Huggins and Secretary, Department of Social Services (Social services second review)
[2021] AATA 3217
•16 August 2021
Huggins and Secretary, Department of Social Services (Social services second review) [2021] AATA 3217 (16 August 2021)
Division:GENERAL DIVISION
File Number:2020/8209
Re:Mr Graham Huggins
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Ms A E Burke AO Member
Date of decision: 16 August 2021
Date of reasons: 7 September 2021
Place:Melbourne
For the reasons given orally at the conclusion of the hearing of this matter, the Tribunal affirms the decision under review.
..........................[sgd]..............................................
Ms A E Burke AO Member
Catchwords
SOCIAL SECURITY – pension bonus scheme – whether qualified for age pension –– renovation on home and rental property does not constitute gainful work – Work test not satisfied – recordkeeping not maintained - 13 week limit – no special circumstances found - working past 75 years of age – age pension correctly cancelled – Decision affirmed
Legislation
Administrative Appeals Tribunal Act 1975 (Cth)
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)Cases
Chong and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 690
Kunnel and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 697
Muir and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 644
Polchow and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 224Secondary Materials
Guide to Social Security Law, Department of Social ServicesPension Bonus Scheme Information Booklet
REASONS FOR DECISION
Ms A E Burke AO Member
7 September 2021
Mr Huggins (the Applicant) is seeking a second-tier review of the decision made by the Secretary of the Department of Social Services (the Respondent) that he was not entitled to a Pension Bonus (PB) under the PB Scheme.
The application was heard by telephone on 16 August 2021. Mr Huggins was self-represented and Mr Tim Noonan, a government lawyer in the Litigation Team of Services Australia, appeared for the Respondent.
The Tribunal provided an oral decision at the hearing affirming the original decision. Mr Huggins has subsequently requested written reasons for the decision in accordance with section 43(2A) of the Administrative Appeals Tribunal Act 1975. These are those reasons.
THE ISSUES IN CONTENTION
The issues in contention before the Tribunal are whether:
(a)Mr Huggins was eligible to receive the PB; and
(b)whether his age pension was correctly cancelled on 24 July 2020.
BACKGROUND
Mr Huggins is a very dynamic 82-year-old, who has been in the workforce from age 14 until the present, predominately working in the building industry. Mr Huggins lives with his wife, who is 15 years younger than him in their own home and has three adult children from his first marriage. Mr Huggins has been an active sportsman all his life and a gifted runner. Until his workplace accident, he competed in the Masters games and was for many years an VFL/AFL umpire and trainer.
In March 2003, Mr Huggins suffered a significant workplace injury which resulted in a left hip replacement. Mr Huggins was made redundant following his injury on 26 November 2003 and was in receipt of weekly workers compensation payments until 2005. Mr Huggins subsequently received a lump sum payment from his former employer. As a consequence, of his lump sum payment, Mr Huggins was not entitled to any Centrelink benefits from 12 November 2005 to 2 January 2009 as there was a compensation preclusion period. During this period, Mr Huggins was suffering from significant physical and mental health issues.
Mr Huggins turned 65 on 31 January 2004, at which time he was deemed eligible to apply for the age pension. Mr Huggins did not seek to apply for the age pension at this time and was still actively seeking to return to the workforce regardless of his significant health issues. Mr Huggins was registered for the PB Scheme from 31 January 2004.
On 2 November 2006, Centrelink advised Mr Huggins he had been accepted as a member of the PB Scheme, the letter stated:
You have indicated the length of time you intend participating in the Pension Bonus Scheme. However you can claim a bonus whenever you are ready, provided you have been an accruing member of the Scheme for at least the minimum 12 month period.
You should contact us immediately if your circumstances change while you are registered for the Pension Bonus Scheme.
You have signed an acknowledgement of your rights and obligations under the Pension Bonus Scheme and received an information booklet which sets out details of the Scheme.
On 19 January 2009, Centrelink advised Mr Huggins that he was still registered as a member of the PB Scheme, the letter stated:
Even if you are not yet ready to claim Age Pension, you might find it helpful to confirm at the end of each working year that you are still "on track" with this Scheme. If you would like to do this, please phone us on 13 1021 to make an appointment. You will need to show us your work record and documents to verify the work you have done. We can then issue you with a letter - an "Evidentiary Certificate" - which confirms that you have met the Scheme's requirements for the year.
You don't have to get an Evidentiary Certificate from us each year, but if you do, it will make it much easier to claim the bonus when you eventually claim Age Pension.
When you are ready to claim Age Pension you will need to claim the bonus at the same time. Please remember that you'll need to lodge your bonus claim within 13 weeks of ceasing work, or within 13 weeks from the date you no longer meet the work test. (You can find out more about the work test by reading the Pension Bonus Scheme booklet. Please phone us on 13 2300 for a copy, or you can read and download this booklet from our website. Just look under 'Pension Bonus Scheme' in the Publications chapter.)
On the 21 August 2019 Mr Huggins made an application for the age pension and PB.
On 22 October 2019 Centrelink wrote to Mr Huggins, apologising for the delay in assessing his claim for age pension and PB and requested additional information in respect of his financial details.
On 20 November 2019, Centrelink rejected Mr Huggins’ claim form age pension as he had not responded to letters sent to him. Mr Huggins replied to this letter in detail on 13 December 2019.
On 24 July 2020, Centrelink made a payment to Mr Huggins for age pension for the period 21 August 2019 to 24 June 2020 and advised he could not be paid PB as he did not claim in the allowable period.
On 24 July 2020 Centrelink cancelled Mr Huggins’s age pension as the value of his and his wife’s combined assets were above the allowable limit.
