Ponting and Secretary, Department of Social Services (Social services second review) - [2021] AATA 2053

Ponting and Secretary, Department of Social Services (Social services second review) [2021] AATA 2053 (1 July 2021)
Division:GENERAL DIVISION
File Number(s): 2020/0358
Re:Paul Ponting
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Member R West
Date:1 July 2021
Place:Melbourne

The decision under review is set aside and the matter is remitted to the Respondent for reconsideration in accordance with directions that:
1.the Applicant’s Disability Support Pension debt for the period 20 June 2009 to 1 March 2019 be recalculated having regard to:
i.the deposits into the Applicant’s Commonwealth Bank account listed at paragraph 4.26 of the Respondent’s Statement of Facts, Issues and Contentions not being assessed as income; and
ii.the value of all the Applicant’s shareholdings being reviewed for the period 20 June 2009 to 1 March 2019 and recalculations of deemed income amounts made; and

2.the Respondent reconsider whether the recalculated Disability Support Pension debt is recoverable or should be written off or waived.

.............[sgd]...........................................................
Member R West
Catchwords
SOCIAL SECURITY – disability support pension – overpayment – disability support pension debt – unexplained deposits – recycled share receipts – gambling receipts – deemed income and value of shares – recalculation – remitted for recalculation and consideration of write off or waiver of the recalculated debt.
Legislation
Administrative Appeals Tribunal Act 1975 (Cth)
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)

Cases
Loizou and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2012] AATA 224.
Magjarraj and Secretary, Department of Social Services (Social services second review) [2017] AATA 720.
Mostovoy and Secretary, Department of Social Services (Social services second review) [2016] AATA 323.
Taleb v Secretary, Department of Social Services [2020] AATA 3451
Nassimi and Secretary, Department of Social Services [2015] AATA 423.
Nguyen; Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2007] AATA 2075.
Ruan and Anor; Secretary, Department of Employment and Workplace Relations [2007] AATA 1758
Read v Commonwealth [1988] HCA 26
Secretary, Department of Social Security v Brian McLaughlin & Anor [1997] FCA 1456
REASONS FOR DECISION
Member R West
1 July 2021
BACKGROUND

