Gingis and Repatriation Commission
[2004] AATA 841
•11 August 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 841
ADMINISTRATIVE APPEALS TRIBUNAL № V2004/80
VETERANS' APPEALS DIVISION
Re: YEFIM GINGIS
Applicant
And: REPATRIATION COMMISSION
Respondent
DECISION
Tribunal: Mr E. Fice, Member
Date: 11 August 2004
Place: Melbourne
Decision:The Tribunal varies the decision under review allowing work-related laundry expenses to be deducted from income.
(sgd) E. Fice
Member
VETERANS' AFFAIRS — service pension – reviewable decision - meaning of "gross ordinary income" - allowances - no advice received regarding change of part‑time earnings - applicant provided current earnings on request by respondent - overpayment - reduction in service pension due to part‑time work - Departmental Policy regarding work-related expenses
Veterans’ Entitlements Act 1986 ss 5H, 46, 57B, 175
REASONS FOR DECISION
11 August 2004 Mr E. Fice, Member
This is an application by Yefim Gingis (the applicant) for review of a decision dated 20 January 2004 made by a senior delegate of the Repatriation Commission (the Commission). The senior delegate affirmed the decision of a delegate made on 18 October 2003, to reduce the rate of service pension paid to Mr and Mrs Gingis with effect from 14 October 2003.
Mr Gingis was represented by his son and Mr R. Fergusson, an advocate of the Department of Veterans' Affairs, appeared for the Commission. The Tribunal received into evidence the documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (T1-T20) (the T‑documents), together with three exhibits (Exhibits A1‑A3) lodged by Mr Gingis and one exhibit (Exhibit R1) lodged by the Commission.
BACKGROUND
Mr and Mrs Gingis were granted a service pension on 28 January 1999. At that time Mr Gingis disclosed income of $5708.00, or $219.53 per fortnight, from part‑time work as a school crossing supervisor for the City of Port Phillip. No advice was received from Mr Gingis regarding any change in the amount of earnings he received from the City of Port Phillip until the Commission made a request for current information in October 2003.
Mr Gingis' tax return for the year ended 2003 disclosed that he had income of $6613.00, or $254.34 per fortnight. Accordingly, the Commission, by letter dated 22 January 2004, advised Mr and Mrs Gingis that each of them had been overpaid $540.62 in service pension and that recovery of the overpayment would be made by deductions from their pension payments between 19 February 2004 and 20 January 2005. Mr Gingis provided to the Commission all of his tax returns from 1999 to the year ending 2003. It is from the information obtained from these tax returns that the Commission calculated the overpayment amount.
Furthermore, on 18 October 2003, the Commission advised Mr and Mrs Gingis that their rate of service pension would be reduced from $378 per fortnight to $369.53 per fortnight, from 14 October 2003. Deductions from Mr and Mrs Gingis' service pension for repayment of the overpayment commenced in February 2004.
PARTIES' CONTENTIONS
Mr Gingis' principal objection with the reviewable decision made by the senior delegate on 20 January 2004 is that, although Mr Gingis earned $6613 gross in the 2002/2003 financial year, he was entitled to set off legitimate work expenses necessarily incurred in earning that income, thereby reducing his income to $5003 for the purposes of calculating his rate of pension. Mr Gingis claims a similar reduction for all of the financial years since 1999.
It was also argued on behalf of Mr Gingis that the Tribunal should make findings that the overpayment calculation was incorrect. It was further argued that the Tribunal should find that the deductions should not have been made from Mr and Mrs Gingis' pensions and that those deductions should be returned forthwith.
The Commission submitted that the definition of "income", for the purposes of calculating the pension rate, means "gross income". Accordingly, the income which is applicable for the purposes of calculating Mr and Mrs Gingis' pension is their total income, including all of the deductions Mr Gingis claims for work expenses.
As far as the calculation of overpayment by the Commission is concerned, the Commission's submission was that there had been no formal review of the overpayment and therefore that matter could not be the subject of review by the Tribunal at this stage. The same was said of the claim by Mr Gingis for a return of any deductions made to his and his wife's pension. In particular, it was submitted that those matters should be remitted to a delegate for the purposes of reviewing the overpayment and recovery, and to determine whether any hardship issues arose.
CONSIDERATIONS
The only applications which may be reviewed by the Tribunal under the Veterans’ Entitlements Act 1986 ("the Act") are those decisions described as reviewable decisions made pursuant to s 175 of the Act.
Section 175 of the Act, in so far as it is relevant, provides:
175(1) …
(1A) …
(2) Where the Commission, under section 57B, affirms a decision of the Commission referred to in section 57 or sets it aside and substitutes another decision for it, a person may apply to the Administrative Appeals Tribunal for a review of the decision so affirmed or substituted.
