Leonard Miocevich and Secretary, Department of Social Services

[2015] AATA 192

[2015] AATA  192

Division	GENERAL ADMINISTRATIVE DIVISION
File Number	2014/4836
Re	Leonard Miocevich
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Senior Member CR Walsh
Date	27 March 2015
Place	Perth

The Tribunal affirms the decision under review.

.............(Sgd) CR Walsh...........................................................

Senior Member CR Walsh

CATCHWORDS

SOCIAL SECURITY – age pension – applicant sole trader carrying on business as a general medical practitioner - applicant received lump sum General Practice Rural Incentives Program payment from Medicare – whether lump sum payment should be treated as having been received by the applicant over 12 months or as the applicant’s ordinary business income – decision under review affirmed

LEGISLATION

Income Tax Assessment Act 1997 – s 8-1

Social Security Act 1991 – s 8(1) – s 8(11) – s 8(11A) - s 1072 - s 1073(1) – s 1073(1)(a) – s 1073(1)(b) - s 1073(2) – s 1075(1)(a)

SECONDARY MATERIALS

Guide to Social Security Law – s 1.1.S.225 – s 4.7.1.10 – s 4.7.1.20 – s 4.7.1.30 – s 4.7.1.40

FOR DECISION

Senior Member CR Walsh

27 March 2015

INTRODUCTION

1. On 19 November 2013, Medicare paid general medical practitioner Dr Miocevich a lump sum amount of $20,665 under the General Practice Rural Incentives Programme (GPRIP) for his work in rural areas of Western Australia in the period 1 April 2012 to October 2013 (Incentive Payment).  Broadly, the GPRIP is a government scheme to encourage doctors to work in rural and regional locations in Australia.[1]

   [1] Information on the GPRIP, and how payments are made to general practitioners under it, is available from the website of Rural and Regional Health Australia, being >

   In short, this application concerns whether the Incentive Payment was correctly treated as ordinary income, received by Dr Miocevich weekly, in equal instalments, over 52 weeks from 19 November 2013 (being the date of receipt) pursuant to s 1073(1) of Social Security Act 1991 (SSA) (resulting in a reduced the rate of age pension for Dr Miocevich and his wife during that 52 week period) or, instead, whether the Incentive Payment should have been treated as ordinary income from Dr Miocevich’s business as a self-employed general medical practitioner under s 1072 of the SSA (in which case, Dr Miocevich and his wife would be owed some arrears of age pension by Centrelink).

2. Centrelink contends that s 1073(1) of the SSA was correctly applied in respect of the Incentive Payment.  In contrast, Dr Miocevich argues that s1073(1) of the SSA does not apply to the Incentive Payment and that the Incentive Payment constitutes his ordinary  “business” income.

   FACTUAL & PROCEDURAL BACKGROUND

3. Dr Miocevich has been a self-employed general medical practitioner for some 50 years.

4. On 9 November 2012, Centrelink granted Dr Miocevich’s claim for age pension.

5. On 19 November 2013, Dr Miocevich received the Incentive Payment.  

6. On 4 December 2013, Dr Miocevich informed Centrelink that he had received the Incentive Payment, and $11,200 income from employment on a locum basis at the Pemberton Medical Centre in October 2013.

7. On the same day, a Centrelink officer decided to apply s 1073 of the SSA to treat the Incentive Payment as ordinary income of Dr Miocevich, received weekly, in equal instalments, over 52 weeks from 19 November 2013 (being the date of receipt), rather than to treat the Incentive Payment as Dr Miocevich’s ordinary business income under s1072 of the SSA. This had the effect of reducing the rate of Dr Miocevich’s (and Dr Miocevich’s wife’s) age pension during that 52 week period (Original Decision).

8. Centrelink also raised a debt for overpayment of Dr Miocevich’s age pension during the fortnight in which the applicant earned income from the Pemberton locum in October 2013.  This debt was recovered from Dr Miocevich on 30 December 2013.

9. On 7 April 2014, Dr Miocevich requested an internal review of the Original Decision by a Centrelink authorised review officer (ARO).

10. On 25 July 2014, the ARO affirmed the Original Decision (ARO Decision).  The ARO Decision states:

    You received a payment of $20,665 under the General Practice Rural Incentives Program.  Information on the Rural Health Australia website states these payments are not subject to Pay As You Go Withholding tax but must be declared for taxation purposes.

