Joseph and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2008] AATA 737

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 737

ADMINISTRATIVE APPEALS TRIBUNAL      )

)           No 2007/6239

GENERAL  ADMINISTRATIVE  DIVISION		)
Re		SHUNILA JOSEPH

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Dr Roderick McRae, Member

Date22 August 2008

PlaceMelbourne

Decision The Tribunal affirms the decision under review.  

(sgd) Roderick McRae

Member

SOCIAL SECURITY – Age pension – partner income – calculation

Social Security Act 1991 ss 8, 43, 55, 1064, Pension Rate Calculator A

REASONS FOR DECISION

22 August 2008 Dr Roderick McRae, Member       

1.       Mrs Shunila Joseph (the Applicant) lodged a claim (accompanied by an Income and Assets form) for age pension (AP) with Centrelink on 12 June 2007.  Centrelink acts as the service delivery agency for the Secretary to the Department of Families, Housing, Community Services and Indigenous Affairs (the Respondent).  A Centrelink officer decided that the Applicant was qualified for AP under the provisions of the Social Security Act 1991 (the Act) on 28 June 2007. 

2.       Centrelink calculated the Applicant’s rate of pension according to the provisions of the Act on 30 July 2007.  The Applicant was dissatisfied with the rate of payment and sought review of the decision.  The original decision-maker affirmed the decision on 22 August 2007.  On 13 September 2007 a Centrelink authorised review officer (ARO) also affirmed the decision.  The Applicant then sought review of the decision by the Social Security Appeals Tribunal (SSAT).  On 23 November 2007 the SSAT affirmed the decision.  The Applicant now seeks a review of the SSAT decision by the Tribunal. 

3. It appeared to the Tribunal that the issues for determination on the review of the decision could be adequately determined in the absence of the parties. The parties consented to the review being determined without a hearing. Therefore, pursuant to s 34J of the Administrative Appeals Tribunal Act 1975 (the AAT Act), the Tribunal proceeded to review the decision by considering the documents or other material lodged with, or provided to the Tribunal without holding a hearing. The Tribunal had before it documents lodged by the Respondent pursuant to s 37 of the AAT Act (the T Documents).

4.       The sole issue before the Tribunal was whether the Applicant’s AP rate had been calculated correctly.  The Tribunal’s decision is that the Applicant’s AP rate has been calculated correctly.  

BACKGROUND

5.       The Applicant is a 65 year-old married Pakistani woman, who is an Australian citizen, and lives with her husband in their own home.  Her husband remains employed.  She received disability support pension (DSP) from 24 March 2004.  Her DSP rate took into account her husband’s earnings.  She lodged a claim for AP on 12 June 2007.  Initially, Centrelink decided that the Applicant did not satisfy the age requirements and therefore was not qualified for the AP.  The decision to refuse the Applicant’s claim was based on some confusion related to the year of her birth.

6.       Subsequently, the Applicant satisfied Centrelink that she was born in 1943, and Centrelink decided that the Applicant was eligible for AP from 8 August 2006.  As a result, Centrelink paid her DSP up to 30 July 2007. 

APPLICANT’S CASE

7.       The Applicant’s case is that she has reached the age of full pension and accordingly it should be granted regardless of any other point.  She do[es] not agree with Centrelink Acts.  Throughout the many and consistent reviews of her application, she has constantly maintained that Australia’s laws do not apply to her.  However, her specific contention was that her husband’s income ought not affect her AP rate. 

RESPONDENT’S CASE

8.       The Respondent’s case is that the AP was correctly calculated according to the Act. 

LEGISLATION

9. Section 55(a) of the Act provides that the rate of AP is worked out by using Pension Rate Calculator A in s 1064 of the Act.

1064-A1         The rate of pension is a daily rate. That rate is worked out by dividing the annual rate calculated according to this Rate Calculator by 364 (fortnightly rates are provided for information only).

Method statement

Step 1. Work out the person’s maximum basic rate using MODULE B below.

Step 1A.         Work out the amount of pension supplement using Module BA below.

Step 2. Work out the amount per year (if any) of pharmaceutical allowance using MODULE C below.

