Fenton and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2012] AATA 670
•3 October 2012
[2012] AATA 670
Division GENERAL ADMINISTRATIVE DIVISION File Number
2012/2598
Re
REGINALD FENTON
APPLICANT
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
RESPONDENT
AND
File Number
2012/2599
Re
PATRICIA FENTON
APPLICANT
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
RESPONDENT
DECISION
Tribunal Dr P McDermott, RFD, Senior Member
Date 3 October 2012 Place Brisbane The Tribunal affirms the decisions under review.
..............................[sgd].....................................
Dr P McDermott, RFD, Senior Member
CATCHWORDS
SOCIAL SECURITY – Pensions, benefits and allowances – Age pension – Assets test – Assessable assets – Investment in superannuation fund – Value of assets held by superannuation fund – Decisions under review affirmed
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) s 34J
Land Valuation Act 2010 (Qld)
Social Security Act 1991 (Cth) ss 9, 11, 55, 1064, 1118
Social Security (Administration) Act 1999 (Cth) ss 79
Superannuation Industry (Supervision) Act 1993 (Cth) s 45REASONS FOR DECISION
Dr P McDermott, RFD, Senior Member
3 October 2012
INTRODUCTION
Mr Reginald Fenton and Mrs Patricia Fenton (“the applicants”) have applied for age pension. Centrelink rejected their claim for age pension on the ground that the value of their assets exceeded the allowable limit for payment of age pension. Their application requires me to consider the value of their superannuation fund. The parties have consented to the determination of this application on the papers without a hearing pursuant to s 34J of the Administrative Appeals Tribunal Act 1975 (Cth).
BACKGROUND
In this statement of reasons, which is a matter of public record, it is not necessary for me to outline the extent of all of the applicants’ financial investments. It is sufficient for me to mention that the applicants have a self-managed superannuation fund which is known as the Fenton Superannuation Fund (“the superannuation fund”). They are of pension age and meet the necessary residency requirements under social security law.
The superannuation fund holds a block of land of some 505.9 hectares at Rangewood in Townsville. There is no evidence that the land is encumbered. The State Valuation Service has valued the land at $510,000. A valuer from the Australian Valuation Office values the land at $1,140,000.
PRIOR DECISIONS
On 11 August 2011, the applicants lodged their claims for age pension.
On 12 September 2011, the claims were rejected on the ground that their total combined assets were above the allowable limit. On 26 September 2011, the applicants sought a review of this decision. On 27 September 2011, the original decision-maker corrected an arithmetical error in the original decisions and issued a decision that the combined assets of the applicants was still over the assessable limit. These decisions were later affirmed by an authorised review officer on 16 December 2011, for the claim by Mrs Fenton, and on 23 February 2012 for Mr Fenton’s claim. On 30 May 2011, the Social Security Appeals Tribunal affirmed the decisions.
LEGISLATION
In considering this application I am required to administer the Social Security Act 1991 (Cth) (“the Act”) and the Social Security (Administration) Act 1999 (Cth)
(“the Administration Act”).
Subsection 11(1) of the Act defines an “asset” as “property or money (including property or money outside Australia)”.
Section 55 of the Act provides that the rate of age pension is calculated using
Pension Rate Calculator A, which is to be found at the end of s 1064 of the Act.
Subsection 1064A-1 provides that a person’s age pension rate is a daily rate calculated using either the “ordinary income test” (which is applied using Module E of Pension Rate Calculator A) or what is referred to as the “assets test” (which is applied using Module G of Pension Rate Calculator A); the age pension rate is whichever rate gives the lower rate. There is no issue that, for present purposes, the “assetstest” is the test that gives the lower rate.
For the purposes of the Act, the applicants are “members of a couple” and are treated as pooling their resources (their income and assets) and sharing those resources on a
50/50 basis (see s 1064A- 2 of the Act).
