Pisano and Secretary, Department of Families, Community Services and Indigenous Affairs

[2007] AATA 1645

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1645

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No S 200700054

GENERAL  ADMINISTRATIVE DIVISION		)
Re		PASQUALE PISANO

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Mr J G Short (Member)

Date8 August 2007

PlaceAdelaide

Decision The Tribunal affirms the decision under review.

..............................................

J G SHORT
  (Member)

CATCHWORDS

SOCIAL SECURITY – pension, benefits and allowances – Age Pension – asset transferred to children considered a deprived asset – decision affirmed

Social Security Act 1991 ss 1064, 1123(1), 1126AC(2)

Re Collingwood and Repatriation Commission (1992) 26 ALD 519

REASONS FOR DECISION

8 August 2007   Mr J G Short (Member)

1.      Mr Pisano (the applicant) has appealed a decision made by the respondent (the Department) on 9 March 2006 to include the then assessed value of a home, transferred by him on that day to his children, as part of Mr Pisano’s assets for both income and asset test purposes.

2.      The decision was affirmed by the Social Security Appeals Tribunal (SSAT) on 15 February 2006.

mr pisano’s evidence

3.      Mr Pisano said that the summary of information recorded by the SSAT in paragraph 9 of its reasons for decision made 15 February 2006, was accurate. 

4.      Mr Pisano said that in about 1985, he and his wife purchased a property situated next door to their family home.  At that time his daughter was about 16 years of age and she and her brother were working after school at a supermarket.  Mr Pisano said that for the next four or five years his son and daughter gave him approximately $10 to $20 each week.  He said that this money was helpful in covering the expenditure associated with the next door property. 

5.      Mr Pisano said that he has a third child, a daughter, living in special needs accommodation.  Mr Pisano said that it was his intention that the son and daughter who contributed between $10 and $20 a week would receive the next door property on his death and that they would make sure that his other child was looked after.

6.      Mr Pisano tendered a letter from his daughter, Lisa, together with six pages of receipts for items of expenditure over the years (Exhibit A1).  Lisa Pisano’s letter reads in part:

“Throughout the past 17 ½ years I have refurbished the home and added value to the home in the following ways.  I have completed these improvements to increase my standard of living within this old home.”

7.      Mr Pisano said that he last worked in about 1997.  He then received WorkCover payments.  He said that his WorkCover payments ceased in about 2000 at which time WorkCover told him that he could go onto a pension.  Mr Pisano said that it was in 2000 that he first spoke with a Centrelink officer.  He could not identify this person.  He said that he was told that he may be better off selling the next door property.  He said that he would not do this as it was his intention that his children should have the property.  He also said that his daughter was living in the property and had done so for nearly 18 years.

8.      After the year 2000 Mr Pisano and his wife continued to receive a part Age Pension.  However, the rate of that pension declined as the value of the next door property increased.  Mr Pisano said that he became very upset when his pension declined greatly in 2005.  He consequently sought assistance from a financial services officer at Centrelink.  Mr Pisano said that he was not unhappy with the advice provided by the Financial Information Service Officer, Mr Glenn Trenwith.  He said that he understood that the property would continue to be treated as his property for assets and income test purposes for a period of five years following the property’s transfer to his children on 9 March 2006.

9.      Mr Pisano said that his main concern was that in 2000, when his WorkCover payments ceased and he transferred to a Centrelink payment, he should have been told by Centrelink that it would have been in his interests to transfer the property at that time to his children because by doing so, the value of the property would have been fixed and he would have avoided the effect of the subsequent increases in property values.

10.     Mr Pisano said that he and his wife currently each receive about $202 a fortnight in Age Pension.  They live in their unencumbered house.  Their daughter continues to reside in the next door property.  Mr Pisano said that he does not have significant debts, but does suffer from diabetes and requires a special diet at additional cost.

consideration

11.     I was referred to paragraph 56 of Re Collingwood and Repatriation Commission (1992) 26 ALD 519. This paragraph quotes from the second reading speech of the Social Security (Budget Measures and Assets Test) Bill 1984 as follows:

“The government believes it is necessary to take account of both assets and income in any pension test in order for it to be both a fair measure of need and equitable to all members of the community…

This purpose is to ensure that people cannot avoid the test, thereby continue to receive the pension, by transferring or gifting their assets to family or friends.  Public subsidy of such arrangements is not a purpose of the pension system.”

