Monty and Secretary, Department of Social Services (Social services second review)
[2015] AATA 856
•10 November 2015
Monty and Secretary, Department of Social Services (Social services second review) [2015] AATA 856 (10 November 2015)
Division
GENERAL DIVISION
File Number(s)
2015/1998
Re
Marie Marthe Gilberte Monty
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Mr S. Webb
Date 10 November 2015 Place Sydney The decision under review is affirmed.
............................[sgd]............................................
Mr S. Webb, Member
CATCHWORDS
SOCIAL SECURITY – pension bonus scheme – divestment of assets – preclusion period – no discretion to vary duration of preclusion period – calculation of pension bonus amount – decision affirmed
LEGISLATION
Social Security Act 1991 ss 92P, 93D,93E, 93F, 93G, 93J, 93UA, 1126AA
REASONS FOR DECISION
Mr S. Webb, Member
10 November 2015
Marie Marthe Gilberte Monty registered for the Pension Bonus Scheme (PBS). Following the death of her husband, she sold the family home and gave most of the sale proceeds to her son as a gift. She worked for several years after reaching pension age. When she claimed and was paid Pension Bonus, the amount of the Bonus was significantly less than she was expecting. She is not happy about this and she has pressed her review rights, thus far without success.
There is no dispute that Mrs Monty qualifies for payment of an amount of Pension Bonus. The issue for determination is the amount of Pension Bonus she is entitled to be paid.
Facts
On 3 April 2008 Mrs Monty contacted Centrelink. The notes of her contact record that “cus already has pension bonus reg fm. Cus will discuss with FIS before deciding when to claim pension, as she will be continuing to work 4days pw”.[1]
[1] T29 folio 193.
On 14 April 2008, Mrs Monty reached age pension age. At that time, she was in ongoing employment by Riette Export Pty Ltd (Riette).
On 7 May 2008, Mrs Monty attended a Centrelink office and spoke with an officer of the Financial Information Service. The notes of this consultation set out the content of matters discussed. It appears that Ms Monty was “Issued PDB [Pensions Deferred Bonus] book and 1/1/08 changes fact sheet”. The officer recorded the following information about Mrs Monty’s assets – “She is a HO [home owner] and no other assets besides $75K super, $18K car and $10K HPE”. [2]
[2] T29 folio 193.
On 28 May 2008, Mrs Monty lodged an SA319 form – a registration form for the pension bonus scheme.[3] Unfortunately, for reasons that have not adequately been explained, this document is not in evidence. Nonetheless, it appears that Mrs Monty was registered for the pension bonus scheme from 14 April 2008.
[3] T29 folio 192.
Documents filed after the hearing reveal that on 12 August 2008, Mrs Monty sold her house for $802,000.[4]
[4] Secretary’s (amended) Statement of Fact, Issues and Contentions, 25 September 2015, Annexure A, page 2.
On 7 October 2008, she deposited $600,000 into her son’s bank account.[5]
[5] Bank statement filed on 7 September 2015.
On 31 March 2009, Centrelink notified Mrs Monty that she was still registered for the PBS.[6] Mrs Monty wrote to Centrelink, enclosing a number of payslips and, it appears, asking for information about the PBS. On 14 April 2009, Centrelink sent her a “”Pension Bonus Scheme RT002” booklet and “Financial Information Service FIS002” sheet”.[7] On 22 April 2009, a Centrelink officer recorded that “Centrelink website “How much bonus will I get?” fact sheet sent to CUS as CUS has indicated still unclear on Pension Bonus Scheme assessment method”.[8] On the same day, Centrelink wrote to Mrs Monty, setting out information about her PBS membership and accrual.[9]
[6] T3A folio 42.
[7] T4 folio 43.
[8] T29 folio 192.
[9] T5.
On 31 August 2009 and 28 September 2009, Centrelink wrote to Mrs Monty about changes to the PBS.[10] Further letters were sent to Mrs Monty about her continuing PBS membership on 31 March 2010, 31 March 2011, 2 April 2012 and 2 April 2013.[11]
[10] T6 and T7.
[11] T8, T9, T10 and T11.
Centrelink records indicate that Mrs Monty contacted Centrelink about the PBS on 12 October 2009, 2 June 2010[12] and 21 April 2012.[13]
[12] T29 folio 191.
[13] T29 folio 190.