    This payment was made to you based on the locum work you completed in rural areas and is in addition to your income from self-employment where you see patients from your home.  When requesting this review you said this payment should be included in your taxable income, with deductions allowed for the expenses incurred in generating the payment.

    The General Practice Rural Incentives Program payment was not earned as part of your self-employment.  It was earned as part of a regular employer-employee arrangement.  As a general rule, a wage earner is not allowed to claim the same deductions as a self-employed person for Centrelink purposes (i.e. travel, accommodation costs, depreciation etc.)  This means that it would not be included in your income from self-employment for Centrelink purposes nor would expenses/deductions be allowed.

    I have therefore decided that the decision to assess your General Practice Rural Incentives Program payment of $20,665 as income for 52 weeks from 19 November 2013 was correct.[2]

    [2] Te Secretary now concedes that Dr Miocevich has at all relevant times carried on business as a sole trader.

11. On 31 July 2014, Dr Miocevich applied to the SSAT for review of the ARO Decision.

12. On 2 September 2014, the SSAT affirmed the ARO Decision (SSAT Decision).  The SSAT Decision states:

    14.During 2013/2014 Mr Miocevich earned income by working as a locum for 10 days in October 2013, in addition to income he earned on a self-employed basis.  Mr Miocevich also received an incentive payment of $20,655 from Medicare on 19 November 2013 under a scheme to encourage doctors to work in rural and regional locations, known as the General Practice Rural Incentives Program (GPRIP).  An incentive payment is payable under GPRIP if a GP meets a “threshold amount” in at least 4 quarters over a two-year period [Footnote omitted]. 

    15.Mr Miocevich said that he thought he had done the necessary amount of work to be paid the incentive payment but when he enquired about it, he was told he had worked across only 3 quarters and needed to do a certain amount of work in a 4^th quarter, and that was why he worked as a locum in October 2013.  Mr Miocevich informed Centrelink that the incentive payment was for work done between 1 April 2012 and October 2013.

    16.The nature of the incentive payment is such that the Tribunal is satisfied that section 1073 of the Act applies.  It was not income from financial assets or income streams.  It was not a periodic payment.  It was not ordinary income from remunerative work undertaken by Mr Miocevich; he was separately remunerated for the work done.  The payment does not meet the definition of exempt lump sum (subsection 8 (11) of the Act).

13. On 17 September 2014, Dr Miocevich applied to this Tribunal for a review of the SSAT Decision.

    ANALYSIS

    Does Centrelink have a discretion not to apply s 1073 of the SSA?

14. Section 1073(1) of the SSA states:

    1073  Certain amounts taken to be received over 12 months

    (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.[3] [Emphasis added]

    [3] Section 1073(2) of the SSA provides certain qualifications to s 1073 which are not relevant to this application.

15. It is not in dispute that Dr Miocevich is, and for some 50 years, has been a sole trader (carrying on business as a general medical practitioner).  What is in dispute is whether s 1073(1) of the SSA applies to the Incentive Payment.

16. Dr Miocevich’s primary position is that s 1073 of the SSA is irrelevant and has no application to his particular circumstances.  Dr Miocevich asserts that because he is, and for some 50 years, has been a sole trader (carrying on business as a general medical practitioner) the Incentive Payment should simply form part of ordinary business income and should not be dealt with separately under s 1073 of the SSA. 

17. In support of his position, Dr Miocevich referred to various sections of the “Guide to Social Security Law” (Guide) dealing with “sole traders”, including s 1.1.S.225 (Sole trader), s 4.7.1.10 (General provisions for Sole Traders & Partnerships), s 4.7.1.20 (Assessment of Income for Sole Traders & Partnerships), s 4.7.1.30 (Assessment of business Deductions & Losses for Sole Traders & Partnerships) and s 4.7.1.40 (Assessment of Assets for Sole Traders).

18. With respect, what Dr Miocevich does not appear to appreciate, is that s 1073 of the SSA is expressed in mandatory terms.  Consequently, if Centrelink (and, in its shoes, the Tribunal) considers that an amount received by a person falls within the scope of s 1073 of the SSA, the amount received must be attributed to the person over a 12 month period in accordance with the section.  In this case, what the Guide says about “sole traders” is irrelevant. It is s 1073 of the SSA (i.e. the legislation) and not the Guide (i.e. departmental policy) which must prevail in such circumstances.

