Fill and Repatriation Commission (Veterans' entitlements)
[2020] AATA 1913
•24 June 2020
Fill and Repatriation Commission (Veterans' entitlements) [2020] AATA 1913 (24 June 2020)
Division:VETERANS' APPEALS DIVISION
File Number:2018/2985
Re:GRAHAM FILL
FIRST APPLICANT
MARILYN FILL
SECOND APPLICANT
AndREPATRIATION COMMISSION
RESPONDENT
DECISION
Tribunal:Senior Member Katter
Date:24 June 2020
Place:Brisbane
The decision under review is set aside and the matter is remitted to the Respondent for reconsideration in accordance with the recommendation that the First Applicant’s pension rate not be nil in accordance with the rate calculator, further to sections 36A(2) and/or 37A(2) of the Veterans’ Entitlements Act 1986.
.......................[SGD].................................................
Senior Member Katter
CATCHWORDS
VETERANS’ AFFAIRS – claim for service pension – s 36A and s 37A of the Veterans’ Entitlements Act 1986 – decision under review set aside and remitted for reconsideration
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth)
Veterans’ Entitlements Act 1986 (Cth)CASES
Burgess and Repatriation Commission [2016] AATA 598
Cooper and Repatriation Commission [1997] AATA 18
Woolley v Repatriation Commission [2007] AATA 2059SECONDARY MATERIALS
Explanatory Memorandum, Social Security and Veterans’ Entitlements Legislation Amendment (Private Trusts and Private Companies-Integrity of Means Testing) Bill 2000 (Cth)
Veterans' Entitlements (Attributable Stakeholders and Attribution Percentages) Principles 2001
Veterans' Entitlements (Attribution of Assets) Principles 2001
Veterans’ Affairs (Legislative Re-making Exercise) Instrument 2014
Veterans’ Entitlements (Means Test Treatment of Private Trusts – Excluded Trusts) Declaration 2015
REASONS FOR DECISION
Senior Member Katter
24 June 2020
APPLICATION
This is a review of a decision of the Respondent declining the Applicants’ claims for service pensions further to sections 36A(2) and 37A(2) of the Veterans’ Entitlements Act 1986 (Cth) (“the Act”).
BACKGROUND
The First Applicant served in the Australian Army from 28 September 1965 until 28 September 1967[1]. The First Applicant served in Vietnam during the period 4 February 1967 to 28 September 1967[2].
[1] Exhibit 1, T-documents T15.5, page 107.
[2]Exhibit 1, T-documents T15.5, page 107; Exhibit 14, Affidavit of the First Applicant dated 23 August 2018 pages 2 and 3.
The Second Applicant is married to the First Applicant, having been married in September 1968[3].
[3] Exhibit 1, T-documents T3, page 9.
By a claim for service pension form received by the Respondent on 4 April 2017[4], the First and Second Applicants[5] lodged a claim for an age service pension[6]. The claim form also applied for an invalidity service pension at the TPI rate or special rate[7], however, as to the question on the form whether the First Applicant receives a ‘DVA disability pension’, it was stated “Yes √ TPI”[8]. The Second Applicant states, as to the question whether the First Applicant is ‘receiving a service pension, income support supplement or disability pension from DVA’: “No √”[9]. Question 34 of the claim for service pension form Part B is not answered: “Are you or have you (and/or your partner) been involved in a private trust in the last five years? You may be, or have been a trustee, an appointor or a beneficiary. You may have made a loan to a private trust, made a gift of cash, assets or property to a private trust in the last five years, relinquished control of a private trust, a private annuity, a life interest or an interest in a deceased estate”[10].
[4] Exhibit 1, T-documents T3, page 6.
[5] Exhibit 1, T-documents T3, page 21.
[6] Exhibit 1, T-documents T3, page 7, section A, point 1.
[7] Exhibit 1, T-documents T3, page 7, section A, point 2.
[8] Exhibit 1, T-documents T3, page 9, section A, point 13.
[9] Exhibit 1, T-documents T3, page 10, section C, point 25.
[10] Exhibit 1, T-documents T3, page 31.
On 11 April 2017, as to the claim for a service pension received on 4 April 2017, a delegate of the Secretary of the Respondent sent a letter to the Applicants requesting further information, stating that the request for further information was authorised by section 54AA[11] of the Act[12]. The following information was requested by that letter dated 11 April 2017:
“I require further information regarding your Trust. Please provide me with a copy of the Trust Deed plus certified copies of any later amendments to the Deed. I also require a copy of the latest available tax return for the Trust as well as the latest balance sheet, profit and loss statement and depreciation schedule plus any notes to the financial statements.
…You advised in the sole claim form that you are involved in a Business such as a Partnership or Sole Trader or Subcontractor. If this is not the case please advise in writing what business you were referring to when you answered this question in the affirmative (Question 36).”[11] Section 54AA(3) of the Act states:
[12] Exhibit 1, T-documents T5, pages 35 and 36.
On 17 April 2017 the Applicants provided to the Respondent copies of the following documents: (1) Fill Unit Trust Deed; (2) 2015 Fill Unit Trust Tax Return; (3) Fill Unit Trust Financial Report for 2015; and (4) Retirement Benefits Form D531[13]. That letter of 17 April 2017 from the Applicants also stated[14]:
“This business has been on a downhill spiral for many years.
You will note the business sustained a loss of $2969:00 in 2015 with a total available for distribution @ $735,841; additionally, there is a non-current loan from G. & M. Fill to the Fill Unit Trust @ $858,792:00The answer to Question 36 is a Law Practice – GBF e-Lawyers.”[13] Exhibit 1, T-documents T7, page 38.
[14] Exhibit 1, T-documents T7, page 38.
On 2 May 2017 a delegate of the Respondent determined that[15]:
[15] Exhibit 1, T-documents T8, pages 66 and 67.
“The Fill Unit Trust is a designated trust as per s 52ZZB of VEA:
Basis of determination:
The Fill Unit Trust is a fixed trust.
The units … Trust are not held by 50+ persons
The … Trust was not created to receive extra pension.
The … [T]rust is not a complying super fund
The … Trust is not an excluded trust. …
[The First Applicant] is the sole unit holder of the trust. Attribution = 100% Mr Fill as per the control test under s 52ZZH of VEA.
Loan to Trust of $858792.00 places [the First Applicant] over the asset limit. There is also an additional loan of $302485 listed as unit holders accounts. As [the First Applicant] is the only unit holder of the trust this will also be counted as a loan. Net assets of the Trust = $735831 Loss. Net income = $2519 Loss”.By a letter dated 2 May 2017 to the Applicants a delegate of the Secretary of the Respondent stated[16]:
[16] Exhibit 1, T-documents T9, pages 68-70.
“On 2 May 2017 a delegate of the Repatriation Commission decided that you are not eligible for payment of an income support pension, as the combined value of your own and your partner’s assets has been calculated to be above the limit that would allow for payment.