The decision reviewed under s 57 of the Act was a decision to reduce Mr and Mrs Gingis' service pension from $378.00 per fortnight to $369.53 each per fortnight, commencing on 14 October 2003. The reasons for decision were given on 20 January 2004. Mr Gingis has not sought a review under s 57, or under any other section of the Act, of the decision regarding overpayment or the deductions from their pensions. Mr and Mrs Gingis were notified of the overpayment and the decision to recover the overpayments by way of deductions by letter dated 22 January 2004, after the reviewable decision had been made. Accordingly, despite Mr Gingis' request that the question of overpayment and deductions be reviewed by the Tribunal, it is clear that the Tribunal does not have jurisdiction to re‑examine those decisions because they do not fall within s 175 of the Act. Furthermore, the letter of 22 January 2004 from the Commission indicated that, if Mr or Mrs Gingis disagreed with the details forming the basis of the assessment or the period during which the overpayment occurred, they could apply for a review. That, presumably, is a reference to a review pursuant to s 57 of the Act. Mr and Mrs Gingis have not yet applied for a review of that decision. The letter also pointed out that there was no right of review in relation to the recovery of the overpayment. Whether that is correct is not for the Tribunal to decide at this time.
Accordingly, the only decision which is reviewable by the Tribunal on this occasion is the decision to reduce Mr and Mrs Gingis' rate of service pension. Section 36N of the Act provides that "A veteran's age service pension rate is worked out in accordance with the Rate Calculator". The Rate Calculator is set out in Schedule 6 of the Act.
Module A of the Rate Calculator sets out the procedure to be adopted in working out the overall rate of pension. Method statement 1, Module A, applies and Step 1 requires the calculation of "the person's maximum basic rate using MODULE B below". Module B provides for the maximum basic rate of pension and that does not seem to be disputed by Mr Gingis. However, after calculating the maximum payment rate, the next step, Step 5, requires the assessor to apply the ordinary/adjusted income test using Module E to work out the reduction for ordinary/adjusted income. Step 6 of Method statement 1 then requires the assessor to "Take the reduction for ordinary/adjusted income away from the maximum payment rate…". The result is called the income reduced rate. Further reductions are then made after an assessment of assets and any remote area allowance and the result is the rate of a service pension.
Put simply, Mr Gingis' rate of service pension must be adjusted by making an allowance for his ordinary income in accordance with Module E.
For the purposes of Module E,
ordinary/adjusted income means:
(a)for the purpose of the calculation of the rate of service pension—ordinary income; or
(b)…
Adjusted income is only applicable for the purposes of calculating the rate of income support supplement. That is not relevant to Mr and Mrs Gingis' case. Accordingly, it is the definition of ordinary income which is critical to Mr Gingis' claim.
Ordinary income is defined under s 46 of the Act as follows:
A reference in this Act to a person's ordinary income for a period is a reference to the person's gross ordinary income from all sources for the period calculated without any reduction, other than a reduction under Division 2.
Gross ordinary income is not defined in the Act. However, the word "gross" is defined in The Australian Concise Oxford Dictionary as "5. total; without deductions". In other words, the appropriate income to be taken into account for the purposes of Module E is the total of Mr Gingis' ordinary income without any deduction. A reduction under Division 2 would only apply in respect of business income. It does not apply to Mr Gingis as he is an employee and does not carry on a business.
However, Mr Gingis argued that the Tribunal should have regard to the definition of income under s 5H(1) of the Act, which is as follows:
income, in relation to a person, means:
(a)an income amount earned, derived or received by the person for the person's own use or benefit; or
(b)…
(c)…
Mr Gingis further argued that, if the definition of income were to be read literally, as he said it should, only the moneys actually received for a person's own use or benefit can be classified as income. That would necessarily preclude any moneys which were received, but which were not for the person's personal use or benefit because those moneys were expended solely for the purpose of providing or maintaining equipment necessary to conduct work from which that person derived income. Accordingly, Mr Gingis submitted that one must deduct expenses necessarily incurred in earning income before that income can be classified as ordinary income.
The definition of income relied upon by Mr Gingis, under s 5H of the Act, is part of a series of definitions under the heading "Income test definitions". In that context, income has been defined, in a general sense, as an amount earned, derived or received by the person for the person's own use or benefit. That definition does not, in my opinion, alter the meaning of ordinary income as defined under s 46 of the Act. It should be noted that ordinary income is also defined under s 5H as income that is not maintenance income or an exempt lump sum. That definition is not intended to be exclusive of s 46 and, in fact, Note 3, under that definition, states:
Note 3: For provisions affecting the amount of a person's ordinary income see sections 46 and 46A (ordinary income concept), …
Therefore, in my opinion, it is not correct to argue that the general definition of income for the purposes of income test definitions qualifies the meaning given to ordinary income under s 46 of the Act. Section 46 of the Act falls under Part IIIB, which is entitled "Provisions applicable to service pensions and income support supplement". Clearly, the meaning given to ordinary income under s 46 of the Act must be applied when using the Rate Calculator set out in Schedule 6 of the Act.
