waiting period, a liquid assets test waiting period, or is subject to an income maintenance period, or seasonal workers preclusion period. Additionally, section 1073(1) was amended at the same time to ensure that amounts of a capital nature were included in the ambit of the provisions that apportioned a lump sum over a 52 week period. (refer extract EM & Bill 93,1998 additional docs A2P17-22).
4.6The respondent contends that section 1073(1) of the Act applies to the distributions of $2, 373, $11,608 and $2,850 paid to Mr and Mrs Creamer from Merredin Holdings Pty Ltd and that they should be maintained as income for a period of 12 months from 20 August 2003, 13 September 2004 and 15 October 2004 respectively.,
4.7The respondent accepts that it was the assets of the Baby Born Doll Trust that were sold and the proceeds distributed to Merredin Holdings Pty Ltd, who distributed them to Mr and Mrs Creamer on 1 October 2004 (T28.P94) and 11 November 2004 (T40.P116-117), however these proceeds are classed as being income for Centrelink purposes under section 8(1) of the Act which defines an income amount as:
(a)valuable consideration; or
(b)personal earnings; or
(c)moneys; or
(d) profits;
(whether of a capital nature or not).
4.8It is applicants’ contentions that the distributions of 1 October 2004 and 11 November 2004 are from the sale of Trust assets and are one-off payments that will not be repeated and so should not be treated as income as per section 1073 of the Act, but should be assessed as exempt lump sums under section 8(11)d of the Act. (T21.P76)
8. (11)An amount received by a person is an exempt lump sum if:
(a)the amount is not a periodic amount (within the meaning of subsection 10(1A)); and
(b) the amount is not a leave payment within the meaning of points 1067G-H20, 1067L-D16 and 1068-G7AR; and
(c)the amount is not income from remunerative work undertaken by the person; and
(d) the amount is an amount, or class of amounts, determined by the Secretary to be an exempt lump sum.
Note: Some examples of the kinds of lump sums that the Secretary may determine to be exempt lump sums include a lottery win or other windfall, a legacy or bequest, or a gift- if it is a one-off gift.
4.9The respondent does not consider that the distributions were exempt lump sums under section 8(11)d of the Act because the proceeds of the sale of the assets became the income of the Baby Born Doll Trust, which was then distributed in the usual way by Merredin Holdings Pty Ltd to Mr and Mrs Creamer and the other unit holders.”
5. As set out in paragraph 4.4 of the respondents Contentions, it is the applicants contention that s 1073(1) of the Act does not apply to Age Pension because it is not specified in s 1073(2) of the Act.
6. At the hearing the respondent handed up a 3-page written submission together with a number of annexures which were received by the Tribunal as Exhibits B, B1, B2, B3, B4 and B5 respectively.
7. The applicants argument cannot, in the Tribunal’s view, be upheld. S 1073(2) of the Act lists a number of allowances to which s 1073(1) applies.
8. However, there is nothing in s 1073(2) which indicates that the list of allowances set out in the subsection is intended to be exhaustive or exclusive. Accordingly, the fact that Age Pension is not specifically mentioned in s 1073(2) does not mean that s 1073(1) does not apply to Age Pension.
9. The applicants also contended that the distribution from the sale of trust assets being “one-off” payments which will not be repeated should not be treated as income but should be assessed as exempt lump sums under s 8(11) (d) of the Act.
10. Under that section, an amount can be determined by the Secretary to be “an exempt lump sum.” The note to the section gives examples of the kind of lump sums that the Secretary may determine to be “exempt lump sums” as including a lottery win or other windfall, a legacy or bequest or a gift if it is a one off gift. Ms Conlon in her submissions said that the respondent would be prepared to treat the letter submitted to the Tribunal by the applicants at the hearing as Exhibit B as an application for a determination by the Secretary under s 8(11)(d) of the Act if the applicants requested this, the applicants not having previously done so. The Tribunal suggested to the applicants that they should pursue this avenue and they undertook to do so.
11. In the Tribunal’s view, the decision of the Social Security Appeals Tribunal dated 20 May 2005 should be affirmed.
I certify that the preceding 11 paragraphs are a true copy of the reasons for the decision herein of Mr A Sweidan, Senior Member
Signed: ...........[Sgd. Ms R Riberi].................................
AssociateDate of Hearing 12 April 2006
Date of Decision 14 June 2006
Representative for the Applicant UnrepresentedSolicitor for the Respondent Ms M Conlan, Centrelink Legal Services
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