Langevin and Secretary, Department of Social Services (Social services second review)

Langevin and Secretary, Department of Social Services (Social services second review) [2022] AATA 86 (27 January 2022)
Division:General Division
File Number: 2017/7746
Re:Arlette Langevin
APPLICANT

Secretary, Department of Social ServicesAnd
RESPONDENT

DECISION
Tribunal:Senior Member P J Clauson AM
Date:27 January 2022
Place:Brisbane

The decision under review is affirmed.
.............[SGD]...........................................................
Senior Member P J Clauson AM
CATCHWORDS
SOCIAL SECURITY - age pension - whether the decision to assess the Applicant’s age pension on the basis of gross overseas income was made correctly - whether any arrears can be paid to the Applicant
LEGISLATION
Income Tax Assessment Act 1997
Social Security Act1991
Social Security (Administration) Act 1999
CASES
Drake v Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634
Re Durant and Secretary, Department of Family and Community Services (1999) 57 ALD 211
SECONDARY MATERIALS
Social Security Guide, Department of Social Services, version 1.290
REASONS FOR DECISION
Senior Member P J Clauson
27 January 2022
INTRODUCTION

On 19 December 2016, the Social Services and Child Support Division of the Administrative Appeals Tribunal (AAT1) affirmed the earlier decision of Services Australia – Centrelink (the Agency):
(a)To calculate Ms Arlette Langevin’s (the Applicant) rate of payment to include the gross amount of overseas income paid to her in France (the rate decision);
(b)To raise and recover a debt of Newstart Allowance (NSA) against the Applicant in the amount of $20,833.99 for the period 1 September 2009 to 12 August 2014; and
(c)To raise and recover an age pension debt against the Applicant in the amount of $1,481.01 for the period of 13 August 2014 to 16 July 2015.
After the Applicant requested a second review of the AAT1 decision, the Applicant and the Respondent came to an agreement in respect of the decision to raise and recover the debts for the periods 1 December 2009 to 12 August 2014 and 13 August 2014 to 16 July 2015.[1]
[1] Exhibit 1, T25 at page 215.
ISSUES
The issues to be decided in this matter are:
(a)Whether the decision to assess the Applicant’s age pension on the basis of gross overseas income was correctly made on 29 July 2015; and if not
(b)Whether any arrears can be paid to the Applicant.
HISTORY AND FACTS
The Applicant has been in receipt of the age pension from 13 August 2014.[2]
[2] Exhibit 4: Attachment “A”, Centrelink Customer Record Extract, Statement of Facts, Issues and Contentions of the Respondent.
On 15 April 2015, the Applicant notified the Agency that she was in receipt of three French pensions (known collectively as the French Pensions).[3]
[3] Exhibit 1, T5, page 87.
That same day, the Agency notified the Applicant, confirming that her rate of age pension was calculated with reference to her combined annual income of $19,754.58.[4]
[4] Exhibit 1, T6, page 93.
On 15 May 2015, the Agency wrote to the Applicant notifying her that her age pension payment rate was calculated with reference to her combined annual income of $27,052.42.[5]
[5] Exhibit 1, T7, page 95.
The Agency again wrote to the Applicant on 16 May 2015 confirming that her income from the French pensions had been included on her record and her rate of age pension in Australia had decreased as a result of that.[6]
[6] Exhibit 1, T8, page 97.
On 4 June 2015, the Applicant provided the Agency with information about the French pensions, including that she had been in receipt of them since 1 September 2009.[7]
[7] Exhibit 1, T9, pages 100 to 102.
On 29 July 2015, the Agency notified the Applicant that she was entitled to receive age pension at the fortnightly rate of $455.19 for the period of 17 July to 30 July 2015 and $452.79 for the period from 31 July to 13 August 2015.
The rates of payment were calculated with reference to the Applicant’s combined annual income of $27,899.94.[8]
[8] Exhibit 1, T10, page 103.
On 1 September 2015, the Agency notified the Applicant she was entitled to receive age pension at the fortnightly rate of $427.95 for the period of 28 August to 10 September 2015 based on her combined annual income of $28,509.06.[9]
[9] Exhibit 1, T11, page 105.
