Gibson; Secretary, Department of Family and Community Services

[2000] AATA 160

DECISION AND REASONS FOR DECISION [2000] AATA 160

ADMINISTRATIVE APPEALS TRIBUNAL      )

)     No  N1999/153

GENERAL ADMINISTRATIVE DIVISION          )          

Re      SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        

Applicant

And    Jared GIBSON        

Respondent

DECISION

Tribunal       Mrs M T Lewis, Senior Member    

Date3 March 2000

PlaceSydney

Decision      The Tribunal sets aside the decision of the Social Security Appeals Tribunal made on 23 December 1998, and remits the matter to the Secretary, Department of Family and Community Services, with the Direction that Jared Gibson was not entitled to payment of Youth Allowance for the period 1 July 1998 until 16 October 1998.  

..............................................
  M T Lewis,
  Senior Member
CATCHWORDS
SOCIAL SECURITY - youth allowance – whether parental income test applies - whether youth allowance payment on 1998/1999 parental income - interpretation of appropriate tax year - whether administrative error
Social Security Act 1991, ss 1067G-F2-F5, ss 1067G-F7- F8

REASONS FOR DECISION

3 March 2000           Mrs M T Lewis, Senior Member                

1. On 2 February 1999, the Secretary, Department of Family and Community Services ("the Applicant") lodged an application for review by this Tribunal of a decision of the Social Security Appeals Tribunal ("the SSAT") made on 23 December 1998 (T2). That decision set aside an earlier determination made on 27 August 1998 by a delegate of the Secretary, Department of Social Security as it then was, which was affirmed by an Authorised Review Officer ("ARO") on 30 September 1998, that Jared Gibson ("the Respondent") was not eligible to receive youth allowance payments from July 1998. The SSAT substituted a new decision that youth allowance be paid on the basis of the estimate of the 1998/1999 parental income of the Respondent. That decision was to take effect from 17 July 1998, the date of the Respondent's application pursuant to s 1067G-F8 of the Social Security Act 1991 ("the Act").

2. By consent of the parties the Tribunal proceeded to review the decision without a hearing, pursuant to s 34B of the Administrative Appeals Tribunal Act 1975 ("the AAT Act"). The Tribunal had before it the documents lodged by the Applicant pursuant to s 37 of the AAT Act. The Applicant also tendered the following documentary evidence -

• Computer copy of letter to Respondent dated 7 July 1998 (exhibit A);

• Minute from the ARO dated 9 August 1999 (exhibit B);

• Statement signed by Perry Burns, Team Leader, Employment Services Youth and Students, Taree Centrelink, dated 9 August 1999 (exhibit C);

• Computer print out of payments made to Respondent for the period 2 March 1999 to 30 April 1999 (exhibit D);

• Computer notation dated 19 April 1999 in respect of the Respondent (exhibit E). 

The Respondent tendered a letter of advice from the Welfare Rights Centre dated 6 July 1999 (exhibit 1) and a letter from the Welfare Rights Centre to the Applicant dated 16 July 1999 (exhibit 2).  Additionally, both parties made written submissions to the Tribunal, the Respondent having had his prepared on his behalf by the Welfare Rights Centre. 

1. The key issue in these proceedings is whether the Respondent can be paid youth allowance any earlier than 16 October 1998, on the basis of his parents' income for the 1998/1999 financial year.
   background evidence

2. Most of the facts in these proceedings are not at dispute. On 29 January 1998 the Respondent claimed Newstart Allowance (T3). An estimate of $63,838 was made in respect of the Respondent's parents' combined taxable income for the 1996/1997 financial year (T6). The Respondent was then transferred to Youth Allowance pursuant to s 540 of the Act.

3. By letter dated 7 July 1998 (exhibit A) the Applicant advised the Respondent that he was not entitled to be paid Youth Allowance from 1 July 1998 because his parents' income for the financial year ending June 1998 was higher than the allowable income limit under the parental income test.  However, on 3 July 1998 Mr Colin Gibson, the Respondent's father, ceased work and subsequently received superannuation, redundancy payments and other benefits.