This matter concerns the decision of the Administrative Appeals Tribunal (Social Services & Child Support Division) dated 3 December 2019 affirming the decision of Services Australia that the Applicant has a disability support debt for the period 20 June 2009 to 1 March 2019 in the sum of $129,159.36.
The relevant history of the matter is as follows:
·The Applicant was granted a Disability Support Pension (‘DSP’) on 5 February 2002.
·On 7 December 2018 the Respondent commenced a review of the Applicant’s eligibility for the DSP.
·On 10 April 2019, Services Australia made a decision that the Applicant had a DSP debt of $129,159.36 for the period 20 June 2009 to 1 March 2019 as deemed income from shareholdings and bank deposits, and income by way of unexplained deposits, had not been taken into account when calculating his rate of payment (‘Original Decision’).
·On 5 June 2019 the Applicant sought a review of the Original Decision.
·On 8 August 2019, an authorised review officer ARO affirmed the original decision (‘ARO Decision’).
·On 27 August 2019, the Applicant requested a review of the ARO decision by the Administrative Appeals Tribunal (Social Services & Child Support Division) (‘the First Tier Review’).
·On 3 December 2019, the Administrative Appeals Tribunal (Social Services & Child Support Division) affirmed the ARO decision (‘AAT-1 Decision’).
·The Applicant applied for a Second Tier Review by the General Division of the Administrative Appeals Tribunal on 17 January 2020.
A hearing in relation to the Second Tier Review was held on 31 March 2021. The Applicant was self-represented. The Respondent was represented by Mr James Henderson, a solicitor with Services Australia.
LEGISLATION
The Tribunal has had regard to the following relevant legislation in making its decision:
·Social Security Act 1991 (‘the Act’);
·Social Security (Administration) Act 1999 (‘the Administration Act’);
·Administrative Appeals Tribunal Act 1975 (‘AAT Act’).
EVIDENCE AND SUBMISSIONS
In conducting the Second Tier Review, the Tribunal has had regard to:
·the documents produced by the Respondent pursuant to s 37 and s 38AA of the AAT Act (T-Documents and Supplementary T-Documents);
·the oral evidence of the Applicant; and
·the Respondent’s Statement of Facts Issues and Contentions (RSFIC).
Respondent’s Contentions
Section 117 of the Act states that a person’s rate of DSP is worked out using Pension Rate Calculator A at the end of section 1064, which states that a person’s rate must take into account the income test in Module E and the assets test in Module G, with the test producing the lowest rate (or nil rate) to apply. Section 98 of the Act states that DSP is not payable if a person’s rate would be nil.
The Respondent asserted that, applying the income and assets test stated in the Act, the Applicant had a DSP debt for the period 20 June 2009 to 1 March 2019 because deemed income from shareholdings and bank deposits and income by way of unexplained deposits had not been taken into account when calculating his rate of DSP initially.
The Respondent’s initial calculation of the debt owed by the Applicant was $129,159.36. However, after further consideration, the Respondent conceded in its submissions that it needed to recalculate the overpayment applying the income and assets test stated in the Act, taking account of a revised calculation of unexplained bank deposits and the revaluation of certain shares held by the Applicant.
Unexplained Deposits
The Respondent asserts that unexplained deposits in the Applicant’s bank account are to be treated as income for the purposes of the entitlement to the DSP under the Act.
Definition of Income
“Income” and the expressions “income amount” and “ordinary income” are defined in section 8(1) of the Act as:
"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;
"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. Subsection 8(2) of the Act states that reference to an income amount ‘earned, derived or received’ is a reference to:
(a) an income amount earned, derived or received by any means; and
(b) an income amount earned, derived or received from any source (whether within or outside Australia).
The Tribunal has considered unexplained deposits on a number of occasions. It is settled that they can be assessed as income under section 8 of the Act.[1]
[1] See for example: Nassimi and Secretary, Department of Social Services [2015] AATA 423 and Taleb v Secretary, Department of Social Services [2020] AATA 3451
The unexplained Commonwealth Bank account deposits assessed as income by the Respondent between 1 July 2011 and 30 October 2018 amounted to $287,094.05 and are set out in a Table at paragraph 3.11 of the RSFIC.
The Respondent accepts that some of the amounts deposited into the Applicant’s Commonwealth Bank account between 1 July 2011 and 30 October 2018 and currently assessed as unexplained deposits have been adequately explained and are not income for the purpose of the Act. These deposits total $10,243.05 and are itemised in the RSFIC at paragraph 4.26.
The Respondent submits that the remaining unexplained deposits to the Applicant’s Commonwealth Bank account between 1 July 2011 and 30 October 2018 totalling $276,851 should be regarded as income under section 8 of the Act and be assessed accordingly under the income test.
The Applicant asserted that the deposits in question should not be assessed as income for two principal reasons as they were:
a.recycled money from the sale of shares; or
b.the proceeds of gambling.
Recycled Share Receipts
The Respondent has accepted that certain deposits which can be verified or cross-referenced to specific share sales should be excluded from income for the purpose of calculating the debt,[2] and those amounts were excluded. The contentious issue is whether unspecified deposits which the Applicant asserts were the proceeds of share sales should also be excluded.
[2] See paragraph 4.27 of the RSFIC.
The definition of income is couched in the widest terms and includes money received by a person for their own use and benefit. The term is ‘…wide enough to embrace receipts of a capital nature as well as receipts of income, for "income" is defined to mean, inter alia, any moneys, valuable consideration or profits irrespective of the means by which or the source from which those moneys, etc. are received.’[3]
[3] Read v Commonwealth [1988] HCA 26 at [3]; see also Secretary, Department of Social Security v Brian McLaughlin & Anor [1997] FCA 1456.
It is for the Applicant to satisfy the Tribunal that the monies deposited in his bank account were for a purpose other than for his own use and benefit.[4]
[4] Nassimi and Secretary, Department of Social Services [2015] AATA 423.
In the Applicant’s case, the monies were deposited into his bank account, were under his control and were available for his own use and benefit and as a means of support. The Applicant claimed that the deposits represented ‘recycled’ money from the sale of shares and were thus the same asset in a different form. He justified this by explaining that when he sold a parcel of shares the money would be deposited into his account and he would then withdraw the money as cash and store it in a hiding place in his house. He also kept cash he derived from gambling as part of this cash reserve. Then, when he decided to purchase other shares, he would take the cash from its hiding place and deposit it into his bank account to facilitate the purchase. When asked to justify this unusual arrangement the Applicant stated that he didn’t like banks and he did not want them to profit from having his money on deposit. He explained that he had held up to $100,000 in cash hiding in his house.
The Tribunal does not accept this explanation. The alleged arrangement makes no sense. It would have involved the Applicant holding large sums of cash in an insecure manner and forgoing interest solely because he held an unfavourable view of the banks. He seemed to hold this view selectively because it did not prevent him participating in the banking system in other respects.
Gambling Receipts
In addition to recycled share receipts, the Applicant claimed that his bank deposits also included money from gambling and were thus not assessable as income[5].
[5] T4 at p 66.
