Randazzo and Secretary, Department of Family and Community Servic Es
[2004] AATA 300
•19 March 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 300
ADMINISTRATIVE APPEALS TRIBUNAL )
) No T2003/125
GENERAL ADMINISTRATIVE DIVISION ) Re ANGELO RANDAZZO Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Associate Professor B W Davis AM (Part-time Member) Date19 March 2004
PlaceHobart
Decision The decision under review is affirmed. [Sgd B W Davis]
Part-Time Member
CATCHWORDS
Social Security - age pension - Italy - Australia - compensation payments - INAIL (Italian Workers' Compensation Authority) - INPS (the Italian pension Authority) - Social Security Appeals Tribunal.
Social Security Act 1991 - ss17(1), 44(1), 1064(1), 1173
Social Security (Administration) Act 1999
Social Security (International Agreements) Act 1999
Guide to Social Security Law
Agreement on Social Security between Australia and the Republic of Italy
Re Nemaz and Secretary, Department of Social Security (1987) 12 ALD 107
Re Zanon and Secretary, Department of Social Security (19890 18 ald 82
Re Sallan and Secretary, Department of Family and Community Services (1999) AATA 539
Re Bersee and Secretary, Department of Family and Community Services (2003) AATA 201
REASONS FOR DECISION
19 March 2004 Associate Professor B W Davis AM (Part-time Member) Decision Under Review
1. The decision under review is a decision made by a Centrelink officer on 19 November 2002 and an Authorised Review Officer (ARO) on 2 February 2003, subsequently varied by the Social Security Appeals Tribunal on 13 June 2003, to reject the applicant’s claim for Australian age pension due to his Italian compensation income.
Issue
2. The issue is whether payments received by the applicant from the Italian Workers Compensation Authority (INAIL) should be treated as compensation payments in accordance with s17 of the Social Security Act 1991, for the purposes of age pension in Australia.
Standard of Proof
3. The standard of proof is on the balance of probabilities and to the reasonable satisfaction of the Tribunal.
legislation and Agreements
4. The relevant legislation is the Social Security Act 1991 (“the Act”) and amendments, ss17, 44, 1064 and 1173. Schedule 2 of the Social Security (International Agreements) Act 1999 sets out the Agreement on Social Security between Australia and the Republic of Italy. Note also the Guide to Social Security Law.
Background
5. The applicant, Angelo Randazzo, resides in Italy and is unable to attend hearings in Australia. He indicated on 17 September 2003 that he would accept a decision on the papers.
6. Mr Randazzo lodged a claim for Australian age pension on 3 December 2001 with the Italian Pension Authority (INPS), shortly before his 65th birthday on 18 December 2001. On 8 November 2002 Centrelink International Services in Australia received the claim.
7. On 19 November 2002 a Centrelink officer decided Mr Randazzo was entitled to an Australian age pension, but could not be paid the pension as the rate that would be payable was nil. Mr Randazzo sought a review of that decision and after the original decision-maker had affirmed the decision again, it was referred to an Authorised Review Officer (ARO) who further affirmed the decision on 7 February 2003.
8. In an outline summary the ARO’s reasons for decision were as follows:
· Mr Randazzo was 65 years of age on 18 December 2001.
· He receives monthly compensation payments through INAIL of Italy.
· As at 1 November 2002 the compensation was Euros 531.06 a month (Euros 6372 per year) which was equivalent to $A10,683 a year (calculated on the basis of 1 Euro being $A0.5964).
· The amount of compensation is a direct deduction (in Australia) from the amount of age pension that otherwise would be payable to Mr Randazzo.
· The amount of age pension otherwise payable to Mr Randazzo is $4,401 per annum, affected by his Italian age pension of Euros 17,089 per annum.
· The amount of compensation is greater than the amount of age pension, so no age pension was payable to Mr Randazzo.
9. In respect of the above it should be noted that the applicant has two elements of Italian income, one arising as injury compensation payments through INAIL and the other through INPS.
10. Mr Randazzo did not accept the Centrelink decisions and applied for review by the SSAT which in his absence from Australia, conducted its hearing in Hobart on 3 June 2003. The Tribunal considered all electronic and paper records, held by Centrelink as well as letters from Mr Randazzo. There was clear evidence Mr Randazzo was receiving an INAIL payment of Euros 6,372.72 per year, in addition to an INPS contributory pension of Euros 16,955.25. His Australian working residency was from 24 June 1960 to 2 September 1972, and calculated as 147 months, while his INPS contributory period was reported as 30 years.
11. In a statement to the SSAT, the applicant wrote that compensation income from INAIL was for an injury at work and is not designated as income in Italian law, because it is subject to periodic examination and review and may be reduced or cease if recovery from injury occurs, Mr Randazzo also advised that his pension is the only income entering his household, from which he supports his wife and himself, as well as an unemployed adult daughter and a student adult son. The correct name for INPS is Instituto Nazionale della Previdenza Social, which translates as the Italian National Social Security Institute, and it is through this organisation that social security benefits, such as age pension, are paid.
12. Having considered all evidence before it, the SSAT finally concluded it was unable to determine whether the payment Mr Randazzo receives from INAIL is a payment of “compensation” as described in s17(2) of the Act. There were a number of reasons for this uncertainty.
