Peek and Repatriation Commission
[2006] AATA 947
•8 November 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 947
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W2006/33
VETERANS APPEALS DIVISION ) Re IAN DENYS PEEK Applicant
And
REPATRIATION COMMISSION
Respondent
DECISION
Tribunal Brigadier A G Warner Date8 November 2006
PlacePerth
Decision Tribunal affirms the decision of a senior delegate of the Repatriation Commission dated 4 January 2006. .......[Sgd A G Warner]...........
Member
CATCHWORDS
VETERANS’ AFFAIRS – veterans’ entitlements – service pension - royalty payments – income – exempt lump sum – periodic amount – calculation of income – decision under review affirmed
Veterans’ Entitlements Act 1986 (Cth) ss5H(1), ss5H(12), ss5K(1A), s 46A
REASONS FOR DECISION
8 November 2006 Brigadier A G Warner Introduction
1. This is an application to the Administrative Appeals Tribunal (“the Tribunal”) by Ian Denys Peek (“the applicant”) for a review of the 4 January 2006 decision of a senior delegate of the Repatriation Commission which affirmed an earlier decision by the Repatriation Commission dated 13 October 2005. That decision involved a reassessment of the applicant’s service pension, on the basis that royalty payments received by the applicant from sales of his book “One Fourteenth of an Elephant” constituted income.
The Issue and the Tribunal’s Determination
2. The issue is whether the Tribunal is reasonably satisfied that the applicant’s royalty payments constitute “income” as defined in subsection 5(H)(1) of the VE Act.
3. For the reasons which follow the Tribunal has determined that the applicant’s royalty payments do constitute “income” (as so defined).
Background
4. On the basis of the “T Documents” lodged by the respondent, in accordance with section 37 of the Administrative Appeals Act 1975 (Cth), the Tribunal finds the background facts to be as follows.
5. The applicant has received a service pension since March 2004.
6. The applicant’s wife died on 25 April 2004.
7. On 4 August 2004 the applicant advised the Department of Veterans’ Affairs that his book “One Fourteenth of an Elephant” had been published by Pan Macmillan Australia Pty Ltd. (T3 page 10) He received a royalty payment of $43,341.04 on 30 September 2003 and another payment of $12,087.09 in March 2004.
8. On 18 August 2004, a delegate of the Repatriation Commission continued the applicant’s service pension at the maximum rate. (T5 page 14) The delegate noted that this was a post-bereavement review. The royalty payments were received before the death of the applicant’s wife and the file was to be referred to the overpayment unit for calculation of any overpayment.
9. On 30 October 2004, the applicant advised the Department of Veterans’ Affairs that he had received payment of $5,092.79 for the publishing rights of his book in the United Kingdom and a royalty cheque of $27,940.22 for the period January-June 2004. (T6 page 17)
10. On 5 November 2004 a delegate of the Repatriation Commission continued the applicant’s service pension at the maximum rate. (T7 page 18)
11. On 11 November 2004, the delegate discussed the royalty payments with the applicant by telephone. (T8 page 22) The applicant advised that the Australian Taxation Office had classified the royalties as coming from a hobby rather than as earnings and as such were not taxable, and that his accountant had told him that the royalties would not affect his service pension.
12. On 11 November 2004, the delegate spoke with the applicant’s accountant by telephone and was told that there was no written Australian Taxation Office determination concerning the royalty payments. (T9 page 23)
13. On 11 November 2004, the delegate reassessed the applicant’s service pension, treating the royalty payments as income. (T10 page 24) The amount of service pension payable to the applicant was calculated to be nil and an overpayment of $839.80 was raised.
14. On 17 November 2004 the applicant wrote to the Department of Veterans’ Affairs. (T11 page 28) His letter was treated as an application for review of the delegate’s decision by a senior delegate of the Repatriation Commission.
15. On 17 December 2004 a senior delegate of the Repatriation Commission affirmed the delegate’s decision. (T17 page 35)
16. On 3 May 2005, the applicant advised the Department of Veterans’ Affairs of receipt of a royalty payment of $1157.19 for the period July-December 2004 and a contingency sum of $5000.00 previously withheld from royalty payments. (T20 page 41).
17. On 6 May 2005, a delegate of the Repatriation Commission determined that the applicant’s income from royalties continued to exceed the maximum amount under the income test and that the amount of service pension payable to the applicant continued to be nil. (T22 page 43).
