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

[2008] AATA 439

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 439

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2007/6075

GENERAL ADMINISTRATIVE DIVISION		)
Re		SOSEFO MAKA (JOSEPH STONE)

Applicant

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

Respondent

DECISION

Tribunal Ms G Ettinger Senior Member

Date28 May 2008

PlaceSydney

Decision  The Tribunal affirms the decision under review.

................[sgd]..............................

Ms G Ettinger
  Senior Member 

CATCHWORDS

Health Care Card – income test – Applicant suffers a stroke in the workplace – compensation consists of weekly workers’ compensation payments, a commutation and lump sums – Applicant has severe speech limitations due to the incident, incapacity for work, and permanent impairment -  Applicant receives income from a rental property - Applicant’s income for the statutory period in regard to the low income health care card exceeds the threshold – no discretion -  decision under review affirmed.

Social Security Act 1991 ss1061Z0,   1071A

Social Security (Administration Act) 1999  ss 16, 36

Re D’Angelo and Secretary, Department of Family and Community Services (2003) 76 ALD 726

Secretary, Department of Employment and Workplace Relations v Richards (2007) 98 ALD 310

REASONS FOR DECISION

28 May 2008	Ms G Ettinger Senior Member
BACKGROUND

1.      The Applicant, Mr Sosefo Maka, also known as Joseph Stone, is fifty years old, and suffered a cerebral episode at work on 20 February 1993 with resulting brain damage, and severe impairment to his speech. He is virtually unable to speak. He has received weekly workers’ compensation payments, lump sum payments and most recently, upon application, he became entitled on 8 May 2007, to a lump sum of workers’ compensation benefits to the value of $150,000. After certain deductions were made from the settlement moneys, Mr Maka received $132,617.90.  Mr Maka also receives income from a rental property.

2.      On 23 April 2007, Mr Maka applied for a low income Health Care Card (HCC) which would assist with obtaining medical treatment and medicines at reduced prices (T7).

3.      The application for the card was refused by Centrelink on the basis that Mr Maka’s income was above the allowable limit. That limit at the time was income of $423 average weekly earnings, or $3,384, for the eight weeks prior to the application for the card on 23 April 2007 (T13), that is from 26 February 2007, (sections 1061Z0 and 1071A of the Social Security Act (the Act)).

4.      The Authorised Review Officer and the Social Security Appeals Tribunal affirmed the decision of Centrelink, and Mr Maka exercised his rights to appeal to this Tribunal. At the hearing he appeared unrepresented. The Secretary was represented by his Advocate, Mr M Nicoletti. The Tribunal was assisted by an interpreter in the Tongan language, Mr Topou.

5. I found from the evidence and documents before me that Mr Maka’s income for the eight week period immediately prior to his application for a HCC which was comprised of workers’ compensation payments and rental income, was in excess of the permitted limit. Whilst I accept that Mr Maka suffers major medical problems, that he has expenses such as a mortgage, two young daughters to educate, and has lost his opportunity to be employed, he has been compensated for that loss of income. Unfortunately there is no discretion with regard to the application of section 1061Z0 of the Act. Mr Nicoletti submitted that due to changes in his income situation, Mr Maka may be able to obtain a HCC if he reapplies after 11 April 2008.

6.      However in regard to this application I have no discretion, and must affirm the decision of the Respondent.  My reasons follow.

ISSUE IN THIS CASE

7. There is only one issue in this case which is whether at the time of the application for a HCC on 23 April 2007, Mr Maka met the income test pursuant to section 1071A and section 1061ZO of the Act.

LEGISLATION

8.      The relevant legislation in this matter is the Social Security Act 1991 (the Act), and the Social Security (Administration) Act 1999 (Admin Act). Section 8 of the Act deals with what “income” means in terms of the legislation, section 1071A-4 with “ordinary income”, and sections 1071A and 1061Z0 of the Act with eligibility for the HCC.

