Pikoulas and Secretary, Department of Family and Community Services
[2004] AATA 576
•4 June 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 576
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2003/1508
GENERAL ADMINISTRATIVE DIVISION ) Re ARISTOMENIS PIKOULAS Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Dr J D Campbell, Member Date 4 June 2004
Place Sydney
Decision The decision under review is affirmed.
[Sgd] Dr J D Campbell
Member
CATCHWORDS
SOCIAL SECURITY – age pension – income test – determination of income levels – assessment of arrears – decision under review affirmed.
Social Security Act 1991 sections 8, 9, 1064 – E1, 1076, 1083
Social Security (Administration) Act 1999 section 109(2)
REASONS FOR DECISION
4 June 2004 Dr J D Campbell, Member 1. This is an application by Mr Aristomenis Pikoulas (“the Applicant”) for a review of the decision of the Social Security Appeals Tribunal (“SSAT”) made on 19 August 2003 to set aside the decision of Centrelink on 24 April 2002 which determined the income level used to calculate Mr Pikoulas’ rate of Age Pension. The decision of Centrelink was affirmed by an authorised review officer on 23 May 2003. The decision of the SSAT decided to substitute a new decision that the correct amount of deemed income relating to Mr Pikoulas’ bank balance has been assessed by Centrelink from April 2002. The SSAT decided that income from boarders and lodgers should be assessed from 21 January 2002, Mr Pikoulas’ rate of age pension should be re-calculated accordingly, and if there are any arrears owing, they should be paid to him. The subject of this current appeal is a review of this previous decision and the extent to which it was correct.
2. At the hearing before the Tribunal on 1 March 2004, the Applicant, Mr Pikoulas, was self represented. The Respondent was represented by Jane Green, Advocate from the Service Recovery Team at Centrelink.
THE ISSUES
3. In this current appeal, the central issues for the Tribunal to decide and determine are:
(i)Whether the SSAT correctly determined Mr Pikoulas’ income levels which were used in the calculation of his Age Pension.
(ii)Whether arrears of Age Pension, as a result of a rate adjustment, due to the SSAT decision of 19 August 2003, can be paid back to Mr Pikoulas any time before 21 January 2002. The date of 21 January 2002 was the date in which Mr Pikoulas contacted Centrelink wanting to appeal the affect of his current income levels on his rate of Age Pension (T39/73).
BACKGROUND
4. In order to assess the current application, the foundational facts of the case need to be outlined. During the hearing at the Tribunal the Applicant was asked whether he agreed with the facts and he responded that he did agree with the facts outlined. Accordingly, the following facts outlined by the Respondent detail the background to this current application:
“02/02/95During the course of applying for Age Pension customer informed Respondent that he was receiving $40 per week in lodgings income. (T9/33)
23/02/95Applicant was granted Age Pension and paid from 9/02/95 at rate of $331.30. This rate took into account $28 (70% of $40.00) of lodgings income as notified by Applicant. (T1/5)
21/02/01Applicant advised Centrelink that he had 2 lodgers renting rooms in his house, one at $160.00 per week and one $60.00 per week. He also advised of interest on his mortgage of $104 per fortnight. (T32/61)
10/02/01Applicant sent a letter from Centrelink regarding his current rate of Age Pension. (see attachment A and T36/66).
20/12/01Applicant borrowed $50,000 from the Laiki Bank Australia Ltd. (T37/67-69A).
21/01/02Applicant contacted Centrelink wanting to appeal the affect of current income levels on his rate of Age Pension. (T39/73).
18/03/02Applicant wrote to Centrelink outlining his complaints about his rate of Age Pension. (T42/78-81).