18. On 7 October 2005, the applicant advised the Department of Veterans’ Affairs that he had received a royalty cheque for $7087.01. (T26 page 52)
19. On 13 October 2005, a delegate of the Repatriation Commission reassessed the applicant’s service pension, reinstating it with the royalties treated as income.
20. On 21 November 2005, the Department of Veterans’ Affairs received a letter dated 1 November 2005 from the applicant to the Honourable Julie Bishop, MP, (T31 page 65) and treated it as an application for review of the delegate’s decision. (T33 page 68).
21. On 4 January 2006, a senior delegate of the Repatriation Commission affirmed the delegate’s decision. (T35 page 70)
22. On 17 February 2006, the applicant applied for a review by the Administrative Appeals Tribunal.
23. On 30 October 2004, the applicant advised the Department of Veterans’ Affairs that he had received payment of $5,092.79 for the publishing rights of his book in the United Kingdom and a royalty cheque of $27,940.22 for the period January-June 2004. (T6 page 17)
24. On 5 November 2004 a delegate of the Repatriation Commission continued the applicant’s service pension at the maximum rate. (T7 page 18)
25. On 11 November 2004, the delegate discussed the royalty payments with the applicant by telephone. (T8 page 22) The applicant advised that the Australian Taxation Office had classified the royalties as coming from a hobby rather than as earnings and as such were not taxable, and that his accountant had told him that the royalties would not affect his service pension.
26. On 11 November 2004, the delegate spoke with the applicant’s accountant by telephone and was told that there was no written Australian Taxation Office determination concerning the royalty payments. (T9 page 23)
27. On 11 November 2004, the delegate reassessed the applicant’s service pension, treating the royalty payments as income. (T10 page 24) The amount of service pension payable to the applicant was calculated to be nil and an overpayment of $839.80 was raised.
28. On 17 November 2004 the applicant wrote to the Department of Veterans’ Affairs. (T11 page 28) His letter was treated as an application for review of the delegate’s decision by a senior delegate of the Repatriation Commission.
29. On 17 December 2004 a senior delegate of the Repatriation Commission affirmed the delegate’s decision. (T17 page 35)
30. On 3 May 2005, the applicant advised the Department of Veterans’ Affairs of receipt of a royalty payment of $1157.19 for the period July-December 2004 and a contingency sum of $5000.00 previously withheld from royalty payments. (T20 page 41).
31. On 6 May 2005, a delegate of the Repatriation Commission determined that the applicant’s income from royalties continued to exceed the maximum amount under the income test and that the amount of service pension payable to the applicant continued to be nil. (T22 page 43)
32. On 7 October 2005, the applicant advised the Department of Veterans’ Affairs that he had received a royalty cheque for $7087.01. (T26 page 52)
33. On 13 October 2005, a delegate of the Repatriation Commission reassessed the applicant’s service pension, reinstating it with the royalties treated as income.
34. On 21 November 2005, the Department of Veterans’ Affairs received a letter dated 1 November 2005 from the applicant to the Honourable Julie Bishop, MP, (T31 page 65) and treated it as an application for review of the delegate’s decision. (T33 page 68)
35. On 4 January 2006, a senior delegate of the Repatriation Commission affirmed the delegate’s decision. (T35 page 70)
36. On 17 February 2006, the applicant applied for a review by the Administrative Appeals Tribunal.
Relevant Legislation
37. The Veterans’ Entitlement Act 1986 refers:
“Income” for the purposes of service pension assessment is defined in subsection 5H(1), which reads:
“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).”
38. Subsections (4) and (5) are concerned with home equity conversions and are not relevant. Subsection (8) provides that certain amounts are excluded as income for the purposes of the Act. Those amounts include an extensive range of sources such as payments under the Act, emergency relief or like assistance, payments made by a State or Territory for the purpose of assisting people to purchase or build their own homes, and return on investments in superannuation or approved deposit funds. Subsection (8) also is not relevant.
39. The Act provides for exemptions to the concept of income. Subsection 5H(12) reads:
“An amount received by a person is an exempt lump sum if:
(a)it is not a periodic amount (within the meaning of subsection 5K(1A)); and
(b)it is not income from remunerative work undertaken by the person; and
(c)it is an amount , or one of a class of amounts, that the Commission determines to be an exempt lump sum.”
40. A “periodic amount” is defined in subsection 5K(1A) which reads:
“….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.”
41. Section 46A prescribes the calculation of income for the purposes of determining the amount of service pension payable.