9. Section 8 of the Act provides that:

Income test definitions

8(1)  In this Act, unless the contrary intention appears:

…

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).

…

10. Section 1061ZO of the Act states that:

Qualification

1061ZO(1)  A person is qualified for a health care card on a day if this section applies to the person on that day.

1061ZO(2)  This section applies to a person on a day if, on that day:

(a)  in the case of a child—the person is:

(i)  an Australian resident or a special category visa holder residing in Australia; or

(ii)  living in Australia with an Australian resident or with a special category visa holder residing in Australia; and

(b)  in the case of a person other than a child—the person is:

(i)  an Australian resident or a special category visa holder residing in Australia; and

(ii)  in Australia; and

(c)  the person is not an FTB child aged over 16 years; and

(d)  the person satisfies the health care card income test.

….

11. Sections 1071A-1 and 1071A-4 of the Act provide that:

Health care card income test

The Health Care Card Income Test Calculator at the end of this section is to be used in working out whether a person satisfies the health care card income test for the purposes of Division 3 of Part 2A.1.

Health Care Card Income Test Calculator

Satisfying the health care card income test: persons claiming a card

1071A‑1  This is how to work out whether a person claiming a health care card satisfies the health care card income test on the day on which the person claims the card, whether or not the person is the holder of a health care card at that time.

Method statement

Step 1.   Work out the amount of the person’s ascertained income for the period of 8 weeks ending on the day on which the person lodged the claim.

Step 2.   Work out the amount of the person’s allowable income for the period.

Step 3.   If the person’s ascertained income for the period is less than the person’s allowable income for the period, the person satisfies the health care card income test.

Step 4.   If the person’s ascertained income for the period equals or exceeds the person’s allowable income for the period, the person does not satisfy the health care card income test.

…

Definitions

1071A‑4  In this Part:

allowable income, in relation to any period of 8 weeks, means:

(a)  in relation to a person who had a dependant or dependants on the last day of the period—the amount worked out by multiplying by 8, or such other number as is prescribed, the aggregate of:

(i)  the amount of the weekly rate of income that would, on the last day of the period, be sufficient to prevent both members of a one‑income couple from receiving newstart allowance; and

(ii)  $20, or such other amount as is prescribed; and

(iii)  an amount worked out by multiplying $34, or such higher amount as is prescribed, by the number of the dependants of the person on the last day of the period; or

(b)  in relation to a person who had no dependants on the last day of the period—the amount worked out by multiplying by 8, or such other number as is prescribed, an amount equal to 60%, or such other percentage as is prescribed, of the aggregate of the amount worked out under subparagraph (a)(i) and the amount referred to in subparagraph (a)(ii) if paragraph (a) had applied to the person.

ascertained income, in relation to a period, means:

(a)  in relation to a person who is not a member of a couple—the income of the person in respect of that period; and

(b)  in relation to a person who is a member of a couple—the income of the person and his or her partner in respect of that period.

exceptional circumstances relief payment means exceptional circumstances relief payment under the Farm Household Support Act 1992.

…

income, in relation to a person, means ordinary income and, to the extent that they are not ordinary income, includes:

(aa)  payments of a social security pension or a social security benefit; and

(a)  if the person is receiving a social security pension or benefit—the person’s maintenance income (if any) within the meaning of the Family Assistance Act; and

(b) payments of a pension under the Veterans’ Entitlements Act; and

…

CONSIDERATION OF THE FACTS AND LAW

12.     As noted above, Mr Maka suffered a severe injury at work on 20 February 1993, which has left him with major disabilities, including brain damage and a severe speech disability. Mr Maka applied for a low income HCC on 23 April 2007 (T7), because he says he needs money for medicine, to assist with his mortgage, and to educate his two daughters aged approximately 22 and 21.

