Giacomin and Secretary, Department of Social Services (Social services second review)
[2016] AATA 227
•8 April 2016
Giacomin and Secretary, Department of Social Services (Social services second review) [2016] AATA 227 (8 April 2016)
Division
GENERAL DIVISION
File Number(s)
2015/5356
Re
Olivio Giacomin (Snr)
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
File Number(s)
2015/4115
Re
Olivio Giacomin (Jnr)
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Senior Member J F Toohey
Date 8 April 2016 Place Sydney
The decision under review is affirmed.
........................[sgd]................................................
Senior Member J F Toohey
CATCHWORDS
SOCIAL SECURITY – age pension – carer payment – allowable assets – whether father’s assets exceeded allowable limit for age pension – family trust – attribution of trust income – attributable stakeholders – controlled private trust – whether family trust a special disability trust – whether father’s assets affected son’s carer payment – decisions under review affirmed
LEGISLATION
Social Security Act 1991
Social Security (Attributable Stakeholders and Attribution Percentages) Principles 2000
Social Security (Attribution of Assets) Principles 2001
REASONS FOR DECISION
Senior Member J F Toohey
8 April 2016
BACKGROUND
Olivio Giacomin Snr is 85 years old. His son, Olivio Giacomin Jnr, cared for him at home full time until recently when he moved to permanent residential care.
In August 2013, Mr Giacomin Jnr applied for carer payment. Centrelink rejected his claim on the ground that the value of his father’s assets exceeded the allowable limit. Following a decision of the former Social Security Appeals Tribunal, Centrelink reassessed Mr Giacomin Jnr’s claim. As a result, he was granted carer payment and paid arrears.
On 14 August 2014, Mr Giacomin Snr applied for the age pension. Centrelink rejected his claim on the ground that the value of his assets exceeded the allowable limit. Apparently in the course of assessing Mr Giacomin Snr’s claim, Centrelink determined that it had incorrectly assessed his son’s claim with the result that Mr Giacomin Jnr’s carer payment was cancelled.
On 6 July 2015, the Social Services and Child Support Division of the Tribunal affirmed Centrelink’s decisions.
The legislation concerning age pension and carer payment is in the Social Security Act 1991 (the Act). Different provisions apply to each but the question I have to decide is essentially the same in each case, that is, whether the value of Mr Giacomin Snr’s assets precluded him from receiving the age pension when he applied, and his son from receiving carer payment when it was cancelled. I will refer to these as “the relevant dates”
The answer to that question turns on the value of assets held by the Olivio Giacomin Investment Family Trust (the Family Trust) and whether their full value should be attributed to Mr Giacomin Snr. He has other assets, including a one-third share in a residential property, the value of which is not in dispute.
A further question has arisen, being whether Mr Giacomin Snr is a member of a couple and, if so, what effect that has on the value of his assets.
The legislation concerning the value of trust assets and their attribution is complex. It is set out correctly in the Secretary’s Statement of Facts and Contentions in these proceedings. I will refer to it in summary rather than set it out in full.
Mr Giacomin Snr and Mr Giacomin Jnr participated in the hearing by telephone. Mr Giacomin Jnr spoke on behalf of his father.
SUMMARY OF DECISION
For the reasons below, I find that:
(i)the total value of Mr Giacomin Snr’s assets at the relevant dates was approximately $1.16 million;
(ii)loans from the Family Trust to Mr Giacomin Snr’s daughter and son are trust assets;
(iii)even if those loans were treated as gifts, they would be assets disposed of and most of their value would be included in the trust assets;
(iv)Mr Giacomin Snr is an attributable stakeholder and 100 percent of the value of the assets of the Family Trust is attributable to him;
(v)there is no reason to exercise the discretion not to treat Mr Giacomin Snr as an attributable stakeholder or to attribute him with less than 100 percent of the assets of the Family Trust;
(vi)as a result, the value of Mr Giacomin Snr’s assets exceeded the allowable limit when he applied for the age pension;
(vii)although still lawfully married, Mr Giacomin Snr has not been a member of a couple for at least five years and, probably, since November 2002;
(viii)the value of Mr Giacomin Snr’s assets meant he could not be paid age pension;
(ix)the value of his assets also meant that Mr Giacomin Jnr could not be paid carer payment.
Mr Giacomin Jnr has raised a related matter concerning his eligibility for Newstart allowance and whether he could be exempted from the activity test associated with that allowance. That is not a matter which the Tribunal can review as part of these proceedings.
The assets tests
The rate at which a person may be paid age pension is worked out using the Rate Calculator at the end of s 1064 of the Act: s 55. If a person’s assets exceed the “assets value limit”, he or she has an “assets excess” and the rate of payment is reduced accordingly on a pro-rata basis. Above a certain amount, the entitlement is reduced to nil. Factors such as whether a person is a single or a member of a couple, and whether he or she is a homeowner, are taken into account.
