John House and Secretary, Department of Social Services
[2013] AATA 791
[2013] AATA 791
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2013/2141
Re
John House
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Ms K Hogan, Member Date 8 November 2013 Place Perth Decision Summary
The Tribunal varies the decision under review and finds that the applicant’s Income Maintenance Period is 69 weeks, commencing from 16 November 2012 and ending on 15 March 2014.
…(Sgd) K Hogan..…….
Ms K Hogan, MemberCATCHWORDS
SOCIAL SECURITY - Application for Newstart Allowance - Applicant Qualified for Newstart Allowance - Income Maintenance Period Applied - Whether Payments Constituted Leave or Termination Payments - Whether Income Maintenance Period can be Shortened due to Severe Financial Hardship
LEGISLATION
Social Security Act 1991
CASES
Bristow and Secretary, Department of Education, Employment and Workplace Relations [2009] AATA 1005
Neilsen and Secretary, Department of Education, Employment and Workplace Relations [2012] AATA 591
Secretary, Department of Family and Community Services and Bazzi [2000] AATA 794
Williams and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 354
REASONS FOR DECISION
Ms K Hogan, Member
8 November 2013
BACKGROUND
On 16 November 2012, the applicant ceased employment and consequently received a termination payment. The applicant received a gross amount of $100,897.55, which equated to $79,853.55 after tax.
On 22 November 2012, the applicant paid out monies owed to GE Money totalling $54,803.20. The applicant paid out a credit card debt of $16,132.64 and paid $6,720.00 in respect of rent until the end of April 2013.
On 26 November 2012, the applicant lodged a claim for New Start Allowance (NSA). On 14 January 2013, a Centrelink officer applied an Income Maintenance Period (IMP) to the applicant until 16 August 2013 (Original Decision).
On 12 March 2013, the applicant requested and an internal review of the Original Decision and on 25 March 2013 a Centrelink Authorised Review Officer (ARO) affirmed the Original Decision.
On 3 April 2013, the applicant applied for a review of the ARO’s decision to the Social Security Appeals Tribunal (SSAT). On 23 April 2013, the SSAT affirmed the ARO’s decision. The SSAT found that the applicant’s IMP would end on 10 January 2013.
On 6 May 2013, the applicant applied for a review of the SSAT decision to this Tribunal.
THE LEGISLATIVE FRAMEWORK
The relevant legislation is contained in the Social Security Act 1991 (Cth) (Act). Qualification for NSA is contained in s 593 of the Act. Section 643 of the Act provides that a person’s rate of NSA is calculated using Calculator B contained in s 1068 of the Act.
Section 1068 relevantly provides:
Certain termination payments taken to be ordinary income
1068‑G7AH If:
(a) a person’s employment has been terminated; and
(b) the person receives a termination payment (whether as a lump sum payment, as a payment that is one of a series of regular payments or otherwise);
the person is taken to have received ordinary income for a period (the income maintenance period) equal to the period to which the payment relates.
…
Start of income maintenance period—employment terminated
1068‑G7AKA Subject to point 1068‑G7AKC, if the person is covered by point 1068‑G7AH, the income maintenance period starts, subject to point 1068‑G7AKB, on the day the person is paid the termination payment.
…
Leave payments or termination payments in respect of periods longer than a fortnight
1068‑G7AL Subject to points 1068‑G7AA to 1068‑G7AE (inclusive), if:
(a) a person receives a leave payment or termination payment; and
(b) the payment is in respect of a period greater than a fortnight;
the person is taken to receive in a payment fortnight or part of a payment fortnight an amount calculated by:
(c) dividing the amount received by the number of days in the period to which the payment relates (the daily rate); and
(d) multiplying the daily rate by the number of days in the payment fortnight that are also in the period.
…
1068‑G7AM If the Secretary is satisfied that a person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure while an income maintenance period applies to the person, the Secretary may determine that the whole, or any part, of the period does not apply to the person.
Note 1: For in severe financial hardship see subsection 19C(2) (person who is not a member of a couple) and 19C(3) (person who is a member of a couple).
Note 2: For unavoidable or reasonable expenditure see subsection 19C(4).
Note 3: If an income maintenance period applies to a person, then, during that period:
(a) the allowance claimed may not be payable to the person; or
(b) the amount of the allowance payable to the person may be reduced.
