Faust and Anor and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2008] AATA 1027

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 1027

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2007/3357

GENERAL ADMINISTRATIVE  DIVISION		)
Re		IAN FAUST; ESTATE OF THE LATE KAREN FAUST

Applicants

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Mrs Josephine Kelly, Senior Member

Date17 November 2008

PlaceSydney

Decision The reviewable decision is affirmed.  

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

Senior Member
  Mrs Josephine Kelly

CATCHWORDS

SOCIAL SECURITY – Disability Support Pension – Carer Payment – Temporary Disability Income Benefit (TDIB) – TDIB taken into account in calculating rate of payment -  Small debt raised but waived – Applicant alleges incorrect advice given - Whether TDIB ordinary income – Whether TDIB Income Stream – Held ordinary income - Held income stream – Decision affirmed

Social Security Act 1991, ss 8, 9, 1064, 1064-A1, 1064-E1, 1237AAA

Centrelink E-reference suite

REASONS FOR DECISION

17 November 2008 Mrs Josephine Kelly, Senior Member      

INTRODUCTION

1.      Mrs Karen Faust was working for Qantas when she was diagnosed with metastatic cancer shortly after giving birth to her second child.   She ceased work in early 2005 and died on 25 May 2007.

2.      Mrs Faust’s husband, Mr Ian Faust, has applied to this Tribunal for the review of the decision made by the Social Security Appeals Tribunal (the SSAT) on 25 June 2007.  The SSAT affirmed Centrelink’s decision to assess Temporary Disability Income Benefit (TDIB) received by Mrs Faust from Qantas as “ordinary income” under the Social Security Act 1991 (the Act). The consequence was that it was taken into account in determining Mrs Faust’s disability support pension and Mr Faust’s carer payment. The payment of $2,041.50 was made by Qantas for the period 28 June to 28 September 2006.

3.      Centrelink raised a debt of $35.74 in relation to that payment, but waived it pursuant to s1237AAA(2) of the Act, because the amount was under $50. However Mr Faust still wishes to appeal. He stated his reason succinctly in the application:

Because the decision made was based purely on the legislation that was applied.  I am not appealing the legislation.  I am appealing the fact that I acted upon advice from Centrelink, and that advice was incorrect both times.

4.      Following advice from a hospital care worker, Mrs and Mr Faust had approached Centrelink for financial assistance.  Mr Faust stated in his letter supporting his application to this Tribunal: 

We were both faced with a very important financial decision at a time where we were both very new to the workings of Centrelink, and when we were under enormous financial and emotional strain.    

5.      Mr Faust said that Mrs Faust would have taken a Permanent Disability / Death Benefit from Qantas, rather than a TDIB, if they had been correctly advised. He contends that as a result of the advice his family has lost over $44,100 in superannuation entitlements, and more than $7,000 in social security benefits.  He is really seeking compensation for that financial loss.  This Tribunal has no power to deal with that issue.

6.      Although the SSAT affirmed the decision it was reviewing, it also suggested that Centrelink treat Mr Faust’s matter as a claim under the Compensation for Detriment Caused by Defective Administration Scheme.   I do not know whether Mr Faust has pursued such a claim, however, I have no jurisdiction in any event.   Mr Faust said during the hearing that he intends to pursue this matter with the Ombudsman and his local member, and wants to be able to say that he has exhausted all avenues of appeal.

ISSUES

7. The issue the Tribunal has jurisdiction to address is whether the TDIB of $2,041.50 received by Mrs Faust from Qantas was “ordinary income” within the definition of s 8 (1) of the Act.

CONSIDERATION

8.      Mr Faust was granted carer allowance in September 2005, and in November Mrs Faust was granted disability support pension and Mr Faust was granted carer payment.  Qantas advised Mrs Faust on 7 October 2005 that she had an entitlement to sick leave until 11 April 2006 and then her annual leave entitlement would be from 12 April to 26 May 2006.

9.      Following is my understanding of what happened around the time Mr Faust says he received the incorrect advice, derived from a number of contemporaneous Centrelink computer records. 

10.     On 12 May 2006, Mr Faust contacted Centrelink by telephone to advise of an insurance payout for Mrs Faust's disability. The note taken included: "which will be placed into super fund will not be assessed".  Mr Faust was advised that paperwork needed to be shown to the office to verify that.

11.     On 7 June 2006 Mr Faust made an inquiry in person.   There were three file notes in evidence about this contact.   A note was made that Mrs Faust had received a super insurance payment which had been left in a super fund.  Another document of the same date repeats that, and states that Mr Faust completed a document updating all details, which included changes to savings/shares/other assets.  Mrs Faust's earnings were deleted from 29 May 2006, because she was not receiving any payments from Qantas.  The entry continued:  

employer Qantas is considering paying some form of disability income payment to her in the future – client will advise if this occurs. 

12.     As a result of the updated details given by Mr Faust,  Mrs Faust's DSP  and Mr Faust’s carer's payment increased under the income test.

13.     The third file note made on 7 June 2006 stated that Mr Faust had advised Centrelink that Mrs Faust had received a superannuation payout of $772,500.000 from MLC Superannuation. It was recorded that this payment was not assessable. .