13.     He has received workers weekly workers compensation payments, and a permanent impairment payment pursuant to the Workers Compensation Act 1987 (NSW), and payments awarded by the Compensation Court of NSW on 10 December 2002 (T3). The SSAT noted some disagreement between Mr Maka and the Respondent over what amounts he was actually paid. Ultimately I did not have to explore that disagreement in order to make a decision regarding whether Mr Maka qualified for the HCC.

14.     I am also mindful that pursuant to case law, (Re D’Angelo and Secretary, Department of Family and Community Services (2003) 76 ALD 726 where other case law is discussed), the date on which Mr Maka became entitled to his various payments is the day on which he “received”  those payments in terms of the social security legislation.

15.     What is not in dispute is that Mr Maka was notified by his solicitors on 8 May 2007 of a commutation of his workers compensation entitlements of $150,000 of which he received $132,617.90 after various necessary deductions had been made.  At T10, (23 May 2007), Mr Maka completed a form regarding real estate details and disclosed to Centrelink that he receives $260 per week gross for a rental property. 

16. The application for the card was refused by Centrelink on the basis that Mr Maka’s income was above the allowable limit. That limit at the relevant time was income of $423 average weekly earnings, or $3,384, for the eight weeks prior to the application for the card (T13) (sections 1061Z0 and 1071A of the Act). However on the basis of the $150,000 settlement, Mr Maka’s income was calculated to be $23,013.20 over the eight week period preceding his application for the HCC. This was even before any rental income had been taken into account. Mr Maka’s application was also refused by the Authorised Review Officer and the Social Security Appeals Tribunal (SSAT), hence his appeal to this Tribunal.

17.     I am satisfied that Mr Maka was seriously injured, and that a HCC would be of great assistance to him. However what I must do is consider the law and how to apply it. I have noted the above provisions in the legislation, and must also consider the application of the provisions in Guide to Social Security 3.9.1.70, in relation to the low income HCC. The Guide provides that “The low income HCC (LIC) is a claimable concession card that can be issued to people whom meet a particular income test … At new claim stage, a claimant’s eligibility for a LIC is based upon their average weekly assessable income for the eight week period before the claim.”  I have already noted above that at the time of Mr Maka’s application, the average weekly income over eight weeks for a single person such as Mr Maka was $423 a week or $3,384 total over the eight weeks.

18.     In order to ensure fairness to both parties, after hearing all the evidence and considering the submissions made, I adjourned the hearing for the Respondent, Centrelink to inquire of GIO General Ltd, the insurer, regarding a payment of $636.90 made to Mr Maka on 16 April 2007.  The query arose in the context of a difference in figures shown on Exhibit R2, a print-out of weekly payments made to Mr Maka, and what was shown at T8/41, Mr Maka’s Commonwealth Bank statement which indicated the insurer had paid $636.90 on 16 April 2007. The reply took some time, and eventually a handwritten notation dated 31 March 2008 was made on the letter Centrelink had sent querying the entries. The reply stated: “$363.90 would be a weekly payment and paid from GIO pre-tax. Tax would have been deducted prior to being deposited into his account. I do not normally manually deduct tax.” I noted also a GIO statement at T5 which indicated Mr Maka was paid $636.90 net, (that is tax having been deducted), or $856.60 gross for the period 12 April 2007 to 24 April 2007.  I was satisfied with the accuracy of the payment shown at T5 and T8; there appears to have been some confusion between gross and net figures.

19. Now in order to qualify for the low income HCC, Mr Maka must satisfy section 1061Z0 of the Act.That means if on the day he applied, that is 23 April 2007, he was an Australian resident, he was living in Australia, and he satisfied the conditions for the HCC income test. I am satisfied that he meets the first two conditions, and accordingly moved on to consider section 1071A of the Act which specifies how to work out whether a person claiming an HCC is eligible on the day of application. There are four steps as follows:

·     Step 1.  Work out the amount of the person’s ascertained income for the period of   8 weeks ending on the day on which the person lodged the claim.