4. On 17 July 1998 the Respondent and his father inquired of the Applicant regarding the cancellation of Youth Allowance and the possibility of reclaiming it because of his parents' reduced income (T9).  Specifically, the Respondent requested his Youth Allowance be reassessed on the assumption that his father's taxable income for the 1998/1999 financial year would be lower than the previous years' taxable income (T9).  Subsequently, a delegate of the Applicant advised the Respondent he was not entitled to a reassessment of Youth Allowance until 1 January 1999 because his father's income reduction did not occur in the year following the base year (1996/1997).  The Applicant also advised an earlier reassessment could be made only if either of his parents were in receipt of a Low Income Earners' Health Care Card or if they were receiving an income support payment (T9. p37).

5. On 30 August 1999 an ARO reviewed and affirmed the decision to cancel the Respondent's Youth Allowance (T15). In applying s 1067G of the Act to calculate the rate of Youth Allowance payable to the Respondent, the ARO advised that his entitlement since 1 July 1998 was nil. The ARO made the following points:

• The tax year for assessing parental income is the base tax year, that is, the financial period ending on 30 June in the calendar year immediately before the calendar year in which the Youth Allowance payment period ends.

• An exception to the rule that the base tax year must be used in the assessment of parental income can apply, provided ss 1067G-F7, 1067G-F8 and 1067G-F9 are satisfied in the event that a person requests that the appropriate tax year be changed. In effect, where there is a decrease in the parental income which will affect the person's Youth Allowance rate, and the person requests that the appropriate year be changed, the Youth Allowance rate is reassessed using the parental income for the financial year following the base financial year as the appropriate tax year. 

• Application of s 1067G-F7 then means the change in the Respondent's father's income cannot be taken into account until 1 January 1999 since the "revised" appropriate tax year would be the 1997/1998 financial year. The Respondent's father ceased work on 3 July 1998 and so the year for which income would be reduced is the 1998/1999 tax year, not the 1997/1998 tax year.

1. On 18 October 1998 the Respondent's father was granted a Low Income Earners' Health Care Card.  It is the Applicant's evidence that an application form for this was sent to Mr Gibson on 17 July 1998 following his discussions with Perry Burns, the Team Leader of Employment Services - Youth and Students section at Taree Centrelink (exhibits B and C).  However, the Respondent in his submission said he did not recall receiving the application form from Perry Burns, and he did not apply for the Low Income Earners' Health Care Card until advised by Centrelink's Financial Advisor in late September or early October 1998 that he would be eligible.

2. On 23 December 1998, the SSAT set aside the primary decision and decided the Respondent was entitled to be paid Youth Allowance on the estimate of his parents' 1998/1999 income from the date he originally made the request, being 17 July 1998.  It is that decision which is the subject of this appeal.
   legislative background

3. The rate of Youth Allowance payable to a recipient depends on a number of factors, one of which is the income of that person's parents in a financial year, to which reference is made in the Act as the "appropriate tax year". Pursuant to s 1067G-F4 the "appropriate tax year" is the "base tax year for that period". Section 1067G-F5 defines the "base tax year" as "the tax year that ended on 30 June in the calendar year that came immediately before the calendar year in which the period ends".

4. Section 1067G-F7 of the Act stipulates the circumstances in which there can be a change to the "appropriate tax year" at the person's request, viz.

   If:

   (aa)a person's combined parental income for the tax year following the base tax year is substantially less than it was in the base tax year and is likely to continue to be so for 2 years after the later of:

   (i)1 January in the tax year following the base tax year; or

   (ii)the day on which the combined parental income is reduced; and

   (a)the person requests the Secretary to make a determination under point 1067G-F8; and

   (b)as a result, the Secretary determines under that point that, for the purpose of applying this Module to the person in respect of a youth allowance payment period that ends on or after:

   (I)    the day on which the request is made; or
   (ii)  1 January in a year;

   whichever day is later, the appropriate tax year is the tax year following the base tax year;
   the appropriate tax year, for that purpose, is the tax year following the base tax year.

