Polyzogopoulos and Secretary, Department of Employment and Workplace Relations

[2006] AATA 649

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 649

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No T2006/42

GENERAL ADMINISTRATIVE  DIVISION		)
Re		NIKI  POLYZOGOPOULOS

Applicant

And SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Associate Professor B W Davis AM (Part-time Member)

Date24 July 2006

PlaceHobart

Decision The decision under review is affirmed.

[Sgd B W Davis]

Part-Time Member

CATCHWORDS

Social Security - disability support pension - overseas residence - Greece - valuation of asset - assets test - inability to travel - pension rate calculator - pension rate - Social Security Appeals Tribunal (SSAT)

Social Security Act 1991 and Amendments - ss11, 117, 1064, 1118, Pension Rate Calculator A (Module G)

Social Security (Administration) Act 1999

Social Security (International Agreements) Act 1999

Guide to Social Security Law

Re Drake and Minister for Immigration and Ethnic Affairs (1979) 24 ALR 557

Re Drake (No 2) (1979) 2 ALD 634

Re Walsh and SDFCS (2002) AATA 881 (4 Oct 2002)

Re Secretary DSS and Langton (1993) 31 ALD 579

Miezitis and SDFCS (2005) AATA 1063 (24 Oct 2005)

REASONS FOR DECISION

24 July 2006   Associate Professor B W Davis AM        

Decision under Review

1.      The decision under review is a decision made by a Centrelink Officer on 26 September 2005, subsequently affirmed by the Social Security Appeals Tribunal (SSAT) on 22 February 2006, to reduce the rate of Mrs Polyzogopoulos’ Disability Support Pension (DSP) due to the valuation of her assets.

2.      The applicant resides in Greece and has agreed to a decision on the papers.

Issues

3.      (a)       what is the value of the applicant’s assets?; and

(b)      given the value of assets, how is her rate of Disability Support Pension                  to be calculated?

Legislation

4.      Relevant legislation is the Social Security Act 1991 (“the Act”) and amendments:

Section 8 Definition of Income

Section 11 Asset Test definitions

Section 117 How to work out a person’s DSP rate

Section 1064 Rate of Age, disability support, partner pensions and carer payments involved.

Section 1064-A method of calculating rate

Section 1064-E1 Effect of income on maximum payment rate

Section 1064-G1 Effect of assets on maximum payment rate

Section 1118 Certain assets to be disregarded in calculating the value of a           person’s assets

5.      Note also the Social Security (Administration) Act 1999 (“the Administration Act’); Social Security (International Agreements) Act 1999 (“the International Act”).   Guide to Social Security Law.

Standard of Proof

6.      The standard of proof is on the balance of probabilities and to the reasonable satisfaction of the Tribunal.

Context

7.      The applicant, Mrs Niki Polyzogopoulas, and her husband have been in receipt of Australian Disability Support Pension (DSP) since 1986 and have resided in Greece since 1996.

8.      During the applicant’s absence from Australia her former home at 49 Columbine Avenue, Punchbowl, NSW, was retained but rented out.   From 6 December 2000 the property was valued at $300,000, but on 23 September 2005 the property was revalued by the Australian Valuation Office (AVO) as being worth $500,000, reflecting rising market property values and prices.

9.      As a result of the amended value of assets, the applicant’s pension was reduced from 26 September 2005 and she was sent a letter to this effect.   The applicant sought a review of the decision on 15 November 2005, but it was again affirmed and an Authorised Review Officer (ARO) also determined on 22 November 2005 the decision was correct.

10.     Mrs Polyzogopoulos requested review by the SSAT on 6 January 2006, but a decision by that Tribunal on 28 February 2006 again affirmed the initial decision was correct.    The applicant sought review by the Administrative Appeals Tribunal on 23 March 2006 and agreed to a decision on the papers on 20 May 2006.

Analysis

11.     The matter before the Tribunal is a de novo merits review of an administrative decision and the Tribunal in arriving at a correct and preferable decision, is bound to apply the law.    The Tribunal must also take into account extant policy provisions and any relevant prior case determinations (for confirmation see Re Drake and Minister for Immigration and Ethnic Affairs (1979) 24 ALD 557 and Re Walsh and Secretary, Department of Family and Community Services (2002) AATA 881 (4 October 2002).

12.     The Tribunal notes that the applicant claims to be in a difficult situation, reliant upon DSP with little other income, unable to return to Australia until their son finishes his university education and the applicant recovers from a leg injury which doctors estimate will take nine months to mend from March 2006.   But the Tribunal also notes the couple are reluctant to sell their Australian property to gain more liquid assets.    In terms of any asset test they must be treated as renting their property, not living in it.   The applicant has not made any submission querying the property valuation of $500,000.

13. All entitlements to Social Security payments are governed by the Act and the Administration Act. There is no formal agreement between Greece and Australia as to welfare payments, thus the International Act is not applicable and in the current case, Australian social welfare law applies.

