Joustra and Repatriation Commission

[2005] AATA 564

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 564

ADMINISTRATIVE APPEALS TRIBUNAL      )

)Nos T2004/147 and T2004/154

GENERAL ADMINISTRATIVE DIVISION

)

Re

TJIPKE JOUSTRA
JANKE TINE JOUSTRA
  Applicants

And

REPATRIATION COMMISSION

  Respondent

DECISION

Tribunal Miss Mary Imlach (Senior Member)

Date10 June 2005

PlaceHobart

Decision The decision under review is affirmed.

[Sgd Mary Imlach]

Senior Member

CATCHWORDS

Veterans’ Affairs – service pension – income streams – overseas pensions.

Veterans’ Entitlements Act 1986 – s5J

REASONS FOR DECISION

10 June 2005   Senior Member Miss Mary Imlach

1.      On 1 November 2004 a senior delegate of the respondent affirmed an earlier finding of the Commission dated 29 July 2004 that the assessment of the applicants’ service pension should include the gross amount of their Dutch National Old Age Pension (AOW).

2.      The effect of the finding of 29 July 2004 was to reduce the amount of service pension payable to the applicants.   

3.      At the request of the applicants and with the consent of the respondent the application before the Tribunal was decided on the documentary evidence filed by the parties with the Tribunal.

Background

4.        On 27 July 2004 the applicants advised the respondent of the new rate of their Dutch AOW pensions.    Following this advice a delegate of the respondent updated details of the applicants’ income in the departmental computer system.    This reduced Mr and Mrs Joustra’s service pension to A$333.65 per fortnight from A345.58 the change being effective from 30 July 2004.

5. On 17 August 2004 the applicants’ wrote to the respondent putting their case that the Dutch AOW scheme had the same characteristics as Australian superannuation schemes and fitted the description in s5J(1) of a regulated superannuation fund. They claimed therefore, that the Dutch AOW scheme should be treated the same as Australian schemes and that an allowance should be made for the undeducted purchase price (UPP) of their Dutch AOW pension.

6.        On 1 November 2004 a senior delegate of the respondent wrote to the applicants advising them that he affirmed the earlier determination of the respondent’s delegate made on 29 July 2004 that the assessment of their service pension should include the gross amount of their Dutch AOW pension which reduced the amount of the service pension payable to them.

7. The first applicant Tjipke Joustra lodged an application for review under sub-section 29(1) of the Administrative Appeals Tribunal Act 1975, with this Tribunal on 24 November 2004.

8.        The second applicant Janke Joustra also lodged an application for review on 3 December 2004.

9. The sole issue between the parties is whether or not the overseas pensions paid to the applicants under the Dutch National Old Age Pensions Act (AOW) should be assessed as gross ordinary income under s46U or 46V of the Veterans’ Entitlements Act 1986 (“the Act”).

10.      The applicants submitted:

(a)That an undeducted purchase price was granted for Dutch AOW payments as from 1996.

(b)That the Netherlands AOW scheme meets requirements similar to those of regulated Australian superannuation funds and therefore should be treated the same.

(c)That the Australian Taxation Office allows a deduction of the taxable amount, but the Department of Veterans’ Affairs does not allow a reduction from income for calculation of the pension.    The Department does however allow a reduction when it concerns payments from Australian superannuation funds provided certain criteria are met.

(d)That the Agreement on Social Security made between Australia and the Netherlands requires that the pension scheme be treated the same as other Australian superannuation schemes.

11.The respondent did not file any written submissions.

Consideration of Law and Findings

12.     As stated earlier, the sole issue for the Tribunal to determine is whether the gross amount of the Dutch AOW pensions received by the applicants should be included in the assessment of their service pension.