On 4 February 2014, Mrs Monty’s full-time employment by Riette came to an end.[14]
[14] T23 folio 144.
On 5 February 2014, she commenced part-time work with SPX Traders Pty Ltd. This ended on 29 May 2014.[15]
[15] T24 folio 166.
On 1 April 2014, Mrs Monty commenced employment with Howard Exports. This employment ceased on 30 May 2014.[16]
[16] T23 folio 143.
On 19 March 2014, Mrs Monty signed a Claim for Age Pension and Pension Bonus form[17] and an Income and Assets form.[18] In response to the question ‘In the period from 5 years before your registration date for the Pension Bonus Scheme until now, have you given away any money or other assets, or sold assets for less than their market value?’, Mrs Monty ticked No.[19] And in response to the question ‘In the last 5 years have you (and/or your partner) given away, or sold for less than their market value, or surrendered right to any cash, assets, property or income?’, Mrs Monty ticked No.[20]
[17] T12 folio 74.
[18] T13 folio95.
[19] T12 folio 78.
[20] T13 folio 92.
In an undated Pension Bonus claim form, she again ticked No to the question ‘In the period from 5 years before your registration date for the Pension Bonus Scheme until now, have you given away any money or other assets, or sold assets for less than their market value?’.[21] I note that the words “before your registration date” have been underlined and annotated with “from 14.4.2003”. Mrs Monty told me that the annotation was not made by her, but by her accountant, Antonio Tisano. According to Mrs Monty, Mr Tisano completed the forms and she signed them without reading them. She told me that Mr Tisano was fully aware that she had given her son $600,000 from the proceeds from selling her house. She could not explain why the questions about giving away money were answered in the negative.
[21] T22 folio 113.
On 7 April 2014, Mrs Monty informed Centrelink that she had been working in employment from 5 February 2014, and that she would lodge a claim when she ceased employment.[22]
[22] T17.
On 12 May 2014, she wrote to Centrelink requesting a new claim form.
On 19 June 2014, Mrs Monty signed a fresh Claim for Age Pension and Pension Bonus form.[23] In this form, her response to the question ‘In the period from 5 years before your registration date for the Pension Bonus Scheme until now, have you given away any money or other assets, or sold assets for less than their market value?’ is obscured by a note – “Question 15 Not sell, transfer of moneys for son”.[24] Mrs Monty informed me that she did not write the note.
[23] T23 folio 136.
[24] T23 folio 140.
On 30 June 2014, Mrs Monty sent an Income and Assets form to Centrelink “completed with the assistance of Antonio Tsitano (Accountant)”.[25] In this form, she ticked No to the question ‘In the last 5 years have you (and/or your partner) given away, or sold for less than their market value, or surrendered right to any cash, assets, property or income?’.[26]
[25] T24 folio 161.
[26] T24 folio 157.
On 24 June 2014, Jean-Max Didier Monty informed Centrelink that “… in 2008 when my mother Gilberte Marie Monty sold her property in … Lilyfield, 2040, I got a gift of $600,000…”.[27]
[27] T24 folio 167.
On 10 July 2014, Centrelink notified Mrs Monty of her Age Pension and payment of $2,594.60 Pension Bonus.[28]
[28] T25 folio 169.
Mrs Monty applied for review of the Pension Bonus decision.
The decision was affirmed by an Authorised Review Officer on 11 September 2014[29] and by the Social Security Appeals Tribunal on 19 March 2015.[30]
[29] T28.
[30] T2.
Issues
There is no dispute arising from Mrs Monty’s registration for the PBS or in respect of the number of years in which she was gainfully employed and working more than 960 hours per year thereafter.
The sole issue for determination is the correct amount of Mrs Monty’s Pension Bonus payment.
Correct amount of Pension Bonus
Mrs Monty told me that she has worked diligently for over 40 years. She lost her job well after reaching Pension age through no fault of her own, and she has not been paid all of her work entitlements. She explained that her life has been difficult since her husband died and she has moved house several times, staying with family and friends. She could not afford to make necessary repairs on the house that was her marital home, so she sold it. She gave money to help her (then) newly married son with a mortgage, and she should not be penalised for doing so.