Current Asset Limits
For you to be eligible to receive payments of the income support pension the value of your combined assets must be below $821500.00.
Asset Valuations
The total value of your assets is calculated to be $1278228.00.
In calculating the level of your assets the Department takes into account the market value of your assets. This means, what you would be likely to receive for the asset if it was realised (for investments) or sold (for other assets) on the open market. Your principal place of residence is not considered to be an asset under the Assets Test.
A full listing of your assets as calculated for income support pension payment purposes is attached.
You may re-apply for the income support pension at any time in the future should you feel that the value of your assets would permit payment.
…INCOME AND ASSETS SUMMARY
Asset/Income Type Asset Total Income Total
Financial Institutions $1505.00
Loans to Trust $1161277.00*
Financial Assets – Deemed
Income p/f $1406.04
Home Assets $10000.00
Fill Unit Trust $0.00 $0.00
Life Assurance $12000.00
TOTAL ASSETS $1278228.00
TOTAL INCOME p/f $1406.40
*Whilst the loans to the Trust are accepted as liabilities and subtracted from the Trust assets, they are also assessed as financial assets.”On 3 July 2017 the Applicants, further to the correspondence from the Respondent dated 2 May 2017[17], provided by correspondence the following documents: (1) notice of resignation as trustee of the Fill Unit Trust; (2) Minutes of resignation of Trustee; and (3) Deed of appointment and retirement of Trustee[18]. That correspondence of 3 July 2017 from the Applicants also stated[19]:
[17] Exhibit 1, T-documents T9, pages 68-70.
[18] Exhibit 1, T-documents T11, pages 72 and 73.
[19] Exhibit 1, T-documents T11, pages 72 and 73.
“As previously advised it is intended to appeal your decision.
In the circumstances, we would request that you nominate a reviewer of your decision so that we may proceed with Appeal documentation.
At this stage the basis of the appeal will centre around your income and assets summary with respect to Graham Boyden Fill.
Graham Fill has no institutional assets.
Mr Fill is a TPI Pensioner. Monies advanced to the Fill Unit Trust have been written off. Those funds were advanced to the Fill Unit Trust so that it could continue to practice. Any funds advance[d] are not recoverable.Mr Fill has no financial assets. …
Mr Fill is not a member of the Fill unit trust;
Mr Fill is neither a trustee nor beneficiary of the Fill Unit Trust and has no entitlement to recover from the trust even if the “loans” are recoverable.
The Life Insurance policy is on Mr Fill’s life. Apart from its surrender value of the policy it is worthless to Mr Fill.Mr Fill has a motor vehicle which is necessary to convey him and his wheel chair. He is a dual amputee (a below knee amputation of the left leg and a partial amputation of the right foot)[.] The motor vehicle is a necessary which should not be considered when MEANS TESTING.
We calculate the assets as follows: $1,278,228:00
Less “Loans to Trust” $1,161,277:00
Sub Total $116, 901:00
Less Financial Institutions $1,595:00
Sub Total $115,426:00
Less Financial Assets (Deemed) Nil $1,406:49
Sub Total $113,517:51
Less Motor Vehicle Great Wall $10,000:00
Total Assets & Income $103,51751”.On 30 August 2017, further to a request for further specificity by the Applicants dated 18 August 2017, the Respondent stated that the main issue concerned the assessment of the Fill Unit Trust and particularly the loans to the Fill Unit Trust totaling $1,161,277.00[20]. The Respondent stated it had been determined by the delegate in the decision dated 2 May 2017 that the First Applicant was the sole unit holder of the Fill Unit Trust[21]. The Respondent further stated: “ … if evidence is provided as to the Applicants removing themselves as beneficiaries from the Trust, then section 52ZZY of the Act applies as an attributable stakeholder who resigns control of a private trust on or after 1 January 2002 is treated in a manner comparable to other people who gift or relinquish assets”[22]. The Respondent stated that the loan amount of $1,161,277.00 was obtained from the Fill Unit Trust financial report for the year ended June 2015 and that that was the latest report available at the time of the Applicants’ claim for service pension[23]. The Respondent then asked a series of questions relating to the loan amount and sought bank account statements and mortgage statements for all accounts held by the Applicants from 30 June 2015 to the date of that correspondence[24].
[20] Exhibit 1, T-documents T12, page 80.
[21] Exhibit 1, T-documents T12, page 80.
[22] Exhibit 1, T-documents T12, page 81.
[23] Exhibit 1, T-documents T12, page 81.
[24] Exhibit 1, T-documents T12, pages 82 and 83.
By correspondence to the Applicants on 25 September 2017, the Respondent stated that the total assessable assets for the Applicants, based on the Fill Unit Trust financial statements for the year ended 30 June 2015, were $1,278,228.00, with the assets value limit for a married homeowner as at 2 May 2017 being $821,500.00[25]. Further, the Respondent stated that the assets consist of two loans to the Fill Unit Trust of $858,792.00 and $302,485.00, totaling $1,161,277.00[26].
[25] Exhibit 1, T-documents T14, page 86.
[26] Exhibit 1, T-documents T14, page 86.
On 17 October 2017 the First Applicant sent correspondence to the Respondent, enclosing documents and stating as follows[27]:
[27] Exhibit 1, T-documents T15, pages 89 and 90.
“The practice was gift[ed] to Grant Boyden Fill. The transfer is from the Trustee to one of the Unit holder. It is the writers view that no tax is payable by the incoming trustee. We are simply awaiting … his formal appointment as having an open practicing certificate. As soon as he gets the go ahead we will formally notify the Law Society and the Bank with respect to the Trust Account.
We note with respect to the performance of the Fill Unit Trust; but for the injection of funds from Mr and Mrs Fill the Trust would have been trading insolvent for many years certainly since 2004 Financial Year.
To answer the specific questions in Item 9 above – There was no formal loan agreement.