·     Step 2.  Work out the amount of the person’s allowable income for the period.

·     Step 3.  If the person’s ascertained income for the period is less than the person’s allowable income for the period, the person satisfies the health care card income test.

·     Step 4.  If the person’s ascertained income for the period equals or exceeds the person’s allowable income for the period, the person does not satisfy the health care card income test.

20. In order to qualify for the HCC, pursuant to section 1071A-1 of the Act, Mr Maka must, on the day he applied for the HCC, that is 23 April 2007, have his ascertained income for the eight weeks prior to that date, commencing on 26 February 2007, less than his allowable income.

21.     There are definitions of “allowable income”  and “ascertained income” (section 1071A-4 of the Act), and “ordinary income”. I note that “ordinary income” is defined in section 1072 of the Act, being that for purposes of this Act, 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, other than a reduction under Division 1A. 

22.     In Secretary, Department of Employment and Workplace Relations v Richards (2007) 98 ALD 310, Collier J discussed the definition and concept of “ordinary income” in the Act.

23. I note further that income is dealt with in section 8(1) of the Act, which leads also to the consideration of what is “exempt income” (section 8(11) of the Act). A consideration of section 8(11) indicates that the lump sum settlement of $150,000 to which Mr Maka became eligible in early 2007 cannot be considered to be “exempt income” pursuant to section 8(11). That is because it is an amount he received which has not been declared an exempt amount by the Secretary, and it is not a periodic amount, and it is not a leave payment or income from remunerative work. I note further that rental income (Mr Maka declared that he receives $260 per week from a rental property), is not “exempt income”.

24. I note further that pursuant to section 17(2) of the Act, the amount of $150,000 Mr Maka received is compensation as it is a payment made to him under a workers compensation insurance scheme in compensation for the injury he suffered at work. Therefore it has to be apportioned over a year (section 1073 of the Act), or as the Secretary calculated, an additional $2,884.61 per week or $8,653.83 for the relevant period related to the application for the HCC.

25.     Accordingly, Mr Maka’s rental income, weekly workers compensation payments, and the apportioned amount of the $150,000 settlement received during the relevant period of eight weeks before 23 April 2007 are income for purposes of the HCC.  The allowable income at the time of Mr Maka’s application, for the eight weeks prior to his application for the HCC on 23 April 2007, was $423 a week or $3,384 total over the eight weeks.

26.     I have accepted the calculations made by the Respondent which are as follows:

·     Weekly compensation payments       $ 4,852.78

·     Rental income  $1,456

·     Section 1073 income  $ 8,653.83

·     TOTAL INCOME  $14,962.61

27.     Even if one of the above payments were to be exempt which I find they are not, Mr Maka’s income for the relevant period in relation to his application for a HCC would exceed the threshold.

28.     In applying the four steps mentioned above, and coming to a conclusion, I have accepted that Mr Maka’s ascertained income for the period of eight weeks ending on the day on which Mr Maka lodged the claim (23 April 2007), is $14,962.61, and that the threshold income for that period was $423 or $3,384 over the eight weeks. Accordingly he is not eligible for the HCC and his application must fail.

CONCLUSION

29.     Mr Maka’s income for the relevant period 26 February – 27 April 2007 exceeded the threshold for the eligibility for a Low Income Health Care Card. There is no discretion in the legislation for me to exercise in that regard. 

30.     Depending on his level of income, Mr Maka may be able to apply again for a HCC.

DECISION

31.     The Tribunal affirms the decision under review.

I certify that the 31 preceding paragraphs are a true copy of the reasons for the decision herein of Ms G Ettinger Senior Member

Signed:         ..........[sgd]......................................................................
  Associate

Date of Hearing12 March 2008

Final submission   31 March 2008

Date of Decision  28 May 2008
Appearance for the Applicant        Self-represented
Solicitor for the Respondent          Mr Mark Nicoletti, Centrelink Legal Services