FISCHER and Secretary, Department of Social Services (Social services second review)

This matter concerned an appeal by the applicant, Ms Fischer, against a decision by the Secretary of the Department of Social Services to affirm a cancellation of her Age Pension. The cancellation was based on the applicant's combined assets exceeding the allowable limit, specifically due to income derived from an account-based pension within the BAT Superannuation Fund (BATSF). The central dispute was whether the income stream from her partner's account-based pension in the BATSF qualified as an asset-test exempt income stream under the relevant legislation.

The Administrative Appeals Tribunal was required to determine whether the income stream provided by the BATSF was an asset-test exempt income stream for the purposes of the Social Security Act 1991 (Cth). This involved considering whether the commencement date of the income stream met the legislative requirements and, crucially, whether the governing rules of the superannuation fund permitted commutation of the pension in a manner that complied with the Act's provisions for asset-test exemption.

The Tribunal reasoned that for an income stream to be asset-test exempt, it must generally have commenced before 20 September 2007 and its governing rules must not allow for commutation, except in specific circumstances outlined in section 9A(2)(h) of the Act. The evidence demonstrated that the account-based pension in the BATSF had been fully commuted on multiple occasions after its commencement, with the capital base being increased each time, effectively creating new pensions. The Tribunal found that the rules of the BATSF allowed for full commutation of the pension account, which meant that any income stream derived from an account-based pension provided by the BATSF could not satisfy the requirements of section 9A(2)(h) and therefore could not be an asset-test exempt income stream. Consequently, the Tribunal affirmed the decision to include the income stream from the account-based pension in the applicant's assessable assets.