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

[2008] AATA 536

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 536

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          2008/1037

GENERAL ADMINISTRATIVE DIVISION		)
Re		JANELLE KENNA

Applicant

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

Respondent

DECISION

Tribunal Mr R G Kenny, Member

Date26 June 2008

PlaceBrisbane

Decision The Tribunal affirms the decision under review

...........[Sgd]...................................

Member

CATCHWORDS

SOCIAL SECURITY – Pensions, Benefits and Allowances – disability support pension – termination of employment – imposition of an income maintenance period based on receipt of long service leave and annual leave payments –- income maintenance period to commence on date of receipt of payments – decision under review in relation to the commencement date varied.

SOCIAL SECURITY – Pensions, Benefits and Allowances – disability support pension - career change grant of $50,000 paid under Queensland Government’s Career Change Program constitutes ordinary income treated as being received over a 12 month period - decision under review in relation to the career change grant affirmed.

Social Security Act 1991 ss 8(11) 94, 1064, 1064-F5, 1065-F8, 1065-F14, 1073

Guide to Social Security Law s 4.3.2.35

Explanatory Memorandum accompanying the Social Security and Veterans’ Affairs Legislation Amendment (Budget and Other Measures) Bill 1997

Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634
Re Minister for Immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82

Re Strauss and Secretary, Department of Family and Community Affairs [2005] AATA 608

REASONS FOR DECISION

26 June 2008  Mr RG Kenny, Member

Application

1.      Janelle Kenna was employed by Education Queensland until 29 June 2007.  On 4 July 2007, Ms Kenna received payments of $28,245.44 and $329.41 comprising, respectively, long service leave and annual leave entitlements.  She also received a Career Change Grant (the grant) of $50,000 as part of the Queensland Government’s Career Change Program.  On 12 October 2007, Ms Kenna lodged a claim for a disability support pension, a form of income support available under the Social Security Act1991 (the Act). 

2.      On 20 November 2007, an officer with Centrelink determined that Ms Kenna was qualified to receive the disability support pension.  However, he also determined that the pension was not payable to her because she was subject to an income maintenance period during which her income level exceeded that which enabled the pension to be paid.  The income maintenance period was calculated with regard being had to all three of the amounts, noted above, which were received by Ms Kenna when she finished her employment with Education Queensland.  It extended from 29 June 2007 until 8 August 2008.  On 3 December 2007, an authorised review officer with Centrelink affirmed that decision.

3.      The Social Security Appeals Tribunal (the SSAT), on 26 February 2008, varied that decision by reducing the length of the income maintenance period to 21 weeks from 29 June 2007.  This was on the basis that only the long service leave and annual leave entitlement amounts were relevant to the calculation of the income maintenance period.  In relation to the grant of $50,000, the SSAT determined that this comprised ordinary income which was deemed to have been received by Ms Kenna over the 12 months from 29 June 2007.

Issues and Legislation

4.      It is not in dispute that Ms Kenna meets the qualification requirements for the disability support pension as set out in s 94 of the Act.  This entitles her to certain ancillary benefits such as use of a pensioner concession card.  However, in accordance with the provisions in Part 3.2 of the Act, the rate of payment is dependent upon a recipient’s income levels.  Section 1064 of the Act provides that disability support pension is to be calculated in accordance with the rate calculator set out at the end of that section.  Where employment has been terminated and a “termination payment” was received, s 1064-F5 of the Act provides that the person is taken to have received ordinary income for a period equal to the period to which the termination payment relates.  This period is calculated in accordance with the formula in Part 3.2 of the Act.  A termination payment includes a “leave payment” and a “redundancy payment” and these terms are defined in s 1064-F14 of the Act. 

5.      The SSAT, determined that the long service leave amount of $28,245.44 and the annual leave amount of $329.41 paid to Ms Kenna are leave payments and, therefore, termination payments under s 1064-F14 of the Act.  It also determined that the grant is neither a leave payment nor a redundancy payment and, therefore, is not a termination payment under that provision.  I am satisfied that those characterisations of the amounts are correct and, indeed, this was not in dispute.  I am also satisfied that the application of the formula in Part 3.2 of the Act to the long service and annual leave payments results in the calculation of a 21 week income maintenance period.  This was the period identified by the SSAT and it is not in dispute.  

6.      The issues for determination are the date of commencement of the 21 week income maintenance period and the extent to which payability of disability support pension to Ms Kenna is affected by the grant of $50,000.

Consideration

Commencement of income maintenance period

7.      Section 1064-F8 of the Act provides that an income maintenance period commences on the date that a termination payment is made.  In evidence was an Employment Separation Certificate completed by an officer of Education Queensland.  It declares that long service leave and annual leave payments were made to Ms Kenna on 4 July 2007.  In the decision under review, the commencement date of the income maintenance period was identified as 29 June 2007, the date of termination of employment.  However, I am satisfied that the appropriate commencement date is 4 July 2007.  The decision under review is varied, accordingly.

Effect of grant of $50,000

8.      Mr Hamilton, for the respondent, submitted that the approach adopted by the SSAT should be followed such that the grant was to be treated as ordinary income in accordance with s 1073(1) of the Act and treated as having been received over a 12 month period. 

9.      Ms Kenna submitted that the grant was for the purpose of enabling her to engage in activities which would enable her to transition into a new from of employment other than teaching which, because of a deteriorating physical condition, was becoming increasingly difficult for her to cope with.  To that end, she submitted that the grant was not intended to be utilised for expenditure in the usual sense applicable to income receipts and that the amount should not be treated as ordinary income under s 1073(1) of the Act.  Ms Kenna also submitted that, if it were to be treated initially as ordinary income, it should also be treated as an “exempt lump sum” under s 8(11)(d) of the Act such that it was excluded from the operation of s 1073(1) of the Act.