On 7 August 2020 on internal review, a departmental Authorised Review Officer (ARO) found the decision to cancel Mr Huggins age pension and reject his claim for PB was correct. The ARO found that:
Pension Bonus Scheme decision
Pension Bonus Scheme payments are assessed when a person submits their Age Pension claim. If a person is not qualified or payable for an Age Pension claim, they will not be eligible for a Pension Bonus Scheme payment. The Pension Bonus Scheme payment amount is based on a person’s rate of Age Pension.
A person who is registered for the Pension Bonus Scheme is considered an accruing member whilst meeting the work test requirements. The work test requirements must be at least 960 hours of gainful work during the period. This averages to 20 hours per week for 48 weeks per year.
For the purposes of the Pension Bonus Scheme, gainful work is work performed for financial gain or reward. The work must involve the member being engaged in some form of gainful activity for financial reward rather than contrived situations.
A member is not considered to be engaged in gainful work if they are:
managing their own, or their family's, financial investments,
performing domestic duties at their, or their partners' place of residence, or
engaged in any form of voluntary work.
Non-accruing membership of the scheme occurs during any period that the member is subject to:
a disposal preclusion period, or
a compensation preclusion period, or
a carer preclusion period, or
a period of non-accruing membership (paid or unpaid leave for up to 26 weeks at a time).
If a person is considered non-accruing member of the scheme they do not have to meet the work test provisions.
Based on the evidence provided to date, I have found that you were a non-accruing member of the Pension Bonus Scheme for the period 31 January 2004 to 2 January 2009 due to compensation preclusion periods.
I have found that you were an accruing member from 3 January 2009 to 30 June 2010 as you met the work test requirements.
For the period 1 July 2010 to 30 June 2016 you failed to meet the work test. This means you ceased to be an accruing member of the scheme and the non-accruing membership provisions did not apply.
Your tax returns for the 2011, 2012, 2013, 2014, 2015 and 2016 financial years show that there was no new income generated from your self-employment business. The main income source stated on the tax returns was carrying over previous year’s losses and/or income generated from your real estate investment. Based on the evidence provided to date, I am not satisfied that the work test requirements have been meet during the period 1 July 2010 to 30 June 2016.
For the period 1 July 2016 to 9 August 2019 you met the work test requirements, however as you turned 75 in 2014, the post-75 rules apply. Once a member turns 75 years of age they can no longer accrue further bonus periods under any circumstances. Members aged over 75 years of age can remain members provided they continue to meet the work test.
Upon ceasing to meet the work test, a claim for Age Pension and Pension Bonus Scheme must be submitted within 13 weeks. To be eligible for the payment you would have had to have submitted your Age Pension and Pension Bonus claim within 13 weeks of ceasing to meet the work test on 1 July 2010. The annual letters sent to you in regard to the Pension Bonus Scheme membership advised of this.
I note there are provisions in the legislation where the secretary can consider an activity as gainful work. I note you have mentioned you completed a lot of work on your own home and your mother’s home. These letters did not provide the dates these events occurred, therefore based on the evidence provided I could not consider the discretion as stated in the legislation. If you were to provide the dates that you were undertaking the work, this discretionary legislation could be considered.
This means the decision to reject your claim for Pension Bonus was correct.
Age Pension cancellation decision
A person’s Age Pension is assessed on either the income or assets test. The test that yields the lowest or nil rate is applied.
The decision to cancel your Age Pension due to excess assets was made using the following information from your Age Pension claim form and supporting documents:
Savings - $165,371
Other assets - $46,500 (vehicles and home contents)
Superannuation - $851,356
Real Estate - $380,000
Total = $1,443,227.
As at 24 March 2020 your total combined assets exceeded the allowable amount and as such the Age Pension was cancelled. This decision was correct.
I also note you queried the annual income amounts stated on the letter dated 24 July 2020.
Based on the information provided in the Age Pension claim, the income amounts stated include:
Deeming applied to financial investments as at 24 March 2020 - $28,842.00 per annum. Income from rental property as at 24 March 2020 - $8,750.00 per annum. Net income for your partner’s business as per the 2020 financial year tax return - $27,166 per annum.
Total income = $64,758.
As your assets exceeded the assets test limit, if the above income amounts were to change, namely your partner’s business income ceasing or reducing, this would have no effect on your eligibility for an Age Pension if the assets continued to be above the asset limit.
On 16 November 2020, the Social Security and Child Support Division of the Tribunal (AAT1) affirmed the decision of the ARO that Mr Huggins was not entitled to PB and his cancellation of his age pension was correct. The Member stated:
I find that the applicant ceased to meet the pension bonus work test on 1 July 2010 and that he did not claim pension bonus within 13 weeks of that date. Accordingly, I am satisfied that this decision to reject the applicant’s claim for pension bonus is correct.
With respect to the age pension cancellation decision this was undertaken due to the application of the assets test as provided for under section 1064 of the Act. Section 44 of the Act also sets out that age pension is not payable if a person’s rate is nil. When I questioned the applicant about the value of the combined assets utilised in this decision he did not seek to dispute the values used. I note that these values were taken from the applicant’s own age pension claim form. The value of his combined assets disclosed was $1,443,227, which included superannuation of $851,356. I note that the maximum allowable assets test limit for a pensioner couple who own their own home was $869,500 and has now increased to $876,500.1 As this is clearly less than the value of the applicant’s combined assets I am satisfied that the decision to cancel his age pension is also correct.
On 10 December 2020, Mr Huggins sought a review of the AAT1 decision by this division of the Tribunal, stating:
No consideration was given to the nature of the injury I had that stopped me from working, I returned to the workforce as soon as I was physically and mentally able too and worked till, I was eighty.
There is not enough room on this document to explain how I was treated by certain Centrelink staff. I would like to discuss my treatment by Centrelink at the Hearing.
Relevant Legislation and Issues
Part 2.2A of the Act is dedicated to the Pension Bonus Scheme. Section 92A provides a simplified outline of the Scheme:
Simplified outline
The following is a simplified outline of this Part:
* A person who qualifies for an age pension but defers claiming that pension may be able to get a single lump-sum pension bonus.
