Miller and Repatriation Commission

[2000] AATA 972

DECISION AND REASONS FOR DECISION [2000] AATA 972

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No V00/619

VETERANS'     APPEALS       DIVISION         )          
           Re      ALFRED ERNEST MILLER         
  Applicant
           And    REPATRIATION COMMISSION
  Respondent

DECISION

Tribunal       Mrs Joan Dwyer, Senior Member            

Date6 November 2000

PlaceMelbourne

Decision      The Tribunal affirms the decision under review.
  (Sgd) Joan Dwyer
  Senior Member
VETERANS' AFFAIRS – assets test – retirement village residents – entry contribution less than difference between home owner and non-home owner asset value limits – entry contribution required to be included as an asset – decision affirmed

REASONS FOR DECISION

6 November 2000   Mrs Joan Dwyer, Senior Member   

1. This is an application for review under s 175(2) of the Veterans' Entitlements Act 1986 ("the Act") of a decision of the Repatriation Commission, made 12 April 2000 and affirmed 19 May 2000, reducing the rate of service pension payable to Canon and Mrs Miller from $221.60 to $193.50 per fortnight. That reduction is a result of including the amount of $77,000 paid by Canon and Mrs Miller on entry into a retirement village as part of their assets. That treatment of the entry contribution is required by the Act and thus the decision must be affirmed.

2. Canon Miller appeared. He explained why he was unhappy that a non-refundable entry contribution of $77,000 had to be maintained as an asset for the purposes of calculating the rate of service pension payable to him and his wife under the Act.

3. Mr Douglass, an advocate with the Department of Veterans' Affairs, appeared for the Repatriation Commission.  In his Statement of Facts and Contentions he set out the relevant statutory provisions.  During the hearing he explained the background to the relevant legislative provisions and clarified some issues for Canon Miller and the Tribunal.

4. There is no dispute about the facts.  In early 1999 Canon and Mrs Miller became residents of the Old Colonists' Association of Victoria ("the Association").  To do so they were required to make a "non-refundable donation to the funds of the Association" of $77,000.  They paid that amount out of the proceeds of the sale of their former home.  First they moved to a unit at Braeside Park, Berwick, later they moved to a unit in Leith Park Retirement Village at Eltham North.  They occupy their unit rent free but they pay a maintenance charge which is currently $126.00 fortnightly.

5. The assets test under the Act applies differently to home owners and non-home owners. The Act makes specific provision for the treatment of retirement village residents. In summary, if their entry contribution is less than the difference in asset value limit for home owners and non-home owners then they are treated as non-home owners. If it is more than that difference they are treated as home owners. Mr Douglass explained that the asset value limit for home owners at the relevant time was $351,000 (T docs p12). Home owners have a lower asset value limit but their home is disregarded in calculating their assets. The delegate, in the decision of 19 May 2000, said there was an $90,000 difference in allowable assets for home owners and non-home owners at the relevant time which was the time when the contribution was paid. Canon and Mrs Miller are treated as non-home owners but the entry contribution of $77,000 is taken to be an asset in the calculation of their rate of pension.

6. That is the effect of s 52R of the Act if it applies to Canon and Mrs Miller. It provides as follows:

   52R  Members of couples

   Entry contribution equal to or below extra allowable amount

   . . .

   (3)       Where:

   (a)     this section applies to a special resident; and

   (b)the person's entry contribution was equal to or less than the extra allowable amount;

   then, for the purposes of this Act:

   (c)the person is to be taken not to have a right or interest in relation to the person's principal home; and

   (d)the person's assets are to be taken to include an asset the value of which is equal to the amount of the person's entry contribution; and

   (e)subsection 52(1) and section 52H do not apply to an asset that the person is, because of paragraph (d) of this subsection, to be taken to have.

Sub-section 52(1) of the Act is the provision which provides for a principal home to be disregarded in calculating the value of a person's assets. Section 52H of the Act is the section providing that where there has been a disposal of assets, in certain circumstances those assets are maintained for five years for assets test purposes.

1. In order to consider whether s 52R(3) applies to Canon and Mrs Miller it is necessary to consider a number of definitions. They are "special residents" as that term is defined in sub-section 5MC(3) of the Act. That definition provides:

   . . .

   (3)       A person is a special resident if the person is:

   (a)a retirement village resident; or

   . . .

The terms "retirement village" and "retirement village resident" are defined in s 5M as follows:

. . .

(3)Premises constitute a retirement village for the purposes of this Act if:

(a)the premises are residential premises; and

(b)accommodation in the premises is primarily intended for persons who are at least 55 years old; and

(c)        the premises consist of:

(i)        one or more of the following kinds of accommodation:

(A)self-care units;

(B)serviced units;

(C)hostel units; and

(ii)communal facilities for use by occupants of the units referred to in subparagraph (i)

. . .

(5)A person is a retirement village resident if the person's principal home is in a retirement village.

1. Canon Miller does not dispute that the retirement villages in which he and Mrs Miller have lived are "retirement villages" as defined in s 5M(3).  Thus Canon and Mrs Miller are "special residents".  The amount of their "entry contribution" is ascertained by reference to s 52M(1)(b):

   (1)     A special resident's entry contribution is:

   …

   (b)if the resident is a member of a couple, shares the resident's principal home with the resident's partner and is not a member of an illness separated couple—an amount equal to 50% of the resident's individual residence contribution and of the partner's individual residence contribution; or

The term "individual residence contribution" is defined in s 52M(1C)(a):

(1C)For the purposes of this Division, the individual residence contribution is:

(a)for a retirement village resident—the total amount paid, or agreed to be paid, for the resident's current right to live in the retirement village; and

The term "extra allowable amount" is so far as relevant explained in s 52N(2)(c) which provides:

(2)If a retirement village resident became entitled to take up residence in the retirement village on or after 12 June 1989, the resident's extra allowable amount is:

. . .

(c). . . the amount that, as at the time when the person becomes entitled to take up that residence, is the difference between the partnered property owner AVL and the partnered non-property owner AVL.

The letters "AVL" stand for asset value limit.

1. Thus it is clear that the Act requires that the entry contribution of $77,000 made by Canon and Mrs Miller when they became retirement village residents, must be included in their assets for calculation of the rate of pension payable to them.

2. Canon Miller submitted that as his entry contribution has no refund or resale value it is not really an asset.  However he agreed that it does have value in that it has provided him and his wife with rent free accommodation for the rest of their lives.  He submitted that perhaps the $77,000 should be amortised so as to reduce each year, taking into account figures as to expected life span and thus remaining value.  There may be something to be said for that suggestion but it is not reflected in the legislation.

3. The decision under review must be affirmed.

   I certify that the 11 preceding paragraphs are a true copy of the reasons for the decision herein of Mrs Joan Dwyer, Senior Member

   Signed:         Grace Carney
     Associate

   Date/s of Hearing  6 November 2000
   Date of Decision  6 November 2000
   Counsel for the Applicant        Nil
   Solicitor for the Applicant         Nil - Self Represented
   Counsel for the Respondent    Nil
   Solicitor for the Respondent    Nil
   Departmental Advocate           Mr R Douglass