Perosh and Secretary, Department of Social Services (Social services second review)

[2017] AATA 44

Perosh and Secretary, Department of Social Services (Social services second review) [2017] AATA 44 (24 January 2017)

Division:GENERAL DIVISION

File Number:           2016/3679

Re:Tony Perosh

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Dr L Bygrave, Member

Date:24 January 2017

Place:Sydney

The decision under review is affirmed.

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

Dr L Bygrave, Member

SOCIAL SECURITY – age pension – rate of pension – change in applicant’s marital status – date of effect of favourable determination – where an applicant disposes of an asset – where the disposal directly or indirectly diminishes the value of the asset – where the applicant received no consideration for the diminution in value of the asset – where the amount constitutes a deprived asset – decision affirmed

Social Security Act 1991 (Cth)

Social Security (Administration) Act 1999 (Cth)

REASONS FOR DECISION

Dr L Bygrave, Member

24 January 2017

INTRODUCTION

1. The applicant, Mr Tony Perosh, was granted the age pension from 28 March 2002 pursuant to the provisions of the Social Security Act 1991 (Cth) (the Act). At this time, Mr Perosh was paid the rate of age pension as a member of a couple; he was married to his wife, Ms Angela Perosh, and they lived together in a property at Concord West.

2. On 27 March 2015 and 31 March 2015, Mr Perosh obtained advice from the Financial Information Service (FIS) at Centrelink regarding marriage separation, selling his home and buying another, pension income and assets tests, thresholds, limits and deeming.[1]

   [1] Exhibit T1 at T9, pp 90-91.

3. On 2 June 2015, Mr Perosh attended a Centrelink office. The Centrelink records stated he decided not to proceed with his booked FIS appointment at this stage but would ‘make an appointment upon finalising the sale of his house in a month’s time’.[2]

   [2] Exhibit T1 at T9, p 92.

4. Mr Perosh separated from his wife on 2 July 2015 and submitted a MOD S (Separation details) form to Centrelink on 3 December 2015.[3] This form and attached documents showed that:

   (a)Mr and Ms Perosh had sold the property at Concord West;

   (b)with the proceeds from the sale of the Concord West property, Mr Perosh purchased a property at Homebush on 9 July 2015 for $690,000 and no mortgage;

   (c)as at 15 July 2015, title to the Homebush property was held by Mr Perosh and his two sons as joint tenants in equal shares;

   (d)Mr Perosh’s two sons did not make a financial contribution towards the purchase of the Homebush property.

   [3] Exhibit T1 at T4, pp 67-78.

5. On the basis of this information, Centrelink decided:

   (a)on 2 February 2016, to pay Mr Perosh the single rate of age pension from 3 December 2015, which had the effect of increasing the rate of age pension paid to Mr Perosh;[4]

   (b)on 23 February 2016, to assess $450,000 as a deprived asset from 15 July 2015, which had the effect of reducing the rate of age pension paid to Mr Perosh.[5]

   [4] Exhibit T1 at T9, p 96.

   [5] Exhibit T1 at T9, p 98.

6. Centrelink affirmed these decisions in an internal review on 10 March 2016.[6]

   [6] Exhibit T1 at T7, p 84-87.

7. Mr Perosh applied to the Social Services and Child Support Division (SSCSD) of the Administrative Appeals Tribunal for a review of Centrelink’s decisions. The SSCSD affirmed the decisions made by Centrelink on 24 June 2016.[7]

   [7] Exhibit T1 at T2, p 4-9

8. On 15 July 2016, Mr Perosh applied to the General Division of the Administrative Appeals Tribunal for a review of the SSCSD decision.

9. The matter was heard in Sydney on 2 December 2016. Mr Perosh attended the hearing in person and was self-represented.

   ISSUES

10. The determinative issues before the Tribunal are:

    (a)whether Mr Perosh was correctly paid at the single rate of age pension from 3 December 2015, rather than an earlier date in 2015;

    (b)whether Mr Perosh disposed of or diminished the value of his home by registering title as joint tenants in equal shares with his two sons; and

    (c)if so, what the amount of the disposition or diminution was when calculating the rate of Mr Perosh’s age pension.

    RELEVANT LEGISLATION AND CONSIDERATION

11. The rate of a person’s age pension is calculated in accordance with s 1064 of the Act and is affected by factors such as marital status, income and assets. The age pension consists of payments that include a pension supplement, telephone allowance, pharmaceutical allowance and rent assistance. The partnered rate of these payments is less than the single rate because, as set out in s 1064-A2 of the Act:

    Where 2 people are members of a couple, they will be treated as pooling their resources (income and assets) and sharing them on a 50/50 basis… They will also be treated as sharing expenses (e.g. for rent) on a 50/50 basis…

    What is the date from which Mr Perosh can be paid the single rate of age pension?

