James Kearns and Secretary, Department of Social Services
[2014] AATA 126
[2014] AATA 126
Division GENERAL ADMINISTRATIVE DIVISION File Number
2013/0055
Re
James Kearns
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Mr R G Kenny, Senior Member
Date 7 March 2014
Place Brisbane The Tribunal affirms the decision under review.
...........................Sgd...........................................
Mr R G Kenny, Senior Member
CATCHWORDS
SOCIAL SECURITY – Pension Bonus Scheme – Work test – Accruing and non-accruing membership – Gainful employment - Acceptance of late registration – Application for pension bonus out of time - No special circumstances to justify extension of time – Decision affirmed
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) s 34J
Social Security Act 1991 (Cth) ss 23(5A), 92A, 92C, 92H, 92U, 92X
Social Security (Administration) Act 1999 (Cth) ss 21, 25
CASES
Beadle and Director-General of Social Security (1984) 1 AAR 362
Beadle v Director-General of Social Security (1985) 60 ALR 225
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Hunter Valley Developments Pty Ltd and Cohen (1984) 7 ALD 315
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
SECONDARY MATERIALS
Guide to Social Security Law, Australian Government
Social Security (Pension Bonus Scheme – Non-accruing Members) Declaration 2007
REASONS FOR DECISION
Mr R G Kenny, Senior Member
7 March 2014
BACKGROUND
Where a person qualifies for an age pension (“AP”), but chooses to remain in employment rather than claim that pension, a tax-free lump sum pension bonus (“PB”) may be paid. Matters relating to the registration, qualification and payment of the PB under the pension bonus scheme (“PBS”) are set out in Part 2.2A of the Social Security Act 1991 (Cth) (“the Act”). A simplified outline of Part 2.2A of the Act is given in s 92A thereof which reads:
92A 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.
·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.
On 23 May 2012, a Centrelink officer rejected Mr Kearns’ application for registration in the PBS. That decision was affirmed by an authorised review officer on
19 September 2012. On 4 December 2012, the matter came before the Social Security Appeals Tribunal (“SSAT”) which accepted that Mr Kearns was eligible for late registration for the PBS but denied his claim for the PB because it was outside of the statutory time-frame for that application to be made. The matter is to be determined by the Tribunal in the absence of the parties without a formal hearing.[1]
Registering for the PBS
[1] In accordance with s 34J of the Administrative Appeals Tribunal Act 1975 (Cth).
Under s 92C of the Act, a person claiming a PB must have registered as a member of the PBS. Under s 92H of the Act, a person must apply for registration for the PBS within
13 weeks of qualifying for the AP. Mr Kearns reached 65 years of age[2] on 6 August 2007 and sought to be registered for the PBS on 2 February 2012. He does not satisfy the time requirement.
[2] This is the qualifying age for his AP: see s 23(5A) of the Act.
Mr Kearns’ time for registering may be extended under s 92H(4)[3] of the Act. The PBS distinguishes between accruing and non-accruing membership.[4] Mr Kearns’ employer completed an Employment Separation Certificate on 20 April 2010. Therein, it is recorded that Mr Kearns commenced work on 14 January 2008 and continued at 40 hours per week until 1 April 2010 when he ceased work due to illness. In reliance on that statement and taking 14 January as the start date for each year, Mr Kearns worked for two full years and part of a third year. Centrelink calculated that, in the third year, he worked a total of 474.5 hours which met the work test requirements[5] for 25 weeks and
5 days. That meant that Mr Kearns would be treated as an accruing member with an end date of 11 July 2010.
[3] Per 92H(3) of the Act.
[4] In assessing whether a person is an accruing or a non-accruing member, there is an assumption that he was a member for the purposes of the exercise: see s 92H(4) of the Act..
[5] Having passed the work test: see s 92U of the Act.
From 12 July 2010 until 9 January 2011, Mr Kearns would be assessed as a non-accruing member for the maximum statutory period of 26 weeks.[6] From 10 January 2011, he would be considered to be neither an accruing nor a non-accruing member until he registered for the PBS.
[6] See s 92Q of the Act and the Social Security (Pension Bonus Scheme — Non-accruing Member) Declaration 2007 cl 6.
Under s 92H(4)(a) of the Act, Mr Kearns would be eligible for late registration if, for the whole of the pre-application period from his 65th birthday until he registered for the PBS, he would be considered to be either an accruing or a non-accruing member.[7] He would not meet that requirement because of his status in neither category in the period from
10 January 2011.
[7] See s 92H(5) of the Act.
Under s 92H(4)(b) of the Act, late registration is open if Mr Kearns would have been an accruing member for some of the pre-application period and would have passed the work test for each test period. The term test period is defined in s 92H(6) of the Act which reads:
(6) For the purposes of this section, to work out what is a test period:
(a)identify the overall accruing period, which is that part of the pre‑application period for which, if it were assumed that the person had been a member of the pension bonus scheme throughout the pre‑application period, the person would have been an accruing member of the scheme;
(b)if the overall accruing period is 365 days or less—the overall accruing period is the only test period;
(c)if the overall accruing period is longer than 365 days—each of the following periods is a test period:
(i) the full‑year period beginning at the start of the overall accruing period;
(ii) if 2 or more succeeding full‑year periods are included in the overall accruing period—each of those full‑year periods;
(iii) the remainder (if any) of the overall accruing period.