* A person who wants to get a pension bonus must register as a member of the pension bonus scheme. An application for registration cannot be made on or after 1 July 2014.
* To get a pension bonus, a person must accrue between 1 and 5 bonus periods while deferring age pension.
* Generally, a bonus period runs for 1 year.
* To accrue a bonus period, the person must pass the work test for that period.
* To pass the work test for a year, either the person, or the person's partner, must gainfully work for at least 960 hours during that year.
* The amount of a person's pension bonus depends on the number of accrued bonus periods and the person's annual rate of age pension. A person may get a bigger bonus by accruing more bonus periods.
At the outset the Tribunal notes there is nothing simple with respect to the PB Scheme. The process for claiming and assessing eligibility is complex: the registration requirements, the work test, the obligation to keep records, all make it a very difficult scheme to navigate. It is therefore understandable that along the way Mr Huggins was bamboozled by the rejection of his claim as he was complying at all times with what had been asked of him by Centrelink. The Tribunal notes the PB scheme has subsequently been discontinued and is closed to new entrants from 1 July 2014.
When Mr Huggins registered for the PB Scheme he was provided with a Pension Bonus Scheme Information Booklet which outlined the scheme’s objects, intent, qualifications required to enter the scheme and eligibility:
The Pension Bonus Scheme is an Australian Government initiative, which commenced on 1 July 1998. Under the Pension Bonus Scheme, if you defer claiming Age Pension and stay in the workforce you can get a tax free lump sum bonus when you eventually claim and receive Age Pension.
The Pension Bonus Scheme is entirely voluntary. You can choose to participate in the scheme or claim Age Pension.
You must register to become a member of the Pension Bonus Scheme, then pass a 'flexible work test' for at least 12 months from the date your membership commenced. If you do not work and your partner does, their work may still earn you a bonus if they are Age Pension age or over.
You must claim the bonus at the same time you claim Age Pension, usually when you retire from the workforce. If you cannot get any Age Pension you cannot get a bonus.
You must be an accruing member for at least one year to be paid a bonus. A maximum of five years accruing membership can be taken into account for your bonus. Work after age 75 cannot be included.
You must claim the bonus together with your Age Pension within 13 weeks of the following events:
• you stop meeting the work test (see page 16), or
• a period of non-accruing membership ends (see page 14).
Bonus claims lodged later than 13 weeks could result in the amount of bonus payable being reduced or lost.
If you decide to continue working after age 75, your bonus does not increase; however you can remain a member of the scheme after reaching age 75.
The work test for the Pension Bonus Scheme requires you to complete at least 960 hours of gainful work each year that is, an average of 20 hours per week for 48 weeks each year. At least 640 of these hours must be worked in Australia.
In other words, you must work an average of 18.41 hours (18 hours, 25 minutes) a week. Leave (like time off for holidays, long service leave, personal or family leave and unpaid leave) does not count as work for the Pension Bonus Scheme.
The work test is flexible enough to meet all types of working patterns such as seasonal work as well as regular hours. For example, you can meet the work test (that is, 960 hours a year) if you work 30 hours per week over a total period of 32 weeks.
The work test requires that your work:
• involves a substantial degree of personal effort or exertion
• is for the provision of goods or a service, and
• is for financial gain or reward.
Generally, managing family financial investments (such as a family company or trust) does not count as gainful work. Financial investments could include shares, managed investments, bank accounts and so on.
If your work involves a commercial business, then the work test may be satisfied.
If you are earning money by doing domestic duties in other people's homes, or if you are self-employed with a cleaning business, you would meet the requirements of the work test. However, domestic duties in your own home do not count as gainful work.
You will need to keep a record of the:
• sort of work you are doing
• dates on which you did the work
• number of hours you worked
• number of hours you worked outside Australia (if any),
and
• name(s) of your employer(s).
You should keep a running total of your hours worked so that you know whether you are meeting the average required. This is especially important if there is a chance you won't keep meeting the work test.
You will need to let Centrelink see your payment summaries and tax returns. In some cases, Centrelink may need to see a letter from your employer or accountant to help verify your work record.
To meet the record keeping requirements, you can use a diary or use a form like the one contained on pages 22-25 in this booklet.
Important: If you stop meeting the work test requirements, you may need to lodge both your Age Pension and Pension Bonus claims within 13 weeks. Bonus claims lodged later than this could result in the amount of bonus payable being reduced or lost.
EVIDENCE
Mr Huggins wrote to Centrelink on 13 December 2019 in reply to Centrelink’s rejection of his age pension, in it he states:
With reference to your letter of 22 October 2019, I too must apologize for my late response.
Your office advised it would take 46 days for me to receive a response to my claim. I repeatedly phoned your office to check on my application but was advised that no action had been taken. I advised your office that I was going overseas from 22 October until 9 December 2019. On my return I found your letter in my mail dated 22 October 2019 – the very day I went overseas.
It should be noted that before I gave any thought to retirement, I met with … in the Greensborough Branch office to discuss if I was entitled to claim my deferred pension bonus scheme. I left his office with the opinion that I had met the requirements to make a claim and retire.
Regarding clarification of my work situation, when my income was low, it should be noted I was incapacitated due to a workplace injury- a fall that required me to have hip replacement surgery. This was a dark period in my life as the accident affected me physically and mentally. My recovery was a very long process, but I finally was able to return to work.
Several years later, I was again unable to work and forced to have a second hip replacement. Each year, I received a letter from your office on the pension bonus scheme and provided an update on my situation. I returned to work after both surgeries to insure I could claim the pension bonus.
I note that five years working of 960 hours per years is required to be able to make a bonus scheme claim. I can assure you that I have worked more than three times the required 19 hours per week. Now, as I reach my 81st birthday next month, I am prepared to return to work for whatever time is necessary to meet the claim requirements.
