Hall and Repatriation Commission
[2003] AATA 690
•4 July 2003
Administrative
Appeals
Tribunal
DECISION AND ORAL REASONS FOR DECISION [2003] AATA 690
ADMINISTRATIVE APPEALS TRIBUNAL )
) No S2002/329
GENERAL ADMINISTRATIVE DIVISION ) Re VIOLET HALL Applicant
And
SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES
Respondent
DECISION
Tribunal Senior Member WJF Purcell Date4 July 2003
PlaceAdelaide
Decision For the reasons given orally at the Hearing of this matter, the Tribunal affirms the decision under review.
(Signed)
WJF PURCELL
(Senior Member)
CATCHWORDS
SOCIAL SECURITY - pensions, benefits and allowances – Age Pension – whether income from rental property should be assessed under the Age Pension income test – whether financial hardship rules apply
Social Security Act 1991 sections 8, 1129, 1130
Aged Care Act 1997 sections 57A-2, 57A-9
ORAL REASONS FOR DECISION
4 July 2003 Senior Member WJF Purcell 1. This is an application for review of a decision of the Social Security Appeals Tribunal (the SSAT) of 12 August 2002, which affirmed the decision of an Authorised Review Officer of 8 May 2002, to reduce the rate of the applicant’s Age Pension, with effect from 27 February 2002, because of receipt of rental income.
2. The evidence before the Tribunal comprised the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the T Documents). The applicant was represented by her daughter, Mrs Valmai Pepper, who was accompanied by Mr Paul McDonald. Mr Goldsworthy represented the respondent (the Department).
3. The applicant is in receipt of Age Pension, and has lived in hostel accommodation at the Bellevue Residential Care Centre (Bellevue) since 30 July 1998. She owns a home at 17 Carlow Street, Sturt, which is rented by Mrs Pepper and her friend, Mr McDonald. Mrs Pepper, who is in receipt of Sole Parent Pension, pays $135 per week and Mr McDonald pays $100 per week rent. Mrs Pepper has lived in the house for some 10 or 11 years, and cared for the applicant at the house prior to the applicant moving to Bellevue. Mr McDonald moved in at the end of 2001, and Mrs Pepper is acting as his carer. Mrs Pepper paid rent of approximately $170 per week to her mother for a number of years, and this money did not reduce the applicant’s pension entitlement. Mrs Pepper claimed rent assistance from Centrelink throughout this time, and advised Centrelink as to whom she was paying this rent.
4. On 27 February 2002 a delegate decided to assess the rent money of $235 per week or $470 per fortnight as income. The applicant’s Aged Pension was reduced by $81.16 per fortnight.
5. On 21 March 2002 a Departmental officer made inquiries of Bellevue as to whether the applicant was paying an accommodation charge. The Departmental file note reads:
“Rang Dept Health & Aged Care 210302 to ascertain whether a/n paying “accommodation charge”. No “accommodation charge” is paid by a/n as she was not required to pay a bond (due to her financial circs) and has “aged in place” at facility (moved to a higher level of care in the same facility). A/n is therefore NOT qualified for exemption of inc/assets test on former family home for 5 yrs. Only the normal 2 yr asset exemption applies (from original date of admission).” [T9/45]
6. A further Departmental note of 27 March 2002 reads:
“Paul McDonald phoned on 27/03/2002 at 12:03 Receipt number: 6719
Paul McDonald rang re how rent paid by daughter will affect pension. Daughter and Paul live in family home and both pay rent. Initially I was discussing with Paul without any access to a file and from what he was telling me (said mother in Hostel) I adv there could be a 5 year exemption on asset value of home and therefore whilst exempt rent paid by daughter would not be taken into acct. I then spoke to nominee re the matter and was able to access file to see exactly what the situation was. Advised that exemption is only for 2 years and cannot be extended to 5 years as cus not liable to pay an accommodation charge. Advised that after the 2 year exemption (which would have ended July 2000) any rent at all rec’d would be taken into acct and affect pension.
I advised that what the CSC has done is correct in relation to rent being taken into acct and repeated this several times. The discussion with Paul went on for approx 1 hour as he was reading home and residence choices for older people and confusing the part on page 46 re the nursing home not taking the home into acct if a close family member on income support has been in home for past 5 years. Tried several times to explain that this relates to the N/home and not centrelink.
I ended call by reiterating that what the CSC has done is correct and that it is not serving any purpose to keep going over what is in the booklet.” [T11/47]
7. On 8 May 2002 the decision was affirmed by an Authorised Review Officer and by the SSAT on 12 August 2002.
8. Mrs Pepper submits that she paid her mother $170 per week, and this was properly declared and did not affect the applicant’s pension; and now since February 2002 the pension has been reduced, and Mrs Pepper’s contribution to rent is only $135 of the $235 per week. She maintains that the applicant has so few assets that she comes under the financial hardship rules under section 1129 of the Social Security Act 1991 (the Act) and should be allowed more income, and this rental income should not reduce the rate of pension. Section 1129 of the Act, as far as is relevant for the purpose of these proceedings, provides:
“1129(1) If
(a) either:
(i)a social security pension is not payable to a person because of the application of an assets test; or
(ii)a person’s social security pension rate is determined by the application of an assets test; and
(b) either:
(i)sections 1108 and 1109 (disposal of income) and 1124A, 1125, 1125A, 1126, 1126AA, 1126AB, 1126AC and 1126AD (disposal of assets) do not apply to the person; or
(ii)the Secretary determines that the application of those sections to the person should, for the purposes of this section, be disregarded; and
(c) the person, or the person’s partner, has an unrealisable asset; and
(d)the person lodges with the Department, in a form approved by the Secretary, a request that this section apply to the person; and
(e)the Secretary is satisfied that the person would suffer severe financial hardship if this section did not apply to the person;
the Secretary must determine that this section applies to the person.