The effect of s 1067G-F7 is that if a person makes such a request, the appropriate tax year becomes the tax year following the base tax year.

1. Section 1067G-F2 provides –

   Persons affected by the parental income test
    1067G-F2.  Subject to point 1067G-F3, the parental income test applies to the person if the person is not independent.

   Section 1067G-F3 provides-

   Parent receiving Commonwealth Benefit
   1067G-F3.  The parental income test does not apply while a parent of the person:

   (a)gets a payment of pension, benefit or allowance referred to in Module L; or

   (b)gets a payment under Part 5 or 6 of the Farm Household Support Act 1992; or

   (c)gets ABSTUDY and:

   (i)also gets dependent spouse allowance under ABSTUDY; or

   (ii)has a partner who gets ABSTUDY; or

   (iii)is a single parent; or

   (d)is a disadvantaged person for the purposes of sections 5B and 5D of the Health Insurance Act 1973.

2. In its decision the SSAT noted that s 1067G-F8 allows a person to make a request to change the appropriate tax year in the event the parental income is likely to be reduced. The SSAT considered there was no issue between the parties that such a request had been made in this case, and that the sole issue revolved around the interpretation of s 1067G-F7. Section 1067G-F8 provides –

   If:

   (a)youth allowance:

   (i)is not payable to a person because the rate of youth allowance because of this Module is nil; or

   (ii)is payable at a reduced rate because of this Module; and

   (b)the person gives the Secretary an estimate of the person's combined parental income under Submodule 4 for the tax year following the base tax year; and

   (c)the person requests the Secretary to make a determination under this point; and

   (d)the person agrees that the person's rate of youth allowance for that tax year is to be recalculated if the person's actual combined parental income for that tax year exceeds the amount that the person estimated;

   the Secretary must determine that, for the purpose of applying this Module to the person in respect of a youth allowance payment period that ends on or after:

   (e)the day on which the request is made; or

   (f)1 January in a year;

   whichever day is later, the appropriate tax year is the tax year following the base tax year. 

3. The SSAT made the following remarks by way of statutory interpretation (T2, p4) –

   It is not readily apparent from a reading of subsection 1067G-F7(b)(ii) what is meant by the phrase "1January in a year".  The phrase could be capable of the following meanings, amongst others:

   (1)1 January in a "base tax year", or

   (2)1 January in a tax year following the base tax year", or

   (3)1 January 1998 in a calendar year

   Each of the above interpretations has inherent problems.  In the first possible meaning, 1 January in the base tax year would always precede the day on which the request was made.  Therefore there would be no reason to add subparagraph (ii) to subsection 1067G-F7(b).
   …….and moving to the third, the tribunal was of the view that to interpret the section in this way is to give the relevant words almost no meaning or clarity.
   Turning to the second possible interpretation of the phrase "1 January in a year", it seems that if the phrase is to have any meaning it must be construed in a way which would place that event, that is 1 January in a year, after the day on which the request is made to the Secretary to make a determination under point 1067G-F8.  However that interpretation also has significant problems.  Firstly, this interpretation leads to the result that a person subject to the parental income test cannot obtain any increased payments for six months after the completion of the base tax year…………On balance, the tribunal felt that this interpretation probably sat most comfortably with the words of  the section.