I have asked my accountant for the tax returns required. I have already supplied the current bank statements but will forward copies with my accountant's tax returns. However, as Christmas is now upon us, it may be early in 2020 before you receive them.
Mr Huggins wrote to Centrelink on 2 January 2020, delivering the letter in person to his nearest Centrelink office and sending the letter by registered post to the Department in Canberra, in it he outlines his concerns stating:
I wish to advise you have a breakdown in your communication system in your Human Services Department.
Documents and phone calls I have left with your Greensborough branch do not seem to be reaching you.
When I left documents relating to my Pension Bonus Scheme at your Greensborough office I was advised it would take 46 days to hear from you. I phoned your office on four occasions after that time period to be advised my documents had not been looked at and to phone back in a couple of weeks if I had heard from you. It should be noted waiting time to even talk to any one is over forty minutes. On October 21st 2019 I waited on the phone for over forty minutes to advise your office I was going overseas October 22 to December 9 2019. The lady I spoke to promised me you would receive my message.
I have now received two letters from your office, one dated October 22 ( The same day I left for overseas) but received December 11, apologizing for the delay and requesting certain documents. I replied to that letter December 13 and left it with a gentleman at the front counter at your Greensborough office, who advised me, he personally would forward it on to you. When I asked him to sign a copy of the letter to confirm he had received it, he refused but promised me, you would receive it. To this day I have not had a response to my December 13 letter.
The second letter I received was dated November 20, but received December 23, which states, We cannot pay you Age Pension because we have not received a reply to the letter we sent you. Some one is confused, I'm not claiming the Age Pension, I'm applying for the Pension Bonus Scheme and I'm still waiting on you to reply to me letter dated December 13.
Regarding your letter dated October 22 as mentioned in my letter dated December 13, I have requested documents from my accountant as suggested by yourself. As my accountant is now on a new computer system and away on his Christmas break he will try and get the documents from his old system this month.
I note you have also requested bank statements and account names, if you check the original documents I left with your Greensborough office in August 2019 you will find you already have them. To save all the paper work I am more that happy for you to check my statements on line.
As my bank statements will indicate I didn't earn much income over a number of years due to a serious work accident, which affected me both physically and mentally. I don't want to dwell on that period in my life unless I have too, because I find it vey depressing, but you can check with the following people who I believe will support my comments.
Dr Hugh Palmer Eltham Clinic
Mr Neil Bergman Orthopaedic Surgeon Warringal Hospital
Holding Redlich Lawyers
I have worked very hard to get back on my feet again and return to the work force. When I decided to retire I spoke to your Mr Burns at your Greensborough branch before I applied for the scheme, his advice was go ahead and apply.
I don't want anything I don't deserve, but I do believe I have put in the time and effort to qualify for the Pension Bonus Scheme. The treatment I have received from your office, with unsigned letters unable to contact anyone documents misplaced, to me being Australian Citizen, born in Australia is not the Australian way.
Mr Huggins wrote to Centrelink again on 3 April 2020 detailing his ongoing frustration with how his claim for PB was being deal with:
Since our last discussion for the second time I have read through all documentation supplied to me by Centrelink and I believe I have met all requirements requested by your office.
The treatment I have received from your Canberra office suggest to me they are making it very difficult for me, with the hope I will just walk away from the whole thing. I can assure you that is not the case, as an Australian citizen I have every right to stand up for what I think is right, and it disappoints me I am being treat this way.
It should be remembered I didn't ask to join the scheme, Centrelink asked me and I have carried out their requests to the letter.
I have documentation which supports my belief I am being miss treated, your computer also supports my claim. Why was your office continually asking me for more information when it clearly shows on your computer my application was rejected the very day, I made my application? I was advised by one of your staff members they worked overtime that day. That comment insults my intelligence.
Mr Huggins wrote to Centrelink again on 7 July 2020:
My wife's situation concerns me. Figures show my wife is now working. With the Corona Virus situation here in Victoria causing lack of business now and in the future, she is now forced to look for another avenue for work. Being involved in cleaning properties, properties in area's I might add that have been locked down by the Government is a very high health risk. My wife & I agree she should cease working in this type of environment. The thing that supports my opinion, it is too much work for very little return as her Tax return shows.
It upsets my wife that with her working could affect my application for the Pension Bonus Scheme. My wife has asked a very simple question. If she is allowed to work how much is she allowed too earn so it doesn't affect my application. Should she only look for part time work? If someone can answer that question it would be greatly appreciated.
I have now been advised that I'm not entitled to the Bonus Scheme if I don't qualify for the Age Pension. In 2004 when the Government asked me to join the scheme there was no mention that if I don't qualify for the Age Pension, I'm not entitled to the bonus scheme. If you read your 2004 email the whole focus was keeping me in the work force. …also advised, Centrelink had to receive my application before my wife turned 66 years of age. I did my part but Centrelink failed me with a response.
My current situation really distresses me. First, I am advised by Rita she is handling my case and I am only to speak to her. Two days later Susie rings me and advises she is now handling my case. It is on record how Susie treated me, so bad was her comments to me I have now forwarded an official complaint. Then Rita rings me an advises she is now handling my case. When I asked why Susie off my case Rita is advised Susie was unavailable. Rita helped me through printing the Income & Asset forms then gave me her phone number in case I had any questions. I was given a week to complete the forms, in
this day's environment that task was impossible so I rung Rita to ask for an extension plus some other questions. After waiting on the phone for twenty minutes I ended up talking to an Angie in NSW, Angie advised she had never heard of Rita. I was prepared to hung up but Angie persisted if I explain my problem, she may be able to help. Angie new nothing of my case, once again I explained my situation to a person who new nothing of my case. Angie asked if I could hold while she read some notes on my file. I waited, then Angie answered my questions.
Why would Rita give me a phone number when the person who answers the phone doesn't even know Rita and knew nothing about my case? As I have already mentioned Centrelink fuels stress and depression.