In the following years the Fill Unit Trust made a loss which was deemed unrecoverable and made good by Mr & Mrs Fill: We enclose herewith the following financial records – Profit and Loss Statements and Balance Sheets of the Unit Trust for the following years
30 June 2004 $121,720:68
30 June 2005 $177,583:00
30 June 2006 $236,281:00
30 June 2007 $194,682:00
30 June 2008 $54,136:00
30 June 2009 $388:331:00
30 June 2010 $611,047:00
30 June 2011 $1,061,084:00
30 June 2012 $1,145,9311:00 (See adjunct to 2012 Profit and Loss Statement)
30 June 2013 $723,759:00
30 June 2014 $733, 142:00
30 June 2015 $735,841:00 ($5,872,537:68)
30 June 2016 $707,888:00 (See adjunct to 2017 Profit and Loss Statement)
30 June 2017 $706,397:00 (Debt forgiven)Loss 1/07/2004 to 30 June 2017 $7,286,822:68.”
With that correspondence from the First Applicant dated 17 October 2017 was correspondence from Mr Tim Goh, a partner of Accounting 4 Success, dated 9 October 2017[28]. Mr Goh states that he has been the accountant for the Fill Unit Trust, trading as GBF e-Lawyers and the First and Second Applicants for the past ten years, with the Fill Unit Trust and the Applicants having used, before that time, the accounting practice then acquired by his accounting practice[29]. Mr Goh states that the law practice of GBF e-Lawyers has, since 2009, been sustaining losses, in that the First Applicant was severely incapacitated with poor health[30]. Further, Mr Goh states that the Fill Unit Trust has accumulated losses of $706,987 as at 30 June 2017, which were financially supported by the First and Second Applicants from cash drawn against their superfund entitlements and sale of their residence[31]. Further, Mr Goh states that the “personal loan to the firm is not supported by any tangible or intangible assets of the firm and in 2017 the debts were written off as irrecoverable and statute-barred”[32].
[28] Exhibit 1, T-documents T15.1 pages 104 and 105.
[29] Exhibit 1, T-documents T15.1 pages 104 and 105.
[30] Exhibit 1, T-documents T15.1 pages 104 and 105.
[31] Exhibit 1, T-documents T15.1 pages 104 and 105.
[32] Exhibit 1, T-documents T15.1 pages 104 and 105.
On 20 December 2017 a delegate of the Respondent corresponded to the Applicants requesting the Fill Unit Trust financial statements for the financial year ended June 2016, a final tax return for the Fill Family Trust or a private trust form for that trust, full financial statements for the Fill Family Trust, a private company form for Valbide Pty Ltd and statements relating to any superannuation investments held by the Applicants[33].
[33] Exhibit 1, T-documents T19 pages 429-431.
On 20 February 2018 the Applicants corresponded as to the letter of the Respondent dated 20 December 2017, enclosing 2016 financial reports, profit and loss statements and balance sheets for the Fill Unit Trust, identifying a loss for the trust in 2016 of $707,888.00[34]. As to the Fill Family Trust and Valbide Pty Ltd the Applicants stated that they are “not income producing”[35], with the last tax return of the Fill Family Trust being the year ended 30 June 2013 and that Valbide Pty Ltd is a service company for the Fill Unit Trust[36]. The correspondence attached a Fill Family Trust tax return for 2013[37] and Valbide Pty Ltd balance sheets and financial statements for the years 2016[38].
[34] Exhibit 1, T-documents T20, page 432.
[35] Exhibit 1, T-documents T20, page 433.
[36] Exhibit 1, T-documents T20, page 433.
[37] Exhibit 1, T-documents T20, page 433.
[38] Exhibit 1, T-documents T20, page 434.
Further to the application for review of the decision dated 2 May 2017, on 23 April 2018 the Respondent affirmed the decision dated 2 May 2017[39]. The delegate of the Respondent stated that the Fill Unit Trust Deed received on 21 April 2017 by the Respondent shows the First Applicant as the sole unit holder of 180 units in the Fill Unit Trust, with the income from the Fill Unit Trust being 100% attributed to the First Applicant in accordance with s 52ZZJ of the Act and the assessable assets of the Fill Unit Trust being 100% attributed to the First Applicant in accordance with s 52ZZR of the Act[40].
[39] Exhibit 1, T-documents T21.1, page 510.
[40] Exhibit 1, T-documents T21.1, page 517.
On 22 May 2018 the First Applicant applied to this Tribunal for review of the decision of the Respondent dated 23 April 2018 stating that[41]: “The Decision maker erred in that he did not give sufficient weight or consideration to the submissions by the Applicant. The Applicant’s funds were released to the business in order to keep it operating. The subject trust, in fact runs the business and therefore the applicant, personally, qualifies for [a] service pension by meeting the assets and income test.”
[41] Exhibit 1, T-documents T1, page 2.
EVIDENCE
The First Applicant gave oral evidence at the hearing[42].
[42] Transcript P-5 to P-31.
The First Applicant stated that the only asset that he owned was a motor vehicle he identified as a 10-year old Great Wall SUV[43]. The First Applicant stated that he had no other income, other than the income from his Repatriation Commission disability compensation pension[44]. The First Applicant stated that he held a joint bank account with the Second Applicant, which held a balance ranging ‘somewhere between $16 and $100’[45].
[43] Transcript P-6, line 9.
[44] Transcript P-6, lines 14-16.
[45] Transcript P-6, lines 21-22.
The First Applicant stated that “the Fill Unit Trust is the practice”[46], referring to the legal practice, GBF e-Lawyers. The First Applicant stated that the Fill Unit Trust from 2003 to 2017 incurred losses totalling “something in the order of $7 million”[47]. As to why the First Applicant put money into the practice leading up to the period where he ceased the practice, the First Applicant stated that his eldest son was ‘doing law’ and once the son was qualified he could have the legal practice[48]. The First Applicant stated that his son was “ … already a beneficiary and that occurred around about 2017, 3 January to be precise”[49].
[46] Transcript P-7, line 44.
[47] Transcript P-7, lines 37-38.
[48] Transcript P-7, lines 1-8.
[49] Transcript P-7, lines 8-9.
In cross-examination the First Applicant was taken to clause 2 and the first schedule of the Fill Unit Trust Deed and stated that it was correct that the First Applicant was the only person mentioned in the first schedule as a unit holder[50]. As to whether anyone else held units in the trust, the First Applicant stated that “ … Paul Chadwick would have them” and that ‘he didn’t know’[51]. As to whether the First Applicant was a unit holder in the Fill Unit Trust, the First Applicant referred to sub-clause 24(c) of the Fill Unit Trust Deed, which provided that a trustee may be a unit holder but not the sole unit holder[52]. The First Applicant stated he “did assume that” he was a unit holder in the Fill Unit Trust[53], but he made no assumptions that he was the sole unit holder[54]. The First Applicant referred to the Fill Unit Trust Deed as only being amended in 1980[55].
[50] Transcript P-13, lines 19-21.
[51] Transcript P-13, lines 22-36.
[52] Transcript P-14, lines 7-11.
[53] Transcript P-14, lines 25-30.
[54] Transcript P-14, lines 32-33.
[55] Transcript P-15, lines 11-13.
The Applicant was referred[56] to Minutes of 3 January 2017 (which are included as an exhibit[57] to the First Applicant’s Affidavit sworn 20 November 2018[58]), which record undertakings by the First and Second Applicants as to retiring as beneficiaries of the Fill Unit Trust respectively[59].
[56] Transcript P-17, lines 34-44.
[57] Exhibit 16, Affidavit of the First Applicant dated 20 November 2018, exhibit GBF-05.
[58] Exhibit 16, Affidavit of the First Applicant dated 20 November 2018.