19. Having made that point, the Tribunal will now consider whether the Incentive Payment was correctly dealt with under s 1073 of the SSA.

    Does s 1073 of the SSA apply to the Incentive Payment?

20. It is common ground that points 1067G-H5 to 1067G-H20, 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), referred to in the opening sentence of s 1073(1) of the SSA (see paragraph 15 above), do not apply to the Incentive Payment. 

21. It is also common ground that Divisions 1B and 1C of Part 3.10 of the SSA, referred to in s 1073(1)(a) of the SSA (see paragraph 15 above), do not apply to the Incentive Payment.[4] 

    [4] ^{Division 1B of Part 3.10 of the SSA provides for the deeming of income from financial assets and Division 1C of Part 3.10 of the SSA makes provision in relation to income from income streams.}

22. The issues which then arise are whether the Incentive Payment is:

    (i)income in the form of “periodic payments” for the purposes of s 1073(b)(i) of the SSA (set out in paragraph 15 above);

    (ii)“ordinary income from remunerative work undertaken” by Dr Miocevich for the purposes of s 1073(b)(ii) of the SSA (set out in paragraph 15 above); or

    (iii)an “exempt lump sum” for the purposes of s 1073(b)(iii) of the SSA (set out in paragraph 15 above).

23. Each of these issues is considered, in turn, below.

    Is the Incentive Payment “income in the form of periodic payments” for the purposes of s 1073(1)(b)(i) of the SSA?

24. Section 8(1) of the SSA defines “income”, “income amount” and “ordinary income” as follows:

    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).

    income amount means:

    (a)valuable consideration; or

    (b)personal earnings; or

    (c)moneys; or

    (d)profits;

    (whether of a capital nature or not).

    ordinary income means income that is not maintenance income or an exempt lump sum.

25. The phrase “periodic payments” is not defined in the SSA for the purposes of s1073 (b)(i) of the SSA. Absent statutory definition, the phrase ought to be given its ordinary meaning.

26. As noted by the Secretary, the word “periodic” is used in the adjectival sense in s 1073(1)(b)(i) of the SSA to describe the form of “payments” to which s 1073(1)(b)(i) of the SSA relates. The online Macquarie Dictionary[5] defines “periodic” as:

    1. characterised by periods or rounds of recurrence. 2. occurring or appearing at regular intervals. 3. intermittent.

    [5] See >

    The Secretary contends that the Incentive Payment cannot be characterised as a “periodic payment” in the relevant sense simply because it relates to work undertaken by Dr Miocevich over a period (relevantly April 2012 to October 2013).  Instead, the Secretary asserts that regard must be had to whether the Incentive Payment is part of a series of payments.

27. The Secretary’s position is that the Incentive Payment cannot be characterised as a single payment in a series of GPRIP payments made to Dr Miocevich. The Secretary accepts that Dr Miocevich may have received separate GPRIP payments in the past. However, the Incentive Payment is not “related” to any past GPRIP payment in a way that makes the Incentive Payment part of a series of GPRIP payments received by Dr Miocevich.

28. The Secretary points out that this is because entitlement to a single GPRIP payment depends solely on the satisfaction of the relevant criteria – in Dr Miocevich’s case, the requirement to bill Medicare for a certain value of work in eligible locations for four three-month quarters over two years: refer to the SSAT decision at [14] to [16] at paragraph 13 above. Dr Miocevich’s receipt of any previous GPRIP payment had no bearing on whether he fulfilled the eligibility criteria in respect of the Incentive Payment. Similarly, according to the Secretary, satisfaction of the eligibility criteria for the Incentive Payment had no impact on Dr Miocevich’s entitlement to any other GPRIP payment. Further. the fact that the Incentive Payment is paid under the same scheme as previous GPRIP payments which Dr Miocevich may have received, does not make the Incentive Payment related to those other GPRIP payments in the relevant sense. By fulfilling the eligibility criteria for the Incentive Payment or any other GPRIP payment, Dr Miocevich did not render himself eligible for a series of GPRIP payments.