Mrs Monty says that she was not given and she did not receive Centrelink’s Pension Bonus Scheme booklet (the PBS booklet) and nobody told her that disposing of an asset might affect the level of her PBS payment. In her submission, she was not provided with sufficient information to make a properly informed decision about giving a large amount of money to her son – had she known the effect of doing so, she would not have made the gift. She maintains that she relied on the advice of her accountant and she should not be penalised if the advice was faulty or wrong.
These matters do not bear on the proper calculation of the amount of Pension Bonus that is payable.
The amount of Pension Bonus is to be calculated under relevant provisions of the Social Security Act 1991 (the Act) –
93D How to calculate the amount of pension bonus
(1) To calculate the amount of a person’s pension bonus:
(a) work out which of the person’s bonus periods count as qualifying bonus periods (see section 93E);
(b) work out the person’s overall qualifying period (see section 93F);
(c) work out the person’s pension multiple (see section 93G);
(d) work out the person’s annual pension rate (see section 93H);
(e) apply the appropriate formula in section 93J.
Qualifying bonus periods
Under s 92T, full-year and part-year bonus periods are periods in which the person satisfies the work test and has ‘accruing membership’ of the PBS. The term ‘accruing membership’ is given meaning by s 92N – a person’s membership of the pension bonus scheme as a particular time is accruing unless the person’s membership is ‘non-accruing’ or post-75 at that time. A person cannot accrue bonus periods while their membership of the PBS is ‘non-accruing’.
A person’s membership of the PBS is taken to be ‘non-accruing’ if a ‘disposal preclusion period’ applies under s 92P –
92P Non-accruing membership—preclusion periods
Disposal preclusion period
(1) For the purposes of this Part, if a person is subject to a disposal preclusion period at a particular time when the person is a member of the pension bonus scheme, the person’s membership of the scheme is non-accruing at that time.
After 1 July 2002, ‘disposal preclusion period’ is a period calculated under s 93UA –
93UA Disposal preclusion period—disposals on or after 1 July 2002
A person is subject to a disposal preclusion period throughout any period for which an amount is included in the value of the person’s assets under section 1126AA, 1126AB, 1126AC, 1126AD or 1126E (so far as section 1126E relates to section 1126AA, 1126AB, 1126AC or 1126AD).
Only s 1126AA is of present relevance, as follows –
1126AA Disposal of assets in income year—individuals
Disposals to which section applies
(1) This section applies to a disposal (the relevant disposal) on or after 1 July 2002 of an asset by a person who is not a member of a couple at the time of the relevant disposal.
Increase in value of assets
(2) If the amount of the relevant disposal, or the sum of that amount and the amounts (if any) of other disposals of assets previously made by the person during the income year in which the relevant disposal took place, exceeds $10,000, then, for the purposes of this Act, the lesser of the following amounts is to be included in the value of the person’s assets for the period of 5 years starting on the day on which the relevant disposal took place:
(a) the amount of the relevant disposal;
(b) the amount by which the sum of the amount of the relevant disposal and the amounts (if any) of other disposals of assets previously made by the person during the income year in which the relevant disposal took place, exceeds $10,000.
As can be seen, if an asset with a value greater than $10,000 is disposed of, provision is made for the disposed asset to be included in the value of the person’s assets for the period of five years.
It is quite clear, having regard to s 1123 and s 1124 which set out provisions addressing the disposal of assets, where a person gives away more than $10,000 for no consideration, the giving is within the meaning of disposal of an asset, and the amount of the disposal is the value of the asset deprived. Under s 1126AA, the amount in excess of the $10,000 disposal limit must be included in the value of the person’s assets for five years from that date.
As Mrs Monty gave her son $600,000 for no consideration on 7 October 2008, and in so doing she diminished the value of her assets, it follows that $590,000 must be included in the value of her assets for five years from that date, until 6 October 2013. This is so even though the $600,000 may have been transferred to her son directly from the proceeds of the sale of her previous home – the principal home exclusionary provision under s 1118 does not assist Mrs Monty in the particular circumstances.
The period from 7 October 2008 to 6 October 2013 is a ‘disposal preclusion period’ for the purposes of the PBS provisions. During this period, Mrs Monty’s membership of the PBS is taken to have been non-accruing. For this reason, even though she may have met the work test under s 92U during each full year she worked after reaching Pension age, her continuing employment during the disposal preclusion period does not accrue to bonus periods under s 92T for the purpose of calculating the amount of her Pension Bonus.