Module G of Pension Rate Calculator A (which applies the “assets test”) provides that if “the value of a person’sassetsexceeds that person’sassets value limit” (see s 1064‑G3
of the Act for the applicable “value limit”) then there is a reduction of the maximum payment rate of age pension which is payable to that person. This reduction is made in accordance with s 1064-G4 of the Act where there are “assets” in excess of the
“assets value limit” of the person. Section 1064‑G5 of the Act provides that a person’s “assets excess is the value of the person’s assets less the person’s assets value limit”. The “assets value limit” is worked out using Table G-1. Under the “assets test” which is applicable to the applicants, the “cut-off” point to receive any payment is $959,000 in combined assets.
Section 1118 of the Act provides that certain assets are disregarded in calculating the value of a person's assets for the purposes of the Act. In relevant respects, that section provides:
1118 Certain assets to be disregarded in calculating the value of a person’s assets
(1) In calculating the value of a person’sassetsfor the purposes of this Act ..., disregard the following:
...
(f) the value of the person’s investment in:
(i) a superannuation fund; or
(ii) an approved deposit fund; or
(iii) a deferred annuity; or
(iv) an ATO small superannuation account;
until the person:
(v) reaches pension age; or
(vi) starts to receive a pension or annuity out of the fund;
…
A person’s investment in superannuation is to be disregarded under s 1118(1)(f) of the Act until the person reaches pension age. As the applicants are of pension age, the value of their interest in a superannuation fund cannot be disregarded in calculating
the value of their assets.
The Fenton Superannuation Fund is a “superannuation fund” for the purposes of the Act. This is because s 9(1) of the Act defines a “Superannuation fund” to mean, among other things, “a fund that is or has been a complying superannuation fund within the meaning of s 45 of the Superannuation Industry (Supervision) Act 1993 in relation to any tax year” (see definition (a) for “Superannuation fund”). I will assume that the Fenton Superannuation Fund is a complying superannuation fund as there have been
2011 financial statements prepared for the fund. However, it is not material whether the fund is a complying or not a complying superannuation fund as both types of superannuation fund are included in the definition of “superannuation fund” in s 9(1) of the Act (see definition (b) for “Superannuation fund” in regard to non-complying funds).
CONSIDERATION
I am satisfied that the applicants have the necessary age and residency qualifications to be paid age pension.
The Fenton Superannuation Fund is a “superannuation fund” as defined in section 9(1) of the Act. This superannuation fund is not an asset that can be disregarded as the applicants are of pension age (see s 1118(1)(f)(i) of the Act). Consequently, the superannuation fund is an “asset” under s 11(1) of the Act.
I have to determine the value of the Fenton Superannuation Fund. The principal asset of the fund is a block of land of some 505.9 hectares at Rangewood in Townsville.
There is no evidence that this land is encumbered. The applicants have submitted
a valuation from the State Valuations Service which has placed a “New Unimproved Valuation” of $510,000 on the land. This valuation, for rating purposes, has a date of effect of 30 June 2011. This valuation is the site value of the land for the purposes of the Land Valuation Act 2010 (Qld). This site valuation is different from the market value of the land. The Australian Valuation Office has provided a valuation which has placed
a value on the land of $1,140,000 as at 26 August 2011. This is the same month when the applicants made their claim for age pension. The latest accounts of the Fenton Superannuation Fund, for the year ended 30 June 2011, include a statement of financial position as at 30 June 2011. In that statement the land is valued at $1,500,000.
In these circumstances I do not consider that the Australian Valuation Office valuation is unfair. If anything the valuation of the Australian Valuation Office is a conservative valuation of the land.
The applicants contend that they have a debt to their son of some $1,700,000 for the cost of purchase of the land as well as duty. However, there is no such liability recorded in the latest accounts of the Fenton Superannuation Fund for the year ended 30 June 2011.
This debt cannot reduce the value of the superannuation fund.
The Social Security Appeals Tribunal has, quite properly, advised the applicants of their right to make a claim for hardship.
DECISION
I affirm the decisions under review.
I certify that the preceding 18 (eighteen) paragraphs are a true copy of the reasons for the decision herein of Dr P McDermott, RFD, Senior Member. ...............................[sgd]....................................
Associate
Dated 3 October 2012
Hearing on the Papers 14 September 2012
Key Legal Topics
Areas of Law
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Social Security Law
Legal Concepts
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Assessable Assets
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Superannuation Fund
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Assets Test
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