Croucher and Secretary, Department of Education, Employment and Workplace Relations

[2009] AATA 431

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 431

ADMINISTRATIVE APPEALS TRIBUNAL      )

)         No. 2009/1169

GENERAL  ADMINISTRATIVE  DIVISION		)
Re		NATHAN CROUCHER

Applicant

And SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal G. D. Friedman, Senior Member

Date15 June 2009

PlaceMelbourne

Decision The Tribunal affirms the decision under review.

(sgd) G.D. Friedman

Senior Member

SOCIAL SECURITY – newstart allowance – eligibility – income exceeds allowable limit – income from family trusts 

Social Security Act 1991 ss 8(1), 1068, 1073(1)

Re Christensen and Secretary, Department of Social Security (1995) 37 ALD 795

Re Flaskas and Secretary, Department of Family and Community Services [2002] AATA 1255

REASONS FOR DECISION

15 June 2009   G. D. Friedman, Senior Member

1.       Throughout the 2007/2008 financial year Nathan Croucher was a beneficiary of the Croucher Property Trust and the Croucher No.2 Family Trust.  On 12 December 2008 Mr Croucher lodged a claim for newstart allowance.  This claim  was rejected as his income, which included the distributions from the trusts in 2007/2008, was calculated to be above the allowable limit for newstart to be payable.  This decision was affirmed by the Social Security Appeals Tribunal (SSAT) on 3 March 2009 and Mr Croucher has now applied to this Tribunal for review of that decision.  The parties agreed that the Tribunal will make its decision without holding a hearing.

ISSUE

2.      The issue before the Tribunal is whether Mr Croucher’s income is above the allowable limit for newstart allowance to be payable.

LEGISLATIVE SCHEME

3. A person’s rate of newstart allowance is determined by assessing their income and assets in accordance with the rate calculator set out in s 1068 of the Social Security Act 1991 (the Act).  If a person’s income is above the allowable limit under the rate calculator then newstart is not payable.

4. Section 8(1) of the Act provides:

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).

5. Section 1073(1) states how income from a trust distribution is to be assessed:

1073    Certain amounts taken to be received over 12 months

(1)Subject to points…1068-G7AA to 1068-G7AR (inclusive), 1068A-E2 to 1068A-E12 (inclusive) and 1068B-D7 to 1068B-D18 (inclusive), if a person receives, whether before or after the commencement of this section, an amount that:

(a)is not income within the meaning of Division 1B or 1C of this Part; and

(b)is not:

(i)income in the form of periodic payments; or

(ii)ordinary income from remunerative work undertaken by the person; or

(iii)an exempt lump sum.

the person is, for the purposes of this Act, 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.

is Mr Croucher’s income above the allowable limit for newstart to be payable?

6.      Mr Croucher, in evidence to the SSAT, agreed that he received $23,000 from the Croucher Property Trust and $5,027 from the Croucher No.2 Family Trust by the end of the 2008 financial year.  However, he believes it is unfair that this money should be taken into account when being assessed for newstart allowance in December 2008.

7.      At the SSAT Mr Croucher said that the money he received from the trusts was money paid to him as weekly wages when he worked for his father as a labourer.  He also stated that sometimes his father would put money into his bank account which he had to return immediately.  He told the SSAT that he believes that the only reason he had been paid in distributions from the trusts is because it was advantageous for his father.  He stated that he ceased working for his father in December 2008 as there was no more work for him to do and has elected to no longer be a beneficiary of the trusts.

8.      In Re Christensen and Secretary, Department of Social Security (1995) 37 ALD 795 it was held that upon resolution of the trustee, in accordance with the trust instrument, income to a beneficiary is a distribution of income. In Re Flaskas and Secretary, Department of Family and Community Services [2002] AATA 1255 the Tribunal stated that while work may be performed which permits payments to be made to a beneficiary, ultimately the payments are made as a result of a resolution by the trustee and that until that resolution is made, the payments are considered to be drawings.

9. The Tribunal finds that Mr Croucher received $28,027 from the trusts throughout the 2007/2008 financial year and that on 30 June 2008 both trusts passed resolutions to distribute this to Mr Croucher. The Tribunal finds that Mr Croucher became legally entitled to the distributions on 30 June 2008. Therefore, in accordance with s 1073(1) of the Act, this income is taken to be received over a 12 month period commencing 30 June 2008. This weekly amount is calculated to be over the amount allowable under the rate calculator for newstart allowance as at 12 December 2008 and newstart allowance is not payable to Mr Croucher.

DECISION

10.     The Tribunal affirms the decision under review.

I certify that the ten [10] preceding paragraphs are a true copy of the reasons for the decision of:

G. D. Friedman, Senior Member

(sgd) Mara Putnis 

Associate

Date of hearing:  not applicable: decision on the papers
Date of decision:  15 June 2009