The SSAT concluded that –

… the tribunal was not able to conclusively determine which possible interpretation of subsection 1067G-F7 was intended by the legislature. There being no guidance in the explanatory memorandum or in Centrelink's guide to the administration to the Act, the tribunal decided that it was appropriate to interpret the relevant words in a manner beneficial to the applicant. Accordingly, it was determined that Mr Gibson should have his youth allowance determined on the basis of his parent's revised taxable income from the date of his request.

submissions
Applicant

1. The Applicant submitted the decision of the SSAT was incorrect in law as the Respondent's father ceased work on 3 July and so the reduction in his father's income had not occurred until the 1998/1999 financial year. As such, the 1998/1999 financial year did not constitute the "tax year following the base tax year" as required by the legislation. The relevant year following the base tax year is 1997/1998. In that year the Respondent's father was still working and there had been no substantial reduction in his income. The only "appropriate tax years" which could be used if they applied were the 1996/1997 or 1997/1998 tax years. It was submitted that s 1067G-F7 (aa) had not been satisfied.

2. The Applicant submitted the SSAT had erred in using 1998/1999 as the appropriate tax year, as that financial year could not affect the rate of Youth Allowance until 1 January 1999 at the earliest.

3. In response to the time at which the new rate of Youth Allowance could be applied, the Applicant submitted that the correct interpretation of the legislation "1 January in a year" means "1 January in a tax year following the base tax year" and the SSAT erred in applying the family allowance/family payment provisions of the Act. It was submitted that family payment provisions and the Youth Allowance parental income means test are two distinct provisions with different purposes. It was contended that Parliament had intended the AUSTUDY parental means test to be applied to Youth Allowance recipients in order to provide the same kinds of restrictions.

4. In respect of the Low Income Earners' Health Care Card application, the Applicant submitted an application form was sent to the Respondent's father on 17 July 1998, despite the submission for the Respondent that Mr Gibson had no recollection of receiving that application form until late September or early October 1998.

Respondent

1. It was submitted that the Respondent's father's receipt of a health care card had a direct bearing on whether the parental income test applied. Pursuant to subs 1067G-F3 the parental income test did not apply to the Respondent's circumstances.

2. It was submitted for the Respondent that his Youth Allowance payments were to be considered within the following two periods-

• The period from 16 October 1998 onwards, at which time the Respondent's father was the holder of a Low Income Earners' Health Care Card;

• The period between 17 July 1998 and 16 October 1998, when the Respondent's father did not have a Low Income Earners' Health Care Card.

1. In respect of the former period, it was submitted that s 1067G-F3(d) was applicable in the Respondent's circumstances since his father had been granted a Low Income Earners' Health Care Card. Consequently, it was submitted that from the date of the grant of that card there was no requirement for the parental income test, and so ss 1067G-F7 and 1067G-F8 were irrelevant. Hence, from 16 October 1998, when the Respondent's father was granted the Low Income Earners' Health Care Card, the Respondent was entitled to Youth Allowance payments at the "at home rate".

2. It was also submitted that for the period between 17 July 1998 and 16 October 1998, the Respondent's father was a not a holder of a Low Income Earners' Health Care Card because of an administrative error made by Centrelink.  The Tribunal's attention was directed to a file note (T9-37) dated 17 July 1998, in which it was recorded that the Respondent's father had ceased work, and advice was given to the effect that a reassessment prior to 1 January 1999 could only be made if either parent received an income support payment or a health care card.  It was submitted on behalf of the Respondent that despite this advice there was no mention of an offer by the Applicant to send out a claim form in order for Mr Gibson to receive the appropriate benefits at that time.  

3. The Respondent's father submitted he did not apply for a health care card until Centrelink's Financial Advisor told him he would be eligible to receive one.  It was submitted that the failure to offer the form for the Low Income Earners' Health Care Card was in breach of "Centrelink's Guide to the Administration of the Social Security Act",  and compensation for defective administration should be paid pursuant to Regulation 9 of the Financial Management and Accountability Act 1997.  It was also submitted that the amount of compensation should be the rate of Youth Allowance to which the Respondent would have been entitled had his father been in receipt of the health care card for the period 17 July 1998 to 16 October 1998.
   consideration of evidence and findings of fact

4. The Tribunal finds that during the relevant period the Respondent was aged 19 years and was living at home with his parents.  Therefore the parental means test applied.  The Respondent's father ceased work on 3 July 1998.  Subsequently he lodged an application for a Low Income Earners' Health Care Card on 18 October 1998, which was granted with effect from 16 October 1998. 