On 19 February 2016, the Agency wrote to the Applicant once more, providing information about exchange rates used to calculate her rate of age pension.[10]
[10] Exhibit 1, T12, page 107.
The Agency again wrote to the Applicant on 9 March 2016 notifying her that her fortnightly rate of age pension for the period 26 February – 10 March 2016 was calculated with reference to a combined annual income of $8,252.08.[11]
[11] Exhibit 1, T13, page 110.
The Agency notified the Applicant on 20 June 2016 that her age pension rate per fortnight for the period 17 to 30 June 2016 was calculated with reference to a combined annual income of $14,496.84.[12]
[12] Exhibit 1, T14, page 112.
On 8 July 2016, the Agency was provided with English translations of correspondence relating to the Applicant’s French pension funds as follows:
(a)A letter titled “Notification of pension” from Ile de France Pension Fund, dated 5 June 2009, and addressed to the Applicant;[13]
(b)A letter titled “Statement of Pension Payments” from ARRCO Complementary Pension Fund for Salaried Workers, dated 16 September 2009;[14]
(c)A letter titled “Pension Details” from Angers, dated 11 September 2009;[15]
(d)Banque Populaire Statements dated 3 October 2014;[16]
(e)Banque Populaire Statement dated 5 November 2014;[17]
(f)Banque Populaire Statement dated 3 December 2014;[18]
(g)Banque Populaire Statement dated 5 January 2015;[19]
(h)Banque Populaire Statement dated 4 February 2015;[20] and
(i)Banque Populaire Statement dated 4 March 2015.[21]
[13]    Exhibit 1, T15, page 115.
[14]    Exhibit 1, T15, page 116.
[15]    Exhibit 1, T15, page 117.
[16]    Exhibit 1, T15, page 118.
[17]    Exhibit 1, T15, page 119.
[18]    Exhibit 1, T15, page 120.
[19]    Exhibit 1, T15, page 121.
[20]    Exhibit 1, T15, page 122.
[21]    Exhibit 1, T15, page 123.
On 27 July 2016, the Applicant requested a review of the decision made on 29 July 2015 to calculate her rate of age pension taking into account the gross amount of the French pensions paid to her. The Respondent notes that it is recorded that the Applicant sought review on the basis that she believed her age pension should be calculated with reference to the net rate of the French pensions, as this was the amount she actually received.[22]
[22] Exhibit 1, T20, page 198.
On 14 September 2016, an Authorised Review Officer (ARO) reviewed and affirmed the original decision[23] and, on 21 September 2016, the Applicant lodged an Application for Review of the ARO decision with the AAT1.[24]
[23] Exhibit 1, T21, page 207.
[24] Exhibit 1, T22, page 212.
The AAT1 conducted a hearing and affirmed the decision under review on 12 December 2016[25] and, on 25 January 2017, the Applicant applied to the General Division of the Administrative Appeals Tribunal (the Tribunal) for review of the AAT1 decision, along with an extension of time request.[26]
[25] Exhibit 1, T2, page 41.
[26] Exhibit 1, T1, page 1.
On 15 February 2017, the Tribunal ordered that the timeframe for lodging the Application for Second Review was extended to 25 January 2017.[27]
[27] Exhibit 1, T24, page 214.
On 1 August 2017, the Tribunal dismissed the Application for Review (Reference Number 2017/0468) by reason that the parties had reached an agreement under Section 181 of the Social Security (Administration) Act 1999 (Cth) (the Administration Act) regarding raising and recovering debts of age pension and NSA and the application was taken to be dismissed.[28]
[28] Exhibit 1, T27, page 217.
On 17 September 2020, the Tribunal ordered by consent that the timeframe for making an Application for Review of the rate decision was extended to 25 January 2017.
LEGISLATIVE FRAMEWORK
The legislation relating to determination of this application is contained in:
(a)The Social Security Act1991 (Cth) (the Act); and
(b)The Social Security (Administration) Act 1999 (Cth) (the Administration Act).
Further policy advice is contained in the Social Security Guide, Department of Social Services, version 1.290 (the Guide) and ought to be applied unless there are cogent reasons for departing from it (Drake v Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634).
RESPONDENTS CONTENTIONS
Calculation of the Entitlement to Age Pension