In this case, on the basis of the employer’s certificate of Mr Kearns’ work history, the accruing period is from Mr Kearns’ 65th birthday until 11 July 2010 and, during that time, he satisfied the work test and the requirements of s 92H(4)(b) of the Act are met.
There are some inconsistencies in the evidence concerning the timing of the cessation of Mr Kearns’ employment. Reference was made above to the Employer’s certificate which described him as working until 1 April 2010. However, in evidence was a Centrelink document headed Compensation and damages in which Mr Kearns declared that he had income protection insurance with QBE from whom he received payments of $1,000 per week from December 2009 until December 2011. In his PB claim form, Mr Kearns advised that he worked until 9 December 2009.
Under s 92U of the Act, the work test required that a person must be gainfully employed. What constitutes gainful work is set out in s 92X of the Act which reads:
92X Gainful work—basic rule
(1) For the purposes of this Part, gainful work is work for financial gain or reward, whether as an employee, a self‑employed person or otherwise, where:
(a)the work involves a substantial degree of personal exertion on the part of the person concerned; and[8]
(b)the work is carried on within or outside Australia.
[8] See also the Guide to Social Security Law, Australian Government at 3.4.7.70. For use of the Guide, see Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 639-645.
When Mr Kearns was in receipt of his protection insurance payments, I am satisfied that he was not undertaking work that involved any degree of personal exertion. As I understand it, this would shorten the period when he would have been treated as an accruing member, bringing it to an end when the protection payments started in December 2009. The 26 week period when he would be treated as a non-accruing member would commence from 10 December 2012. For all of the accruing period, he would still have satisfied the work test and, again, the terms of s 92H(4)(b) of the Act are met.
On either of those versions of the cessation of Mr Kearns’ work, the period within which he must lodge his application can be extended and his application for registration is accepted.
Claim for PB
Once a person is registered for the PBS, a claim must be made for the PB. Under s 25 of the Social Security (Administration) Act 1999 (Cth) (“the Administration Act”), this must be done within 13 weeks of being an accruing or non-accruing member of the PBS. It is not in dispute that, at the latest, Mr Kearns would have ceased to be non-accruing member on 9 January 2011. Neither is it disputed that he needed to lodge his PB claim, at the latest, by 10 April 2011. His claim was not lodged until 19 January 2012 and I am satisfied that this was outside of the required time-frame. Again, this is not disputed by Mr Kearns. Accordingly, his claim was not made in compliance with s 25 of the Administration Act.
Discretion to extend time arises under s 21 of the Administration Act. In so far as relevant, this reads:
21 General rule
(1) A claim for pension bonus must be made within the lodgment period fixed by this Subdivision.
(2) However, the Secretary may in special circumstances allow a person a longer period to make a claim than the period fixed by this Subdivision. If the Secretary does so, the lodgment period for the person’s claim is the period allowed by the Secretary.
On 8 January 2014, in his response to the respondent’s statement of facts, issues and contentions, Mr Kearns advised that this was the only component of the decision under review with which he takes issue. The Act provides no guidance as to the meaning of the term “special circumstances”. In Beadle v Director-General of Social Security,[9] the Federal Court stated that it was not possible to lay down precise limits or precise rules for the meaning of the term. The Court indicated that this would depend upon the circumstances of each particular case but commented that, even though the term lacks precision, it was sufficiently understood “not to require judicial gloss".[10] There, the Court affirmed the decision of the Tribunal which had acknowledged that the term was "incapable of precise or exhaustive definition" and that, to be special, the circumstances must be “unusual, uncommon or exceptional” and must have a “particular quality of unusualness that permits them to be described as special".[11]
[9] (1985) 60 ALR 225.
[10] Beadle v Director-General of Social Security(1985) 60 ALR 225, 228.
[11] Beadle and Director-General of Social Security (1984) 1 AAR 362, 364.
In Groth v Secretary, Department of Social Security,[12] Keifel J, after referring to the Federal Court's decision in Beadle’s case, observed that special circumstances:
would require something to distinguish [the] case from others, to take it out of the usual or ordinary case … It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.
Those considerations must be kept in mind when determining, for the purposes of applying s 21 of the Administration Act, whether or not special circumstances exist in a given case.
[12] (1995) 40 ALD 541, 545.
In addition, the Guide to Social Security Law (“the Guide”) provides assistance to those administering the Social Security legislation.[13] In relation to late claims, it provides at 3.4.7.80:
[13] See footnote 8 (above).