5. The Tribunal notes the submission of the Respondent's father, which will be accepted as evidence, that he did not recall having received an application form for the Low Income Earners' Health Care Card from Centrelink. On the evidence of Perry Burns (exhibit C), an application form was sent to the Applicant on 17 July 1998. Considering this evidence in juxtaposition, the Tribunal finds that an application form was sent to the Respondent's father on 17 July 1998, that he now has no recollection of having received it, and that the application which he lodged followed advice he received from Centrelink's Financial Advisor in late September or early October 1998. There is no evidence of an administrative error in the form of Centrelink having failed to advise Mr Gibson of his rights. Even if there was such evidence, there is no power under the Act to assume the Respondent's entitlement to Youth Allowance from 17 July 1998 on the basis of his father being eligible for the Low Income Earners' Health Care Card from that date but for the fact that he had not known to apply for it. Additionally, this Tribunal has no power to direct payments under the Financial Management and Accountability Act 1997 even if there was a prima facie case of an administrative error. 

6. Having found that the Respondent's father was in receipt of a Low Income Earners' Health Care Card from 16 October 1998, pursuant to s 1067G-F3 of the Act, the parental income test does not apply to the Respondent from 16 October 1998.

1. In respect of the period 4 July 1998 until 16 October 1998 when the parental income test does apply to the Respondent, the Tribunal is required to apply s 1067G-F7 of the Act. The Tribunal finds that Mr Gibson's income, and therefore the combined parental income was likely to have been substantially less for the 1998/99 tax year as a result of his ceasing work on 4 July 1998, assuming he was not going to obtain other work before too long. However, that is not the test to be applied by the Tribunal as set out in s 1067G-F7. In applying that test, the Tribunal determines that in this case the base tax year as at 4 July 1998 was 1996/97, being the tax year that ended on 30 June in the calendar year that came immediately before the calendar year in which the period ends, that is, 1997. The question to be asked then, is this; was the combined parental income for the tax year 1997/98, being the year following the base tax year (1996/97), substantially less than it was in the base tax year? The answer to that question, on the facts of this matter, is "no". The Tribunal finds there was no substantial decrease in the parental income until 4 July 1998, being the tax year 1998/99. This is fatal to the Respondent's case, as each of the additional requirements in s 1067G-F7 is predicated on the Respondent first having met this hurdle, which in fact he has failed to meet.

2. Having come to the position that the combined parental income for the tax year 1997/98 was not substantially less than in the base tax year 1996/97, the Tribunal does not need to consider whether the additional requirements in s 1067G-F7 have been satisfied - namely, whether the combined parental income is likely to continue to be substantially less, and in particular the Tribunal does not need to interpret the meaning of "1 January in a year" which in fact was the pivotal issue in the SSAT decision.

3. The Tribunal therefore sets aside the decision of the SSAT made on 23 December 1998, being the decision under review, and remits the matter to the Applicant with the Direction that the Respondent was not entitled to payment of Youth Allowance for the period 1 July 1998 until 16 October 1998. 

I certify that the 46 preceding paragraphs are a true copy of the reasons for the decision herein of Mrs M T Lewis, Senior Member

Signed:         .....................................................................................
  Associate

Date/s of Hearing  Hearing on the papers
Date of Decision  3 March 2000
Counsel for the Applicant        N/A

Solicitor for Applicant               Ms Ann Brimson, Administrative Law Section, Centrelink

Counsel for the Respondent    Unrepresented
Solicitor for the Respondent    N/A