[59] Exhibit 16, Affidavit of the First Applicant dated 20 November 2018, paragraph 6.
The First Applicant denied that the money that was provided to the Fill Unit Trust from about 2004 onwards constituted ‘loans’[60], stating that the financial reports record the money provided as ‘loans’, with that being the “words of the accountant”[61]. The First Applicant was also taken to a letter from the accountant Mr Goh dated 16 August 2012[62] which refers to a loan repayment of $99,996.00[63].
[60] Transcript P-20, lines 35-36.
[61] Transcript P-20, lines 37-40.
[62] Exhibit 14, Affidavit of the First Applicant dated 23 August 2018.
[63] Transcript P-25, lines 5-10.
The First Applicant stated that the purpose of Valbide Pty Ltd was as a service company for the First Applicant’s law firm[64], meaning that it would attend to any non-legal matters and “Valbide would in turn invoice the Fill Unit Trust for payment so that the payment wasn’t directly to the Fill Unit Trust”[65].
[64] Transcript P-8, line 18.
[65] Transcript P-8, lines 25-26.
The First Applicant stated that an entity, Tiananmen Corporation, was a shelf company he purchased from Rapid Companies, a Gold Coast firm, for the purpose of using Tiananmen Corporation as a trading company to conduct operations in New Zealand[66]. The company however never traded, and the First Applicant stated it was deregistered on “19 August last year”[67].
[66] Transcript P-8 lines 40-47.
[67] Transcript P-9 lines 1-4.
The Second Applicant gave oral evidence at the hearing. The Second Applicant stated that the only asset that the Applicants have is the home that they live in, which has a mortgage[68]. The Second Applicant was doing the bookkeeping for the Fill Unit Trust, the Fill Family Trust and Valbide Pty Ltd.
[68] Transcript P-32, lines 38-40.
As to Valbide Pty Ltd, the Second Applicant stated that it did not make money or distribute funds to anyone, other than the payment of accounts relating to the law firm; being wages, stationery and rent[69].
[69] Transcript P-33, lines 10-20.
As to the Fill Unit Trust, the Second Applicant stated that as far as known, the Second Applicant had no interest in that trust[70].
CONSIDERATION
[70] Transcript P-34, lines 31-34.
Sections 36A and 37A
An age service pension is not payable if the age service pension rate would be nil in accordance with s 36A(2).
An invalidity service pension is not payable if the invalidity service pension rate would be nil in accordance with s 37A(2).
Sections 36N and 37N respectively provide that the age service pension rate and the invalidity pension rate are to be worked out in accordance with the Rate Calculator.
The Rate Calculator is in Part 2 of Schedule 6 of the Act. The Schedule 6 Part 2 Rate Calculator includes Module A, being the overall rate calculation process. That Module A includes “Method Statement 1”, which states: “Step 7. Apply the assets test using MODULE F below to work out the reduction for assets.” Module F is headed “Assets test” and has a Method statement which states: “Step 1. Work out the value of the person's assets”.
The word “asset” is defined in s 5L of the Act:
“"asset" means property or money (including property or money outside Australia).
Note: However, certain property or money is to be disregarded when calculating the value of a person's assets for certain purposes (for example, see subsection 52(1)).”
Section 52D
The Respondent submits that s 52D of the Act is applicable as to the whether the relevant ‘loans’, referred to above, are assets, in that s 52D states: “If a person lends an amount after 22 May 1986, the value of the assets of the person for the purposes of this Act includes so much of that amount as remains unpaid but does not include any amount by way of interest under the loan”.
The Respondent submits that where the loan of $824,101 from the Applicants to the Fill Unit Trust remains unrecoverable, the value of the assets of the Applicants for the purposes of the Act includes so much of the loan that remains unpaid in accordance with s 52D.
The Respondent submits that s 52D is determinative, subject only to the potential application of ss 52Y and 52Y of the Act[71]. Both s 36A(2) and s 37A(2) of the Act, as referred to above, include a note, respectively, which states: “Note: A veteran whose rate might otherwise be nil under the Rate Calculator may not have a nil rate after the application of the financial hardship provisions (sections 52Y and 52Z)”.
[71] Exhibit 25, Respondent's further supplementary submissions filed 18 May 2020 page 3
paragraph
10.
Section 52Y(1) only applies if all the paragraphs 52Y(1)(a)-(e) are all satisfied[72]. Section 52Y of the Act, as to access to the financial hardship rules, states as a requirement that the First or Second Applicants lodge at an office of the Department in Australia in accordance with s 5T a written request that s 52Y applies to the person. There is no evidence, specifically, as to a written request in that regard: s 52Y(1)(d). Section 52Z is the application of the financial hardship rules, which are accessible by s 52Y of the Act[73]. Sections 52Y and 52Z are therefore inapplicable and do not alter s 52D.
[72] See Cooper and Repatriation Commission [1997] AATA 18 at [8] per Senior Member Dwyer.
[73] See Cooper and Repatriation Commission [1997] AATA 18 at [9] per Senior Member Dwyer.
Division 11A of Part IIIB
Division 11A of Part IIIB of the Act includes provisions as to the attribution to individuals of the assets and income of private companies and private trusts.
Division 11A of Part IIIB of the Act has the purpose of ensuring that applicants who hold their assets in private companies or private trusts receive comparable treatment under the means test to those who hold assets directly[74].
[74] Explanatory Memorandum, Social Security and Veterans’ Entitlements Legislation Amendment (Private Trusts and Private Companies-Integrity of Means Testing) Bill 2000 (Cth).
Section 52ZZB of the Act states:
“Designated private trusts
(1) For the purposes of this Division, a trust is a designated private trustunless:
(a) all of the following conditions are satisfied:(i) the trust is a fixed trust;
(ii) the units in the trust are held by 50 or more persons;
(iii) the trust was not created, continued in existence or operated under a scheme that was entered into or carried out for the sole or dominant purpose of enabling any individual or individuals to avoid the application of this Division and/or Part 3.18 of the Social Security Act; or
(b) the trust is a complying superannuation fund (see subsection (3)); or
(c) the trust is an excluded trust (see subsection (4)).(2) For the purposes of subparagraph (1)(a)(ii), an individual and his or her associates are taken to be one person.
Complying superannuation funds
(3) For the purposes of this section, a fund is a complying superannuation fundat a particular time if:
(a) that time occurs during a particular tax year of the fund; and(b) under section 45 of the Superannuation Industry (Supervision) Act 1993, the fund is a complying superannuation fund for the purposes of the Income Tax Assessment Act 1997in relation to that tax year.
Excluded trusts
(4) The Commission may, by legislative instrument, declare that each trust included in a specified class of trusts is an excluded trustfor the purposes of this section.
(5) The declaration has effect accordingly.
Definitions
(7) In this section:
"fixed trust" means a trust where persons have fixed entitlements to all of the income and corpus of the trust.
"income" means income within the ordinary meaning of that expression.