24/04/02Applicant completed an income and assets review form in which he stated he had $22,933.00 deposited in the Laiki Bank. (T45/84-94). Deemed income of $573.00 per annum was automatically calculated by the computer system and recorded on his computer record. (See attachment B)
24/04/02Centrelink adjusted the Applicant’s rate of pension to take into account deemed income of $573.00 per annum from the above bank deposit. (T46/95 & attachment B)
23/05/03Authorised Review Officer (ARO) affirmed the decision to pay an Age Pension rate to the Applicant based on deemed income from his bank deposit and rental income from this two lodgers received during the 2001/02 financial year. (T62/131-142) The ARO affirmed that rental income of $6562.00 (that is, $11,440.00 x 70% less $1446.00 of mortgage interest) was to be taken into account when calculating the Applicant’s rate of pension. (T62/141)
16/07/03SSAT set aside the decision of the ARO and substituted a decision that the correct amount of deemed income relating to the Applicant’s bank balance was assessed by Centrelink from 24 April 2002 and that income from boarders and lodgers of $5115 per annum (that is, $11,440 x 70% less $2,893 of mortgage interest) should be assessed from 21 January 2002. The Applicant’s age pension rate should be re-calculated accordingly, and any arrears owing, paid.
29/09/03The Applicant’s pension rate was adjusted and an arrears payment of $77.50 of Age Pension was paid to the Applicant. (see attachment C)”
THE APPLICANT’S SUBMISSIONS
5. The Applicant was self represented at the hearing on 1 March 2003 and gave oral evidence concerning his application for a review of the decision of the SSAT. An application for review of a decision was received by the Tribunal on 22 September 2003. In a letter attached to the application, the Applicant detailed a number of reasons as the basis for a warranted review of the decision given by the SSAT. The attached letter of the Applicant detailed the following reasons:
“…
a) The Decision emphasize its consideration to my letter (wrote to Centrelink on 15 March 2002) the unfair definition of fortnightly income services only, even as in it full comments existed and of course with comparison to the answering letter of ARO they marked their restricted decision in a restricted period of time.
b) There according to the Social Security Law, the Standard Pension Rate and the Age Pension Rate are not the same. An Age Pensioner maximum basic rate applies throughout the date of birth e.g. 10/02/1930 this is my own birthday and from 10/02/1995 became an aged Pensioner. Therefore even not the Standard pension received correct in all these years from 1995 until up today. The received Pension in all those years into my Bank account in comparison with the Standard Pension Rate, See Guide to Social Security Law 5.2.2.10 indicate considerable harras of service. The enclosed calculation based on my Bank’s deposits. Shown an amount required on it is $4,368.43.
…
c) From the same period of time 10/02/1995 and until up date, I’m living alone in a full of alterations property with mortgage and additions of mortgages as a sigle (sic) Age Pension Homeowner, entitlet (sic) Maximum Pension Rates and because of the Family Situation living alone I’m entitled to a Supplement assistance equal to 4% of the Yearly Standard rates according to Social Security Act…”
6. Fundamentally, from the evidence provided to the Tribunal, the Applicant feels that he was underpaid since the year of 1995. While a review of arrears was being sought by the Applicant, it was made known to the Applicant during the course of the hearing that there is difficulty in requesting an assessment dating back to the year of 1995 and that due to legislative requirements, the Tribunal is able to only look at the situation from the year of 2002.
7. The Applicant was asked at the hearing when he first actually wrote to Centrelink expressing his claim and the Applicant answered that he wrote to Centrelink on 15 March 2002. The Applicant was asked whether he had done anything in terms of written communication to Centrelink prior to 21 January 2002 and while the Applicant answered “yes”, there is no evidence of such communication before the Tribunal.
8. At the hearing the Applicant was questioned as to the correctness of various financial matters. The Applicant agreed upon the evidence that during the year 2001-2002, he was paid $220 per week in rent and that he borrowed $50,000 from the Laiki Bank on 20 December 2001 (T37/67). The Applicant stated that he rented out a room in his residence to a student for $60 a week. The Applicant indicated that he had worked towards paying off all debts and was only responsible to the Laiki Bank. It was apparent during the course of the oral evidence that the Applicant may have received some bad advice to accept the $50,000 in a lump sum payment as this could affect his pension payments. The Applicant contended that since 20 March 1995 he has not received the correct money.