I have no idea if documents supplied will entitle me to anything, I'm just following through with a scheme that the Government offered me. The issue for me now is not the Bonus Scheme but how I have been treated over the last eleven months.
It is on record how I am disappointed with some of Centrelink staff. I would suggest Centrelink monitor Angie's (NSW) phone calls then play them back to ALL staff. Staff will then learn how to speak to people. It was so refreshing speaking to Angie, she new I was frustrated & disappointed because I couldn't speak to Rita, her professional manner with me was outstanding. Angie is a delight to speak too, I just hope her skills are recognized by Centrelink Management.
Mr Huggins’ income tax returns were provided to the Tribunal. In summary they record the following:
(a)2007 main business house renovation net loss of $1,282, taxable income $4,066 inclusive of $3,728 rental income;
(b)2009 main business house renovation net loss of $5,936, taxable income $3,665 inclusive of $3,495 rental income;
(c)2010 main business house renovation net loss of $9,765, taxable income $5,5830 inclusive of $5,700 rental income;
(d)2011 main business house renovation net loss of $9,765 taxable, income $5,5830 inclusive of $5,648 rental income;
(e)2012 main business house renovation net loss of $14,797, taxable income $9,008 inclusive of $8,902 rental income;
(f)2013 main business house renovation net loss of $16,411, taxable income $8,380 inclusive of $8,369 rental income;
(g)2014 main business house renovation net loss of $1,211, taxable income $26,689 inclusive of $10,539 rental income;
(h)2015 recorded no business income, taxable income $9,466 inclusive of $9,459 rental income;
(i)2016 recorded no business income, taxable income $8,956 inclusive of $8,950 rental income;
(j)2017 recorded no business income, taxable income $13,377 inclusive of $10,611 rental income;
(k)2018 business income of $97,660, taxable income $10,879 inclusive of $6,549 rental income; and
(l)2019 business income of $84,330, taxable income $27,735 inclusive of $8,43 rental income.
CONTENTIONS
Applicant
Mr Huggins argued eloquently before the Tribunal that he was entitled to the PB as he had not sought to receive the payment but had been registered by Centrelink for the Scheme. He had compiled at every turn with the Scheme’s requirements and had been updated yearly by Centrelink that he was still eligible to receive the payment.
Mr Huggins was aggrieved that Centrelink had not considered that for several years his income had been reduced as he was struggling with physical and mental health issues. Mr Huggins was at pains to explain that following his workplace accident he had fallen into a depression, which he was not even aware of until speaking to one of his treating doctors who thought he needed help. Mr Huggins found it was his work – having a reason to get up every day – that had turned him around and given him a reason to get on with life. Mr Huggins asserted that Centrelink should have taken this into account when it determined his eligibility for PB.
Mr Huggins emphasised that he had not sought to receive an age care pension, had continued working into his 80’s, had given back through his work on his mother’s body corporate and had a low income for some periods because of his health issues. On these bases, he argued he should be entitled to the PB as he had fulfilled the objectives of the scheme by not being a burden on the taxpayer.
Mr Huggins advised the hearing that:
(a)The reason he had been so dogmatic in pursuit of his claim for PB was twofold. The first was that he did not realise he would not qualify for the age pension, as his wife had inherited from her parents well after the time, he registered for the PB. The second reason was that he was extremely disappointed by the way he had been treated by Centrelink and that none of his complaints about Centrelink staff had been investigated, despite repeated assurances that any complaints about client service would be taken seriously and addressed.
(b)He loves to work but he was now 82 and it was time to sit back and do nothing.
(c)He did not know what depression was, he just could not get out of bed, spent days doing nothing, would pretend he had done things during the day so when his wife returned home from work, she would not worry.
(d)Psychological sessions were the best thing he had ever done.
(e)The trigger point in his recovery was to work on his own home which he did on the advice of his doctor of finding a project. He fixed the roof on his home which took a long time but saved him money and gave him something to do and a sense of purpose.
(f)He felt he had been knocked back for PB as Centrelink had not considered and granted special circumstances for the time that he required off work due to his injury and mental health issues.
(g)He had been required to travel to the US on numerous occasions to assist his wife, who was American, with the care of her parents.
(h)He had complied with everything Centrelink had requested of him in the time required but still had his application rejected.
(i)He had attended Centrelink not long after his workplace accident seeking advice and had been advised that he would qualify for PB if he did not apply before his wife turned 66.
Mr Huggins contented that he met the requirements of the Act to receive the PB and could not comprehend what more he could have done to meet the requirements of the scheme.
Respondent
The Respondent explored the numerous hurdles Mr Huggins had to meet in order to be eligible to receive his PB. In summary, the Respondent contended Mr Huggins was not eligible to receive the PB on the bases that:
(a)He did not accrue at least one qualifying full-year bonus period in the period 31 January 2004 to 31 January 2014, as he undertook no gainful work, his main source of income was from his rental property, he had not produced recognised work records and it was inappropriate to waiver the requirements to produce such records;
(b)He turned 75 in 2014 and no work after this time could be considered as accruing towards his qualification period;
(c)He had failed to lodge his claim within 13 weeks of meeting the work test and his circumstances were insufficiently unusual or uncommon to extend the lodgement claim period;
(d)His wife’s income would have resulted in him not being eligible for the age pension regardless of all other factors.
'flexible work test'
The Respondent argued that from 31 January 2002 to 11 November 2005 Mr Huggins did not meet the work test as he was in receipt of periodic Workcover payments and not working.
The Respondent argued that from 11 November 2005 to 2 January 2009 Mr Huggins did not meet the work test as he was subject to a compensation preclusion period as he had received a lump sum settlement from his former employer. The Respondent argued that from 2 January 2009 to 31 January 2014 Mr Huggins did not meet the work test as he was not involved in producing income from “gainful work” under the Act, as the renovation work he undertook was on his own home and his mother’s property (his rental property). The Respondent took the Tribunal to the matter of Polchow and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (Polchow).[1]
[1] [2011] AATA 224.