"unit", in relation to a trust, includes a beneficial interest, however described, in the property or income of the trust.”There is no evidence to indicate that the units in the Fill Unit Trust are held by 50 or more people. As that condition is not applicable, sub-s 52ZZB(1)(a) does not apply, as all the conditions are to be satisfied. The evidence does not indicate, and it is not contended by the Applicants that the Fill Unit Trust is a complying superannuation fund in accordance with sub-s 52ZZB(1)(b). As to sub-s 52ZZB(1)(c) the Fill Unit Trust is not an excluded Trust in accordance with sub-s 52ZZB(4) by declaration in accordance with the Veterans’ Entitlements (Means Test Treatment of Private Trusts – Excluded Trusts) Declaration 2015[75]. The excluded trusts in that Declaration are ‘community trusts’ and ‘fixed trusts’ created before the reference time of 9 May 2000, neither of which are applicable to the Fill Unit Trust.
[75] Registered 11 Aug 2015, Instrument 2015 No. R10, F2015L01246.
Therefore, in accordance with s 52ZZB the Fill Unit Trust is a “designated private trust”, in that sub-paragraphs (1)(a), (b) and/or (c) are not applicable.
Section 52ZZH of the Act states:
Controlled private trusts
(1) For the purposes of this Division, a trust is a controlled private trustin relation to an individual if the trust is a designated private trust and:
(a) the individual passes the control test set out in subsection (2); or
(b) the individual passes the source test set out in subsection (3).Control test
(2) For the purposes of this section, the individual passes the control test in relation to a trust if:
(a) the individual, or an associate of the individual (other than an associate covered by paragraph 52ZQ(1)(j)), is the trustee, or any of the trustees, of the trust; or
(b) a group in relation to the individual was able to remove or appoint the trustee, or any of the trustees, of the trust; or
(c) a group in relation to the individual was able to vary the trust deed or to veto the decisions of the trustee; or
(ca) it could reasonably be expected that the trustee of the trust would make an application of the corpus or income of the trust to the individual if the individual could not meet his or her reasonable costs of living; or
(d) the aggregate of:(i) the beneficial interests in the corpus or income of the trust held by the individual (whether directly or indirectly); and
(ii) the beneficial interests in the corpus or income of the trust held by associates of the individual (whether directly or indirectly);
is 50% or more; or
(da) either or both of the following apply:(i) the individual is eligible to receive an application of the corpus or income of the trust;
(ii) one or more of the individual's associates are eligible to receive an application of the corpus or income of the trust;
and the aggregate number of entities covered by subparagraphs (i) and (ii) is 50% or more of the total number of entities eligible to receive an application of the corpus or income of the trust; or
(e) a group in relation to the individual had the power (by means of the exercise by the group of any power of appointment or revocation or otherwise) to obtain, with or without the consent of any other entity, the beneficial enjoyment of the corpus or income of the trust; or
(f) a group in relation to the individual was able in any manner whatsoever, whether directly or indirectly, to control the application of the corpus or income of the trust; or
(g) a group in relation to the individual was capable under a scheme of gaining the enjoyment or the control referred to in paragraph (e) or (f); or
(h) a trustee of the trust was accustomed or under an obligation (whether formally or informally) or might reasonably be expected to act in accordance with the directions, instructions or wishes of a group in relation to the individual.
(2A) For the purposes of paragraph (2)(da), an entity is eligible to receive an application of the corpus or income of the trust if the trustee of the trust has a discretion to make an application of the corpus or income of the trust to the entity.
(2B) For the purposes of applying paragraph (2)(da) at a particular time, subparagraph (2)(da)(i) is taken to apply at that particular time to the individual if the individual was eligible to receive an application of the corpus or income of the trust at any time during:
(a) the period beginning at the start of the tax year in which that particular time occurs and ending at that particular time; or
(b) the preceding tax year.
(2C) For the purposes of applying paragraph (2)(da) at a particular time, subparagraph (2)(da)(ii) is taken to apply at that particular time to an entity that is an associate of the individual at that particular time if:
(a) the entity was eligible to receive an application of the corpus or income of the trust at any time during:(i) the period beginning at the start of the tax year in which that particular time occurs and ending at that particular time; or
(ii) the preceding tax year; and
(b) the entity was an associate of the individual at the time the entity was so eligible.
(2D) For the purposes of applying paragraph (2)(da) at a particular time, in working out the total number of entities eligible to receive an application of the corpus or income of the trust, take into account an entity that was eligible to receive an application of the corpus or income of the trust at any time during:
(a) the period beginning at the start of the tax year in which that particular time occurs and ending at that particular time; or
(b) the preceding tax year.
(2E) No paragraph of subsection (2) limits any other paragraph of that subsection.Source test
(3) For the purposes of this section, an individual passes the source test in relation to a trust if:
(a) the individual has transferred property or services to the trust after 7.30pm, by standard time in the Australian Capital Territory, on
9 May 2000; and
(b) the underlying transfer was made for no consideration or for a consideration less than the arm's length amount in relation to the underlying transfer.
Group
(4) A reference in this section to a groupin relation to an individual is a reference to:
(a) the individual acting alone; or
(b) an associate of the individual acting alone; or
(c) the individual and one or more associates of the individual acting together; or
(d) 2 or more associates of the individual acting together.Income
(5) In this section:
income means income within the ordinary meaning of that expression.As the Fill Unit Trust is a designated private trust in accordance with s 52ZZB, the question is then whether the control or the source tests as stated in s 52ZZH are applicable, where either or both are required to be applicable for the Fill Unit Trust to be a ‘controlled private trust’in relation to an individual.
For the purposes of s 52ZZH an individual ‘passes’ the control test in relation to a trust if the individual or an associate of the individual (other than an associate covered by paragraph 52ZQ(1)(j)) is the trustee or any of the trustees of the trust. Section 52ZQ(1)(j) of the Act refers to the individual or an entity that is an associate of the individual. The evidence from the Applicants was that their son had become a trustee of the Fill Unit Trust[76]. It is found therefore that an associate is the trustee ‘or any of the trustees’ of the Fill Unit Trust in accordance with s 52ZZH(2)(a) of the Act. The Respondent submitted that sub-paragraph 52ZZH(2)(b) was also applicable, in that the First Applicant was a sole unit holder having power to remove a trustee, referring to clause 25(a)(3) of the Fill Unit Trust Deed[77]. The Respondent further submitted that sub-s 52ZZH(2)(f) and (h) were applicable as a current trustee is the son of the Applicants.
[76]Section 52ZQ(1)(e) of the Act defines an Associate as including a relative of the individual. Section 52ZP of the Act defines a relative as including a child of a person.
[77] Exhibit 1, T-documents T7.1, page 43.
Therefore, the First Applicant ‘meets’ the control test in relation to the Fill Unit Trust and the Fill Unit Trust is a controlled private trust for the purposes of the Division: s 52ZZH(1).