12. It is clear that in assessing the value of a person’s Age Pension, s 1064 of the Social Security Act 1991 (the Act) requires both an income and assets test to be applied.  Included in these tests are any “deprived assets”.  These assets include assets which are considered to have been disposed of by a person.

13. Section 1123(1) of the Act describes the circumstances in which a person will be considered to have disposed of an asset. These circumstances include gifting where no consideration is received in money or money’s worth. The sub-section reads as follows:

“1123  Disposal of assets

(1)For the purposes of this Act, a person disposes of assets of the person if:

(a)the person engages in a course of conduct that directly or indirectly:

(i)       destroys all or some of the person’s assets; or

(ii)      disposes of all or some of the person’s assets; or

(iii)diminishes the value of all or some of the person’s assets; and

(b)      one of the following subparagraphs is satisfied:

(i)the person receives no consideration in money or money’s worth for the destruction, disposal or diminution;

(ii)the person receives inadequate consideration in money or money’s worth for the destruction, disposal or diminution;

(iii)the Secretary is satisfied that the person’s purpose, or the dominant purpose, in engaging in that course of conduct was to obtain a social security advantage.”

14. Under this legislation, if I were to find that Mr and Mrs Pisano had disposed of a valuable asset (the next door property) without receiving consideration then it would follow that the Department acted appropriately and consistently with the relevant legislation, in treating the value of the asset in accordance with s 1126AC(2) of the Act, that is by considering the value of the property for a period of five years following disposal, after deducting $10,000 representing the amount a person can give away in a particular year.

15.     Neither Ms Pisano nor Mr Pisano specifically suggested the creation of a trust.  However, Mr Pisano tendered a general advice pamphlet on bringing a case before the Administrative Appeals Tribunal (Exhibit A2).  This document included some hand-written notes suggesting that it would be unfair if Mr Pisano had sold the property rather than transfer it to two of his children.

16.     This note may be a suggestion of a trust in the light of Lisa Pisano having treated the next door property as her own.  Mr Pisano said that it was always he and his wife’s intention that two of his children would receive the house under Mr and Mrs Pisano’s wills.  However, he also said that he transferred the house to two of his children because of the $10 to $20 a week they provided from their after school jobs for four or five years after the house was purchased.

17.     I have carefully considered the evidence provided by Mr Pisano.  I have reached a view that a trust was never created expressly or by implication.  Mr and Mrs Pisano’s intention that the property should eventually be transferred to two of their children and that those children should care for their third, special needs child, is in my view, simply a common domestic arrangement.

18.     I have also considered whether equity or fairness would require me to construct a trust in favour of Lisa Pisano in the light of the improvements she has made to the property.  Lisa Pisano has had the benefit of rent free accommodation for 17 years prior to the transfer of the property in about March 2006.  She indicates in her statement that she completed the improvements to increase her standard of living within the home.  Her brother is not alleged to have contributed to the improvements and yet he received a share in the property.  In these circumstances I am not satisfied that a trust in any form has existed or should now be deemed to exist.

19.     Mr Pisano concluded his submissions by saying that he should have been told in 2000 that he could have transferred the property to his children and thus fixed the  value of the property for pension purposes.  I have no evidence before me other than Mr Pisano’s indication of a lack of complete advice provided by Centrelink and/or WorkCover in 2000.  The decision under review is affirmed.

I certify that the 19 preceding paragraphs are a true copy of the reasons for the decision herein of Mr J G Short

Signed:         ............J Coulthard...........................................
  Associate

Date of Hearing  13 July 2007
Date of Decision  8 August 2007
Advocate for the Applicant       In person

Advocate for the Respondent   Ms J Kitto

Centrelink Legal Service Branch