John Morton and Secretary, Department of Social Services

[2015] AATA 175

[2015] AATA  175

Division	GENERAL ADMINISTRATIVE DIVISION
File Number	2014/2243
Re	John Morton
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Ms G Ettinger, Senior Member
Date	26 March 2015
Place	Sydney

The Tribunal affirms the decision under review.

........................................................................

Ms G Ettinger, Senior Member

Catchwords

SOCIAL SECURITY –  pension bonus scheme – calculations of Applicant’s entitlements based on earlier earnings – tax return supplied subsequently indicates the Applicant was earning more than previously reported – reduction in payment of pension bonus not contemplated by the Respondent or the Tribunal – the Applicant is not eligible for further payment of pension bonus  – decision under review affirmed.

Legislation

Social Security Act 1991 ss 92C, 93F, 93G, 93F, 93G, 93H, 93J, 93K

Social (Administration) Act 1999 s 17(1)

Secondary Materials

Guide to Social Security Law

REASONS FOR DECISION

Ms G Ettinger, Senior Member

26 March 2015

SUMMARY

1. Mr John Morton is the Applicant before this Tribunal requesting a review of the decision of the Social Security Appeals Tribunal (the SSAT), which affirmed the decisions of Centrelink, and held that he had been paid the correct amount of pension bonus, and was not eligible for a top-up.

2. Mr Morton requested to give evidence at this Tribunal by telephone due to health issues. His evidence was that he had always done the right thing, that he had been given incorrect information by Centrelink on which he had relied, and that he was eligible for an increase in the pension bonus.

3. I am satisfied that Mr Morton, who reached the date to be eligible for age pension on a particular day in 2009, registered for the pension bonus on that day. He claimed the age pension on 9 July 2013, and was qualified for the payment of pension bonus on that day. I am satisfied from the evidence and a consideration of the relevant legislation that Mr Morton was paid the correct amount of pension bonus. I have accordingly affirmed the decision of the SSAT. My reasons follow.   

   ISSUES BEFORE THE TRIBUNAL

4. The issues before the Tribunal are:

   ·whether the Applicant was paid the correct amount of pension bonus at the date he claimed age pension on 9 July 2013; and

   ·whether the Applicant was entitled to any top-up amount of pension bonus due to a reduction in his income before 8 October 2013 (13 weeks from 9 July 2013, the day he claimed age pension).

   RELEVANT LEGISLATION

5. The relevant legislation is the Social Security Act 1991 (the Act) and the Social Security (Administration) Act 1999 (the Administration Act). Policy guidance set out in the ‘Guide to Social Security Law’ (the Guide) is also relevant.

6. The pension bonus scheme is directed at persons who qualify for age pension, but delay claiming the age pension while they continue to work. A lump sum, the pension bonus, then becomes available to those persons when they lodge their claim for age pension, as Mr Morton did. A person’s annual pension rate is determined in accordance with section 93H of the Act.

7. Eligibility for the pension bonus is set out in section 92C of the Act. It is not in dispute that the Applicant satisfied these criteria, and was eligible to be paid a pension bonus under the pension bonus scheme.

8. The calculation of the quantum of pension bonus payable is carried out pursuant to Division 6 of Part 2.2 of the Act. A person’s overall qualifying period and pension multiple is defined in sections 93F and 93G of the Act respectively.

9. Section 93J(1) provides that where a person is either single, or a member of a couple during the qualifying period, their pension bonus is worked out by applying a set formula, which I have not reproduced here.

10. There are situations where a person may make a claim for age pension and still have ongoing income at the time the claim is made (retirement benefits or leave payments for example). As a result of this income at the time of the claim, the amount of that person’s pension bonus may be reduced.

11. There is also a provision for top-up determinations under the pension bonus scheme. Section 93K of the Act provides that the Secretary, or the Tribunal standing in his shoes, may make a determination to recalculate, (or top-up), the amount of pension bonus payable to a person. Pursuant to section 93K, a person’s pension bonus may be increased or topped-up as a result of the rate of his or her pension being increased within the 13 weeks following the start date for the person’s pension bonus. That variation in pension may have occurred because of a reduction in the value of the person’s assets or a reduction in the person’s ordinary income.

12. I have noted that at the time Mr Morton lodged his claim for age pension on 9 July 2013, his most recent tax return for the year 2013/14 was not available. His annual business income was assessed on the basis of his 2011/2012 tax return. This showed his net business income as $27,846.

13. Schedule 2 to the Administration Act sets out the rules for determining the start days for the purposes of the social security law. Clause 3 of Schedule 2 sets out the general rule, which essentially is that if a person makes a claim for a social security payment, and the person is qualified for the payment on the day on which the claim is made, the person’s start day in relation to the payment is the day on which the claim is made.