In Polchow, the applicant conducted works on an additional dwelling on his property which was used to provide rental accommodation. The works included construction of a second flat on the ground level, retaining walls, car parking space and a water tank. The Tribunal concluded that was not “gainful work”:
35 It should be apparent that Mr Polchow could properly have claimed the age pension after having accrued five bonus periods and nevertheless conducted the works he did on the rental property without those works in any way affecting the amount of pension to which he was entitled. Clearly, that work was not carried out in substitution for receiving the age pension as it could have equally been undertaken while receiving the age pension. He was not paid for that work.
36 There is also a second argument against Mr Flower’s submission. The work Mr Polchow conducted on the rental property may well have enhanced the capital value of that property, although even that is not certain. While it may have allowed Mr Polchow to demand higher rental for that property (although there was no evidence of that before me), if it did, then the increased rental cannot be described as financial gain or reward arising from his exertions. Any increased rentals would arise from the improved appearance and facilities attributed to the property. They would simply be an indirect consequence of the work performed. Accordingly, I find that the work Mr Polchow conducted after September 2004 in respect of the rental properties does not satisfy the basic rule regarding gainful work set out in s 92X of the Act.
The Respondent argued that from 2 January 2009 to 31 January 2014 Mr Huggins did not meet the work test as he was not involved in producing income from “gainful work” under the Act as he was deriving his income from his rental property.
The Respondent took the Tribunal to the following matters which found that income derived from rental property was not considered “gainful work”:
(e)The Tribunal in Chong and Secretary Department of Families, Housing, Community Services and Indigenous Affairs,[2] the applicant engaged in buying and selling of real estate and online share trading. The Tribunal concluded that s 93 applied to those activities which were also not “gainful work” under s92X:
[2] [2009] AATA 690.
21 In completing this part I am satisfied that the acquisition of properties gave rise eventually to rental income. I am also satisfied that the sale of properties gave rise to a capital profit. The income and capital receipts were paid into a jointly held and managed bank account which contained available money or deposit money which constitutes a financial investment as defined by s 9 and which is the descriptor of the activity referred to in s 93. The activities associated with the buying and selling of real estate fails to meet the work test in s 92U and, more precisely, fails to meet the definition of gainful work at s 92X. This activity, could not be found to be self employment involving a substantial degree of personal exertion. A similar finding will be made concerning the applicant being engaged in online share trading
(f)In Muir and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (Muir),[3] the applicant maintained a share portfolio. The Tribunal found that s 93 applied:
14…at the time the pension bonus scheme was introduced, it was the intention of Parliament to specifically exclude work of the nature performed by Mr Muir: managing personal financial investments. Section 93 of the Act has not changed since it was introduced in 1998. The Social Security and Veterans’ Affairs Legislation Amendment (Pension Bonus Scheme) Act 1998 (“the amending Act”) amended the Act to introduce the pension bonus scheme. The explanatory memorandum for the Bill of the amending Act reads as follows:
…
New subsection 93(1) provides in general that, unless the Secretary otherwise determines, work which consists of the management or administration of one or more financial investments (see definition of “financial investment” in subsection) is taken not to be gainful work. The rationale for this rule is that the pension bonus scheme is designed to encourage people to participate in the workforce, past their normal retirement age, in employment which goes beyond mere decision-making processes relating to the investment of their assets.
(g)In Kunnel and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs,[4] the applicant engaged in share trading on his own behalf. As in Muir, the Tribunal decided that s93 applied:
23 Mr Thomas Kunnel has always been open in agreeing that his share trading was only on his own behalf. He lives alone and manages only his own finances. The Tribunal finds that s 93 of the Act applies to Mr Thomas Kunnel. He managed financial investments in which he had an interest and meets the definition of family group which sets out that if there are no family members, the single person is considered to be a family group. Hence, Mr Thomas Kunnel’s share trading does not count as gainful work for the pension bonus scheme.
[3] [2009] AATA 644.
[4] [2010] AATA 697.
Work after age 75 cannot be included
The Respondent argued Mr Huggins’s employment after 31 January 2014 could not be considered for the purpose of assessing the work test to be eligible for the PB as he had turned 75 and he had not undertaken an activity which, due to special circumstances, could be treated as “gainful work” under the Act.
An accruing member for at least one year to be paid a bonus
The Respondent submitted Mr Huggins did not qualify for the PB as he had not accrued at least one qualifying full-year bonus from his registration in 31 January 2004 to his 75th birthday on 31 January 2014.
The Respondent argued on these bases that as Mr Huggins had not passed the work test or accrued an eligible bonus period.
Record keeping requirements
The Respondent argued Mr Huggins had produced no “recognised work record” for the period 2007 until 2014 when he claimed to be renovating his and his mother’s properties and as such did not satisfy the work test as he has not complied with the “record keeping” requirements of the Act. The Respondent also argued there were no grounds on which to waiver Mr Huggins’s obligation to fulfill this requirement.
13 week period in which PB must be claimed
The Respondent argued Mr Huggins was not entitled to the PB because he did not lodge his PB claim within 13 weeks of ceasing to meet the work test.
The Respondent submitted Mr Huggins lodged his PB claim on 21 August 2019 – 10 years after ceasing to satisfy the work test – and submitted that the Tribunal should not extend the lodgement period until 21 August 2019 as it could not be said special circumstances existed.
PB can only be paid if you are eligible for the Age Pension
The Respondent argued that even if Mr Huggins had submitted his claim in time, he would not have been entitled to PB as his wife’s income for the 2009 and 2010 financial years - respectively $89,591 and $93,348 – took their combined income above the allowable asset limit.
