Ferreira and Secretary, Department of Social Services (Social services second review) - [2018] AATA 1290

Ferreira and Secretary, Department of Social Services (Social services second review) [2018] AATA 1290 (15 May 2018)
Division:GENERAL DIVISION
File Number: 2017/3293
Re:Paul Ferreira
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Senior Member Dr M Evans
Member L M Gallagher
Date:15 May 2018
Place:Perth

The Tribunal affirms the AAT Tier 1 Decision of 16 May 2017.
.......[sgd].................................................................
Senior Member Dr M Evans
CATCHWORDS
SOCIAL SECURITY – Parenting Payment (Single) – Income Test – Income from Family Trust – when Applicant entitled to receive trust income - permissible deductions for rental property income – repairs or capital improvements – decision under review affirmed
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) – s 25(1)
Evidence Act 1995 (Cth) – s 163
Income Tax Assessment Act 1997 (Cth) – s 8-1, s 8-5
Social Security Act 1991(Cth) – s 8, s 503, s 500I(1), s 1068A, s 1072, s 1073, s 1073(1), s 1075(3) and (4), s1207, s 1707A, s 1207B, s 1207C, s1207P, s 1207V, s 1207V(2)(a), s 1207X(2)(c)
Social Security (Administration) Act 1999(Cth) – s 142(1), s 179(1), item 8, Table to s 147, s 237(3)
CASES
British Insulated and Helsby Cables Ltd v Atherton [1926] AC 205
Lindsay v Federal Commissioner of Taxation (1961) 106 CLR 377
Mount Isa Mines Ltd v Federal Commissioner of Taxation (1992) 176 CLR 141
Phillips v Whieldon Sanitary Potteries Ltd (1952) 33 Tax Cas 213
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Vallambrosa Rubber Co Ltd v Farmer (1910) 5 TC 529
SECONDARY MATERIALS
Australian Master Tax Guide (58th ed, CCH Australia Limited, 2016)
Julie Cassidy, Concise Income Tax (5th ed, Federation Press, 2010)
CCH Commentary: Australian Income Tax Guide - para [4-075]
Guide to Social Security Law - para 4.3.8.30
Social Security (Attributable Stakeholders and Attribution Percentages) Principles 2017 - para 7(2)(c)
REASONS FOR DECISION
Senior Member Dr M Evans
Member L M Gallagher
15 May 2018
BACKGROUND

The Applicant is a single parent of a minor child. He made a claim for a parenting payment (single) (PPS) on 15 February 2016 (T9).
His claim for a PPS was rejected on 13 April 2016 (Exhibit R3, Attachment A, p 5) and 23 June 2016 (T17) on the basis that he failed to provide sufficient information about his income and assets.
By a Director’s Declaration dated 2 September 2015, the Applicant received a lump sum distribution from the Ferreira Family Trust (Family Trust) for the financial year ending 30 June 2015 (T6). The Trustee of the Family Trust is a company of which the Applicant’s parents are the Directors (T13, page 146).
The Applicant provided further information about his income and assets, however, on 8 September 2016 his claim was rejected on the basis that his assets exceeded the limit (Exhibit R3, Attachment A, p 11).
The Applicant sought an internal departmental review, and on 2 November 2016 an authorised review officer of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Ferreira and Secretary, Department of Social Services (Social services second review) [2018] AATA 1290
Case: [2018] AATA 1290
Decision Date: 15 May 2018

CaseChat Overview and Summary

This matter concerned an appeal to the Administrative Appeals Tribunal (AAT) by an applicant against a decision of an authorised review officer, which had been affirmed by the AAT on a first-tier review. The applicant sought a Parenting Payment (Single) and the core dispute revolved around whether he met the income test at the time of his claim on 15 February 2016. The respondent conceded that the applicant satisfied the assets test.

The AAT was required to determine two primary legal issues. Firstly, whether the applicant received income by way of a distribution from a family trust on 2 September 2015. Secondly, whether the installation of a new gas cooktop and a ducted split system air conditioning unit in a rental property constituted permissible deductions for the purpose of calculating rental income under the relevant legislation.

The Tribunal found that the AAT Tier 1 had erred in its determination of the date the applicant received the authorised review officer's decision, concluding that the applicant had lodged his application for review within the prescribed 13-week timeframe. This jurisdictional finding allowed the Tribunal to consider the substantive issues. The Tribunal then proceeded to consider the applicant's entitlement to the Parenting Payment, focusing on the income test and the deductibility of expenses related to the rental property.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