29. The Tribunal agrees with the above contentions of the Secretary on this issue and finds that because the Incentive Payment is not one payment in a series, or “periodic” in any other relevant sense, the Incentive Payment is not “income in the form of periodic payments” for the purposes of s 1073(1)(b)(i) of the SSA.

    Is the Incentive Payment “ordinary income from remunerative work undertaken” by Dr Miocevich for the purposes of s 1073(1)(b)(ii) of the SSA?

30. It is not in dispute that the Incentive Payment was “ordinary income” of Dr Miocevich within the meaning of s 8(1) of the SSA and for the purposes of s 1073(1)(b)(ii) of the SSA:  refer to paragraph 25 above.

31. What is in dispute is whether the Incentive Payment was “from remunerative work” undertaken by Dr Miocevich for the purposes of s 1073(1)(b)(ii) of the SSA.

32. Centrelink’s records indicate that Dr Miocevich initially advised it that he received the Incentive Payment in relation to work undertaken between 1 April 2012 and 30 September 2013. However, the SSAT Decision records that Dr Miocevich clarified with Centrelink that the Incentive Payment was for work done between 1 April 2012 and October 2013: SSAT Decision at [15]. The documentary material Dr Miocevich provided to this Tribunal, also states that the Incentive Payment relates to work done between 1 April 2012 and October 2013.

33. The Tribunal agrees with the Secretary’s contention that the relevant “work” for the purposes of s 1073(1)(b)(ii) of the SSA is the “work” undertaken by Dr Miocevich to meet the eligible quarter threshold for the value of Medicare billed items for eligible services provided in eligible rural locations between 1 April 2012 and October 2013 (Relevant Work).

34. It is not in dispute that the Relevant Work was “remunerative work undertaken by” Dr Miocevich for the purposes of s 1073(1)(b)(ii) of the SSA.

35. However, the Secretary contends that Dr Miocevich did not receive the Incentive Payment “from” the Relevant Work undertaken in the sense required to take the Incentive Payment outside of the operation of s 1073 of the SSA.  According to the Secretary, Dr Miocevich’s eligibility for the Incentive Payment depended on him billing Medicare for the threshold value of work carried out at rural locations over the required period. The Secretary notes that Dr Miocevich received the Incentive Payment from Medicare for fulfilling this eligibility criteria and the fact that one aspect of the criteria was performance of a certain amount of remunerative work does not make the incentive payment “from” remunerative work for the purpose of s1073(2)(b)(ii) of the SSA.

36. The Secretary notes that Dr Miocevich was separately compensated in wages for the Relevant Work and that the Incentive Payment should more properly be characterised as a “bonus” paid to Dr Miocevich not for his work, but for his choice to carry out that work in a rural location.

37. The Tribunal agrees with the above contentions of the Secretary on this issue and finds that the Incentive Payment is not “ordinary income from remunerative work undertaken by” Dr Miocevich for the purposes of s 1073(1)(b)(ii) of the SSA.

    Was the incentive payment an exempt lump sum?

38. “Exempt lump sum” is defined in s 8(11) of the SSA as follows:

    (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.

    Note:Some examples of the kinds of lump sums that the Secretary may determine to be exempt lump sums include a lottery win or other windfall, a legacy or bequest, or a gift—if it is a one-off gift.

39. “Periodic amount” is defined in s 8(11A) of the SSA as follows:

    (11A)         An amount is a periodic amount if it is:

    (a)the amount of one payment in a series of related payments, even if the payments are irregular in time and amount; or

    (b)the amount of a payment making up for arrears in such a series.

40. As the Secretary commented, the definition of “exempt lump sum” in s 8(11) of the SSA is expressed in language that is both exhaustive and cumulative, meaning all four of the criteria (a) to (d) must be satisfied for an amount to come within the definition of “exempt lump sum” in s 8(11) of the SSA.