9. The Applicant contended that the amount of payments he received for Pension Rates has been incorrect and that in essence he has been underpaid. According to the Applicant’s Table of Figures at T1/4, the Applicant argued that he has been underpaid an amount of $4,368.43. In relation to this figure the Applicant stated at the bottom of the Table of Figures:
“…
This total amount is required for to complete the standard Rate pension of which I’m entitle and further that I required the Maximum rate of pension as for all this period: 10/02/95 until 30/06/03 and as a single Age Pensioner also entitle from 01/01/2000 until up to day supplement for to protect GST exps. Also Module BA- Pension’s Supplement: 1064-BAI. The amount of a person’s pension supplement (of 4% of maximum rate p.f.) depents (sic) of the person’s family situation as single homeowner aged Pensioner. See: 1064.BI table B.”
10. The Applicant further re-iterated his case in letters (Exhibit A1 and A2) to various Centrelink Officers. In a letter dated 10 October 2003 (Exhibit A1) addressed to a Mr Davies, the Applicant stated:
“The Social Security Appeals Tribunal sent to Centrelink also a copy of their decision, belonging to my as above file, 204 607 973L, a copy in which are enclosed all the documents and details you required on this received your letter, details also from my TAX return as above mentioned. As addition to the Social Security Appeal Tribunal decision required to recalculate in a restricted period of time the reason because the net rent income is less than $6000 and therefore I’m entitlet (sic) to receive the Maximum Age Pension rate, something has been Ignored from Centrelink Services from the date 10-02-1995 when I began to be, by Family reasons Single Homeowner Aged Pentioner. Therefore according to Social Security Law I’m entitlet (sic) for better Service, then what I received from lengthy time ago.”
11. At the hearing the Tribunal requested that the Respondent issue further written submissions on the area of the correct rate of Age Pension payable to the Applicant. The Tribunal requested the Respondent to analyse the Table of Figures prepared by the Applicant at T1/4 with respect to the rate of Age Pension payments made to him. The Respondent analysed the calculations provided in the Table for the period of 18 April 1996 to 21 January 2002 and issued the Tribunal with these findings on 7 April 2004. These further submissions (as discussed later in the Respondent’s submissions) indicated that in the Respondent’s viewpoint, the Applicant owes a debt of $197.42 owing to Centrelink, however no action has been taken on this debt as yet.
12. Upon receipt of such further submissions, the Applicant had two weeks within which to formulate a reply to such findings. The Applicant’s further written reply submissions to the Respondent’s contentions was dated 16 April 2004 and the Tribunal officially received them for consideration on 22 April 2004.
13. The submissions received by the Applicant in reply to the Respondent’s submissions express his initial concerns over the calculation of the Age Pension and emphasize the harassment that the Applicant feels he has been subjected to in this matter. The Applicant detailed the following with respect to further evidence he requested the Tribunal to take into account in considering this matter:
“1) Centrelink until up today has been not implemented the Social Security Appeals Tribunel’s (sic) decision. it is strange that the financial years 2001/02 and 2002/03 and further to 29th September 2003, has been not settled until. An appeal letter to Centrelink is enclosed.
2)From Centrelink and Particular from Mrs Jane Green I receive a band of pages shown calculation of details about what I’m entitled and what I received, from Centrelink the period 18/04/1996 and until 21/01/2002 which confuse the correction of my demands:
Comments are:
a)I don’t know why they don’t follow my birthday date which characterize my Aged Pension on which based my entitlements eg Pension, Standard Pension rates, Maximum rates, Aged Pension maximum basic rates, and ignored me and my Pension state that all.
b)According to the Social Security Act 1991 Module B Section 1064-B1 an Aged Pension with maximum basic rates depends on the Family situation Table B, Column 1 indicate home owner living alone with ordinary income which doesn’t exceeds the threshold free area is entitled for a supplement of 4% of the amount received on a whole year plus the alteration of the C.P.I per six months. e.g. If the Standard rates are the maximum rates for an Aged Pensioner like me, then from the date 10/02/1995, I’m entitled for a supplement of 4% for all those years as there never receive correct the standard maximum rates and further more any ordinary rent income does not exceed the threshold by income test.
c)Centrelink or its represent Mrs Jane Green selected a period of calculations from 18/04/1996 and until 21/01/2002 and try to found me wrong of an amount of $197.42, but no where they mentioned that they required in two options money back!...