14. Mr Morton lodged his claim for pension bonus on 9 July 2013. This claim was made with his claim for age pension in accordance with section 17(1) of the Administration Act. His start date is therefore 9 July 2013. Thirteen weeks from 9 July 2013 is 8 October 2013. Therefore, if the Applicant’s income reduced at any time between 9 July 2013 and 8 October 2013, a top-up determination can be made.

15. Certain superannuation payments may be deductible. However, I rely on Part 4.7.1.30 of the Guide which states that superannuation expenses that relate to a sole trader, such as Mr Morton was, (rather than an employee of the sole trader), are not allowable business deductions. Therefore Mr Morton’s superannuation expenses were not deductible, and had to be added back to complete his total income, which became $32,846.

16. The Applicant was paid $9,816.90 in pension bonus on the basis of the above income.

17. Part 4.7.1.20 of the Guide sets out Centrelink’s policy in assessing the income of sole traders. Income of a sole trader is the net amount after allowable expenses of running the business, and before income tax and other personal deductions.

18. I have already noted above that Mr Morton’s income from his business as a sole trader should be determined by reference to income in the applicable tax return which was not available at the relevant time. That tax return was for the 2013/14 financial year. It became available later, and shows that Mr Morton’s business had a net income of $15,108. However, this amount reflects a deduction of $26,000 for superannuation payments made to the Applicant. Once that is added in, as it must be, the total income for the business was $41,108 for the 2013/14 financial year.

19. Therefore, far from Mr Morton’s income reducing during the relevant period (9 July 2013 - 8 October 2013) for calculation of his pension rate and pension bonus, it actually increased. He therefore does not qualify for a top-up. However the Tribunal does not contemplate, and neither has the Respondent submitted, that it should reduce Mr Morton’s pension bonus which has been paid to him.

20. The Respondent also considered whether using profit and loss statements supplied by the Applicant might assist his case to increase his pension bonus, and concluded it did not. This was raised in the Respondent’s Statement of Facts and Contentions, but not at the hearing. I have not verified that information. 

    THE TRIBUNAL’S DELIBERATIONS AND CONCLUSIONS

21. In coming to a decision regarding whether Mr Morton was paid the correct amount of pension bonus at the date he claimed age pension on 9 July 2013, and whether he was entitled to any top-up amount of pension bonus, I have taken into account the evidence before me, the legislation and the Guide.

22. I note that Mr Morton operated as a sole trader, and worked after he reached pension age in 2009. He had registered for pension bonus on his birthday in 2009. He claimed age pension on 9 July 2013, which was granted from that date, and was determined in accordance with section 93H of the Act.

23. Mr Morton’s pension bonus, a lump sum, being $9,816.90, then also became available to him on 9 July 2013. Eligibility for the pension bonus is set out in section 92C of the Act. It is not in dispute that the Applicant satisfied those criteria, and was eligible to be paid a pension bonus under the pension bonus scheme. Mr Morton’s pension bonus was calculated based on income figures relevant to him, taken from 9 July 2013 - 8 October 2013 (being the statutory 13 weeks). As Mr Morton’s 2013/14 tax return was not available at the relevant time, his 2011/12 tax return was used as the basis for calculating his pension rate, and accordingly, his pension bonus. The latter amounted to $9,816.60 which was paid to him.

24. Mr Morton thought that he should have received a top-up payment. His evidence was that he had had difficult and unsatisfactory communications with Centrelink, and that he had not been informed about the situation correctly. I have noted his evidence, but it does not alter the law which I can apply in regard to the facts before me in considering whether Mr Morton is eligible for a top-up.

25. Section 93K of the Act provides that a top-up applies where a person’s rate of pension increases within 13 weeks of the original grant. That may occur if the person’s income is reduced, his or her rate of pension is increased, and accordingly the increase in pension bonus follows.

26. The figures before me indicate that Mr Morton’s income did not fluctuate in the relevant period 9 July 2013 - 8 October 2013, and that his pension and pension bonus should therefore remain as originally calculated by Centrelink. Accordingly he cannot be paid top-up, and the decision under review must be affirmed.

    DECISION

27. The Tribunal affirms the decision under review.

I certify that the preceding 27 (twenty-seven) paragraphs are a true copy of the reasons for the decision herein of Ms G Ettinger, Senior Member

...........................[sgd]..........................................

Associate

Dated 26 March 2015

Date(s) of hearing	12 February 2015
Applicant	By phone
Solicitor for the Respondent	Department of Human Services