Section 52ZZJ of the Act states:
“Attributable stakeholder, asset attribution percentage and income attribution percentage …
Trust
(2) For the purposes of this Division, if:
(a) a trust is a controlled private trust in relation to an individual; and
(b) the trust is not a concessional primary production trust in relation to the individual (see section 52ZZZF);
then:
(c) the individual is an attributable stakeholderof the trust unless the Commission otherwise determines; and
(d) if the individual is an attributable stakeholder of the trust--the individual's asset attribution percentagein relation to the trust is:(i) 100%; or
(ii) if the Commission determines a lower percentage in relation to the individual and the trust--that lower percentage; and
(e) if the individual is an attributable stakeholder of the trust--the individual's income attribution percentagein relation to the trust is:(i) 100%; or
(ii) if the Commission determines a lower percentage in relation to the individual and the trust--that lower percentage.
(2A) The only attributable stakeholderof a special disability trust is the principal beneficiary of the trust.
Note 1: For special disability trust, see section 52ZZZW.
Note 2: For principal beneficiaryof a special disability trust, see subsection 52ZZZWA(1).
Determinations
(3) A determination under this section is to be in writing.
(4) A determination under this section has effect accordingly.
(5) In making a determination under this section, the Commission must comply with any relevant decision-making principles.”
It is not contended by the Applicants that the Fill Unit Trust is “not a concessional primary production trust”: s 52ZZJ(2)(b).
There is a determination further to sub-s 52ZZJ(3) of the Act: Veterans’ Affairs (Legislative Re-making Exercise) Instrument 2014 (Cth) (“the Instrument”)[78]. As to s 52ZZJ(2)(c) of the Act, the Instrument “ … sets out decision-making principles with which the Commission must comply in making a determination that … an individual is not an attributable stakeholder of a … trust”[79]. The relevant decision-making principles are the Veterans’ Entitlements (Attributable Stakeholders and Attribution Percentages) Principles 2001 (“the Principles”) contained in Schedule 2 of the Instrument. Section 7 of the Principles states:
[78] F2015L00068, 2014 No. R62, registered 23 Jan 2015 (to sunset on 1 April 2025).
[79] Veterans’ Affairs (Legislative Re-making Exercise) Instrument 2014, Schedule 2, Veterans’
“7 Circumstances affecting relationship with company or trust
(1)The Commission must consider whether there are relevant circumstances that make it inappropriate for the individual to be an attributable stakeholder of the company or trust.
(2) For subsection (1), relevant circumstances include the extent to which the relationship between the individual and the company or trust is affected by any of the following circumstances:
(a) circumstances arising from the legal structure of the company or trust;
(b) circumstances arising from the administrative arrangements of the company or trust;(c) whether, having regard to the relationship between the individual and the company or trust, the individual can reasonably be
expected to exercise effective control in relation to the company or trust.”
The Respondent submits, as to sub-section 7(2) of the Instrument, that the only unit holder in the trust was the First Applicant, in circumstances where the documents do not record any other document as to a unit holding by anyone else at any time. Further, it is not contended that any other person or entity is a unit holder. It was submitted, therefore, that the loans have to be attributed to the Applicants. The Respondent further submitted that the renunciation as trustee on the part of the First Applicant was not in accordance with the provisions of the Fill Unit Trust Deed, where a renunciation is said to have occurred as to the units.
Therefore, the First Applicant is an attributable stakeholderof the Fill Unit Trust (s 52ZZJ(2)(c)), in that the trust is a controlled private trust in relation to an individual and the trust is not a concessional primary production trust in relation to the individual. The First Applicant as an attributable stakeholder of the trust has an asset attribution percentage and income attribution percentage in relation to the Fill Unit Trust of 100%: s 52ZZJ(2)(d)(i) and s 52ZZJ(2)(e)(i).
Section 52ZZR of the Act states:
Attribution of assets
“(1) For the purposes of this Act, if:
(a) an individual is an attributable stakeholder of a … trust at a particular time on or after 1 January 2002; and
(b) at that time, the … trust owns a particular asset (whether alone or jointly or in common with another entity or entities); and
(c) if, at that time, that asset had been owned by the individual instead of by the … trust, the value of the asset would not be required to be disregarded by any express provision of this Act; and
(d) at that time, the asset is not an excluded asset (see subsection (2));there is to be included in the value of the individual's assets an amount equal to the individual's asset attribution percentage of the value of the asset referred to in paragraph (b).
Note: For attribution of the assets of a special disability trust, see section 52ZZZWK.
Excluded assets
(2)The Commission may, by writing, determine that, for the purposes of the application of subsection (1) to a specified individual and a particular company or trust, a specified asset is an excluded asset.
(3)A determination under subsection (2) has effect accordingly.
(4) In making a determination under subsection (2), the Commission must comply with any relevant decision-making principles.”
The Respondent submitted that the assets from the Fill Unit Trust were attributable to the First Applicant under s 52ZZR of the Act[80]. Both the loan of $824,101 from the Applicants to the Fill Unit Trust and the $302,485 for ‘unit holders current accounts’, were shown in the financial statements for the Fill Unit Trust for the year ended 30 June 2016 and were held to be financial assets for income support purposes[81]. These two amounts, together, exceed the asset value limit for a homeowner of $821,500.00[82].
[80] Exhibit 1, T-documents.T21.1, page 531.
[81] Exhibit 1, T-documents T21.1, page 532.
[82] Exhibit 1, T-documents T21.1, page 531.
Section 52ZZS of the Act states:
“When attributed asset is unrealisable
(1) For the purposes of this Act, if:
(a) an individual is an attributable stakeholder of a … trust at a particular time on or after 1 January 2002; and
(b) at that time, the … trust owns a particular asset (whether alone or jointly or in common with another entity or entities); and
(c) under section 52ZZR, there is included in the value of the individual's assets an amount equal to the individual's asset attribution percentage of the value of the asset held by the company or trust;the amount referred to in paragraph (c) is taken not to be an unrealisable asset of the individual unless the asset referred to in paragraph (b) is an unrealisable asset of the company or trust.
(2) For the purposes of this section, in determining whether an asset is an unrealisable asset of a company or trust, ignore any limitation or restriction:
(a) in the constituent document of the company or the trust deed of the trust, as the case requires; or
(b) under a scheme that was entered into or carried out for the sole or dominant purpose of enabling any individual or individuals to avoid the application of this section and/or section 1208F of the Social Security Act.(3) For the purposes of this section, in determining whether an asset is an unrealisable asset of a company or trust, subsections 5L(11) and (12) have effect as if each reference in those subsections to a person included a reference to a company or trust.”
The First Applicant is an attributable stakeholder of the Fill Unit Trust after 1 January 2002: s 52ZZS(1)(a).