The Respondent contends that section 55 of the Act provides that the payment rate of age pension is calculated using the Pension Rate Calculator (the Calculator) at the end of section 1064 (where the person is not permanently blind). It is contended by the Respondent that Module E within the Calculator sets out the ordinary income test, which concerns what the effect of a person’s ordinary income is on their maximum payment rate (section 1064-E1 of the Act).
“Ordinary income” is defined in Section 8(1) of the Act as income that is not maintenance income or an exempt lump sum. “Income” is defined in that section as:
“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 a gift or allowance;
(c)A periodical benefit by way of a gift or allowance;
but does not include an amount that is excluded under subsection (4), (5) or (8).”
The Respondent further contends that the application of the ordinary income test is affected by section 1072 of the Act[29] which provides that a reference to a person’s ordinary income for a period is a reference to the person’s gross ordinary income from all sources for the period calculated without any reduction (unless a reduction in relation to business income is allowed under Division 1A).
[29] See Note 2, Section 1064-E(1) of the Act.
It is the Respondent’s contention that a reference to “income” is a reference to the gross income earned, derived or received by a person.
The Guide, at 4.3.6.10, contains general rules applying to income from overseas payments which are referred to as Comparable Foreign Payments (CFPs). A CFP is a payment type that is available from a foreign country and is similar to a Social Security pension, which includes age pension under section 23 of the Act. The Guide relevantly in this matter states:
“The gross current rate of payments from overseas is generally treated as income for Social Security purposes whether the payments are made:
·     From overseas, or
·     Through an Australian agent.
No amount is deducted for any tax deductions, bank charges or for foreign country debts deducted from the overseas payment.
Exception: The treatment of some CFPs may be modified by Australia’s Social Security agreements with other countries. Payments may be treated as:
·     A direct deduction, rather than as ordinary income, or
·     Exempt from the income test, or
·     Partly assessable, with only some components of the payment, or a proportion of the payment being assessable.”
The Applicant in this matter is from France and receives French pension payments from her pension funds. As Australia does not, and did not, have a Social Security agreement with the Republic of France, the Respondent submits in its Contentions that no exception will apply to CFPs made to the Applicant.
The Act, in section 1100, indicates how a payment in foreign currency is to be determined. It is contended by the Respondent in the Applicant’s case, the value of the French pensions in Australian currency is calculated using the appropriate market exchange rate for the foreign currency on the fifth business day before the calculation date, adjusted monthly.
The Guide, at 4.3.6.50, provides that in circumstances where the rate the person actually receives differs by more than 5% to the rates set using the appropriate market exchange rate, the person may request a review of the exchange rate used.[30]
[30] Exhibit 4: Attachment B – Historical Guide Reference as at March 2015, Statement of Facts, Issues and Contentions of the Respondent.
The Respondent contended that barring that the Applicant asserts her age pension rate ought to be calculated with reference to net foreign income derived from the French pensions, the Respondent observed that her application does not assert any error in the particular exchange rates used to calculate her entitlement. The Applicant’s evidence to the hearing reconfirmed that she had stopped contesting that aspect of the decision under review that gross income should not have been the basis upon which the decision was made. She stated to the Tribunal “Yes, absolutely, yes” that she accepted that the calculation was on the gross income.[31]
[31] Transcript of Proceedings, line 16, page 12.
Her confirmation accorded with her Statement of Issues[32] at the penultimate paragraph where she stated:
“The issue of whether the decision to assess my aged pension on the basis of gross overseas income was correctly made on the 29th of July 2015, has been withdrawn as after reading all the guidelines it appears as France does not have any special arrangements that the gross overseas income is what has to be taken, not the net.”[33]