Step 3. Work out the amount per year (if any) for rent assistance in accordance with paragraph 1070A(b).

Step 4. Add up the amounts obtained in Steps 1, 1A, 2 and 3: the result is called the maximum payment rate.

Step 5. Apply the ordinary income test using MODULE E below to work out the income reduction.

Note:    Module F contains provisions that may apply to working out the ordinary income of a person, and the ordinary income of a partner of the person, for the purposes of disability support pension.

Step 8. Take the income reduction away from the maximum payment rate: the result is called the income reduced rate.

Step 9. Apply the assets test using MODULE G below to work out the reduction for assets.

Step 10.          Take the reduction for assets away from the maximum payment rate: the result is called the assets reduced rate.

Step 11.          Compare the income reduced rate and the assets reduced rate: the lower of the 2 rates, or the income reduced rate if the rates are equal, is the provisional annual payment rate.

Step 12.          The rate of pension is the amount obtained by:

(a)subtracting from the provisional annual payment rate any special employment advance deduction (see Part 3.16B); and

(b)if there is any amount remaining, subtracting from that amount any advance payment deduction (see Part 3.16A); and

(c)adding any amount payable by way of remote area allowance (see Module H).

Note 1: if a person’s assets reduced rate is less than the person’s income reduced rate, the person may be able to take advantage of provisions dealing with financial hardship (sections 1129 and 1130).

Note 1A:         If a person’s rate is, or is to be, an income reduced rate or an assets reduced rate, and at least one of those reduced rates is not a nil rate, the person may be able to take advantage of provisions dealing with the pension loans scheme (sections 1133AA to 1144).

Note 2: if a person’s rate is reduced under Step 11 the order in which the reduction is to be made against the components of the maximum payment rate is laid down by section 1210 (maximum basic rate first, then rent assistance).

Note 3: the rate calculation for a member of a couple is affected by the operation of points 1064-A2 and 1064-A3.

Note 4: in some circumstances a person may also be qualified for a pharmaceutical allowance under Part 2.22.

Note 5: a person’s rate may also be reduced because the person or the person’s partner receives compensation (see section 1168) or because the person or the person’s partner is receiving a foreign pension (see scheduled international social security agreements at section 1208).

Note 6: An amount of remote area allowance is to be added under Step 11 only if the person’s rate of pension after Step 10 is greater than nil.

Members of a couple

1064-A2         Where 2 people are members of a couple, they will be treated as pooling their resources (income and assets) and sharing them on a 50/50 basis (see points 1064-E2 and 1064-G2 below). They will also be treated as sharing expenses (e.g. for rent) on a 50/50 basis (see section 1070V).

…

1064-E1         This is how to work out the effect of a person’s ordinary income on the person’s maximum payment rate:

Method statement

Step 1. Work out the amount of the person’s ordinary income on a yearly basis.

Note 1: For the treatment of the ordinary income of members of a couple see point 1064-E2.

Note 2: Module F contains provisions that may apply to working out the ordinary income of a person, and the ordinary income of a partner of the person, for the purposes of disability support pension.

Step 2. Work out the person’s ordinary income free area (see points 1064-E4 to 1064-E9 below).

Note:    a person’s ordinary income free area is the amount of ordinary income that the person can have without any deduction being made from the person’s maximum payment rate.

Step 3. Work out whether the person’s ordinary income exceeds the person’s ordinary income free area.

Step 4. If the person’s ordinary income does not exceed the person’s ordinary income free area, the person’s ordinary income excess is nil.

Step 5. If the person’s ordinary income exceeds the person’s ordinary income free area, the person’s ordinary income excess is the person’s ordinary income less the person’s ordinary income free area.

Step 6. Use the person’s ordinary income excess to work out the person’s reduction for ordinary income using points 1064-E10 to 1064-E12 below.

Note 1: see point 1064-A1 (Steps 5 to 8) for the significance of the person’s reduction for ordinary income.