Cancellation of Age Pension
The Respondent argued Mr Huggins’s age pension had been correctly cancelled on 24 March 2020 as the value of his (combined) assets ($1,447,341.54) exceeded the ($869,500) assets value cut off limit for a coupled homeowner under the Act.
CONSIDERATION
The Tribunal was impressed by the candour and calibre of Mr Huggins’s presentation at the hearing. He argued eloquently about his love of work and his identity as a physically active person who did not seek to take but to give back to the community.
The Tribunal was at pains to explain to Mr Huggins that he had done nothing wrong and that it was not his actions which had resulted in him being found ineligible to receive the PB. The Tribunal looked at all of Mr Huggins records to determine if there was an avenue open to determine his eligibility for a payment under the Scheme but on detailed inspection during the hearing, the Tribunal concluded that Mr Huggins had not passed the many hurdles to qualify for the Scheme.
The Tribunal found:
PB can only be paid in you are eligible for the Age Pension
The starting premise of eligibility for PB is that an individual must qualify for the age pension. The PB Scheme booklet provided to Mr Huggins when he registered for the scheme clearly outlined this requirement.
Section 92A of the Act outlines the PB provisions of the Act: A person who qualifies for an age pension but defers claiming that pension may be able to get a single lump-sum pension bonus.
Mr Huggins’s eligibility for the age pension was not tested until he applied for the benefit in August 2019. Centrelink rejected Mr Huggins’s claim for age pension in November 2019 and subsequently cancelled his age pension in March 2020.
Mr Huggins had continued working well past retirement age, after his workplace accident, two hip replacements and the death of his mother as he firmly believed he would qualify for the PB if he applied after his wife's 66th birthday.
Whilst the Tribunal does not have all the documentation to arrive at a conclusive outcome as to Mr Huggins’s eligibility for the age pension, based on his wife's income, superannuation payments and inheritance, it would appear the couple's combined assets would have been above the allowable limit for much of the time between 2004 and 2019.
The Tribunal believes that this would have been an easier means of explaining to Mr Huggins why he failed to qualify for PB had the numerous decision-makers along the way ascertained his eligibility for the age pension at various periods. This would have negated consideration of a myriad of other hurdles Mr Huggins had to overcome. It was this complexity that has led to Mr Huggins’s dogged pursuit of his claim. A simple calculation of his eligibility for age pension between 2004 and 2014 when he turned 75 could have negated a considerable amount of confusion and frustration on Mr Huggins’s part.
Given this exercise was not undertaken, the Tribunal considered all the factors required for Mr Huggins to qualify for PB as the basic premise of his eligibility to be granted the age pension had not been undertaken by Centrelink.
The Tribunal found that when Mr Huggins applied for the PB Scheme in 2019, he was not eligible by the fact that he did not qualify for the age pension as his combined assets were above the allowable limit.
'flexible work test'
The next step required to determine if Mr Huggins qualified for PB was to ascertain if he met the flexible work test.
Section 93(1) of the Act states that [subject to the discretion in s92Y of the Act] any work consisting of the management or administration of one or more financial investments in which the person has a legal or equitable interest as a member of a family or family company or trustee of a family trust is taken not to be gainful work.
The Tribunal accepted Mr Huggins’s evidence that he had worked throughout the period, taking only limited time out of the workforce because of his injury, recovery from surgery and the death of his mother. The Tribunal also accepted that Mr Huggins’ income had reduced as he was suffering from significant depression following his workplace accident. However, the Tribunal found that Mr Huggins did not meet the work test nor demonstrate special circumstances for the entirety of the period between 2004 to 2014. Consequently, none of Mr Huggins’ work could be assessed as producing income from gainful employment. The Tribunal considered Mr Huggins’ depression at the time could have been considered as constituting special circumstances. However, it was not Mr Huggins’ lack of income earned during this period but the source from which it was derived which meant he failed to meet the flexible work test.
The Tribunal found that none of Mr Huggins’s employment after 2014 could be considered as he had turned 75 years of age and as he had not met the work test prior to this period, he could no longer be a member of the Scheme.
The Tribunal found that Mr Huggins did not meet the work test:
(a)From January 2004 until January 20009 as he was in receipt of WorkCover payments and then a preclusion period;
(b)From January 2009 to January 2016 as he was not involved in producing income from “gainful work” under the Act as the renovation work, he undertook were on his own home and his mother’s property (his rental property); and
(c)From July 2016 to August 2019 as he was performing the functions of body corporate management and not simply looking after his own investments (however, as noted this period could not be considered as it was after his 75th birthday and work past this period could not be included for calculation of PB).
Work after age 75 cannot be included
The next step required to determine if Mr Huggins qualified for PB was to ascertain if any work after the age of 75 could be considered for his qualifying period. On this point the Guide states:
Members can only accrue bonus periods up to the age of 75 years.
Bonus periods CANNOT be accrued once the member has turned 75 years of age.
The Tribunal found that as Mr Huggins turned 75 in 2014, the post-75 rule applied and he could no longer accrue further bonus periods under any circumstances, nor could he continue to be a member of the Scheme as he had not meet the work test prior to this period.
An accruing member for at least one year to be paid a bonus
The next step required to determine if Mr Huggins qualified for PB was to ascertain if he accrued at least one year of flexible work test.
Section 92C(d) of the Act provides that a person is qualified for a PB if “the person has accrued at least one full-year bonus period while registered as a member of the pension bonus scheme”.
As the Tribunal has determined that Mr Huggins did not meet the work test requirement under the Act, he cannot be found to have accrued one full year bonus period to qualify for PB.
Record keeping requirements
The next step required to determine if Mr Huggins qualified for PB was to ascertain if he kept a record of his work history.
Under section 93C of the Act a person must keep a record of their work history, notably taxation records (if relevant) and a “recognised work record” to satisfy the work test
The Tribunal found Mr Huggins had not produced any “recognised work record” beyond his taxation returns for the period 2007 to 2014 which could demonstrate he was gainfully employed renovating his and his mother’s properties to satisfy the work test.