13. The relevant legislation is the provision in s5J(1) of the Act which states:

“`governing rules’, in relation to an income stream, means any trust instrument, other document or legislation, or combination of them, governing the establishment and operation of the income stream.

income stream means:

(a) an income stream arising under arrangements that are regulated by the Superannuation Industry (Supervision) Act 1993; or

(b) an income stream arising under a public sector superannuation scheme (within the meaning of that Act); or

(c)       an income stream arising under a retirement savings account; or

(d) an income stream provided by a life insurance business (within the meaning of the Life Insurance Act 1995); or

(e)       an income stream provided by a friendly society; or

(f)an income stream designated in writing by the Commission for the purposes of this definition, having regard to the guidelines determined under subsection (1F); or

(fa)      a family law affected income stream;

but does not include any of the following:

(g)       available money;

(h)       deposit money;

(i)        a managed investment;

(j)        a listed security;

(k)       a loan that has not been repaid in full;

(l)        an unlisted public security;

(m)      gold, silver or platinum bullion.”

It can be seen from the legislation that the definition is an exhaustive one and is restricted to income streams which are regulated under Australian prudential arrangements.   It is not possible it being beyond the constitutional powers of the Commonwealth of Australia, to legislate to regulate or supervise income streams from other countries.

14. Overseas pension and annuities cannot be assessed using the income or assets test assessment rules specified under sub-division B, sections 46U or 46V of the Act, which can only be applied to those income streams as defined in subsection 5J(1) of the Act.

15. The UPP attributed to the applicants AOW is only used for assessing taxation matters. The UPP has no bearing when assessing pension entitlements. In the case of the applicants, the UPP deduction was not applicable because the pension is not an income stream within the definition of s5J(1) of the Act.

16. The reference to “old age pensions” in paragraph 19(3)(b) of the Superannuation Industry (Supervision) Act 1993 is a reference to old age pensions in paragraph 51 (xxiii) of the Australian Constitution, as defined under subsection 10(1) of the Superannuation Industry (Supervision) Act 1993. The pension paid to the applicants by the Dutch AOW scheme cannot be regarded as an old age pension as referred to in the Australian constitution. “Old Age Pensions” in the constitution refers to welfare benefits over which the Australian Government has legislative control. The pensions paid by the Dutch AOW scheme are not welfare payments for which the rate of payment can be determined or altered by the Australian Government.

17.      It is for the same reasons that the argument put forward by the applicants that the Agreement on Social Security between Australia and the Netherlands should apply cannot be upheld.    The Agreement cannot apply to a matter which is beyond the legislative power of the Australian Government.

18.      The applicants’ claimed that in correspondence from the Department “the letter of the Act was always quoted and never the intention of the Act.” They did not produce any evidence to support their claim that Parliament had an intention to include other income streams in the definition contained in s5J(1), nor could they have done so. The section states specifically which income streams are included and covered by the section. All other income streams are by definition therefore excluded from the operation of sections 46U and 46V of the Act which can only be applied to “income streams” as defined in subsection 5J(1) of the Act.

19. The applicants’ claim that the AOW complied with the technical requirements for a regulated superannuation fund and should be given status as an income stream as defined by the Act is not correct.

20. The Dutch AOW scheme does not satisfy paragraph 19(3)(a) of the Superannuation Industry (Supervision) Act 1993, therefore it has not nor can it elect to be regulated under the Superannuation Industry (Supervision) Act 1993.

21. Paragraph 19(3)(a) of the Superannuation Industry (Supervision) Act 1993 states that the trustee of the fund must be a constitutional corporation. The reference to a constitutional corporation is a reference to constitutional corporation as defined in paragraph 51(xx) of the Constitution, as defined under subsection 10(1) of the Superannuation Industry (Supervision) Act 1993. The Trustee of the Dutch AOW Scheme cannot be regarded as a trustee of a trading corporation or a financial corporation formed within the limits of the Commonwealth (within the meaning of paragraphs 51(xx) of the Constitution) as it is not a corporation which has been incorporated within Australia.

22.      The Department in its letter of 8 September 2004 pointed out to the applicants that this Tribunal like the respondent is bound to apply the existing legislation and that any change to the existing legislation had to be pursued by the applicants through political efforts to bring about such change.

23.      The decision under review is affirmed.

I certify that the  23  preceding paragraphs are a true copy of the reasons for the decision herein of  Miss Mary Imlach
Senior Member

Signed:  K L Miller (Administrative Assistant)

Date/s of Hearing  Matters decided on the papers.
Date of Decision  10 June 2005