GVADJAVA and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

[2010] AATA 753

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 753

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2010/1494

GENERAL ADMINISTRATIVE DIVISION		)
Re		ALEXANDRE GVADJAVA

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Senior Member R W Dunne

Date24 August 2010

PlaceAdelaide

Decision For the reasons given orally at the hearing of this matter, the Tribunal affirms the decision under review.

R W DUNNE
  (Signed)
  (Senior Member) 

CATCHWORDS

SOCIAL SECURITY – pensions, benefits and allowances – receipt of age pension – applicant has financial asset – deemed income on financial asset calculated by respondent at threshold rates – applicant asserts actual interest rates should apply – decision under review affirmed.

Social Security Act 1991, ss 9(1), 1076, 1081(1), 1082

Social Security (Deeming Threshold Rates) (DEEWR) Determination 2009 (No.2)

REASONS FOR DECISION

24 August 2010   Senior Member R W Dunne

Introduction

1.      The applicant, Mr Alexandre Gvadjava, has requested written reasons for my decision which I delivered orally at the conclusion of the hearing in this matter.  The following is an edited version of my reasons.  However, in order to put my conclusion and findings in context, I will now supplement my oral reasons by referring to certain background facts which were not in contention, and to the relevant legislative scheme.

2.      Mr Gvadjava has been in receipt of age pension since 22 June 2005.  His only recorded asset is money he has invested in a Commonwealth Bank Pensioner Security Account.  On 4 November 2009, the balance in that account was $59,560 and an officer of the respondent (“Centrelink”) decided that, based on that balance, Mr Gvadjava was deemed to have an annual income of $1,366.80.  He requested a review of Centrelink’s decision, which was affirmed by an Authorised Review Officer and by the Social Security Appeals Tribunal (“SSAT”).  Mr Gvadjava has applied to this Tribunal for a review of the decision of the SSAT.

3. At the hearing before me, Mr Gvadjava represented himself and gave evidence through a Russian interpreter and translator, Ms Polina Frishling. Mr C Visser (from the Centrelink Advocacy Branch) appeared for the respondent. I received into evidence the T documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (Exhibit R1), together with the applicant’s documents (Exhibit A1).

Issue for the Tribunal

4.      The issue for the Tribunal is whether the respondent correctly assessed the deemed income of the applicant from his financial asset for the purpose of determining the rate of his age pension.

Legislation

5.      The legislation relevant to this application for review is found within the social security law, in particular, the Social Security Act 1991 (“Act”). Under the Act, income deeming rules now apply in relation to all financial assets. Under the rules, the total value of a person’s financial assets are added together, regardless of the nature of the asset or when it was purchased. Under s 9(1) of the Act, the expressions “financial investment” and “financial asset” are defined.  The definitions read:

“9        Financial assets and income streams definitions

(1)In this Act, unless the contrary intentions appears:

financial investment means:

(a)       available money; or

(b)       deposit money; or

(c)       a managed investment; or

(d)       a listed security; or

(e)       a loan that has not been repaid in full; or

(f)        an unlisted public security; or

(g)       gold, silver or platinum bullion; or

(h)       an asset-tested income stream (short term);

but does not include an investment in an FHSA (within the meaning of the First Home Saver Accounts Act 2008)

…

financial asset means:

(a)       a financial investment; or

(b)       a deprived asset …”.

6. Section 1076 of the Act provides that a person who has financial assets is taken, for social security purposes, to have received deemed ordinary income calculated in accordance with the method statement in that section. Section 1076 relevantly reads:

“1076 Deemed income from financial assets—persons other than members of couples

(1)This section applies to a person who is not a member of a couple.

(2)A person who has financial assets is taken, for the purposes of this Act to receive ordinary income on those assets in accordance with this section.

(3)If the total value of the person’s financial assets is equal to or less than the person’s deeming threshold, the ordinary income the person is taken to receive per year on the financial assets is the amount worked out by multiplying the value of those assets by the below threshold rate.

(3A)If the total value of the person’s financial assets exceeds the person’s deeming threshold, the ordinary income that the person is taken to receive is worked out as follows: 

Method statement

Step 1.Multiply the person's deeming threshold by the below threshold rate.

Step 2.Subtract the deeming threshold from the total value of the person's financial assets.

Step 3.Multiply the remainder worked out at Step 2 by the above threshold rate.

Step 4.The total of the amounts worked out at Steps 1 and 3 represents the ordinary income the person is taken to receive per year on the financial assets.

(4)The person is taken, for the purposes of this Act, to receive one fifty‑second of the amount calculated under subsection (3) or (3A) as ordinary income of the person during each week.”

7. Section 1081 of the Act makes reference to the thresholds for calculating deemed income for couples and non-couples. The deeming threshold amounts are indexed every 1 July. Section 1081 relevantly reads:

“1081Deeming threshold

(1)The deeming threshold for a person who is not a member of a couple is $30,000.

(2)The deeming threshold for a pensioner couple is $50,000.

Note.The amounts fixed by subsections (1) and (2) are indexed every 1 July.  See sections 1190 – 1192.”

8.      The current deeming threshold for single age pension recipients is $42,000.

9. Section 1082 of the Act provides that the below threshold and above threshold deeming rates are determined by legislative instrument, namely the Social Security (Deeming Threshold Rates)(DEEWR) Determination 2009 (No.2) (“Determination”).  The Determination provides that the relevant below threshold rate is 2 percent and the current above threshold rate is 3 percent.