…
Single payment in respect of different kinds of termination payments
1068‑G7AP If a person who is covered by point 1068‑G7AH receives a single payment in respect of different kinds of termination payments, then, for the purposes of the application of points 1068‑G7AG to 1068‑G7AN (inclusive), each part of the payment that is in respect of a different kind of termination payment is taken to be a separate payment and the income maintenance period in respect of the single payment is worked out by adding the periods to which the separate payments relate.
Definitions
1068‑G7AQ In points 1068‑G7AG to 1068‑G7AP (inclusive):
…
termination payment includes:
(a) a redundancy payment; and
(b) a leave payment relating to a person’s employment that has been terminated; and
(c) any other payment that is connected with the termination of a person’s employment.
1068‑G7AR In points 1068‑G7AA to 1068‑G7AQ (inclusive):
leave payment includes a payment in respect of sick leave, annual leave, maternity leave and long service leave, but does not include:
(a) an instalment of parental leave pay; or
(b) dad and partner pay.
Section 19C of the Act deals with severe financial hardship and unavoidable or reasonable expenditure, and relevantly provides:
19C Severe financial hardship definitions
…
Meaning of in severe financial hardship: person who is not a member of a couple
(2) A person who is not a member of a couple and who makes a claim for parenting payment, austudy payment, special benefit, disability support pension, carer payment or one of the following allowances:
(a) newstart allowance;
(b) widow allowance;
(c) mature age allowance;
(d) sickness allowance;
(e) youth allowance;
is in severe financial hardship if the value of the person’s liquid assets (within the meaning of subsection 14A(1)) is less than the fortnightly amount at the maximum payment rate of the payment, benefit, pension or allowance that would be payable to the person:
(f) if the person’s claim were granted; and
(g) in the case of a person to whom an income maintenance period applies, if that period did not apply.
…
(4) Unavoidable or reasonable expenditure, in relation to a person who is serving a liquid assets test waiting period or is subject to a seasonal work preclusion period, or a person to whom an income maintenance period applies, includes, but is not limited to, the following expenditure:
(a) the reasonable costs of living that the person is taken, under subsection (6) or (7), to have incurred in respect of:
(i) if the person is serving a liquid assets test waiting period—that part of the period that the person has served; or
(ii) if the person is subject to a seasonal work preclusion period—that part of the period that has expired; or
(iii) if an income maintenance period applies to the person—that part of the period that has already applied to the person;
(b) the costs of repairs to, or replacement of, essential whitegoods situated in the person’s home;
(c) school expenses;
(d) funeral expenses;
(e) essential expenses arising on the birth of the person’s child or the adoption of a child by the person;
(f) expenditure to buy replacement essential household goods because of loss of those goods through theft or natural disaster when the cost of replacement is not the subject of an insurance policy;
(g) the costs of essential repairs to the person’s car or home;
(h) premiums in respect of vehicle or home insurance;
(i) expenses in respect of vehicle registration;
(j) essential medical expenses;
(k) any other costs that the Secretary determines are unavoidable or reasonable expenditure in the circumstances in relation to a person.
However, unavoidable or reasonable expenditure does not include any reasonable costs of living other than those referred to in paragraph (a).
Meaning of reasonable costs of living
(5) The reasonable costs of living of a person include, but are not limited to, the following costs:
(a) food costs;
(b) rent or mortgage payments;
(c) regular medical expenses;
(d) rates, water and sewerage payments;
(e) gas, electricity and telephone bills;
(f) costs of petrol for the person’s vehicle;
(g) public transport costs;
(h) any other cost that the Secretary determines is a reasonable cost of living in relation to a person.
THE ISSUES
The issues under consideration for this Tribunal are:
(a)What is the length of the IMP, and as a result what will the start date for NSA be; and
(b)Does the applicant suffer from severe financial hardship as a result of unavoidable or reasonable expenditure.
THE EVIDENCE
The written evidence before the Tribunal comprised of:
(a)Section 37 documents provided by the respondent; and
(b)Written submissions filed by the respondent.
The Tribunal heard oral submissions on behalf of both parties.
APPLICANT
The applicant's evidence was that he was not aware of the Centrelink rules and he did not seek advice from Centrelink until he had dispersed the vast majority of the termination payment.
The applicant submitted that he paid off all his financial debts before applying for NSA because he did not want to burden his sons with these debts. His current assets are:
(a) a Hyundai motor vehicle worth approximately $8,000.00;
(b) a utility worth approximately $1,000.00;
(c) money in the bank of approximately $3,000.00;
(d) house contents, insured for $80,000.00 (evidence at the hearing), but with a market value of $40,000.00 (T6,p65.)