As to whether or not the loans to the Fill Unit Trust are “assets” as that word is used in s 52ZZS(1)(b), the loans were included as assessable financial assets for income support purposes under s 52ZZR, as referred to above; that is they were included in the value of the individual's assets in an amount equal to the individual's asset attribution percentage of the value of the asset held by the trust. That amount is not to be included in accordance with s 52ZZS(1) if it is an unreaslisable asset of the Fill Unit Trust. Sub-section 5L(11) and (12) state:
“Unrealisable asset
(11) An asset of a person is an unrealisable asset if:
(a) the person cannot sell or realise the asset; and
(b) the person cannot use the asset as a security for borrowing.(12) For the purposes of the application of this Act to a service pension, income support supplement or a veteran payment, an asset of a person is also an unrealisable asset if:
(a) the person could not reasonably be expected to sell or realise the asset; and
(b) the person could not reasonably be expected to use the asset as a security for borrowing.”As to the loans to the Fill Unit Trust, the Applicants submit that the First Applicant is neither a trustee nor beneficiary of the Fill Unit Trust and has no entitlement to recover from the trust even if the “loans” are recoverable. In that regard, the Applicant submitted that the Act does not apply to “Trustee Solicitors”[83]. The evidence of the Applicants, as referred to above, does indicate that the loans are unrealisable, in that the Applicants could not reasonably be expected to sell or realise the loans. The financial documents for the Fill Unit Trust do indicate a net loss over a long period of time. The Applicants submit that there have been losses by the Fill Unit Trust between the 2004 financial year and the present time. However, the Respondent submitted that there were significant professional fees paid, together with management fees to Valbide Pty Ltd and that it cannot be assumed that because there was a net loss the loans were irrecoverable and were of no value.
[83] Exhibit 20, Submissions of the Applicant, filed 25 July 2019, part XXXI page 80.
As to whether in accordance with s 52ZZS the Applicants could reasonably be expected to realise the loans, therefore making the loans an unrealisable asset, s 52ZZU of the Act states:
“Effect of unsecured loan on value of assets
(1) For the purposes of the application of this Subdivision to a particular individual and a particular … trust, if:
(a) the … trust is the borrower under a loan; and(b) the loan is not secured by a charge or encumbrance over one or more of the assets of the … trust;
the Commission may, by writing, determine that the value of a specified asset of the … trust is to be reduced by the whole, or a specified part, of the amount of the loan.
(2) A determination under subsection (1) has effect accordingly.
(3) In making a determination under subsection (1), the Commission must comply with any relevant decision-making principles.
In accordance with s 52ZZU, the Fill Unit Trust was the borrower as to the relevant loans and there is no evidence that the loans were secured by a charge or encumbrance over one or more of the assets of the Fill Unit Trust.
The Instrument states[84]:
[84] Schedule 3, Veterans' Entitlements (Attribution of Assets) Principles 2001.
“Part 4 Effect of loan not secured by charge or encumbrance over asset of company or trust
11 Purpose of Part 4
This Part sets out decision-making principles with which the Commission must
comply in making a determination under subsection 52ZZU(1) of the Act.
12 Effect of unsecured loan on value of assets
In relation to an unsecured loan, the Commission must take into account:
(a) whether a transaction that gave rise to the loan was an arm’s length transaction, having regard to the criteria described in section 13; and
(b) the matters referred to in section 14.
13 Criteria for arm’s length transaction
(1) For paragraph 12(a), a transaction is an arm’s length transaction if:
(a) the transaction is for the purposes of the business activities of the company or trust; and
(b) the transaction is made under a written agreement that is signed by each party to the agreement, and witnessed by an individual who is not a party to the transaction; and
(c) each party to the transaction is:
(i) at least 18 years old; or
(ii) at least 16 years old and engaged in a full-time occupation; or
(iii) at least 16 years old and receiving a social security entitlement; and
(d) the transaction is made for an arm’s length amount.
(2) For subparagraph (1)(c)(ii), a full-time occupation:
(a) includes any employment, trade, business, profession, vocation or calling; and
(b) does not include a course of education at a school, college, university or similar institution.”
The loans are not “arm’s length transactions” as stated in Part 4, paragraph 13 of the Instrument, as referred to above, as those sub-paragraphs are not all met: there is no evidence of a written agreement signed by each party and witnessed by an individual not a party to the transaction (s 13(1)(b)). It is therefore decided that the value of the loans, in accordance with s 52ZZU(1) is not to be reduced.
As an alternative submission, the Respondent further submitted that section 52E[85] of the Act was applicable, in that the loans were assets of the Applicants that were diminished, without receipt of consideration for the diminution of the loans. In that the First Applicant is an attributable stakeholder of the Fill Unit Trust having an asset attribution percentage and income attribution percentage in relation to the Fill Unit Trust of 100%, there is not a requirement to decide whether there is satisfaction that the diminution of the loans was for the ‘dominant purpose’ stated in s 52E.
[85] “Disposal of assetsThe Respondent additionally contends, in the alternative, that ‘similar issues’ pertaining to Valbide Pty Ltd and Tiananmen Corporation Pty Ltd may also be necessary for the Tribunal to consider[86], however, having regard to the reasons above as to the attribution percentage in relation to the Fill Unit Trust of 100%, it is not necessary to consider those other entities further.
[86] Exhibit 2 Respondent’s Statement of Issues, Facts and Contentions, filed 27 May 2018 paragraph 4.
The Respondent submits that the decision in Woolley v Repatriation Commission [2007] AATA 2059 (“Woolley”) is relevant[87]. In Woolley the applicant had loaned money to the family company and contended that the loans should not be included in the valuation of assets for the purposes of determining eligibility for the pension as the loans were unrecoverable[88]. In Woolley it was stated relevantly:
“[17] There can be no question that the loan represents an asset under section 52D (see also the definition of assets in section 5L(1) of the Act and the interpretation of the term property in Re Eimberts and Repatriation Commission (1988) 16 ALD 19).
[18] The loans should be assessed at face value. There is nothing in the legislation which requires or enables the Respondent to take account of the fact that the loans are unrecoverable. This conclusion is consistent with numerous previous decisions of this Tribunal in relation to the same or equivalent legislation, the more recent including Re Glenn and Secretary, Department of Family and Community Services and Indigenous Affairs [2006] AATA 919; Re Greenhill and Secretary, Department of Family and Community Services [2006] AATA 176; Re Juric-Kacunic and Secretary, Department of Family and Community Services [2003] AATA 15; Re Lyons and Secretary, Department of Family and Community Services [2007] AATA 1095; (2007) 94 ALD 450; Re Mroz and Secretary, Department Employment and Workplace Relations [2006] AATA 274; Re WBP and Secretary, Department of Family and Community Services and Indigenous Affairs [2007] AATA 34; (2007) 94 ALD 219.”
