Gheorghiu and Secretary, Department of Family and Community Servi Ces

[2003] AATA 1138

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 1138

ADMINISTRATIVE APPEALS TRIBUNAL      )

)      No Q2003/560-561

GENERAL  ADMINISTRATIVE  DIVISION		)
Re		GEORGETA GHEORGHIU IOAN GHEORGHIU

Applicants

And

SECRETARY, DEPARTMENT

OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr RG Kenny, Member

Date14 November 2003   

PlaceBrisbane

Decision The Tribunal affirms the decision under review. 

....................(Sgd)......................

RG Kenny
  Member

CATCHWORDS

SOCIAL SECURITY – pensions - mature age allowance and partner allowance – Romanian pensions - pensions paid into Romanian bank account - whether pension constitutes income on application of the income test

Social Security Act 1991 ss 8, 1068

Re Secretary, Department of Family and Community Services and Singh (2002) 69 ALD 413

Rose v Secretary, Department of Social Security (1990) 19 ALD 601

Podkalicki and Repatriation Commission [2002] AATA 38

REASONS FOR DECISION

14 November 2003  Mr RG Kenny, Member      

Background

1.      Ioan Gheorghiu and Georgeta Gheorghiu, husband and wife, are the applicants in this matter.  They have been in receipt of the mature age allowance and partner allowance, respectively, since 4 November 2002.  These allowances are payable in accordance with the terms of the Social Security Act 1991 (the Act).  They had been in receipt of these payments at an earlier time and they were resumed from 2 November 2002 after the allowances were reclaimed by them following a return from travel to Romania, where they previously lived.  Each of the applicants is in receipt of a pension which is paid by the Romanian Government directly into a bank account of Bancpost.

2.      By letters dated 12 November 2002, the applicants were advised that, in calculating the level of their allowance, regard was being had to the Romanian pension which was being assessed as fortnightly income in the amount of $33.17 in the case of Mr Gheorghiu and $67.33 in the case of Mrs Gheorghiu.  Whilst this did not impact on the level of Mr Gheorghiu’s allowance, it had the effect of reducing Mrs Gheorghiu’s allowance.  Due to variations in currency values as between Australia and Romania since that time, neither of the allowances payable to the applicants is currently reduced by the Romanian pension although regard is still had to it.

3.      The decision to take the Romanian pension into account was affirmed by an Authorised Review Officer on 31 March 2003 and, in turn, on 4 June 2003, by the Social Security Appeals Tribunal (the SSAT).  The applicants sought review of that decision by the Administrative Appeals Tribunal (the Tribunal) on 7 July 2003.

Hearing

4.      The applicants attended the hearing and the matters were dealt with together.  Each was represented by Mr Gheorghiu.  Mr T Ffrench appeared for the Secretary, Department of Family and Community Services (the respondent).

5.      The following material was taken into evidence:

Exhibit 1documents prepared in accordance with section 37 of the Administrative Appeals Tribunal Act 1975 (the AAT Act – T1 to T28);

Exhibit 2supplementary documents prepared in accordance with section 37 of the AAT Act (S1 to S12);

Exhibit 3a statement, dated 20 March 2002, completed by the applicants; and

Exhibit 4a submission, dated 30 October 2003, completed by Mr Gheorghiu.

Issues and Legislation

6. In accordance with subsection 1068(1) of the Act, mature age allowance and partner allowance are paid at a rate which is calculated in accordance with the terms of section 1068-A1 of the Act. That provision reads:

“Method of calculating rate

1068-A1.  The rate of benefit is a daily rate.  That rate is worked out by dividing the fortnightly rate calculated according to this Rate Calculator by 14.

Method statement

Step 1            Work out the person's maximum basic rate using MODULE B below.

Step 2Work out the amount per year (if any) of pharmaceutical allowance using MODULE D below.

Step 3Work out the applicable amount (if any) for rent assistance (using MODULE F).

Step 4Add up the amounts obtained in Steps 1 to 4: the result is called the maximum payment rate.

Step 5Apply the income test using MODULE G below to work out the income reduction.

Step 6Take the income reduction away from the maximum payment rate: the result is called the provisional fortnightly payment rate.

Step 7.           The rate of benefit is the amount obtained by:

(a)subtracting from the provisional fortnightly payment rate any special employment advance deduction (see Part 3.16B); and

(b)if there is any amount remaining, subtracting from that amount any advance payment deduction (see Part 3.16A); and

(c)except where the person is a CDEP Scheme participant in respect of the whole or a part of the period for which the rate of benefit is being worked out, adding any amount payable by way of remote area allowance (see Module J).”

7.      In accordance with Module G, regard must be had to the income test. The level of the allowance will be affected where income in excess of an income-free area is received.  Under subsection 8(1) of the Act, the term “income” is defined to include an income amount, earned, derived or received by a person for their own use or benefit and the term “income amount” is defined to include monies.  Under subsection 8(2) of the Act, the phrase “earned, derived or received” is defined as meaning:

“(a)     an income amount earned, derived or received by any means; and

(b)an income amount earned, derived or received from any source (whether within or outside Australia.”

8. The issue for the Tribunal is whether or not the Romanian pension payments made to the applicants must be taken into account as income for the purposes of the application of the rate calculator in section 1068 of the Act.