12. Mr Perosh provided his MOD S (Separation details) form to Centrelink on 3 December 2015 and subsequently, Centrelink made a favourable determination pursuant to s 110 of the Social Security (Administration) Act 1999 (Cth) (Administration Act):

    110 Date of effect of favourable determination

    (1) Subject to subsections (1 A) to (11) (inclusive), if a favourable determination is made following a person having informed the Department of the occurrence of an event or change in circumstances, the determination takes effect:

    (a) on the day on which the person so informed the Department; or

    (b) on the day on which the event or change occurred;

    whichever is the later. [emphasis added].]

13. At the Tribunal hearing, Mr Perosh said that he separated from his wife when he moved into his Homebush property on 2 July 2015. Mr Perosh accepted that he received the MOD S (Separation details) form from Centrelink sometime in June 2015 but, due to dealing with moving home and health issues, he did not submit the form to Centrelink until 3 December 2015.

14. Mr Perosh also asserted that he had visited a Centrelink office to report his situation and where he was living several times between June and December 2015. However, there are no Centrelink records that verify Mr Perosh contacted Centrelink between 3 June 2015 and 2 December 2015.

15. I accept Mr Perosh’s evidence that he separated from his wife on 2 July 2015 and, in March 2015 and June 2015, had discussions with Centrelink staff regarding his intended separation from Ms Perosh. I also accept the Secretary’s contention that for Centrelink to act on advice that a person intended to separate from their partner in the future ‘would yield a peculiar and unpredictable result’.[8]

    [8] Secretary’s Statement of Facts, Issues and Contentions, dated 18 November 2016, para 6.9.

16. There is no evidence before the Tribunal that Mr Perosh informed Centrelink about his change of circumstances on 2 July 2015 until he submitted the MOD S (Separation details) form to Centrelink on 3 December 2015.

17. In accordance with the requirements of s 110 of the Administration Act, I am satisfied on the basis of the evidence before me that the ‘favourable determination’ must take effect from 3 December 2015, which is the ‘later’ day the ‘change in circumstances’ happened for Mr Perosh. Therefore, the correct date Mr Perosh can be paid the single rate of age pension is from 3 December 2015.

    Did Mr Perosh dispose of or diminish the value of his home?

18. Section 1123 of the Act sets out the circumstances in which a person ‘disposes of assets’. An ‘asset’ is defined in s 11 of the Act as including ‘property or money’. If a person disposes of assets for the purposes of s 1123 of the Act, s 1124 stipulates the amount of disposal or disposition of assets. Relevantly, in circumstances where a person receives no consideration for the diminution in value of the asset, the amount of the disposition is equal to the amount of the diminution in value of the assets.

19. Pursuant to s 1126AA(2) of the Act, if the amount of the disposal exceeds $10,000 in an income year, then the amount of the excess is to be included in the value of a person’s assets when assessing the rate at which a social security payment is paid from a period of five years from the date of the relevant disposal. This is known as the ‘disposal free limit’; any amounts disposed of in excess of the disposal free limit are called ‘deprived assets’ and are assessable under the assets test set out in Module G of the Act.

20. The Tribunal accepts the facts set out in paragraph 4 of these reasons; that is, that Mr Perosh and Ms Perosh sold their Concord West property, and Mr Perosh subsequently purchased a property at Homebush for $690,000 with no mortgage.

21. The Certificate of Title for the Homebush property issued on 15 July 2015 showed that Mr Perosh and his two sons were joint tenants in equal shares. By placing legal title in the name of his sons, Mr Perosh disposed of or diminished the value of his Homebush property by $460,000 (i.e. two thirds of the $690,000 purchase price). Taking into account a deduction of $10,000 (the ‘disposal free limit’), an amount of $450,000 was maintained as an asset for the purposes of calculating Mr Perosh’s rate of age pension from 15 July 2015.

22. Mr Perosh told the Tribunal that his solicitors made an error in listing himself and his two sons as joint tenants in equal share. Rather, the title to his Homebush property should have recorded the title as being held by Mr Perosh and his two sons as tenants in common, with Mr Perosh holding a 198/200 share and each of his sons holding a 1/200 share. The Tribunal was provided with an updated Certificate of Title issued on 11 August 2016, which reflects this arrangement.[9]

    [9] Exhibit A1.

23. It is clear from this updated Certificate of Title that Mr Perosh did not intend that he and his two sons be recorded as joint tenants in equal title. However, at the time of the SSCSD decision on 24 June 2016, which is the decision I am required to review, Mr Perosh and his two sons were registered as joint tenants of the Homebush property. I am therefore satisfied that it was the correct decision to maintain $450,000 as an asset for the purpose of calculating Mr Perosh’s rate of age pension.

    DECISION

24. The decision under review is affirmed.

I certify that the preceding 24 (twenty-four) paragraphs are a true copy of the reasons for the decision herein of Dr L Bygrave, Member

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

Associate

Dated: 24 January 2017

Date(s) of hearing:	2 December 2016
Applicant:	In person
Solicitors for the Respondent:	Department of Human Services