DJHN and Secretary, Department Social Services (Social services second review)

[2021] AATA 1660

DJHN and Secretary, Department Social Services (Social services second review) [2021] AATA 1660 (10 June 2021)

Division:GENERAL DIVISION

File Number(s):      2020/6315

Re:DJHN

APPLICANT

AndSecretary, Department Social Services

RESPONDENT

DECISION

Tribunal:L RIEPER, MEMBER

Date:10 June 2021

Place:Hobart

The Applicant’s periodic payments from the Defence Force Retirement and Death Benefits Scheme (DFRDB) are a family law affected income stream and form part of her ordinary income. Her combined income therefore exceeds the allowable income limit for payment of Newstart allowance.

The decision under review is affirmed.

..........................[sgd]........................................

Ms L Rieper, Member

SOCIAL SECURITY – eligibility for Newstart allowance – family law affected income stream – Defence Force Retirement and Death Benefits Scheme – DFRDB assessed as income stream – no exemption in s 9A applicable

Legislation

Social Security Act 1991 (Cth)

Family Law Act 1975 (Cth)

REASONS FOR DECISION

L Rieper, Member

10 June 2021

INTRODUCTION

1. The Applicant seeks a review of a decision made by the Social Security and Child Support Division of this Tribunal on 21 September 2020.

2. The issue to be determined is whether the Applicant qualified for Newstart allowance following the claim she made on 5 June 2019.

3. The only qualification in dispute in this matter is whether the Applicant’s combined income exceeded the allowable income limit for payment of Newstart allowance.  The Respondent says that it did because of an income stream she receives in accordance with orders of the Federal Circuit Court.

4. A hearing was held by telephone on 4 June 2021.  The Applicant represented herself and the Respondent was represented by Mr Lozynsky of Services Australia.

   LEGISLATION

5. The qualifications for Newstart allowance, now known as JobSeeker payment, are contained in s 593 of the Social Security Act 1991 (the Act). 

6. Section 643 of the Act states that a person’s rate of Newstart allowance is to be worked out using the Rate Calculator at the end of s 1068 of the Act. 

7. The Rate Calculator includes an income test and an asset test.  The lower of the income tested rate of benefit and the assets tested rate of benefit is the rate that applies.

8. Module A of the Rate Calculator establishes the overall rate calculation process and the remaining Modules provide for the calculation of the component amounts used in the overall rate calculation.  A person’s income reduction amount (worked out by Module G) is subtracted from the maximum payment rate (worked out by Module B) to determine a provisional rate of Newstart allowance that can be paid.  Module G of s 1068 of the Act provides the method to work out the effect of “ordinary income” on the payment rate.  

9. The notes to the method statement in Module G say that “ordinary income” includes income from “income streams” in div 1C of pt 3.10 of the Act.  Subdivision C of div 1C deals with “family law affected income streams.”

10. “Income streams” is defined in s 9(1) of the Act to include a “family law affected income stream.”

11. “Family law affected income stream” is defined in s 9C:

    If:

    (a)  an income stream is acquired or purchased (the original family law affected income stream) by a person (the member); and

    (b)  the member's partner or former partner (the non-member) becomes entitled to be paid some or all of that income stream under:

    (i) a payment split under Part VIIIB of the Family Law Act 1975; or

    (ii) an order under Part VIIIAA of the Family Law Act 1975;

    then so much (if any) of the income stream paid to the non-member as a series of ongoing payments (secondary FLA income stream) and the remainder (if any) of the income stream paid to the member as such a series of payments (primary FLA income stream) are each family law affected income streams.

12. Subsection 8(8) of the Act sets out amounts which are not “income” for the purposes of the Act.

    EVIDENCE AND CONSIDERATION

13. The facts in this matter are not in dispute.

14. As a result of orders made by the Federal Circuit Court on 7 July 2016, the Applicant receives periodic payments, being 50 per cent of her former husband’s periodic benefits from his superannuation account with the Defence Force Retirement and Death Benefits Scheme (DFRDB).  The relevant order says:

    In accordance with Section 90MT(1)(b) of the Family Law Act 1975, whenever a splittable payment within the meaning of section 90ME of the Act becomes payable to or on behalf of the Husband from his interest in the Superannuation Fund, the Wife is entitled to be paid by the Trustee of the Superannuation Fund 50% of the splittable payment and there shall be a corresponding reduction in the amount the Husband would be entitled to receive but for these Orders.

15. The Tribunal notes that s 90ME, which at the time was contained within pt VIIIB of the Family Law Act 1975 (Family Law Act) and defined “splittable payments”, has subsequently been renumbered s 90XE.

16. When the Applicant submitted her claim for Newstart allowance on 5 June 2019, she disclosed the existence of the periodic payments.

17. The Applicant says the periodic payments could not be commuted and it is unfair to continue to treat them as income in her hands.  She argued that the payments should be exempted under s 9A of the Act.

18. The Tribunal is satisfied that the periodic payments the Applicant receives from the DFRDB are a “family law affected income stream” as defined in s 9C of the Act as they are the result of a payment split under pt VIIIB of the Family Law Act. It is therefore an “income stream” within the meaning in the Act.

19. The only way in which the income stream could be exempted from being treated as ordinary income for the purposes of determining the Applicant’s claim is if it were one of the excluded amounts listed in sub-s 8(8) of the Act.  The Tribunal has carefully reviewed the list and is satisfied that it is not. 

20. In respect of the Applicant’s reliance on s 9A of the Act, the Tribunal is satisfied that it is not applicable in this case.  That is because of the operation of sub-s 1099DB(1)(b) of the Act.

21. Section 9A of the Act sets out the circumstances in which an income stream is exempt from consideration when applying the asset test.  However, sub-s 1099DB(1)(b) of the Act says that the income from those income streams is to be used in working out the annual rate of ordinary income.  This means that s 9A of the Act would have been of assistance to the Applicant if her rate of benefit was determined under the asset test, but it is not of assistance in determining her rate of benefit under the income test.

22. The Applicant did not challenge any other element of the reviewable decision and in light of the evidence before it the Tribunal has no alternative but to affirm the decision under review.

I certify that the preceding 22 (twenty-two) paragraphs are a true copy of the reasons for the decision herein of L RIEPER, Member.

.......................[sgd]...................................

Associate

Dated:   10 June 2021

Date(s) of hearing:	4 June 2021
Applicant:	Self-represented
Solicitor for the Respondent:	Mr George Lozynsky, Services Australia