Further to that they never mentioned into no where, that I lost sufficient Rent Income from the period May and July 1999 about six plus four fortnights waiting for Tribunal’s decision. Residential Tribunal Notice of Order: file No 99/30308 (quote in all enquiries) Amount $2142.85 Plus time. Particular this Period of time I received $311.80 per fortnight as the maximum standard entitled rates was $361.40 or $366.50 per fortnight. The deduction is very heavy, is not acceptable.
…
3)Honourable Dr Campbell, in an extra calculation for the same period, that Mrs Jane Green selected for hers calculation report e.g. 18/04/1996 an Adjustment period until 21/01/2002, I calculated also the fortnights rates I have to have (entitle) as an Aged Pensioner, based on Guide to Social Security Laws 5.2.2.10 and that topic last updated is date 20 March 2003 for the same Period as Mrs Green selected 18/04/1996 and until 21/01/2002. The different amount shown into my own enclosed calculation of $5,159.50 is subtracted from Centrelink out of my standard rates only from this particular period and as exable of course shown in % of harass.
…
Notisable is also the whole of so many years period, never the rental income axcessed (sic) the threshold for to have a deeming deduction on my Aged Pension income for a Pensioner living alone. All those illegal action of the Centrelink administration required recalculation and the arrears to settle down as soon as practical, because all the deemings, or deduction, or sudstractions (sic) occurred without any meaning of correction, as the Social Security LAW indicated.
Further to that The Social Security family Law at the section 1964 B1 refered (sic) about maximum rates Aged Pensioner depenting on family situation living lonely alone, indicate a supplement of 4% of the total yearly amount. The Section 1064 B table, indicate the entitlement.”
THE RESPONDENT’S SUBMISSIONS
14. The Respondent issued the Tribunal with their Statements of Facts and Contentions (Exhibit R1) on 18 February 2004. The Respondent stated that Module A of Section 1064 of the Social Security Act 1991 (“the Act”) provides for the calculation of the rate of a person’s Age Pension by reference to their assets and other income they receive. A separate rate is calculated under both the Income and the Assets Test, with the one that results in the lowest rate of pension being applicable to the person in question. The Respondent contended that in this scenario the relevant test in working out the Applicant’s rate of Age Pension was the Income Test.
15. With respect to the income from lodgers, the Respondent contended that the rental income that the Applicant received from his two lodgers during the 2001/2002 financial year falls within the definition of “income” under section 8 of the Act because it is an income amount received by him for his own use or benefit.
16. Furthermore, the Respondent contended that the amount of income from lodgers received by the Applicant for the 2001/2002 financial year was $5,115 per annum (that is, $11,440 x 70% less $2,893 mortgage interest), as determined by the SSAT (T2/13, T5/24, T51/110).
17. With respect to deemed income from a bank account, the Respondent contended that the amount of deemed income was $573.00 per annum calculated from the Applicant’s bank balance as at 24 April 2002 correctly in accordance with sections 1076 and 1081 of the Act.
18. The Respondent highlighted that under section 9 of the Act, a loan that has not been utilised in full, which is sitting in a person’s bank account, is considered to be a financial asset. The Respondent argued that actual returns on financial assets are not treated as ordinary income of a person, as outlined in section 1083 of the Act. Under section 1076 of the Act, the Respondent contended that a person is deemed to have received ordinary income from their financial assets in accordance with the method set out in 1076(3A). The Respondent maintained that in accordance with the method set out in section 1076 of the Act, the Below Threshold Rate (BTR) of 2.5% was applied to any financial assets held by the Applicant up to and including $34,400. The Respondent maintained that Centrelink was required to calculate a deemed amount of ordinary income from the $22,933 held in the Laiki Bank. At the date of 24 April 2002, the amount of $573.22 ($22,933 x 2.5%) was calculated.