Mrs Monty has accruing membership of the PBS from 14 April 2008 to 6 October 2008 and from 7 October 2013 to 11 June 2014. Under s 92R, her accruing membership is counted continuously, despite the intervening period of non-accruing membership from 7 October 2008 to 6 October 2013. This means that she has two bonus periods, a full-year from 14 April 2008 to 13 April 2014 (excluding the non-accruing membership period) and a part-year from 14 April 2014 to 11 June 2014 (she worked more than the pro rata number of hours worked out under s 92V).
Overall qualifying period
Under s 93F, Mrs Monty’s overall qualifying period commences on the day her registration took effect, 14 April 2008, and finishes on the day she claimed Pension Bonus and Age Pension, 11 June 2014. But it does not include her non-accruing membership during the disposal preclusion period from 7 October 2008 to 6 October 2013.
This equates to 1.162 years after rounding under s 93D(2).
Pension multiple
Mrs Monty’s pension multiple is to be calculated under s 93G using the following formula –
0.094 x No. of years in the person’s overall qualifying period
This equates to 0.109[31]: 0.094 x 1.162.
[31] Calculated to three decimal places under s 93D(2).
Annual pension rate
Mrs Monty’s annual pension rate for present purposes is worked out under s 93H(2) with reference to step 4 and step 11 of the method statement set out in s 1064-A1.
I have examined the Secretary’s calculation and I am satisfied that it is correct. The maximum payment rate for Mrs Monty as of 12 June 2014 is $19,916. The amount derived from the table in s 93H(4), as adjusted relative to the Consumer Price Index, is $569.40.
On this basis, Mrs Monty’s provisional annual pension rate for Pension Bonus purposes is $20,485.40.
Amount of Pension Bonus
The amount of Mrs Monty’s Pension Bonus is calculated using the formula set out in s 93J(1) –
Annual pension rate x pension multiple x No. of years in the person’s overall qualifying period
The calculation is as follows –
$20,485.40 x 0.109 x 1.162 = $2,594.60
Thus it follows that the amount of Mrs Monty’s Pension Bonus is $2,594.60.
Conclusion
The correct amount of Mrs Monty’s Pension Bonus is substantially less than she was expecting.
There is no discretion that would permit a different calculation or method, or that would allow a decision-maker some flexibility in the particular circumstances of any case. For this reason, even if I were to accept that Mrs Monty was not given sufficient information about the asset disposal provisions of the Act (and I make no such finding), or that she was given incorrect information or advice by her accountant, as she alleges, it would not make any difference to the result. Once the fact of her disposal of a substantial asset is established, the disposal preclusion provisions apply without any flexibility or latitude.
To my mind, inflexible provisions of this kind underscore the desirability of Centrelink providing accurate, timely information to claimants, including prospective claimants such as Mrs Monty in March 2008. This is important to assist claimants who may not have access to professional advice to make properly informed decisions about actions or conduct that may bear heavily on questions of eligibility and on the calculation of the quantum of entitlements that may be payable if a claim is granted.
The available records suggest that Centrelink provided Mrs Monty with relevant information when she enquired about the Pension Bonus Scheme. I have perused the PBS booklets Centrelink published in 2008 and in 2009. These documents set out information about the asset disposal rules. Had Mrs Monty read these booklets, which the Centrelink records suggest she was given or were sent to her address, she would have found information about the asset test and the asset deprivation rules. Furthermore, if Mrs Monty and her accountant had completed the Pension Bonus claim forms correctly disclosing the gift of $600,000 to her son, she would have been informed earlier about the effect of that gift on the calculation of her Pension Bonus.
Mrs Monty staunchly denies being given information about the asset disposal preclusion period under the PBS. Even if Ms Monty’s assertion is correct, it does not affect the result of these proceedings.
Decision
The decision under review is affirmed.
I certify that the preceding 55 (fifty -five) paragraphs are a true copy of the reasons for the decision herein of Mr S. Webb, Member ........................[sgd]................................................
Associate
Dated 10 November 2015
Date(s) of hearing 28 August 2015 Date final submissions received 8 October 2015 Applicant In person Solicitors for the Respondent Department of Human Services
Key Legal Topics
Areas of Law
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Social Security Law
Legal Concepts
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Pension Bonus Calculation
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Disposal of Assets
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Preclusion Period
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