Note 1: For social security pension see subsection 23(1).
Note 2: for unrealisable asset see subsections 11 (12) and (13).
1129 (1A) In subsection (1):
social security pension does not include a pension PP (single).
Note: Financial hardship rules for pension PP (single) are contained in sections 1130B and 1130C.
1129 (2) A decision under subsection (1) takes effect:
(a)on the day on which the request under paragraph (1) (d) was lodged with the Department; or
(b)if the Secretary so decides in the special circumstances of the case - on a day not more than 6 months before the day referred to in paragraph (a).”
9. Section 1130, as far as is relevant for the purposes of this review, provides:
“Value of unrealisable asset to be disregarded
1130(1) If section 1129 applies to a person, the value of:
(a) any unrealisable asset of the person; and
(b) any unrealisable asset of the person’s partner;
is to be disregarded in working out the person’s social security pension rate.
Deduction from social security pension maximum payment rate
1130(2) If section 1129 applies to a person, there is to be deducted from the person’s social security pension maximum payment rate an amount equal to the person’s adjusted annual rate of ordinary income.
Adjusted annual rate of ordinary income
1130(3) A person’s adjusted annual rate of ordinary income is an amount per year equal to the sum of:
(a)the person’s annual rate of ordinary income (other than income from assets); and
(b)the person’s annual rate of ordinary income from assets that are not assets tested; and
(c) either:
(i)the person’s annual rate of ordinary income from unrealisable assets; or
(ii)the person’s notional annual rate of ordinary income from unrealisable assets;
whichever is the greater; and
(d)an amount per year equal to $19.50 for each $250 of the value of the person’s assets (other than disregarded assets).
Assets tested asset
1130(4) For the purposes of subsection (3), an asset is not assets tested if the value of the asset is to be disregarded under subsection 1118 (1).
…”
10. The Department argues that Age Pensions are paid subject to the income and assets of the person claiming the payment. Section 8 of the Act defines income as an amount “earned, derived or received” by the person by any means. Section 8(8)(zn) excludes as “income” any rent received from the person’s principal home while the person is accruing a liability to pay an accommodation charge. Accommodation charge is defined in schedule 1 of the Aged Care Act 1997 as:
”… in relation to a person, means an amount of money that accrues daily and is paid or payable to an approved provider by the person for the person’s entry to a residential care service or flexible care service through which care is, or is to be, provided by the approved provider.”
11. The rules under which a person is liable to pay an accommodation charge are set out in section 57A-2 of the Aged Care Act 1997, which, as far as is relevant for the purposes of this review, provides:
“(1)The rules relating to charging an *accommodation charge for the *entry of a person to a residential care service as a care recipient are as follows:
(a) at the time of entry, all of the following must be true:
(i) the person requires a *high level of residential care;
(ii)the person’s approval as a care recipient of residential care is not limited under section 22-2 to a *low level of residential care;
(iii)the service, of the *distinct part of the service through which the care recipient is to receive care, does not have *extra service status;
(iv)section 57-23 does not allow the approved provider to charge an *accommodation bond for the entry;
Note: A *concessional resident cannot be required to pay an accommodation charge—see section 57A-6.
…”
12. The Department noted that the applicant is not liable to pay an accommodation charge at Bellevue. It would appear that at the time she entered residential care she did not require a high level of care. She was transferred to high level care after she entered the facility. A decision also appears to have been made by Bellevue, that no liability arises, as an accommodation charge would cause her financial hardship, pursuant to section 57A-9 of the Aged Care Act 1997. The applicant’s rental income therefore, the Department submits, is not an excluded amount, and must be assessed as “income” for the purposes of Age Pension.
13. In relation to Mrs Pepper’s request that this Tribunal consider payment under the financial hardship rules, no valid request has been made to the Department for consideration under the financial hardship rules. The delegate, the Authorised Review Officer, and the SSAT have not considered the issue. The Department contends therefore that this Tribunal has no jurisdiction over the matter. In addition, the financial hardship rules apply only if a person’s pension rate is reduced because of the assets test in accordance with section 1129(1)(a) of the Act. The effect of the financial hardship rules is to disregard an “unrealisable asset” under the assets test, pursuant to section 1130(1) of the Act. The applicant’s pension is paid at a reduced rate because of the income test. The financial rules could not provide any benefit to her, even if the financial hardship provisions were satisfied.
14. In my view, the applicant’s rental income has been properly treated as income under section 8 of the Act, and in accordance with the income test, this income together with any other income she receives, is taken into account in the assessment of the appropriate rate of pension payable. In this matter, the amount of income as at 27 February 2002 would appear to have been above the allowable threshold, with the result that the applicant’s rate of payment was reduced. I do not consider sections 1129 or 1130 of the Act are relevant, as they apply to the assets test; and in any event, no valid request has been made by the applicant.
15. For these reasons, the Tribunal affirms the decision under review.
I certify that the 15 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member WJF Purcell
Signed: .......................................................................................
AssociateDate of Hearing 4 July 2003
Date of Decision 4 July 2003
Counsel for the Applicant Mrs V Pepper
Solicitor for the Applicant -
Counsel for the Respondent Mr C Goldsworthy
Solicitor for the Respondent Service Recovery Team
0
0
0