10.     Section 1073(1) of the Act relates, generally, to social security benefits and to social security pensions.  Module E of Rate Calculator A in s 1064 requires s 1073 to be applied in calculating ordinary income for disability support pension[1].  It reads:

[1] See s 1064-E1 of the Act (at step 6); and also the Explanatory Memorandum accompanying the Social Security and Veterans’ Affairs Legislation Amendment (Budget and Other Measures) Bill 1997.

“s 1073 Certain amounts taken to be received over 12 months

1073.(1)  Subject to points 1067G‑H5 to 1067G‑H20 (inclusive), 1067L‑D4 to 1067L‑D16 (inclusive), 1068-G7AA to 1068-G7AR (inclusive), 1068A-E2 to 1068A-E12 (inclusive) and 1068B‑D7 to 1068B-D18 (inclusive), if a person receives, whether before or after the commencement of this section, an amount that:

(a) is not income within the meaning of Division 1B or 1C of this Part; and

(b) is not:

(i) income in the form of periodic payments; or

(ii) ordinary income from remunerative work undertaken by the person; or

(iii) an exempt lump sum

the person is, for the purposes of this Act, taken to receive one fifty-second of that amount as ordinary income of the person during each week in the 12 months commencing on the day on which the person becomes entitled to receive that amount.”

11.     A sum to which that provision applies is taken to have been received on a weekly basis over a 12 month period.  I have noted the contentions of Ms Kenna concerning the characterisation of the grant.  Nevertheless, I am satisfied that it meets the requirements of s 1073(1)(a), (b)(i) and (b)(ii) of the Act.  In relation to paragraph (a), Divisions 1B and 1C relate to deemed income from business assets and from income streams, respectively, and these are not relevant in this matter.  In relation to paragraphs (b)(i) and (ii), the grant is not income in the form of periodic payments or ordinary income from remunerative work. 

12.     As for s 1073(1) (b)(iii), the term “exempt lump sum” is defined in s 8(11) of the Act and reads:

“s 8(11)  An amount received by a person is an exempt lump sum if:

(a) the amount is not a periodic amount (within the meaning of subsection (11A)); and

(b) the amount is not a leave payment within the meaning of points 1067G‑H20, 1067L‑D16 and 1068-G7AR; and

(c) the amount is not income from remunerative work undertaken by the person; and

(d) the amount is an amount, or class of amounts, determined by the Secretary to be an exempt lump sum.”

13.     It is not in dispute and I am satisfied that paragraphs (a) to (c) of that provision are satisfied and it remains to be determined whether s 8(11)(d) of the Act is met.

14.     In evidence were extracts from the Guide to Social Security Law (the Guide) which is published by the respondent.  It is well established that the Tribunal, whilst not bound to apply policy guidelines of the kind in the Guide, may do so and will usually apply the guidelines unless there are cogent reasons in a particular case for not doing so[2].  In this case, there is no material before the Tribunal to indicate that the Guide should not be applied.  Paragraph 4.3.2.35 of the Guide lists the amounts or classes of amounts that have been determined by the Secretary, for the purposes of s 8(11) of the Act, to be exempt.  It includes some thirty-nine determinations.  These do not include an amount which equates with Ms Kenna’s grant in this case.  The final category listed in the Guide describes other individual exempt payments where people hold a s 8(11) determination signed by the Secretary.  Ms Kenna’s evidence was that she does not hold such a determination.  She also indicated that she intended to make application for such a determination. 

[2] Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634 at 639-645 and Re Minister for Immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82 at 86.

15.     Mr Hamilton submitted that, while, in many of its components, the Act enables Centrelink officers and the Tribunal to exercise a discretion vested by the Act in the Secretary, this was not the situation with the discretion under s 8(11)(d) of the Act.  In evidence was a copy of the instrument of delegation signed by the chief executive officer of Centrelink.  It nominates the provisions under which Centrelink officers may exercise a discretion.  Section 8(11) of the Act is not listed in that provision.  I accept as correct the submission of Mr Hamilton that the discretion to declare an amount to be an exempt lump sum is not one that may be exercised by the Tribunal.[3] 

[3] See Re Strauss and Secretary, Department of Family and Community Affairs [2005] AATA 608.

16.     I am satisfied that the grant does not satisfy the requirements s 8(11)(d) of the Act and, therefore, it is not an exempt lump sum as provided for in that provision.  It follows rhat the grant falls within the scope of s 1073 of the Act and Ms Kenna is taken to receive one fifty-second of that amount as ordinary income during each week in the 12 months commencing on the day on which the person becomes entitled to receive that amount.  It is not in dispute that she became entitled to receive the grant on 29 June 2007, the date that she ceased employment.

Decision

17.     The decision under review is varied by amending the date of commencement of the income maintenance period to 4 July 2007 and, in all other respects, is affirmed.

I certify that the 17 preceding paragraphs are a true copy of the reasons for the decision herein of Mr RG Kenny, Member

Signed: ……………[Sgd]………………………………………
  Elizabeth Young, Research Associate

Date/s of Hearing  17 June 2008
Date of Decision  26 June 2008
For the Applicant   Assisted by a friend, Mr D King

For the Respondent                 Mr B Hamilton, Departmental Advocate