The applicant’s Case

9.      Mr Gheorghiu said that the Romanian Government paid pension directly into a Romanian Bank of its choice, Bancpost.  He said that he had made enquiries of the bank to see whether it was possible for the bank to transfer monies directly into an Australian bank account.  He said that he had been unable to obtain confirmation in writing but had been told that this was not possible.  He said that, if monies were not withdrawn from the account after a period of six months, they were confiscated by the Government.  For that reason, he and his wife had each given a power-of-attorney to Mr Gheorghiu’s nephew to withdraw the pension monies periodically and to re-deposit them into their separate accounts with Bancpost. 

10.     He said that this was currently being done and that the monies were securely located in these second accounts and were not subject to any confiscation rules.  He said that the monies in these accounts were available for him and his wife to use should they travel to Romania. He also said that they were able to be transferred to an Australian account although the cost of doing this was so high as to make it impractical.  He said that, at the moment, there was approximately $1,600 in his wife’s account and $800 in his own.

11.     Mr Gheorghiu submitted that the Romanian pensions should not be considered as income but, rather, as an investment sum or capital asset.  He said that the amount equates to sums of money in an Australian bank account which were treated in that way rather than as income.  He said the only level of income was that which was calculated in accordance with the deeming provisions of the Act.  He said that, according to these, capital sums were deemed to earn a certain level of income.  He said this was a much smaller amount and was akin to the interest payable on a sum.  He said this was being done in relation to savings accounts that he and his wife had in Australia and he submitted that the same approach should be adopted in relation to the monies in the Romanian bank.

12.     He submitted that it was illegal for Centrelink to apply deeming rules to one amount in an Australian account and not to do so in respect of monies in the Romanian account.  He submitted that Centrelink officers simply invented rules to ensure that his Romanian pension was taken into account as income.

13.     Mr Gheorghiu also submitted that, because the Act was meant to be legislation to provide support to people, it should be treated as beneficial legislation so that, in the event of any ambiguity arising in the interpretation of provisions in the Act, they should be resolved in a way which was favourable to the recipient of the benefit.

14. Mr Gheorghiu also submitted that the Act should be amended to remove the effects of provisions such as section 8 and that the model utilised in taxation legislation should be substituted because this had the effect of ensuring that monies received in a foreign account would not be treated as income.

Consideration

15. Insofar as they apply to the applicants’ situations, I am satisfied that there is no ambiguity in the relevant components of the income test definitions in section 8 of the Act. Periodic payments of Romanian pension paid by the Romanian Government into Bancpost accounts of the applicants are amounts which are derived or received by them from that source. These amounts meet the definition of income in section 8.

16.     In evidence were extracts from the Guide to Social Security Law.  These indicate that, in some situations, the respondent is prepared to disregard certain amounts of overseas income which is “blocked” in the sense that access to the monies is so limited that they are not in a real sense able to be earned, derived or received by a person for their benefit.  This policy appears to be based on a beneficial application of the Act which had been applied in various Tribunal decisions prior to a decision of the Full Federal Court in Rose v Secretary, Department of Social Security (1990) 19 ALD 601. There, pension was paid into a bank account in the German Democratic Republic (GDR) and this was unable to be accessed except by the pensioner while in the GDR. International transfer of the monies was not possible.

17.     That is not the situation with the applicants who have ready access to the monies after they have been transferred into a separate account and are hindered from having the monies transferred to an Australian bank only by the cost of doing so.  Even so, in the case of Rose, despite the fact that the monies were so restricted in their availability, the Court nevertheless held that they constituted income for the purposes of the Act. The Court said, at 605:

“The entitlement of the appellant to his GDR pension arises at the latest once the pension payments have been paid into the relevant account of the appellant in the GDR.  He is then free to draw upon them and spend them in the GDR.  His capacity to remove the pension payments from the GDR and to spend them outside the GDR is prohibited by the law of the GDR;  the restraint is upon his transferring the monies outside the GDR.

The pension payments made to the appellant in the GDR are monies “received” by him in a sense of ‘realised’ by him in the GDR.  It is not to the point that those monies are in that sense received by him outside Australia.  The payments answer the description of monies ‘earned, derived or received’ (in the sense of ‘realised’) by him for his own use or benefit from a source outside Australia and fall within the definition of ‘income’ in section 3.”

18.     The statutory reference in that case was to a provision of the forerunner to the Act i.e. the Social Security Act 1947 but the decision has been followed consistently under the Act and, indeed, under the Veterans’ Entitlements Act 1986. This has been done in circumstances where monies were “blocked” and also, as in this case, where it was available to the applicants:  see Re Secretary, Department of Family and Community Services and Singh (2002) 69 ALD 413 and Podkalicki and Repatriation Commission [2002] AATA 38.

19. I have noted the contention of Mr Gheorghiu that the monies in the Romanian accounts should be treated like his Australian accounts and be subjected to the deeming provisions of the Act which, in effect, focus on the earning capacity of the sum in a manner equivalent to calculating interest on an account. There would seem to be no reason why this cannot be done. However, that does not change the fundamental nature of the source of the monies as being a pension which meets a definition of income as provided for in section 8 of the Act.

20.     I have also noted the suggestion by Mr Gheorghiu that the Act should be amended.  However, the Tribunal is obliged to apply the provisions of the legislation as they stand and I am satisfied that they must be applied in this case in a manner which requires the decisions under review to be affirmed.

Decision

21.     The Tribunal affirms the decisions under review.

I certify that the 21 preceding paragraphs are a true copy of the reasons for the decision herein of Mr RG Kenny, Member

Signed:         Denise Burton
  Administrative Assistant

Date/s of Hearing  30 October 2003
Date of Decision  14 November 2003
Mr Gheorghiu represented himself and his wife
For the Respondent                  Mr T Ffrench, Departmental Advocate