Note 2: the application of the ordinary income test is affected by provisions concerning:

·the general concept of ordinary income (sections 1072 and 1073);

·business income (sections 1074 and 1075);

·deemed income from financial assets (sections 1076 to 1084);

·income from income streams (sections 1095 to 1099DAA);

·disposal of income (sections 1106 to 1112);

Ordinary incomes of members of couples

1064-E2         If a person is a member of a couple, add the couple’s ordinary incomes (on a yearly basis) and divide by 2 to work out the amount of the person’s ordinary income for the purposes of this Module.

…

1064-E10       A person’s reduction for ordinary income is:

Ordinary income excess x 0.4.

10.     A person is a member of a couple for the purposes of the Act if the person is legally married to another person and is not… living separately and apart from the other person on a permanent or indefinite basis (s 4(2) of the Act).  Income is defined in s 8 of the Act:

income, in relation to a person, means:

(a)       an income amount earned, derived or received by the person for the person’s own use or benefit; or

(b)       a periodical payment by way of gift or allowance; or

(c)       a periodical benefit by way of gift or allowance;

but does not include an amount that is excluded under subsection (4), (5) or (8).

Note 1: See also sections 1074 and 1075 (business income), sections 1076‑1084 (deemed income from financial assets), sections 1095 to 1099DAA (income from income streams), section 1099F (exempt bond amount does not count as income) and section 1099K (refunded amount does not count as income).

Note 2: where a person or a person’s partner has disposed of income, the person’s income may be taken to include the amount which has been disposed of—see sections 1106‑1112.

Note 3: income is equivalent to ordinary income plus maintenance income.

CONSIDERATIONS

11. The AP provisions are set out in s 1064 of the Act which includes Pension Rate Calculator A. This includes an income test, which may reduce the amount of AP a person is entitled to receive. It requires calculation of an applicant’s ordinary income. Section 1064-E2 of the Act provides that if a person is the member of a couple, the person’s ordinary income (defined in s 8 of the Act) incorporates any income from the person’s partner. Income includes earnings from any source, including earned from employment. As provided by s 1062-A2 of the Act the Applicant’s ordinary income is calculated by summing her income with her husband’s income and halving it. The Tribunal notes this is the identical process involved in calculation of the Applicant’s DSP rate.

12.     The maximum rate of AP is decreased by $0.40 for each dollar of income above an indexed specified threshold. 

FINDINGS

13.     There is no dispute that the Applicant is entitled to AP from 8 August 2006.  The issue before the Tribunal is whether the Applicant’s rate of AP was calculated correctly, specifically by taking her husband’s income into account.  In her claim for AP, the Applicant indicated that she is legally married and currently living with her husband.  Therefore, she is a member of a couple as defined in s 4(2) of the Act and the couple will be treated as pooling their resources and sharing their expenses (s 1064-A2 of the Act). 

14.     The Applicant’s husband’s income was $1374.40 per fortnight, which equals $35,734.40 per year. 

15.     The couple’s liquid assets at the date of the claim were $54.00.  The annual deemed income is $1.84. 

16.     The couple’s combined income is $35,736.24.  Half of this amount ($17,868.12) is applied towards calculating the Applicant’s AP rate.  This equates to $49.08824 per day, or $687.23 per fortnight. 

17.     The Applicant’s income for the purposes of determining AP is $687.23 per fortnight. 

18.     The income free area is $116.00 per fortnight.  If we subtract $116.00 from $687.23 we get $571.23.  Therefore, $571.23 is the income amount that will affect the AP rate.  40 per cent of $571.23 is $228.49. 

19.     The maximum payment rate of AP on 8 August 2006 for a member of a couple was $441.40 per fortnight.  The AP to which the Applicant is entitled is the income reduced rate of $441.40 minus $228.49, which equals $212.91. 

CONCLUSION

20.     The determined AP rate is $212.91. 

DECISION

21.     Accordingly, the Tribunal affirms the decision under review. 

I certify that the twenty-one [21] preceding paragraphs are a true copy of the reasons for the decision of:

Dr R. McRae, Member

(sgd):      Olympia Sarrinikolaou

Clerk

Date of Hearing:  Hearing on the papers

Date of Decision:  22 August 2008

Advocate for the Applicant:                Self‑represented

Advocate for the Respondent:           Ms Kayren. Paul, Centrelink Legal Services Branch