Discretion to accept late claims - PBS claims lodged on or after 1 January 2008
The Secretary has discretion to accept any late PBS claim lodged on or after
1 January 2008 (including claims from exempt partnered persons, those non-accruing immediately after the end of the last bonus period and post-75 members) providing there was a special reason for late lodgement of the claim. The event that caused the late lodgement of the claim may have occurred prior to 1 January 2008.Reasons to accept late claims
The intention of the late claims provisions is to allow acceptance of late claims from members who have not been able to lodge a claim within the time limits due to special circumstances, and not for members who deliberately claim late in order to get a higher bonus. The member should be asked for their reasons for making a late claim for pension bonus and evidence should be provided, where applicable/appropriate.
The reasons for acceptance of a late claim are different to those that apply to late PBS registrations.
Examples may include cases where a member:
·has poor numeracy or literacy skills,
·was ill,
·was located in a remote area,
·performed irregular work that made it difficult for the member to determine the lodgement period,
·was helping a close family member suffering from a serious illness,
·has experienced the death of a close family member,
·had experienced a major disruption to their living arrangements (such as their home being fully or partially destroyed or the member or member's partner moved into a nursing home),
·was unaware that post 20 September 2009 they could no longer be a non-accruing member whilst their younger partner was working and the working partner was affected by the closure of the scheme to new entrants (a time limit of approximately 12 months would apply to these cases).
The list above is not a full list of acceptable reasons to accept a late claim. Each case should be judged on its merits.
Before accepting a late claim, the delegate of the Secretary should consider how late the claim is, and whether this is reasonable when considering the event/s that caused the member to claim late. For example, if a person was ill for 4 months after ceasing work, it would not be reasonable for the claim to be 12 months late (unless there were other special circumstances that contributed to the delay).
Verification of reasons for a late claim
In the case where claims are lodged within a few weeks of the normal claim period, evidence of the reason for the delay would not normally be required. In order to make a decision about whether a very late claim should be accepted, it is acceptable to ask for evidence of the reason for the delay (provided it is likely that the member has evidence or could obtain evidence without excessive cost or delay).
Examples: If a claim was lodged late due to the member's illness, it would be reasonable to ask for medical evidence. If someone lodged their claim late due to a fire in the home, then insurance documents, bills from builders or police reports may be available. If a person lodged late because they were attending an overseas funeral, it would be reasonable to expect that the person provide a funeral notice and/or travel documents.
In the reasons published by the SSAT, factors identified for Mr Kearns’ late claim were summarised as including awareness that he would receive reduced or no age pension payment because of the income protection payments he received until December 2011; lack of knowledge of details of the scheme although they were aware of the scheme generally; and that he was entitled to the PB because he had worked beyond his 65th birthday. No reference is made to Mr Kearns’ health. In the documents before me, including Mr Kearns’ application for review of the SSAT decision, no challenge has been made by him to that summary of the grounds advanced by him as constituting special circumstances.
In his written submission to the Tribunal, Mr Kearns contended that, while he was not aware of the PBS until he applied for registration, there were special circumstances in his case which justified the exercise of discretion to extend the time for making his PB claim. He submitted that he ceased his employment solely because of illness and, if not for that, he would have continued in employment thereby accumulating both accruing and non-accruing membership of the PBS until he retired at which time he would have applied for AP and PB; that he had been unaware of the PBS; that his unawareness was due to his illness; that he applied for registration in the PBS as a soon as he was advised of it by a Centrelink officer; that he rejected Centrelink’s suggestion that he did not claim payment because he was in receipt of income protection payments which were more beneficial to him. Clearly, in that submission, Mr Kearns’ focus is on his health.
Mr Kearns has given a completely different set of reasons in those two forums. I do not accept that he was unaware of the PBS. At the SSAT, he conceded a general awareness and his evidence at the SSAT, that he consciously delayed his AP claim because of the impact of his income protection payments, reflects that awareness of the PBS. That Mr Kearns was in poor health from September 2009 is not disputed. He had prostate cancer and received the income protection payments from December 2009. His claim for AP and PB were made shortly after those payments ceased in December 2011.
Illness is one on the factors listed in the Guide as a special circumstance on which the exercise of discretion under s 21 of the Administration Act may be based. However, the Guide also refers to the need for verification of the explanation for a late claim. No medical evidence was provided to the Tribunal in respect of Mr Kearns’s health. In the absence of such evidence, it is not possible to infer that his condition was such as to have the various impacts identified by him. Prima facie, statutory time limits ought be complied with.[14] Mr Kearns’ application was some nine months out of time and I am satisfied that, on the evidence before me, there was nothing unusual, uncommon or exceptional about his circumstances and no particular quality of unusualness that permits them to be described as special. It follows that Mr Kearns cannot be paid the PB.
[14] See Hunter Valley Developments Pty Ltd and Cohen (1984) 7 ALD 315 at 324.
DECISION
The decision under review is affirmed.
I certify that the preceding 22 (twenty-two) paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Senior Member ............................Sgd.........................................
Associate
Dated 7 March 2014
Hearing on the papers 4 March 2014
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