The Evidence
42. The evidence before the Tribunal comprised the T Documents. The applicant, who was not represented, relied on his letter attached to his Application for Review of Decision dated 14 February 2006 (T1 pages 5-6) and did not give evidence. He did, however, make oral submissions.
43. The applicant presented as open, honest and genuine in his view that the Department of Veterans’ Affairs had not considered his position and argument adequately. The Tribunal is of the opinion that the Department had treated him with respect, understanding and consideration.
Consideration
44. The applicant’s primary contention is that his royalty payments were the result of work over a number of years, as a hobby only, and never intended as a source of income or wages. He contends that the payments should be treated as assets rather than income. In the hearing he said:
“….the royalties from my book were not the result of any sort of employment. They were purely my own effort, my own intellectual property. And money was collected on my behalf because I was not in a position to do so and I was paid out of that. This is my own money being collected for me and passed onto me. In no way was it a wage or a commercial or any other form of remuneration. It was my own money. And Veterans’ Affairs have regarded it as income, whereas I consider it is an asset.”
45. In this case, the payments to the applicant are royalties in the ordinary sense, payments to an author for copies of an original work sold. The royalties accrue from a contract between the applicant and Pan MacMillan Australia Pty Ltd and are paid directly to him. The Tribunal is satisfied that the royalty payments constitute “income” within the meaning of subsection 5H(1) of the Act and cannot be construed to be assets. It is sufficient that the payments come within one of the elements of the definition to be regarded as “income” for the purposes of the Act.
46. It is now necessary to consider this income with respect to the exemptions allowed under subsection 5H(12) and the definition of “periodic amount” at subsection 5K(1A). Mr Peek has received royalty payments related to the publication and sale of his book since September 2003. The Tribunal finds that these payments are clearly periodic under the 5K(1A) definition, they are income from remunerative work, and the Commission has not determined them to be “exempt lump sums”. For the payments in this case to be regarded as “exempt lump sums”, they would need to satisfy the three elements of subsection 5H(12). They do not meet any element. Consequently, the Tribunal is satisfied that the royalty payments received by the applicant are not “exempt lump sums”.
47. The applicant’s secondary contention follows his understanding of his taxation position with respect to his royalty payments. He contends that as the Australian Taxation Office regards him as exempt from tax on his royalties because the writing of his book was in the nature of a hobby, the Department of Veterans’ Affairs should treat him accordingly. The applicant said:
“I have been told at one earlier point in this by Veterans’ Affairs that the word “income” with Veterans’ Affairs does not have the same meaning as the word “income” with the Tax Office and, therefore, I can’t consider them as a word with a single meaning. Well, that may be so, but I think that the Taxation Office decision should carry enough weight to influence the Veterans’ Affairs.”
48. The Tribunal’s view is that it is not persuaded by this argument. The Tribunal can only consider the meaning of “income” in the unique context of the Veterans’ Entitlement Act. It would be inappropriate to apply meanings from other statutes or jurisdictions.
49. Having determined that the applicant’s royalty payments are “income”, the Tribunal now turns to the calculation of income on a fortnightly basis for the purpose of deriving the service pension payable. This element of the decision under review was not contested in the hearing before me, but is included here for completeness.
50. Fully appreciative that the hearing before the Tribunal was de novo, it is useful to set out the relevant part of the Statement of Reasons by the Senior Delegate of the Repatriation Commission dated 4 January 2006 (T2 page 9). That part reads:
“I have had regard to section 46A of the Act, which provides for circumstances such as in this case. Which is, that a fortnightly amount of income is calculated simply by dividing the royalty payments by 26, and this is treated as fortnightly income for the period of 12 months commencing on the day on which the payment was received.
This is the method used by the Delegate when she calculated the amount of income for service pension purposes. This is the correct approach, and the Tribunal is satisfied that the applicant’s earnings have been correctly assessed for service pension purposes.”
51. The Tribunal accepts that the correct methodology has been used in the calculation of the applicant’s service pension.
Finding
52. The Tribunal finds that the royalties received by the applicant constitute “income” as defined in subsection 5H(1) of the VE Act.
Decision
53. For the above reasons the Tribunal affirms the decision of a senior delegate of the Repatriation Commission dated 4 January 2006.
I certify that the fifty three (53) preceding paragraphs are a true copy of the reasons for the decision herein of
Signed: ..........[Sgd S da Motta]....................................
AssociateDate/s of Hearing 24 August 2006
Date of Decision 8 November 2006
Representative for the Applicant Self RepresentedRepresentative for the Respondent Mr C Ponnuthurai, Advocate
Department of Veterans Affairs
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