The evidence shows that the Applicant maintained regular gambling through accounts with TAB[6] and BetEasy,[7] but apart from their summary statements the Applicant kept no records, had no system or regularity in approach and did not conduct his activities in a measured or professional way. In addition to his regular gambling receipts the Applicant advised the Australian Taxation Office that he had won $145,000 at the Caulfield Cup carnival in 2015 and claimed to have produced a photograph of the money as evidence.[8] However, there is no clear corresponding deposit record in the Applicant’s Commonwealth Bank account in relation to that gambling receipt.[9]
[6] T20 at pp 659-787.
[7] T21 at pp.789-801.
[8] T5 at p 135.
[9] T18, p 426.
The Tribunal has accepted that gambling receipts may be regarded as income for the purposes of the Act in a number of decisions.[10]
[10] Nguyen; Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2007] AATA 2075,
Mostovoy and Secretary, Department of Social Services (Social services second review) [2016] AATA 323 and Magjarraj and Secretary, Department of Social Services (Social services second review) [2017] AATA 720.
In Ruan and Anor; Secretary, Department of Employment and Workplace Relations[11], the Tribunal found that the whole of the Applicant’s gambling receipts were part of his income for the purposes of the Act unless they could properly be characterised as part of a business. The Tribunal stated:
The expression “ordinary income” excludes certain amounts (which are not presently relevant) and “an exempt lump sum” (see section 8(11)). The Tribunal notes that gambling receipts do not comprise “an exempt lump sum” as defined. Moreover, although examples of lump sums are given in the Note to s 8(11) in the Act, such as a lottery win or other windfall, a legacy or bequest, or a gift (if it is a one-off gift), gambling receipts are not included. Given the nature of gambling activities (particularly as they were in Mr Ruan’s case), it would in the Tribunal’s view be difficult to describe gambling receipts as “one-off” receipts or gifts. The Tribunal is also satisfied that the Secretary has not determined that gambling receipts constitute exempt lump sums under section 8(11)(d) of the Act.
It follows from what has been said in the previous paragraph that Mr Ruan’s gambling receipts are “moneys” earned, derived or received by him from his gambling activities. On his evidence, he has used those receipts for various purposes, including socialising, the payment of bills, the purchase of a house and further gambling. In relation to the expression “own use or benefit”, it is not defined in the Act. In these circumstances, the expression has the meaning it bears in ordinary speech and is a question of fact (see Secretary, Department of Social Security v Ekis (1998) 52 ALD 246 at 251 per Drummond J). Given the use to which he put the receipts, the Tribunal is satisfied (and so finds) that the receipts have been earned, derived or received by Mr Ruan for his “own use or benefit”. The receipts do not represent a one-off windfall, nor are they amounts which could not be foreseen or predicted or expected or which are unlikely to occur again. There has been a course of conduct by Mr Ruan which takes his gambling receipts outside the ambit of the exempt lump sum provisions in section 8(11).
… Thus, the whole of Mr Ruan’s gambling receipts are part of his “ordinary income” for the purposes of the Act, unless his gambling activities can properly be characterised as “carrying on a business”.
[11] [2007] AATA 1758.
In Loizou and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs,[12] the Tribunal addressed the characterisation of gambling proceeds as an exempt lump sum:
Ms Riley, who appeared as advocate for Mr Loizou, contended that the amounts received by Mr Loizou by way of gambling winnings should be treated as having the character of a lottery win or other windfall and therefore be treated as an “exempt lump sum” pursuant to s 8(11) of the Act. However pursuant to the terms of s 8(11), in order for an amount to constitute an “exempt lump sum”, in addition to the requirements that it not be a periodic amount, a leave payment or income from remunerative work, an amount must be “an amount, or class of amounts, determined by the Secretary to be an exempt lump sum”. The difficulty for Ms Riley’s argument is that the Secretary has not determined that any form of gambling receipts, or Mr Loizou’s gambling receipts in particular, are to be treated as an exempt lump sum
[12] [2012] AATA 224.
To the extent that the Applicant’s unexplained deposits may be gambling receipts, they are properly to be regarded as income under section 8 of the Act and assessed accordingly for the following reasons:
a.the Secretary has not made a determination that gambling receipts are exempt lump sums under subsection 8(11) of the Act;
b.the nature and frequency of the Applicant’s gambling activities mean that the subsequent receipts cannot be described as a ‘one-off’ or ‘windfall,’ per section 8(11) of the Act;
c.the Applicant’s gambling receipts were available for his own use and benefit; and
d.the Applicant’s gambling activities cannot be characterised as ‘carrying on a business’ for the purposes of section 1075 of the Act.
The Respondent did not assess the Applicant’s claimed gambling receipts of $145,000.00 from the Caulfield Cup Carnival on 27 October 2015 in its calculations, but argued that it is open for the Tribunal to do so in view of the Applicant’s own evidence to the ARO.
The Tribunal is satisfied that the $145,000 as part of the Applicant’s gambling receipts can properly be regarded as income for the purpose of the Act. However, the evidence regarding the $145,000 winnings is inconclusive. It was not deposited to the Applicant’s bank account as a single lump sum nor is it possible to identify any specific deposits as part of that amount. The Applicant’s evidence was that money from the $145,000 winnings was added to his cash reserve for personal use and to deposit into his account as he needed to purchase shares. Thus, some or all of the $145,000 may have been accounted for as unexplained deposits and included in the Respondent’s assessment of income.
In these circumstances, and without further evidence, the Tribunal is not satisfied that all or some part of the $145,000 receipt should properly be included in assessing the Applicant’s income for the purpose of the Act.
It is apparent that the inclusion of the $145,000 may not be materially relevant in any event. The Respondent stated in its RSFIC that:
If the Tribunal were to accept this gambling receipt as income, it would be assessed for 12 months from the date of receipt on 27 October 2015 in accordance with the income test and section 1073 of the Act, resulting in a nil entitlement to disability support pension (exceeding income test limit). Given the Applicant’s unexplained income already exceeded the income test limit from 8 January 2016 for the remainder of the year (limit $49,296, income of $53,400), assessment of these gambling receipts as income from 27 October 2015 would have minimal impact on the overall debt amount.
Deemed Income and Value of Shareholdings
The Respondent has set out the value of shareholdings from which deemed income amounts have been calculated and included in the assessment under the income test.[13] The Respondent understands that the Applicant disputes the value of his shareholdings (as set out at ST4), from which deemed income amounts are calculated and included for assessment under the income test. The Respondent concedes that the value of some shareholdings is incorrect and that errors have been made. As such, the Respondent submits that the value of all the Applicant’s shareholdings ought to be reviewed and recalculations of deemed income amounts made, to ensure that the DSP debt during the period 20 June 2009 to 1 March 2019 is correct.
[13] ST4.
CONCLUSION
The Tribunal is satisfied that the Applicant is indebted to the Commonwealth in respect of overpayments of the DSP in the period 20 June 2009 to 1 March 2019, but the exact amount of the debt is not determined. As conceded by the Respondent the correct calculation of the debt requires that the calculation of the unexplained bank deposits exclude the total sum of $10,243.05 and that the value of the Applicant’s shareholding be reassessed. It is appropriate that the matter be remitted to the Respondent for this recalculation to be conducted.
It is a matter for the Respondent whether it also has regard to the $145,000 Caulfield Cup winnings in conducting the recalculation. If it does so the Respondent will need to be satisfied of the extent to which that amount has been otherwise included in the unexplained deposits in the Applicant’s bank account to avoid double counting.