41. In relation to s 8(11)(a) of the SSA, the Tribunal considers that the Incentive Payment is not a “periodic amount” within the meaning of s 8(11A) of the SSA.  Section 8(11A)(a) of the SSA states, relevantly, that an amount is a “periodic amount” if it is the amount of one payment in a series of related payments, even if the payments are irregular in time and amount. Although the definition of “exempt lump sum” in s 8(11)(a) of the SSA specifically uses the phrase “periodic amount”, in contrast to s 1073 of the SSA which uses the phrase “periodic payments”, the Tribunal considers that the reasoning set out above (in paragraphs 28 to 310) is of assistance in deciding whether the Incentive Payment is a “periodic amount” for the purpose of the definition of “exempt lump sum” in s 8(11) of the SSA. Applying that reasoning, the Tribunal considers that the Incentive Payment is not one in a “series” of GPRIP payments to Dr Miocevich, as Dr Miocevich’s entitlement to the Incentive Payment has no bearing on his entitlement to any other GPRIP payment (and vice versa).

1. In relation to s 8(11)(b) of the SSA, the Incentive Payment is clearly not a “leave” entitlement payment.

2. Further, in relation to s 8(11)(c) of the SSA, for the same reasons set out above in relation to s 1073(1)(b)(ii) of the SSA(see paragraphs 35 to 38) the Tribunal takes the view that the Incentive Payment is not “income from remunerative work undertaken by” Dr Miocevich.

3. Finally, in relation to s 8(11)(d) of the SSA, the Tribunal considers that the Incentive Payment is not “an amount or class of amounts” determined by the Secretary to be an “exempt lump sum”.  The “Note” to s 8(11)(d) of the SSA provides some examples of the kinds of lump sums that the Secretary may determine to be “exempt lump sums” for the purposes of s8(11)(d) of the SSA,, including a lottery win or other windfall, a legacy or bequest or an one-off gift.  The Incentive Payment clearly does not fall within such a class of payment.

4. As the Incentive Payment does not satisfy all the criteria of the definition of “exempt lump sum” in s 8(11) of the SSA, it cannot be an “exempt lump sum” for the purposes of s 1073(1)(b)(iii) of the SSA.

   Conclusion – s 1073(1) of the SSA

5. For the above reasons, the Incentive Payment satisfies the criteria in s 1073(1) of the SSA such that it was correctly treated by Centrelink as having been received by Dr Miocevich in equal instalment over 52 weeks commencing on 19 November 2013 (being the date of receipt).  It follows that the Incentive Payment cannot also be treated as ordinary (business) income of Dr Miocevich under s 1072 of the SSA.

   Deductions

6. Section 1075(1)(a) of the SSA permits a person who carries on a business to reduce their ordinary income by, among other things, “losses and outgoings that relate to the business and are allowable deductions for the purposes of section 8-1 of the Income Tax Assessment Act 1997”.

7. Dr Miocevich contends that his work expenses for the 1 April 2012 to October 2013 period should be deducted against the Incentive Payment (as it is ordinary business income) for the purpose of calculating his income and age pension rate under the SSA.

8. As stated, for the above reasons, the Incentive Payment satisfies the criteria in s 1073(1) of the SSA such that it was correctly treated by Centrelink as having been received by Dr Miocevich in equal instalments over 52 weeks commencing on 19 November 2013 and, therefore, cannot also be treated as ordinary (business) income of Dr Miocevich under s 1072 of the SSA.  It follows that Dr Miocevich is unable to claim deductions against the Incentive Payment under s 1075 of the SSA.  In any event, the relevant deductions have already been applied against Dr Miocevich’s business income.

   Dr Miocevich’s dealings with Centrelink

9. Dr Miocevich contends that he has been unfairly treated by Centrelink and that he should be compensated by Centrelink on the grounds of “legal liability, defective administration or moral obligation”.

10. The Tribunal is limited in its jurisdiction to a review of the SSAT Decision.  As stated above, the Tribunal considers that Centrelink correctly treated the Incentive Payment as falling within s 1073(1) of the SSA and, therefore, that the SSAT Decision is correct.  If Dr Miocevich considers that he has been treated unfairly by Centrelink and wishes to be compensated accordingly, there may be other avenues of redress open to him.  However, the Tribunal is not the appropriate forum for this.

    DECISION

11. For the above reasons, the Tribunal affirms the SSAT Decision.

I certify that the preceding 54 (fifty four) paragraphs are a true copy of the reasons for the decision herein of Senior Member CR Walsh

......(Sgd) A Tran..................................................................

Associate

Dated 27 March 2015

Date of hearing	25 March 2015
Applicant	In person
Representative for the Respondent	Mr D Carroll
Solicitors for the Respondent	Australian Government Solicitor