On the 14 August 2014, when he applied for the age pension, Mr Giacomin Snr advised Centrelink that he was separated and a homeowner. At that time, the assets limit above which age pension was not payable to a single homeowner was $764,000.
A carer’s entitlement to carer payment depends on the assets of the care receiver: s 198D. As it applied to Mr Giacomin Jnr and his father on 23 October 2014 when Mr Giacomin Jnr’s carer payment was cancelled, the upper limit for a care receiver’s assets was $642,000.
For the reasons below, Mr Giacomin Snr’s assets exceeded the relevant limits at both times.
Mr Giacomin Snr’s assets
When he applied for the age pension, the total value of Mr Giacomin Snr’s assets was $1,168,400 comprising:
Olivio Giacomin Investment Family Trust $858,532
A one-third share of a property at Riverstone NSW $216,666
CBA savings bank account $ 86,668
St George bank account $ 4,884
Home contents and vehicle $ 1,650
There is no dispute about the value of the assets other than those held by the Family Trust. To the extent that the value of any of the assets may have varied since the relevant dates, it makes no difference to the outcome.
The Olivio Giacomin Investment Family Trust
A person’s assets are not limited to those held in his or her personal capacity; he or she may be attributed with the assets of the company or a private trust: see Part 3.18 of the Act (Means Test Treatment of Private Companies and Private Trusts).
Section 1208E sets out the circumstances in which the assets of a company or trust may be attributed to a person. If an individual is an attributable stakeholder of a company or trust and, at that time, the company or trust owns a particular asset, the individual’s assets include his or her asset attribution percentage of the value of that asset: s 1208E(1).
A person who meets the description in s 1207X is an attributable stakeholder: s 1207A. In summary, if a trust is a controlled private trust in relation to an individual, then he or she is an attributable stakeholder unless the Secretary determines otherwise, and his or her attribution percentage is 100 percent unless the Secretary determines otherwise.
A trust is a controlled private trust if it is a designated private trust and the individual passes the control test: s 1207V
By s 1207P(1), a trust is a designated private trust unless it satisfies certain conditions, none of which the Family Trust in this case satisfies. Mr Giacomin Snr is the sole trustee of the Family Trust and so passes the control test.
From all this it follows that 100 percent of the value of the assets held by the Family Trust is to be included in the value of Mr Giacomin Snr’s assets unless the Secretary (and so the Tribunal) exercises the discretion:
(i)not to treat him as an attributable stakeholder; or
(ii)to attribute less than 100 percent of the value of the assets to him.
Should Mr Giacomin Snr not be treated as an attributable stakeholder?
The discretions must be exercised in accordance with the principles in the Social Security (Attributable Stakeholders and Attribution Percentages) Principles 2000 (the Attribution Principles) which are made under s 1209E of the Act.
Part 2 of the Attribution Principles concerns determinations that a person is not an attributable stakeholder. In exercising the discretion, the Secretary must consider:
(i)the relationship between the individual and the trust having regard to the reason why, but for a determination, he or she would be an attributable stakeholder;
(ii)whether there are relevant circumstances that make it inappropriate for the individual to be an attributable stakeholder of the trust;
(iii)whether the individual has received a benefit from a distribution made by the trust;
(iv)whether it is reasonably foreseeable that the individual may receive a benefit from a future distribution by the trust;
(v)whether the individual receives or derives any kind of benefit from the assets or income, or both, of the trust;
(vi)any other circumstance that affects the involvement of the individual with the activities or the administration of the trust.
It is not in dispute that Mr Giacomin Snr is the sole trustee and controller of the Family Trust. Documents provided to Centrelink indicate that it settled in October 2009. The balance sheet for the Family Trust as at 30 June 2013 shows that Mr Giacomin Snr contributed all but $175 of the total equity of $836,320. A private trust document which he completed on for September 2013, apparently with the help of Mr Giacomin Jnr, shows that he is a beneficiary of the Family Trust with his daughter, Joycelin Giacomin, and Mr Giacomin Jnr.
The Secretary submits, and I accept, that there is no justification for determining that Mr Giacomin and should not be an attributable stakeholder of the Family Trust.
Part 3 of the Attribution Principles concerns the determination of asset attribution percentage. In exercising the discretion to attribute less than 100 percent of the value of trust assets, the Secretary must consider the relationship between the individual and the trust having regard to circumstances including:
(i)whether there are relevant circumstances that make it inappropriate for the individual to have an asset attribution percentage of 100 percent
(ii)the value and proportion of the value of any contribution made by an individual;
(iii)whether he or she has received any benefit from the trust and, if so, the value of that benefit.
The Secretary submits, and I accept, that there is no basis for attributing Mr Giacomin Snr with less than 100 percent of the assets of the Family Trust. The evidence is that he has always had effective control over the trust; he appears to have contributed all of its assets; it is a discretionary trust which he has been able to use to provide assistance to his children as well as himself; and it would be consistent with the purpose and constitution of the trust for its assets to be used to support him. I accept the Secretary’s submission that, but for the fact that they are held in the Family Trust, the assets would be considered to belong to Mr Giacomin Snr.