14. Section 117(a) of the Act states that the rate of a person’s Disability Support Pension (DSP) is to be worked out using Pension Rate Calculator A at the end of s1064 of the Act. Section 1064-A7 requires that both an income test and an assets test be applied and the test which reduces the person’s pension the greatest, is the test to be used. Mr and Mrs Polyzogopoulos have very little income other than their DSP and have no significant assets other than their Australian property, thus it is the assets test which is likely to govern pension rate.

15.     As previously noted, the two issues to be resolved are:

(a)      what is the value of the applicant’s assets?; and

(b)      given the value of assets, how is the rate of DSP to be determined?

What is the Value of the Applicant’s Assets?

16. Section 11(1) of the Act defines assets for the purposes of the Act as being:

“`asset’ means property or money (including property or money outside Australia)”; however a person’s `principal home’ is exempt from this definition, see s1118(1) of the Act.

17. In relation to the property owned by the applicant and her husband at 43 Columbine Avenue, Punchbowl, NSW, the Tribunal notes the couple have not lived on the property since 1996 and during this period it has been rented to tenants. The Act does not specify the method by which an asset is valued, but an appropriate approach is to determine the asset’s market value. Nobody has contested the AVO valuation of $500,000 as at 23 September 2005, an increase over the previous valuation of $300,000, but reflecting recent growth in property values.

18.     As the property at 49 Columbine Avenue is the applicant’s only significant asset, the Tribunal accepts the SSAT’s determination that she and her husband share a property of $500,000 value and this is the sum to be used in determining her rate of pension.

Determining the rate of DSP:

19. Section 1064-A1 of the Act sets out the overall method to be used to calculate a person’s rate of DSP pension if they are not blind or under 21 years of age. There are several steps in this process, which determine pension at a daily rate. There is also a provision about members of a couple:

“Members of a couple

1064-A2  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 (see points 1064-E2, 1064-F2 and 1064-G2 below).   They will also be treated as sharing expenses (e.g. for rent) on a 50/50 basis (see section 1070V).”

20.     The respondent contends that for purposes of calculation, the applicant’s share of her and her husband’s income is $5,027.00 per annum and her share of her and husband’s assets is $250,000.    The applicant is not entitled to pharmaceutical allowance as she resides outside Australia and not entitled to rent assistance as she does not pay rent in respect of premises in Australia.

21. Applying provisions of section 1064-A1 in stepwise fashion, the respondent has identified the maximum payment rate of pension at 26 September 2005 as $10,613 per annum, but this is subject to an income test under s1064-E1 of the Act:

Step 1            Applicant’s total income $5,027 per annum

Step 2            Ordinary income free area $2,860 (s1064-E4)

Step 3 - 5      Ordinary income excess $2,167 (S1064-E11)

Step 6            Reduction for ordinary income $866.80 (s1064-E10)

22. This means that under Step 8 of s1064-A1 of the Act, the applicant’s income reduced rate of pension would be $10,613.20 less $866.80 i.e. $9,746.40 per annum. It remains to identify the equivalent asset reduced rate and see which is the lesser.

23.     All of these calculations are set out in detail in the Secretary’s Statement of Facts and Contentions dated 29 May 2006, but the Tribunal has analysed them and considers they represent a valid assessment of Mrs Polyzogopoulas’s situation.

24. Turning to the asset reduction test required by s1064-64 of the Act, the situation is as follows:

Step 1            Value of applicant’s assets $250,000

Step 2            Assets value limit $168,250 (s1064-G3)

(Note that the applicant is not living in the house she and her husband own, hence she is not regarded as a homeowner for the purposes of her asset value limited (s11(4) of the Act.

Step 3-5        Assets excess $81,750.00 (ss1064-G5 and 1064G7)

Step 6            Reduction for assets $6,376.50 (ss1064-G4)

25.     This means that the asset reduced rate of pension is $10,613.20 less $6,376.50 i.e. $4,236.70.    This is lower than the income reduced rate and therefore becomes the applicant’s rate of pension per annum, equivalent to 11.6393 per day.   Records show this is the amount being paid since 26 September 2005.

26.     To summarise the situation:

(a)Australian social security law requires that all income and assets must be considered in determining benefits.    Married couples are regarded as pooling resources, which are shared on a 50/50 basis unless special circumstances apply.

(b)In determining Disability Support Pension (DSP) both an income test and assets test apply.

(c)Either may reduce benefits if income or assets exceed certain limits. The method of determining what the limits are and how they compare with actual figures is set out stepwise in Pension Rate Calculator A in s1064 of the Act.

(d)In the case of Mrs Polyzogopolous and her husband, the current asset value of their property at 49 Columbine Avenue, Punchbowl, NSW is $500,000 which exceeds the limit for a non-homeowner couple of $336,500 and hence as at February 2006 a reduction in pension arises.

(e)This means the applicant’s rate of DSP has been reduced due to the value of their assets and the decision of the SSAT dated 28 February 2006 is affirmed.

I certify that the 26 preceding paragraphs are a true copy of the reasons for the decision herein of Associate Professor B W Davis AM

Signed:  KL Miller (Administrative Assistant)

Date/s of Hearing  Application decided on the papers.
Date of Decision  24 July 2006