McGrath; Department of Family and Community Services

DECISION AND REASONS FOR DECISION [2001] AATA 194

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2000/346

GENERAL ADMINISTRATIVE DIVISION       )
           Re      SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES
  Applicant
           And    DANIEL GRAHAM McGRATH
  Respondent

DECISION

Tribunal Mr K L Beddoe (Senior Member)

Date15 March 2001
PlaceBrisbane

Decision      The Tribunal affirms the decision under review.
  (Sgd) K L Beddoe.
  Senior Member

Decision No: 194/2001
CATCHWORDS : Social Security - Youth Allowance - Income Test - Reduction of Youth Allowance - Whether board and lodging under a bursary constitutes "income" within meaning of Social Security Act 1991.

Social Security Act 1991 s 8(1), (8), 10(1), 556, 1067G, 1284
Read v Commonwealth (1988) 78 ALR 655
Re Taxis and DSS (1998) 19 ALD 121
Re Siebel and DSS (1983) 5 ALN 194
DSS and Davies, (1997) 47 ALD 634.

REASONS FOR DECISION

15 March 2001 Mr K L Beddoe (Senior Member)

On 31 January 2000 an Authorised Review Officer decided to affirm a decision to reduce the Youth Allowance payable to the respondent because the monetary value of a bursary should be regarded as income of the respondent. The decision treated the amount of $10,170 attributed to board and lodging as income of the respondent. An amount of $6,780 attributed to tuition was not treated as income and is not in dispute in these proceedings.
The Social Security Appeals Tribunal ("SSAT") set aside the decision under review and substituted a decision to the effect that the $10,170 attributed to board and lodging was not to be included as income for the purposes of the income test. The applicant seeks review of that decision. The SSAT also decided that the allowance should be paid at the away from home rate.
Part 2.11 of the Social Security Act 1991 ("the Act") includes detailed legislation providing for qualification for Youth Allowance and for payment of the Allowance. Section 556 provides that the rate of a person's youth allowance is to be worked out in accordance with the Youth Rate Calculator in section 1067G of the Act.
Section 1067G-A1 includes a requirement to apply the income test using Module H to work out the person's income reduction. Module H works out a person's ordinary income on a fortnightly basis subject to sections 1067G-H2 to 1067G-H25 none of which apply on the facts of this case.
As to what is included in a person's ordinary income depends upon the criteria in definitions in section 8(1) of the Act. That sub-section defines "income" in relation to a person, to mean:

(a)an amount earned derived or received by the person for the persons 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), (7A) or 8 of section 8.
"Income Amount" is defined to mean:
(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.

Maintenance income is defined in section 10(1) in terms that make it not relevant for present purposes.
Section 8(8) defines an "exempt lump" as follows:
"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 10(1A)): 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

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.