On 16 May 2017, the AAT Tier 1 affirmed the decision of the authorised review officer dated 2 November 2016 (the Reviewable Decision). The AAT Tier 1 did not review the substantive issues regarding the Applicant’s assets and income due to a finding that the Applicant lodged his application for a Tier 1 review outside of the 13 week timeframe. This Tribunal respectfully disagrees with those findings for the reasons set out below under the heading “Jurisdiction” and has considered the substantive issues, as set out in these reasons below. On 6 June 2017, the Applicant made an application to appeal the Reviewable Decision to the General Division of the Administrative Appeals Tribunal (AAT Tier 2) (T1). ISSUE The overall issue requiring determination by the Tribunal is whether the Applicant’s claim for a PPS on 15 February 2016 was correctly rejected. The Respondent conceded at the commencement of the hearing that the Applicant satisfied the assets test for a PPS because the Applicant provided evidence that the value of his assets at the time of his claim were less than the assets value limit. The Tribunal is also satisfied on the evidence that the Applicant satisfied the assets test at the time of his claim and refers to paragraphs 39 to 52 of Exhibit R2 in this regard. Thus, the specific issue before the Tribunal is whether the Applicant satisfied the income test on the day that he made his claim or during the following 13 weeks. To determine whether the Applicant satisfied the income test the Tribunal must consider:(a)whether the Applicant received income by way of a distribution from the Family Trust on 2 September 2015?; and(b)whether the installation of a new gas cooktop and a new ducted split system air conditioning system in the Waikiki rental property were permissible deductions for the purpose of calculating rental income under the Social Security Act 1991(Cth)(the Act)?JURISDICTION The jurisdiction of the AAT is established by s 25(1) of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act), which states:(1)An enactment may provide that applications may be made to the Tribunal:(a)for review of decisions made in the exercise of powers conferred by that enactment; or(b)for the review of decisions made in the exercise of powers conferred, or that may be conferred, by another enactment having effect under that enactment. In summary, s 25(1) of the AAT Act states that the jurisdiction of the Tribunal is given to it by other “enactments”, which grant it jurisdiction to review certain decisions made under those enactments. Section 142(1) of the Social Security (Administration) Act 1999 (Cth) (Administration Act) gives the AAT jurisdiction to conduct a Tier 1 Review. It provides:(1)Subject to section 144, application may be made to the AAT for review (AAT first review) of:(a)a decision of the Secretary, the Chief Executive Centrelink or an authorised review officer made under section 126 or 135; or(b)a decision under this Act made personally by the Secretary or the Chief Executive Centrelink.

Ratio Decidendi

Legal Principle Established

Section 142(1) of the Social Security (Administration) Act 1999 (Cth) (Administration Act) gives the AAT jurisdiction to conduct a Tier 1 Review. It provides:(1)Subject to section 144, application may be made to the AAT for review (AAT first review) of:(a)a decision of the Secretary, the Chief Executive Centrelink or an authorised review officer made under section 126 or 135; or(b)a decision under this Act made personally by the Secretary or the Chief Executive Centrelink. Section 179(1) of the Administration Act provides that an application may be made to the AAT for a Tier 2 Review:(1) Application may be made to the AAT for review (AAT second review) of a decision of the AAT on AAT first review made under subsection 43(1) of the AAT Act. As noted above, the AAT Tier 1 affirmed the decision of the authorised review officer dated 2 November 2016 on the basis that the Applicant had made his application for an AAT Tier 1 review more than 13 weeks after being given notice of the authorised review officer’s decision. The AAT Tier 1 Decision found that the Applicant was provided with the authorised review officer’s decision on 2 November 2016, and consequently, that when he lodged his application for the AAT Tier 1 Review on 6 February 2017, he was outside of the 13 week period. This meant that, if the AAT Tier 1 made a decision in the Applicant’s favour, it would not result in a material difference to him because it would take effect from 6 February 2017 (being the date he lodged his application for AAT Tier 1 review), when he was already in receipt of a parenting payment (Item 8, Table to s 147 of the Administration Act). However, as the Respondent has correctly stated (in Exhibit R5), 2 November 2016 was actually the day that the authorised officer’s decision was sent to the Applicant. Instead, the decision should be presumed to have been given to the Applicant on the fourth working day after the letter was posted (s 160(1) Evidence Act 1995 (Cth)). Accordingly, the Tribunal respectfully disagrees with the AAT Tier 1 findings regarding the date the Applicant received the authorised review officer’s decision. Instead, this Tribunal finds that the Applicant did lodge his application for review within the 13 week period because he is presumed to have received the authorised review officer’s decision on 8 November 2016 (four working days after 2 November 2016) unless there is evidence to raise doubt about this presumption (s 237(3) of the Administration Act). Consequently, if he is successful at this AAT Tier 2 review, he would be entitled to be paid the parenting payment from 15 February 2016. MATERIAL BEFORE THE TRIBUNAL The hearing commenced on 7 March 2018. The matter was part heard and then adjourned until 18 April 2018 to give the Applicant an opportunity to review the Respondent’s Statement of Facts Issues and Contentions (Exhibit R2) which he did not have before him at the hearing. Both parties appeared at the hearing by telephone. The Applicant was self-represented, and the Respondent was represented by Mr Jonathon Tsianikas from the Department. Oral submissions were made by the parties, and the Applicant gave oral evidence to the Tribunal.