19. The Respondent contended that the Applicant was, at all relevant times, a single homeowner and thus subject to the Income Test set out in Module E of Part 3.2 of the Act. The Respondent maintained that at the relevant time, a single homeowner was entitled to earn an income of up to $112.00 per fortnight, or $2,912 per year to receive a full pension.
20. The Respondent explained that any income above $2,912 per year comes to be considered as “excess income” and the Age Pension rate is reduced by 40% of the excess income amount (section 1064-E4 and 1064-E10 of the Act).
21. With respect to the Age Pension rate prior to April 2002, the Respondent contended that it would be reduced by ($5,115 - $2,912) = $2,203 x 40% = $881.20 per annum which would mean a fortnightly reduction of $33.90 (rounded) from the full rate. The Respondent also contended that at 21 January 2002, the full pension rate was $410.50 plus $5.80 for pharmaceutical allowance. As a result, the Respondent maintained that the correct rate for the Applicant was $416.30 - $33.89 = $382.40 (T63/143).
22. The Respondent maintained that once the Applicant completed an income and assets review form on 24 April 2002 and a deemed income of $573.32 was added to the amount of ordinary income received, the Applicant’s rate changed. The new calculation was: $5,115 + $573.32 = ($5,688.32 – $2,912) = $2,776.32 x 40% = $1,110.50 (rounded) per annum which meant a fortnightly reduction of $42.70 (rounded). The Respondent contended that the full rate of pension at this time was $421.80 plus $5.80 for pharmaceutical allowance and thus the correct rate for the Applicant was $427.60 - $42.70 = $384.90 (T63/143).
23. The Respondent highlighted to the Tribunal that on 10 May 2001, the Applicant sent a letter to Centrelink indicating that he was being paid Age Pension at a rate of $368.60 per fortnight. The Respondent confirmed to the Tribunal that on 21 January 2002, the Applicant asked for a review of his pension rate (T39/73).
24. The Respondent argued that in accordance with section 109(2) of the Social Security (Administration) Act 1999 (“the Administration Act”), as the Applicant asked for a review of the decision more than 13 weeks after the letter of 10 May 2001 (ie on 21 January 2002, some 36 weeks later) and therefore it is only possible to pay any arrears owing back to the 21 January 2002.
25. At the hearing the Tribunal requested that the Respondent assess the calculations of the Applicant with respect to this Age Pension and issue the Tribunal with a statement indicating the figures paid during the period 18 April 1996 to 21 January 2002. The Respondent issued the Tribunal with documents indicating calculations made using a “MultiCal – Centrelink Debt Calculator”. The documents indicate that during the adjustment period of 18 April 1996 and 21 January 2002, the amount of Age Pension the Applicant was entitled to receive was $53,624.27. The tables indicate that the amount of Age Pension actually received by the Applicant was $53,821.69. As a result, the Respondent contends that after an analysis of the figures during this period, it appears that the Applicant owes a debt of $197.42 to Centrelink, however, no action has been taken on this debt as yet.
26. As a result the Respondent contends that the decision of the SSAT is correct and should be affirmed.
CONSIDERATION AND INTERPRETATION OF LEGISLATION
27. Relevant definitions in relation to income are found in section 8 of the Act:
“8.(1) In this Act, unless the contrary intention appears: “income”, in relation to a person, means:
(a)an income 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), (7A) or (8);
“income amount” means:
(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.”
28. The Tribunal is of the opinion that the rental payments received by the Applicant from lodgers is considered to be “income” under section 8 of the Act and was appropriately applied to the Income Test.
29. Under section 9 of the Act, a loan that has not been repaid in full, which is sitting in a person’s bank account is considered to be a financial asset. Section 9 states:
“9.(1) In this Act, unless the contrary intention appears:
Financial asset means:
(a) a financial investment; or
(b) a deprived asset.
Note: For deprived asset see subsection 9(4).