14.     On 28 June 2006 Mr Faust contacted Centrelink by telephone. The record made stated that an amount of approximately $1,000 received by Mrs Faust for annual leave from Qantas would not be assessed as income because she was no longer working for Qantas, however, Mr Faust was advised to update bank balances of accounts where the money was deposited.  As Mr Faust was uncertain about the correct balances and accounts, a document was sent out to allow updating of the necessary information.

15.     Qantas wrote to Mrs Faust on 29 June 2006 and advised that her claim for TDIB under her superannuation plan was approved and she would receive $2,041.50 per month from 28 June 2006 to 28 September 2006. This represented 75% of Mrs Faust’s then current superannuation salary. Mrs Faust’s benefits during the period of incapacity under the superannuation plan would be the same as if she were to continue in full employment with the company.

16.     Centrelink undertook a data match with the Australian Tax Office and wrote to Mrs Faust on 9 August 2006 asking for information about her income.  On 11 August  Mr Faust rang Centrelink in response to that letter.  He stated that Mrs Faust was receiving a TDIB payment through the insurance policy with Qantas and that he would forward the one payslip that had been received. 

17.     On 19 September 2006 a note was made that when Mrs Faust's income details had been updated, taking into account the TDIB payment, a debt had been raised for the period 28 June to 8 August 2006, but "autowaived".    

18.     About six months later, on 12 March 2007,  Mr Faust contacted Centrelink by telephone. He wanted to know how his and Mrs Faust's payments were being affected by their income and assets.   He was told that the TDIB benefit had been assessed as income from 28 June 2006.  He told the officer that he had been told that it would not be assessed because it was being put into super.   Part of the file notes states:

“Doc dated the 07/06/06 by Michele VRZ advised that this [TDIB] wouldn’t be assessable.  Asked if payment was like income protection/insurance and adv that it was so adv that it is being assessed.  Cust not happy with this decision as said may have affected what they would have done with  payment if they had known. Pls f/u so cust has better understanding of why this is being assessed when they were told that it wouldn’t be."

19.     The person who made the decision on 19 September 2006 reconsidered that decision and advised Mr Faust in a letter dated 12 April 2007 that the decision was unchanged and provided reasons. The reconsideration decision was affirmed by an Authorised Review Officer on 14 May 2007.

LAW

20. The provisions for determining the rate of a person’s carer payment and disability support pension is set out in section 1064 of the Act. Section 1064-A1 sets out the method of calculation, in particular, Step 5 of the method statement requires the "ordinary income test" to be applied in accordance with Module E. Section 1064-E1 calls for the person's "ordinary income" to be worked out on an annual basis.

21.     Subsection 8(1) of the Act includes the following definitions:

Income test definitions

…

ordinary income means income that is not maintenance income or an exempt lump sum.

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);

Subsections 8(4) and 8(5) and 8(8) are not relevant in this case.

income amount means:

(a)      valuable consideration; or

(b)      personal earnings; or

(c)       moneys; or

(d)      profits;

(whether of a capital nature or not).

22. The SSAT, and Mr Bullock, who appeared for the respondent, referred to s 9(1) of the Act which defines "income stream", and s 9(1F) which defines "defined benefit income stream". Mr Bullock submitted that, as a matter of policy, TDIB payments are treated by Centrelink as an income stream, because they meet the definition of a defined benefit income stream under s 9(1F) of the Act.

23. As I understand the provisions in s 9, they are intended to define when superannuation benefits are to be treated as income rather assets. The extract from Centrelink's E-reference Suite referred to by the SSAT is helpful.  It states that disability and salary continuance payments from a superannuation fund are treated as income streams because they meet the definition of a defined benefit income stream.  All defined benefit income streams are exempt from the assets test.  There are no deductible amounts in disability or salary continuance payments from a superannuation fund, and they are not subject to the compensation rules.  Such payments are therefore assessed on gross income.

24.     I accept that as a matter of policy that is an appropriate treatment.  However, I would also find, given the width of the definition of "income" in the Act, that the TDIB payment falls within that definition.  The letter from Qantas to Mrs Faust dated 29 June 2006 shows that the payment was income in character.  

25. Finally, whether the payment is "income" because it is treated as a "defined benefit income stream", or because it otherwise falls within the wide definition of "income" in s 8(1), in my opinion the TDIB Mrs Faust received was "ordinary income". It was not maintenance income or an exempt lump sum.

26.      It  was appropriately taken into account by Centrelink in calculating the rate of Mrs Faust’s DSP and Mr Faust’s carer payment.  

DECISION

27.     The decision of the SSAT dated 13 June 2007 is affirmed.

I certify that the 27 preceding paragraphs are a true copy of the reasons for the decision herein of Mrs Josephine Kelly, Senior Member.

Signed: ………[sgd] .……..

Steven Mulipola, Associate

Date of hearing:  12 June 2008

Date of final submissions:  20 June 2008

Date of decision:  17 November 2008

Representative for the Applicant:             Self-represented

Representative for the Respondent:       Centrelink Legal Services