However, notwithstanding my opinion regarding the operation of s 5H(1) of the Act, it has been a long-standing policy of the Commission that bona fide work-related expenses are recognised and deducted from gross ordinary income.
Alternatively, Mr Gingis submitted that the work‑related expenses which he claimed in his tax returns for the years 1999 to 2003, and which have been allowed by the Australian Taxation Office, are, in fact, allowances which have been paid to him by his employer to enable him to properly carry out his employment. The deductions noted in Mr Gingis' tax returns relate to motor vehicle expenses, travel expenses and the maintenance of a uniform. However, Mr Gingis admits that the payments made to him by the City of Port Phillip for working as a road crossing supervisor are made in one lump sum free of any amount for allowances. Nevertheless, Mr Gingis submitted that those amounts claimed as work‑related expenses should be treated as allowances made to him. Mr Gingis then submitted that, because s 5H(3)(8)(f) of the Act provides that payment by way of an allowance is not income in relation to a person for the purposes of the Act, those amounts should not be taken into account when assessing Mr Gingis' ordinary income.
The main problem with Mr Gingis' submission that the deductions claimed in his tax returns should be treated as allowances is the fact that those moneys were not paid to Mr Gingis as an allowance. Mr Gingis agreed that he received a salary with no allowances, although he was expected to have a motor vehicle available in order to drive to school crossings at various times; to maintain a mobile telephone so that he could be contacted, presumably at short notice; to attend school crossings where supervisors were unavailable; and also to maintain the standard uniform of a crossing supervisor. However, to make a claim for expenses necessarily incurred in earning one's income is a different thing altogether from receiving an allowance provided by an employer. An allowance is generally provided in addition to an employee's salary. That is not the case here. Also, an allowance would not necessarily be the same as that claimed by the employee as a deduction for work‑related expenses.
A letter received from Mr Gingis' employer by the Commission on 6 July 2004 stated the following about Mr Gingis' employment:
1.No part of Mr Gingis' remuneration is paid in the form of an allowance.
2.He is paid an hourly rate.
3.Mr Gingis is required to wear a uniform while performing his work. This is provided for him by the Council.
4.Mr Gingis works at a particular location and is not required to move from location to location as part of his work.
5.Mr Gingis is not required to use his own car to perform his work.
6.Mr Gingis is not required to use his own mobile phone in order to perform his work.
On balance, my view is that, although Mr Gingis claimed work‑related expenses as a deduction against his taxable income, those work‑related expenses are not and cannot be equated with an allowance. For that reason, those sums claimed as a deduction against his taxable income are not excluded amounts as described under s 5H(8)(f) of the Act.
CONCLUSION
Mr Gingis' ordinary income for the purposes of calculating his rate of service pension under the Act must include those items for which he has claimed a deduction in his income tax returns. The correct income to be used for that calculation is Mr Gingis' gross ordinary income which is his total income without any deduction. However, given the policy applied by the Commission in respect of work‑related expenses, it is appropriate to take into account the fact that Mr Gingis was required to wear a uniform during his employment with City of Port Phillip. It is clothing which is not suitable for any other use and it is likely that a tax deduction would be allowed for the cost of maintaining the uniform. For that reason, I consider that it is appropriate to apply the Commission's policy regarding genuine work‑related expenses which are assessed at $150 per year for Mr Gingis.
The amounts claimed by Mr Gingis as deductions against his taxable income are not allowances within the meaning of the Act. Those sums cannot be used to reduce Mr Gingis' gross ordinary income for the purpose of calculating his rate of service pension.
For the reasons I have set out, the Tribunal varies the decision under review and determines that Mr Gingis' work-related laundry expenses of $150 per year be deducted from his declared income, effective from 14 October 2003.
I certify that the twenty‑eight [28] preceding paragraphs are a true copy of the reasons for the decision of:
Mr E. Fice, Member
(sgd) Catherine Thomas
Clerk
Date of hearing: 02 June 2004
Date of decision: 11 August 2004
Advocate for applicant: Mr A. Gingis
Advocate for respondent: Mr R. Fergusson
Solicitor for respondent: Advocacy Section, Department of Veterans’ Affairs
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