Financial investment means:
(a) available money; or
(b) deposit money; or
(c) a managed investment; or
(d) a listed security; or
(e) a loan that has not been repaid in full; or
(f) an unlisted public security; or
(g) gold, silver, or platinum bullion; or
(h) an asset-tested income stream (short term).”
30. Actual returns on financial assets are not treated as ordinary income of a person (section 1083 of the Act). Under section 1076 of the Act, a person is deemed to have received ordinary income from their financial assets in accordance with the method set out below:
“1076.(3A) If the total value of the person’s financial assets exceeds the person’s deeming threshold, the ordinary income that the person is taken to receive is worked out as follows:
Method Statement
Step 1. Multiply the person’s deeming threshold by the below threshold rate.
Note 1: For deeming threshold see subsection 1081(1).
Note 2: For below threshold rate see subsection 1082(1).
Step 2:Subtract the deeming threshold from the total value of the person’s financial assets.
Note: For deeming threshold see subsection 1081(1)
Step 3:Multiply the remainder worked out at Step 2 by the above threshold rate.
Note: For above threshold rate see subsection 1082(2).
Step 4:The total of the amounts worked out at Steps 1 and 3 represents the ordinary income the person is taken to receive per year on the financial assets.”
31. In relation to the deeming threshold, the Act maintains that:
“1081.(1) The deeming threshold for a person who is not a member of a couple is $34,400”
32. The Tribunal is of the opinion that the loan of the Applicant falls under section 9 of the Act and that the method under section 1076 of the Act has been appropriately applied.
33. With respect to rate calculation, the Respondent contended that the Applicant, at all relevant times, was a single homeowner and subject to the income test as set out in Module E of Part 3.2 of the Act. As at 1 January 2002, this stated:
“MODULE – ORDINARY INCOME TEST
Effect of income on maximum payment rate
1064-E1. This is how to work out the effect of a person’s ordinary income on the person’s maximum payment rate:
Method Statement
Step 1Work out the amount of the person’s ordinary income on a yearly basis.
Note: for the treatment of the ordinary income of members of a couple see point 1064-E2.
Step 2Work out the person’s ordinary income free area limit (see points 1064-E4 to 1064-E9 below).
Note: a person’s ordinary income free area is the amount of ordinary income that the person can have without any deduction being made from the person’s maximum payment rate.
Step 3 Work out whether the person’s ordinary income exceeds the person’s ordinary income free area.
Step 4If the person’s ordinary income does not exceed the person’s ordinary income free area, the person’s ordinary income excess is nil.
Step 5If the person’s ordinary income exceeds the person’s ordinary income free area, the person’s ordinary income excess is the person’s ordinary income less the person’s ordinary income free area.
Step 6Use the person’s ordinary income excess to work out the person’s reduction for ordinary income using points 1064-E10 to 1064-E12 below.”
34. In accordance with section 109(2) of the Social Security (Administration) Act 1999, the Tribunal concludes that it is only possible to pay any arrears owing back to the 21 January 2002. Section 109(2) states:
“Date of effect of favourable determination resulting from review
109.(2) If:
(a)a decision (the original decision) is made in relation to a person’s social security payment; and
(b)a notice is given to the person informing the person of the original decision; and
(c)more than 13 weeks after the notice is given, the person applies to the Secretary, under section 129, for review of the original decision; and
(d) the favourable determination is made as a result of the application for review;
the favourable determination takes effect on the day on which the application for review was made.”
35. Based on the evidence presented, the Tribunal decides that the SSAT did correctly determine the income levels which were used in the calculation of the Applicant’s Age Pension.
36. In accordance with the legislation, the Tribunal decides that any arrears owing to the Applicant can only be paid back to the date of 21 January 2002 and not any time before.
DECISION
37. The decision under review is affirmed.
I certify that the 37 preceding paragraphs are a true copy of the reasons for the decision herein of
Signed: Neil Glaser
AssociateDate of Hearing 1 March 2004
Date of Decision 4 June 2004
Representative for the Applicant Self-represented
Advocate for the Respondent Jane Green
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