[87]Exhibit 25, Respondent's further supplementary submissions filed 18 May 2020, page 2, paragraph 7.
[88] [2007] AATA 2059 at [15] per Member Hughes.
It is submitted by the Applicants that there are other circumstances which make it unfair or unreasonable to deny the Applicant a pension. However, it is not submitted by the Applicants or the Respondent that there are other circumstances in accordance with the Act, further to those referred to above, which make it unfair or unreasonable to attribute the assets of the Fill Unit Trust to the Applicants in accordance with the Act[89]. The Applicants refer to a ‘breach of duty’ and to causation in submissions. Further, the Applicants also sought a costs order against the Respondent. The Tribunal has no legal power or authority other than that conferred upon it by the Administrative Appeals Tribunal Act 1975 (Cth) and the Act[90]. The Tribunal’s jurisdiction is limited to a review of the Applicants’ claim in accordance with the provisions of the Act, having regard to the available evidence.
[89] Exhibit 2 Respondent’s Statement of Issues, Facts and Contentions filed 29 March 2019, para 71.
[90]Burgess and Repatriation Commission [2016] AATA 598 at [21] per Deputy President K. Bean and Member LtCol R. Ormston (Rtd.).
Therefore, as referred to above, the loans of $824,101 from the Applicants to the Fill Unit Trust and the $302,485 for ‘unit holders current accounts’ were assets of the Applicants and the asset attribution percentage is 100%.
Rate Calculator
The Respondent contends that the primary issue to be determined by the Tribunal is whether the service pension payable to the Applicants would be nil using the Rate Calculator[91].
[91] Exhibit 2, Respondent’s Statement of Issues, Facts and Contentions filed 27 May 2018, paragraph 3.
The Rate Calculator, as referred to above, includes Module F, which requires by the “Method statement” the working out the value of a person’s assets as Step 1. Step 1 of the Method Statement in Module F includes the following note: “Note 1: For the treatment of the assets of members of a couple see point SCH6-F2.”
Point SCH6-F2 in Schedule 6 states:
“Value of assets of members of couples
SCH6-F2 For the purposes of this Module:
(a) the value of the assets of a member of a couple is taken to be 50% of the sum of:(i) the value of the person's assets; and
(ii) the value of the person's partner's assets; and
(b) the value of the assets of a particular kind of a member of a couple is taken to be 50% of the sum of:(i) the value of the person's assets of that kind; and
(ii) the value of the person's partner's assets of that kind.”
The phrase “member of a couple is defined in s 5Q of the Act: "member of a couple": see subsections 5E(2), (3), (4) and (4A) and 5R(3)”. Section 5E states: "member of a couple" has the meaning given by subsections (2), (3), (4) and (4A)”. Section 5E(2)(a) states: “(2) A person is a member of a couple for the purposes of this Act if: (a) the person is legally married to another person and is not living separately and apart from the other person on a permanent basis; or … ”. Section 5R(3) states: “(3) The Commission may determine, for any special reason, that a person who is a member of a couple is not to be treated as a member of a couple for the purposes of this Act.” Therefore, the Applicants are ‘members of a couple’ as that phrase is defined in the Act.
As referred to above, Schedule 6 Module A of the Act includes “Method Statement 1”, which states at step 7: “Apply the assets test using MODULE F below to work out the reduction for assets.” For the purposes of Module F therefore the value of the assets of a member of a couple is taken to be 50% of the sum of the value of the First Applicant’s assets and the Second Applicant’s assets. The Respondent stated the total assets of the Applicants as $1,278,228.00, which included both the ‘loans’ to the Fill Unit Trust of $1,161,277.00. The rate calculator requires that the value of the assets is taken to be 50% of the sum of the First Applicant’s assets and the Second Applicant’s assets; therefore being below the asset value limit for a homeowner of $821,500.00[92].
[92] Exhibit 1, T-documents T21.1, page 531.
The First Applicant’s pension rate would not therefore be nil, further to the rate calculator, in accordance with s 36A(2) and/or s 37A(2).
The reviewable decision made by the Respondent dated 23 April 2018[93], affirming a determination of the Respondent dated 2 May 2017[94], which declined the Applicants’ claims for service pensions is therefore set aside and the matter is remitted to the Respondent for reconsideration in accordance with the decision that the First Applicant’s pension rate would not be nil, further to the Rate Calculator, in accordance with s 36A(2) and/or s 37A(2) of the Act.
[93] Exhibit 1, T-documents T21.1, page 532.
[94] Exhibit 1, T-documents T9, page 68.
DECISION
The decision under review is set aside and the matter is remitted to the Respondent for reconsideration in accordance with the recommendation[95] that the First Applicant’s pension rate not be nil in accordance with the Rate Calculator, further to sections 36A(2) and/or 37A(2) of the Veterans’ Entitlements Act 1986.
[95] Section 43(1)(c)(ii) of the Administrative Appeals Tribunal Act 1975 (Cth).
I certify that the preceding 74 (seventy-four) paragraphs are a true copy of the reasons for the decision herein of Senior Member Katter
...........................................................
Associate
Dated: 24 June 2020
Date of hearing: 14 June 2019 Date final submissions received: 21 May 2020 Advocate for the Applicant: Mr N. Payne OAM Counsel for the Respondent:
Solicitors for the Respondent:
G. Del Villar QC
Australian Government Solicitor
(3) The Secretary may give to a person whose claim or application for a service pension or income support supplement is under consideration by the Commission or the Administrative Appeals Tribunal a notice requiring the person:
(a) to provide the Department, or an officer specified in the notice, with information; or
(b)to produce to the Department, or an officer specified in the notice, documents in the custody or under the control of the person; or
(c) to appear before an officer of the Department specified in the notice to answer questions;
relating to the claim or application.
Entitlements (Attributable Stakeholders and Attribution Percentages) Principles 2001, section 5.
For the purposes of this Act, a person disposes of assets of the person if the person engages in a course of conduct that diminishes, directly or indirectly, the value of the person's assets and:
(a) the person receives no consideration in money or money's worth for the diminution in the value of the person's assets; or
(b) the person receives inadequate consideration in money or money's worth for the diminution in the value of the person's assets; or
(c) the Commission is satisfied that the purpose, or the dominant purpose, of the person in engaging in that course of conduct was:
(i) to obtain or enable the person's partner to obtain a service pension, income support supplement, a veteran payment or a social security pension or benefit; or
(ii) to obtain or enable the person's partner to obtain a service pension, income support supplement, a veteran payment or a social security pension or benefit at a higher rate than that which would otherwise have been payable; or
(iii) to ensure that the person or the person's partner would be eligible for benefits under Division 12 of this Part or fringe benefits under the Social Security Act.
Note: Under Subdivision B of Division 11A of Part IIIB, certain transfers of assets to special disability trusts can be taken not to be disposals of the assets (but this can be subject to a limit on the aggregate value of the transfers).”
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