Calculating the value of the assets of the Family Trust
Mr Giacomin Jnr submits on behalf of his father that assets of the Family Trust are not $858,532 as the Secretary contends. He contends, firstly, that loans of $517,062 to Joycelin Giacomin and $22,679 to himself, as beneficiaries, should not be included in the assets and, secondly, that Mr Giacomin Snr is a member of a couple and half of the remaining value should be considered to belong to his wife.
Subject to certain exceptions, the value of trust assets should be determined in the same way as an individual’s personal assets: s 1208J. If the trust has an unsecured loan, it may be determined that the value of the specific asset is reduced by the value of the loan: s 1208H. In making such determination, the principles in the Social Security (Attribution of Assets) Principles 2001 (Attribution of Assets Principles) must be applied.
Mr Giacomin Jnr says an amount of $517,062 shown in the Family Trust balance sheets at 30 June 2013 as a loan to Joycelin Giacomin was a gift to enable her to buy a house. However, I see no reason the treat that amount as other than as it appears on the balance sheets which were drawn up by the accountants for the Family Trust.
Even if I accepted that $517,062 was a gift to Joycelin Giacomin, the provisions of Part 3.18 concerning the disposal of assets apply with the effect that, at most, $30,000 of that amount may be disregarded over five years. Even if I accepted the Family Trust made gifts totalling nearly $540,000 to Joycelin Giacomin and Mr Olivio Giacomin Jnr, the amount that could be disregarded would make no material difference to the value of Mr Olivio Giacomin’s assets.
Is Mr Giacomin Snr a member of a couple?
The meaning of member of a couple for the purposes of social security legislation is set out in s 4 of the Act. In determining whether a person is a member of a couple, all the circumstances of the relationship must be considered including, in particular, its financial and social aspects, the nature of the household, any sexual relationship and the nature of the people’s commitment to each other.
Mr Giacomin Snr is still lawfully married. However, as I understand it, the suggestion that he is still a member of a couple has only been raised very recently. The Private Trust document which he completed on 13 September 2009 and provided to Centrelink, asked “Do you have a partner?” The form shows he responded “No. Separated 30/11/2002”.
At the hearing, Mr Giacomin Jnr said his mother and father have lived apart for some time and there are “issues between them”. She visits from time to time on the weekend but, as I understand it, she plays no part in caring for Mr Giacomin Snr; Mr Giacomin Jnr has been his full-time carer for some years now. There is little, if anything, of their relationship that would make them members of a couple.
Mr Giacomin Jnr said he helped his father complete the Private Trust form. He could not say why he indicated his father separated in November 2002; he did not think his parents had lived apart for that long; he thought it might have been for about five years but he could not be sure. Information provided to Centrelink shows that his mother has bank accounts in her own name, although I accept that is not determinative of the nature of the relationship. It is relevant, however, that she has not contributed anything to the Family Trust and nor is she a beneficiary.
On the information before me, I am not satisfied that Mr Giacomin Snr is a member of a couple. Whether he and his wife separated in 2002 or five years ago, I am satisfied he was no longer a member of a couple at the relevant times. It follows that there is no reason to treat his assets as belonging to anyone other than him.
Is the Family Trust a “special disability trust”?
Mr Giacomin Jnr submits that, because his father has a serious disability, the Family Trust should be regarded as a special disability trust and should not be counted among his assets.
A special disability trust is one which meets the requirements set out in s 1209L of the Act. In essence, it is a trust established for the purpose of meeting the future care and accommodation needs of a family member who has a severe disability or medical condition. Because special disability trusts attracts taxation and other concessions, including for the purposes of social security payments, the rules regarding their establishment are strict.
In particular, a special disability trust cannot have more than one beneficiary (the “principal beneficiary”) and it must be set up the meeting his or her reasonable care and accommodation needs: s 1209M and s1209N. I am satisfied that the Family Trust in this case is not a special disability trust.
Mr Giacomin Jnr’s claim for carer payment
At the time that Mr Giacomin Jnr’s carer payment was cancelled, the value of his father’s assets was well in excess of the upper limit of $642,000. It follows that the decision to cancel his carer payment was correct.
CONCLUSION
Mr Giacomin Jnr gave up work to care for his father full-time. In doing so and allowing his father to remain at home for so long, he has most probably saved the taxpayer money that would otherwise have been spent on his father’s care. It is not clear why some arrangement was not come to for his father to pay Mr Giacomin Jnr for his services but, apparently, it was not.
For these reasons, I affirm the decisions under review.
I certify that the preceding 44 (forty -four) paragraphs are a true copy of the reasons for the decision herein of Senior Member J F Toohey ..........................[sgd]..............................................
Associate
Dated 8 April 2016
Date(s) of hearing 15 March 2016 Applicant In person Solicitors for the Respondent Ms Gabrielle Doyle, Department of Human Services
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