[32] Exhibit 2: Applicant Bundle of Evidence.
[33] Ibid.
At the hearing, the Applicant attempted to agitate that the definition of income for Social Security payments and income for payment of work bonus are defined differently and should be defined similarly. The Tribunal and the Respondent’s representative explained to the Applicant that the issues regarding the different definitions of the term “income” as used for the purposes of Social Security payment and Job Bonus payments was not an issue that the Tribunal could engage with her upon in this review. The Applicant had an assisting support person who, with assistance from the Respondent’s representative, was able to explain this apparent dichotomy to the Applicant and the Applicant was then able to understand the difference as to how the two definitions applied and understood that the Tribunal was not able to assist her in that regard upon income related to the purpose for Social Security payment or her Job Bonus payment.
It was noted also that the Applicant and the Respondent had reached an arrangement for a repayment plan for the amount outstanding of the Applicant’s debt to the Agency. However, the Applicant wished the Tribunal to consider a variation to this arrangement. It was explained to the Applicant that that was a matter between the Agency and herself, and was outside of the Tribunal’s remit on this review, as the Tribunal was confined to the one and only issue before it.
In considering its decision in this review, the Tribunal has had regard to the observations of Forgie DP in the matter of Re Durant and Secretary, Department of Family and Community Services (1999) 57 ALD 211 wherein an applicant’s Canadian pension was being considered, for taxation purposes, on either a gross or net basis, for assessing the applicant’s Social Security entitlement. Regarding the definition of “income” under Section 8 of the Act, DP Forgie stated:
“… Payment of tax from money which Mr Durant earns, derives or receives is part of the money for his own use or benefit. It is for his own use or benefit that he pays his taxation obligations whether those obligations arise in Canada or Australia. The fact that he is not called upon to meet those obligations from the pensions money he actually receives and that the money is deducted before the balance is sent to him is of no consequence. The analogy lies in the PAYE system used in Australia. The fact that the Income Tax Assessment Act 1997 (Cth) requires an employer to deduct instalments of income tax from an employee’s salary before paying the employee his or her salary does not mean that the payment of income taxation is not the employee’s obligation.”
In reference to section 1072 of the Act, the Deputy President then observed:
“It seems to me that the clear intention of the SS Act is that, provided money can be said to be earned, derived or received for a person’s use or benefit, no deductions are to be made unless they are permitted under Div 1A of Pt 3.10 Compulsory deduction of taxation before it comes into the hands of the recipient does not make the money deducted any lesser payment in satisfaction of a person’s obligation and so a payment for the person’s use or benefit.”
The Tribunal, after considering all of the evidence before it, and the Applicant’s concession that she agrees that the legislation stipulates that it is the gross income to be calculated in regard to her responsibilities under the Act, the Tribunal has decided that the calculation of the Applicant’s age pension rate is correct, having regard to the gross amount that she receives in her French pensions. The Applicant’s application in this matter for review is therefore unsuccessful.
DECISION
The decision under review is affirmed.

I certify that the preceding 40 (forty) paragraphs are a true copy of the reasons for the decision herein of Senior Member P J Clauson AM

................[SGD]........................................................
Associate
Dated: 27 January 2022

Date of hearing:
14 July 2020

Applicant:

By Telephone

Solicitors for the Respondent:
Ms Lisa Palmer

Mills Oakley Lawyers

[2022] AATA 86

27 January 2022

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Appeal

Judicial Review

Procedural Fairness

Statutory Construction