13 week period in which PB must be claimed
The next step required to determine if Mr Huggins qualified for PB was to ascertain if he applied in time for the payment or whether special circumstances existed for this period to be extended:
Section 22(1) of the Administration Act provides that if a person’s last bonus period is a full-year period, the PB claim lodgment period is 13 weeks immediately following that bonus period.
The Tribunal had found much had been made of the fact Mr Huggins had not lodged his claim within 13 weeks of ceasing to meet the work requirements. The Tribunal found the focus on this one criterion had clouded the issue for Mr Huggins, and it seemed to ignore his argument that no consideration had been given to his time out of the workforce because of physical and mental health issues. Indeed, it would appear numerous decision makers had devalued all of Mr Huggins’ efforts to return to full-time employment to qualify for the PB.
The Tribunal has not found a period in which Mr Huggins met the work requirement, nor accrued a 12-month bonus period, and therefore finds he would never have been entitled to PB regardless of when he lodged his claim. The Tribunal considers it to be highly unlikely that Mr Huggins would have qualified for age pension during this period because of his combined assets but notes this has never actually been tested.
The Tribunal also found that Mr Huggins did not fail to apply in time as he was relying on the numerous letters, he received from Centrelink which indicated he was still registered for the PB scheme. He was acting on advice not to apply for the age pension until after his wife’s 66 birthday and was out of the country on numerous occasions dealing with the caring responsibilities of his in-laws whilst dealing with his own health issues. This had resulted in him submitting the application in 2019 which was not within 13 weeks of his last work period. However, it was pointless for the Tribunal to grant special circumstances for this period as he had not met the other requirements to be eligible for the PB.
Cancellation of Age Pension
The Tribunal found Mr Huggins’ age pension had been correctly cancelled on 24 March 2020 as the value of his combined assets ($1,447,341.54) exceeded the assets value cut off limit for a coupled homeowner under the Act. In accordance with Section 80 of the Administration Act, the payment had been cancelled:
If the Secretary is satisfied that a social security payment is being, or has been, paid to a person:
(a) who is not, or was not, qualified for the payment; or
(b) to whom the payment is not, or was not, payable;
the Secretary is to determine that the payment is to be cancelled or suspended
Based on the numerous hurdles that Mr Huggins had to overcome in respect of the Act, despite the fact he had continued to work well past retirement age to his and the communities’ overall benefit, the Tribunal found that Mr Huggins could not qualify for PB. The Tribunal found his reduced income due to his periods of ill health were a factor to be considered but finding special circumstances for this requirement alone would not assist Mr Huggins in meeting the numerous other requirements to receive the payment.
POSSIBLE RECOURSE FOR THE APPLICANT
The Tribunal was at pains to assure Mr Huggins that he had done nothing wrong during the process of registering and applying for the PB. The Tribunal considered Mr Huggins may have been misdirected in registration for the PB, given at the time of his registration for the Scheme he was deemed eligible to apply for age pension, was unemployed and involved in a protracted Workcover claim. Indeed, it may have been more prudent for Mr Huggins to have tested his eligibility for the age pension at the time and not to have gone through this complex stressful appeal process.
Whilst the Tribunal fully understood it was Mr Huggins’ desire to continue working at this time, he was in fact not physically or mentally able to achieve that goal. To his credit, Mr Huggins overcame his numerous issues and returned to work.
The Tribunal has found that Mr Huggins was not eligible for the PB and that no special circumstances apply with respect to his claim. Mr Huggins firmly believes he was given advice that he was eligible for the PB if he continued to work past retirement age and did not apply for the benefit until his wife turned 66. On this basis, Mr Huggins continued to work into his 80’s.
Mr Huggins was also deeply disturbed by the unprofessional and at times hostile manner he was treated by Centrelink staff. Mr Huggins raised his concerns with Centrelink staff on numerous occasions and asked for his concerns to be investigated. Mr Huggins was rightly aggrieved that, despite repeated assurances his concerns were being reviewed, it appears no investigation of his complaints have been undertaken.
The Tribunal addressed the prospect of Mr Huggins seeking redress by making a claim for compensation under the Scheme for Compensation for Detriment caused by Defective Administration (CDDA), which is administered by the Department of Finance. Defective Administration. The CDDA is defined as:
a specific and unreasonable lapse in complying with existing administrative procedures; or
an unreasonable failure to institute appropriate administrative procedures; or
an unreasonable failure to give to (or for) an applicant, the proper advice that was within the officer's power and knowledge to give (or reasonably capable of being obtained by the officer to give); or
giving advice to (or for) an applicant that was, in all the circumstances, incorrect or ambiguous.
It was explained to Mr Huggins that he could only pursue a claim for CDDA as an avenue of last resort when there is no other avenue of redress available.
Applications under the CDDA Scheme are discretionary, they are assessed on their individual merits, and a finding that a mistake has been made by an official does not automatically mean compensation is payable. The Tribunal advised Mr Huggins that it had no jurisdiction in respect of perceived defective administrative matters of the Department and had no jurisdiction over the administration of the CDDA Scheme.
Whilst the Tribunal advised Mr Huggins that it had no way of assessing whether his claims would be successful, it nevertheless encouraged him to lodge an application to seek redress for the way his claim had been handled and Centrelink’s failure to address the genuine concerns he had been raising throughout his long application process.
DECISION
For the reasons given orally at the conclusion of the hearing of this matter, the Tribunal affirms the decision under review
80. I certify that the preceding 79 (seventy-nine) paragraphs are a true copy of the written reasons for the decision of Ms A E Burke AO, Member
......................[sgd]...................................
Associate
Dated: 7 September 2021
Date of hearing: 26 August 2021 Applicant: Self-represented Advocate for the Respondent:
Solicitors for the Respondent:
Mr Tim Noonan
Services Australia
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