In his oral submissions Mr Henderson for the Respondent gave an assurance that the recalculation will not result in more than a 15% reduction in the amount assessed in the Original Decision and on this basis he argued that the Tribunal could determine whether to exercise its discretion available under subsection 1236 (to write off), 1237A (to waive due to administrative error) and section 1237AAD (special circumstances waiver) in respect of the amount as recalculated. However, the Tribunal is concerned that the lack of clarity in the final amount to be recovered means the Tribunal is not able to properly assess whether the discretion available under subsection 1236 (to write off), 1237A (to waive due to administrative error) and section 1237AAD (special circumstances waiver) should be exercised. In the circumstances the appropriate course is for the matter to be remitted to the Respondent so that the recalculation of the debt can be completed and then an assessment made whether the discretion available to write off or waive the debt should be exercised. The Applicant would then retain a right to seek review of that decision.
DECISION
The decision under review is set aside and the matter is remitted to the Respondent for reconsideration in accordance with directions that:
a.the Applicant’s DSP debt for the period 20 June 2009 to 1 March 2019 be recalculated having regard to:
i.the deposits into the Applicant’s Commonwealth Bank account listed at paragraph 4.26 of the RSFIC not being assessed as income; and
ii.the value of all the Applicant’s shareholdings being reviewed for the period 20 June 2009 to 1 March 2019 and recalculations of deemed income amounts made; and
b.the Respondent reconsidering whether the recalculated DSP debt is recoverable or should be written off or waived.

I certify that the preceding 36 (thirty-six) paragraphs are a true copy of the reasons for the decision herein of Member R West

...[sgd]..................................................................
Associate
Dated: 1 July 2021

Date of hearing:

31 March 2021

Solicitors for the Applicant:

Self-represented

Advocate for the Respondent:

Mr James Henderson

Solicitors for the Respondent:

Services Australia

Date of hearing:	31 March 2021
Solicitors for the Applicant:	Self-represented
Advocate for the Respondent:	Mr James Henderson
Solicitors for the Respondent:	Services Australia