Section 8(8)(2a) provides that the value of board and lodging received by a person is not income for the purposes of the Act.
At the hearing Mr Foster represented the applicant Secretary and Ms Heyworth-Smith, instructed by Welfare Rights Centre appeared for the respondent. The documents lodged in the Tribunal pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 were before the Tribunal as the T documents and further were tendered and marked as Exhibit A. No oral evidence was called.
A preliminary issue arose before the Tribunal in relation to a decision made by the applicant on 7 June 2000. That decision was said to have cancelled payment of Youth Allowance with effect from 6 June 2000. That followed a decision by the applicant that the amount of the bursary attributed to tuition should also be treated as income of the respondent. In my view that was a new decision and not a varied decision within the terms of section 1284 of the Act. I came to that view, after submissions by the parties, because the decision made in June 2000 neither varied, set aside or in any way changed the decision of the SSAT made on 15 March 2000, effective January 2000. That decision remains unaltered by the applicant's decision of June 2000 which must be characterised as a new decision relating to a different matter (the tuition component) and effective from a different date. The applicant does not suggest that the June 2000 decision was to have retrospective effect before the date of the decision.
Findings of Fact
On 24 December 1999 the respondent made a claim for payment of Youth Allowance. The respondent's home address was shown as Tooloom NSW [T4].
In conjunction with the claim the respondent provided a copy of a letter dated 21 October 1999, addressed to his mother by the Headmaster, St Joseph's College, Hunters Hill NSW [T5}. The letter advised that the respondent had been offered the Dr Kevin James Cronin Bursary to attend the St Joseph's College in years 11 and 12 commencing year 11 in 2000.
The letter went on to say that the bursary covers boarding and tuition fees for the two years with continuation of the bursary into year 12 dependent on satisfactory conduct and progress.
That offer was accepted and the respondent became a boarder at St Joseph's College at the beginning of the school year 2000. The value of the bursary amounted to $16,950 per annum being $10,170 for boarding fees and $6,780 for tuition fees. There is nothing before me to suggest that these amounts were paid to either the respondent or his mother. If there were any payments it would be reasonable to assume they were made to St Joseph's College by a person or persons not related in any way to the respondent.
Before the SSAT the respondent's mother said that the respondent's local school was a grade 1-12 school (K12). I understand that to mean a typical school found in regional and rural areas with a small number of students spread across the spectrum of primary and secondary education. It is also apparent, and I infer, that St Joseph's College was likely to offer the respondent a course of eduction not available in a K12 school.
The respondent's mother also told the SSAT that she is required to pay $1,125 to St Joseph's annually to cover the cost of books, stationery field trips. If the respondent's needs exceed this amount then she is liable for the extra expenditure. Personal expenditure for clothing, shoes and toiletries is also the mother's responsibility. I so find.
The Applicant's Submissions
The value of the bursary as quantified, is income of the respondent. It is within the defined meaning of "income amount" and is income derived by the respondent. It is also a periodical payment or benefit by way of gift or allowance and therefore within the definition of "income" (s 8(1)).
The income test in section 1067G (module H) applies to reduce Youth Allowance payable because the respondent's ordinary income creates an ordinary income excess resulting in an ordinary income reduction of the allowance.
The applicant points to the decisions in Re Taxis and DSS(1998) 19 ALD 121, Re Siebel and DSS (1983) 5 ALN 194 and DSS and Davies, (1997) 47 ALD 634.
In so far as the SSAT decided that the allowance should be paid at the away from home rate, the applicant does not contest the decision.
The Respondent's Submissions
Section 8(8)(2a) of the Act excludes the value of board and lodging received by a person from the defined meaning of income. The exception is clearly phrased and according to its plain meaning applies on the facts of this case. The respondent receives board at St Joseph's quantified at a certain value. That value is not 'Income".
The bursary may be an "income amount" in the hands of St Joseph's and the bursary trustees in the sense that it is a sum of money paid to the school. However the respondent does not get that money. The benefit that he gets is correctly characterised as board and lodging.
The respondent accepts that the bursary can be characterised as a gift or allowance but submits that it is not a periodical payment. The one payment was made at the beginning of 2000 and, subject to satisfactory performance, a second payment made at the beginning of 2001. As DSS v Davies explains such payments are not periodical payments.
Consideration
The respondent was awarded a bursary which provided for payment of tuition fees and boarding fees at St. Joseph's College. That was not the full cost of the respondent attending St Joseph's. The additional amounts not covered by the bursary are the responsibility of the respondent's mother.
It is not suggested in these proceedings that if the respondent's mother had paid the tuition fees and the boarding fees the amount of the boarding fees would be income of the respondent even though the value of the benefit received by the respondent would be the same as in the circumstances of this case. It seems incongruous that the character of the benefit received can be said to be different because the boarding fees are paid (or waived) by, I presume, the trustees of a fund.
There seems to have been confusion between benefit to the respondent and benefit to his mother. The respondent received the benefit of education at St Joseph's which of necessity included boarding at the school. His mother received the benefit of not being required to pay boarding fees. If there is a financial gain it is not the respondent's. In that regard I will recognise that it is likely the respondent only attended at St Joseph's because he was awarded the bursary. That is perceived to be to his benefit but he does not derive an economic benefit. His reward is his year 11 and year 12 education in academic disciplines he wishes to pursue.
No money comes to the respondent, nor to his mother. There is therefore nothing that can be described as valuable consideration, personal earnings, moneys or profits so as to be an income amount as defined.
Nor in my view is there any periodical payment by way of gift or allowance. As I understand the definition of "income" in section 8(1) of the Act it includes a periodical payment by way of gift or allowance paid to the person or on behalf of the person for that person's benefit.
In Read v Commonwealth(1988) 78 ALR 655 the High Court considered the meaning of income for the purposes of the pension income test in the Social Security Act 1947. The factual basis of that case was different to the present case but certain abiter dicta of the Court is helpful.
The majority judgment, at ALR 659, said that the words "valuable consideration" seem intended to embrace receipts not in money form, but capable of being valued in money terms. The majority cited, with approval, the judgment of Fisher J in the Federal Court, where his Honour identified "board and lodgings, goods, meals, rent free accommodation or provision of gratuitous services" as within the concept of "valuable consideration".
I am satisfied and find that the board supplied by St Joseph's school to the respondent was valuable consideration. However I am not satisfied it was valuable consideration in the hands of the respondent. The school supplied the respondent with board in consideration of the payment of the bursary by the trustees of a fund (if that is the case) or a decision by the school to waive the boarding fees.
Whatever the case there was not a receipt by the respondent capable of being valued in money terms. While the respondent had the benefit of the board and the tuition that went with it they were not capable of being valued in money terms in his hands because there was no monetary value passing between the respondent and St Joseph's School. The relevant fees were paid (or foregone) in circumstances where there was no receipt capable of being valued in money terms. The consideration applicable to the respondent is no different to the consideration applicable to another student whose fees are paid by a parent. It could not be suggested that where the fees are paid by the parent, there is valuable consideration passing between St Joseph's School and the student whose parent had paid the fees. The relevant relationship is the relationship of the fee paying parent to the school.
I am satisfied that the respondent did not receive or derive income from the bursary. Whatever the benefit to the respondent, and I have no doubt there was a very substantial benefit it was not quantifiable as income within the terms of the Act.
In the alternative I am satisfied that the amount attributed to board is within the terms of paragraph 8(8)(za) of the Act if it was correct to say that the respondent received a quantifiable value for board.
The decision of the SSAT was correct and will be affirmed.

I certify that the 35 preceding paragraphs are a true copy of the reasons for the decision herein of Mr K L Beddoe (Senior Member)
Signed:         .....................................................................................
  Associate
Date/s of Hearing  29 August 2000
Date of Decision  15 March 2001
Applicant  Mr Foster, Advocate
Respondent  Ms Heyworth-Smith, Counsel

[2001] AATA 194

15 March 2001

Key Legal Topics

Areas of Law

Social Security Law

Legal Concepts

Income

Social Security Act 1991

Valuable Consideration