Background and Evidence

10. The material facts of this case are largely not in dispute and may be extracted from the reasons for decision of the SSAT. Mr Gvadjava did not dispute that his Commonwealth Bank Pensioner Security Account had a balance of $59,560 in it on 4 November 2009. Nor did he appear to challenge the fact that, under the Act, deemed income is assessed on financial assets at the rate of 2 percent for the first $42,000, or that financial assets above that threshold are assessed for deemed income at the rate of 3 percent. Based on these rates, applied to a financial asset of $59,560, Centrelink calculated that Mr Gvadjava had deemed annual income of $1,366.80. This was equal to deemed weekly income of $26.28.

11.     Mr Gvadjava resides in rental accommodation provided by Housing SA, a division of the South Australian Department for Families and Communities.  It appears that, as part of his agreement with Housing SA, particulars of his deemed income are furnished to that division and are used in determining the amount of the weekly rental for his accommodation. 

12.     In giving his evidence, Mr Gvadjava said that he rejected the information used and the calculations Centrelink had made in assessing deemed income on the funds in his Commonwealth Bank Pensioner Security Account.  He said that “deemed income” was not his real income.  The actual interest rates used by the Commonwealth Bank on his Pensioner Security Account changed from time to time.  However, Centrelink used constant rates for determining his deemed income.  He did not agree with the amount of $26.28, representing weekly deemed income, that Centrelink had provided to Housing SA.  He said this deemed income amount had increased the rental he was required to pay to Housing SA, in respect of his accommodation, to $57.80 per week from January 2010. 

13.     Mr Gvadjava had previously kept his funds at home and was saving to pay for new dentures.  At that time, the funds amounted to about $40,000, but he deposited them with the Commonwealth Bank a couple of years ago.  He had withdrawn $10,000 of the funds on 20 April 2009.  The balance in the account was now $61,000 to $62,000.

Consideration

Has the respondent correctly assessed the deemed income of the applicant from his financial asset for the purpose of determining his rate of age pension?

14.     Mr Gvadjava is in receipt of an age pension.  I understand from Mr Visser that the pension is paid at the maximum rate and that Mr Gvadjava receives an amount of $701.10 per fortnight. 

15. I have reviewed the information that Centrelink used in determining Mr Gadjava’s deemed income pursuant to ss 1076, 1081 and 1082 of the Act. I am satisfied that the amount invested by Mr Gvadjava in his Commonwealth Bank Pensioner Security Account, which he accepts amounted to $59,560 as at 4 November 2009, was “deposit money” and, as such, was a “financial asset”, within the meaning of s 9(1) of the Act. I am also satisfied that the following calculations of deemed income, made by the respondent pursuant to ss 1076, 1081 and 1082 of the Act, are correct:

Balance in Commonwealth Bank Pensioner Security Account

(as at 4 November 2009) -   $59,560

Below threshold rate of 2 percent of deeming threshold ($42,000) -         $840.00

Above threshold rate of 3 percent of balance ($17,560) -   $526.80

Total Annual Deemed Income -   $1366.80

16. Under s 1076(4), Mr Gvadjava is taken, for the purposes of the Act, to receive one fifty-second of his annual deemed income of $1,366.80. Therefore, his deemed ordinary weekly income is $26.28. I note that the weekly deemed income of $26.28 (or $52.56 per fortnight) is well below the sum ($142 per fortnight) that would result in a reduction in his maximum rate age pension. In other words, the amount of the weekly deemed income that is assessed by Centrelink under the Act does not affect the amount of his age pension of $701.10 per fortnight.

17. In the applicant’s documents (Exhibit A1), Mr Gvadjava made various submissions and provided numerous calculations of the interest he believed should be assessed as income on the funds in his Pensioner Security Account. Given the deemed income provisions in the Act, these submissions and calculations were of little practical assistance to me. Mr Gvadjava became quite agitated when I sought to discuss Centrelink’s actions with him and he seemed unwilling or unable to accept the basis upon which the deemed income had been assessed. However, it soon became apparent that he was not concerned about the amount of age pension that he was receiving. His concern was the increase in the amount of rent that he was obliged to pay Housing SA as a result of the weekly deemed income of $26.28 that had been assessed by Centrelink. This was obviously being used by Housing SA to determine the amount of weekly rental that Mr Gvadjava had to pay for his accommodation.

18.     I have sympathy for Mr Gvadjava and the predicament he finds himself in with Housing SA.  However, the Tribunal is unable to be of any assistance to him on this issue in dealing with his application for review.  It would be my recommendation that he approach Housing SA again and request that, rather than use the weekly deemed income assessed by Centrelink, the actual interest on his Pensioner Security Account be taken into account in determining the amount of his accommodation rental.

Summary

19. For the reasons outlined above, I am satisfied that the provisions of the Act dealing with the deeming rules have been properly applied in Mr Gvadjava’s case and that his annual deemed income of $1,366.80 has been correctly calculated.

Decision

20.     The Tribunal affirms the decision under review.

I certify that the 20 preceding paragraphs are a true
copy of the reasons for the decision herein of
Senior Member R W Dunne

Signed:         .....................................................................................

Assistant

Date/s of Hearing  24 August 2010
Date of Decision  24 August 2010

Date of publication of

written reasons  1 October 2010
Applicant  In person
Advocate for the Respondent   Mr C Visser
Solicitor for the Respondent     Centrelink Advocacy Branch