His rent is paid to the end of October.
He has previously suffered two strokes and has disc damage in his back. His ill health means that he expends in excess of $300.00 per month on medication.
He has no credit cards or ability to obtain one.
He believes the Government should tell people what the Social Security rules are.
The applicant argued that it was unfair that he should be penalised for having worked hard and not taken annual leave and long service leave. He argued that these payments should be excluded from the calculation of the IMP.
RESPONDENT
The respondent did not dispute that the applicant qualifies for NSA under s 593 of the Act.
In relation to the length of the applicant’s IMP the respondent submitted that consists of 2777.149 hours, comprised of:
·Annual leave and leave loading of 1259.4369 hours
·Long service serve of 314.8 hours
·RDO term of 362.9121 hours
·Payment in lieu of notice of 200 hours
·Redundancy – with prior support of 640 hours
The respondent submitted that this period equates to 69 weeks, which when starting from 16 November 2012 would find the applicant’s start date to be 15 March 2014.
The respondent submitted that previous decisions in this matter did not take into account the RDO payment and that this should have been done because the RDO payment is a payment that is connected with the termination of the applicant’s employment under the terms of s 1068-G7AQ.
The respondent accepted that the applicant is presently under severe financial hardship but submitted that this hardship was not caused by unavoidable or reasonable expenditure.
The respondent submitted that the applicant’s present financial situation is the result of the applicant paying his personal loans and credit card debts in one lump sum. The respondent submitted that there is no evidence to the effect that all these debts were immediately payable.
The respondent submitted that the Tribunal has no discretion to reduce the length of the applicant’s IMP because the applicant’s hardship was not caused by unavoidable or reasonable expenditure.
ANALYSIS OF THE ISSUES
The Tribunal finds that the applicant qualifies for NSA under s 593 of the Act.
It was not in dispute and the Tribunal finds that the applicant is suffering severe financial hardship.
The Tribunal finds that the applicant’s employment termination payment consisted of:
(a)annual leave and leave loading payment;
(b)long service serve payment;
(c)RDO term payment;
(d)payment in lieu of notice; and
(e)redundancy payment.
The Tribunal finds that payments (a) and (b) are leave payments and must be included in calculating the applicant’s IMP according to s 1068-G7AL(a).
The Tribunal finds that payments (c), (d) and (e) are termination payments and must be included in calculating the applicant’s IMP in according with s 1068-G7AL(a).
There is no evidence before the Tribunal that the payments made by the applicant following the receipt of his employment termination payment were unavoidable or reasonable expenditure. There was no evidence that the loans were due to be repaid or that the applicant was pressured by the credit providers to repay the loans at that time.
In Secretary, Department of Family and Community Services and Bazzi it was found that sudden and full repayments of debts that were borrowed on the condition of gradual repayment over time cannot be reasonable or unavoidable payments ([2000] AATA 837 at [43]). In Williams and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 354, it was found that the repayment of a car loan that was not immediately due or payable in full was not unavoidable or reasonable. Further is was found in Neilsen and Secretary, Department of Education, Employment and Workplace Relations [2012] AATA 591 that the repayment of outstanding personal loans was not unavoidable or reasonable expenditure. The repayment of credit card debts was found not to be unavoidable or reasonable expenditure in Bristow and Secretary, Department of Education, Employment and Workplace Relations [2009] AATA 1005.
Having considered all the evidence the Tribunal is unable to find that the repayments made by the applicant following the receipt of his employment termination payment were unavoidable or reasonable expenditure.
Although the Tribunal has found that the applicant is suffering severe financial hardship, the Tribunal is bound by the legislation and must apply the law accordingly.
The Tribunal finds that the Applicant’s IMP should be 69 weeks, correspondingly the applicant should be paid NSA from 15 March 2014.
DECISION
The Tribunal varies the decision under review and finds that the applicant’s Income Maintenance Period is 69 weeks, commencing from 16 November 2012 and ending on 15 March 2014.
I certify that the preceding 37 (thirty-seven) paragraphs are a true copy of the reasons for the decision herein of Ms Hogan, Member .
....(Sgd) T Freeman...............
Associate
Dated 8 November 2013
Date of hearing 23 October 2013 Applicant In Person
Representative for the respondent Ms S Yik Long Solicitor for the respondent Australian Government Solicitor
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