13. Australian social security law treats “income” as gross income from all sources in determining qualification and rate of pensions (ss8 and 1072 of the Act). The Guide to Social Security Law makes it clear this also applies to pensions from overseas sources and there are several AAT decisions reinforcing this point (see, for example, Sallan and Secretary, Department of Family and Community Services (1999) AATA 539 and Crewer and Secretary, Department of Family and Community Services (2001) AATA 509. The SSAT could not identify any exclusion provisions which would apply to the amount described as compensation from INAIL.
14. But the SSAT also noted reference to the manner in which periodic payments may affect the rate of age pension and certain other kinds of benefits, described as “compensation affected payment”. These only apply in limited circumstances described in s17(2) of the Act. The SSAT was unsure how this might affect the situation, in that the Centrelink ARO review referred to the amount of age pension which would “otherwise” be payable to Mr Randazzo, but the Tribunal found this term ambiguous; to what did it apply?
15. The SSAT decided to direct Centrelink to calculate the rate of age pension which would be payable if the INAIL compensation benefits were treated as ordinary income. If the rate was calculated as nil, the under s44(1) of the Act, no age pension could be paid to Mr Randazzo regardless of how the INAIL payment was categorised in Australia. If on the other hand the compensation payments were excluded from income and some notional rate of age pension then applied, the Tribunal would set aside the original decision and remit the matter to Centrelink for further consideration and determination.
16. It is documented that Centrelink did pursue further evidence, but the only outcome recorded prior to the AAT hearing is that if the INAIL payments were treated as income, the applicant would have been entitled to some age pension at an unspecified rate.
Analysis
17. The Tribunal is now required to stand in the shoes of the original decision-maker, examining all evidence anew, taking into account statutory provisions and any relevant case determinations.
18. This case centres around characterisation of payments the applicant receives from INAIL. It is important to understand both Italian and Australia legal provisions in this regard, as well as details of the International Agreement on Social Security between Australia and the Republic of Italy.
19. Article 16 of the International Agreement, which is incorporated in Schedule 2 of the Social Security (International Agreements) Act 1999, provides for claims for age pension lodged with INPS in Italy to be taken as a claim lodged with Centrelink. The SSAT concluded that under this provision Mr Randazzo would qualify for Australian age pension, but not if the rate payable was nil.
20. The rate of a person’s age pension in Australia involves both an income test and an asset test and is not determined by any prior contributions made by a person. The Social Security Act 1991 defines income in broad terms, viewing it as the gross ordinary income of an individual or couple. The SSAT could not identify any exclusion that would apply to the amount described as “compensation” from INAIL.
21. The Tribunal notes that ss17(1) and 17(2) of the Act makes special provisions for some forms of so-called “compensation affected payments, including “… 17(1)(aa) age pension”. But this is primarily intended to resolve certain technical aspects of Australian welfare payments and does not aid the applicant’s case, for a number of reasons. Consider s17(2) of the Act recorded below.
22. Section 17(2) of the Act states that subject to subsection (2B), “compensation” means:
(a) a payment of damages; or
(b) a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or
(c) a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or
(d) any other compensation or damages payment;
(whether the payment is in the form of a lump sum or in the form of a series of periodic payments and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.
17(2A) Paragraph (2)(d) does not apply to a compensation payment if:
(a)the recipient has made contributions (for example, by way of insurance premiums) towards the payment; and
(b) either:
(i)the agreement under which the contributions are made does not provide for the amounts that would otherwise be payable under the agreement being reduced or not payable because the recipient is eligible for or receives payments under this Act that are compensation affected payments; or
(ii)the agreement does so provide but the compensation payment has been calculated without reference to the provision.
17(2B) A payment under a law of the Commonwealth, a State or a Territory that provides for the payment of compensation for a criminal injury does not constitute compensation for the purposes of this Act.”
23. Mr Randazzo’s situation is one where:
(a)He is in receipt of INAIL payments arising from work injuries in 1975 and 1990;
(b)He was an employee of a shipping company and has advised that all contributions earlier made to INAIL were paid by his employer.
24. This means that under Australian social security law, s17(2A) of the Act is not enlivened to exclude the application of s17(2)(d) to payments received by the applicant from INAIL. In other words compensation payments from INAIL must be treated as ordinary income for purposes of determining what age pension, if any, applies.
25. It is now necessary to determine what effect Mr Randazzo’s compensation payments actually have on his prospective age pension. Here s1173 of the Act is relevant, since it explains that periodic compensation payments made in respect of a work injury that occurred prior to making a claim for age pension (as a “compensation affected payment’), reduces the age pension on a dollar for dollar basis:
“1173(1) If:
(a) a person receives periodic compensation payments; and
(b) the person was not, at the time of the event that gave rise to the entitlement of the person to the compensation, qualified for, and receiving, a compensation affected payment; and
(c) the person receives or claims a compensation affected payment in relation to a day or days in the periodic payments period;
the rate of the person's compensation affected payment in relation to that day or those days is reduced in accordance with subsection (2).
1173(2) The person's daily rate of compensation affected payment is reduced by the amount of the person's daily rate of periodic compensation.
1173(3) The reference in subsection (2) to a daily rate of periodic compensation is a reference to the amount worked out by dividing the total amount of the periodic compensation payments referred to in paragraph (1)(a) by the number of days in the periodic payments period.”
26. There is evidence that at the date Mr Randazzo first lodged his application for age pension (3 December 2001), the maximum rate of age pension payable in Australian dollars to an applicant, before application of the ordinary income test, was $8,907 per annum.
27. There is further evidence that the annual rate of the applicant’s payment from INAIL at the time, in Australian dollars, was $10,683.39 calculated as follows:
· INAIL benefit Euros 531,06 per month.
· Annual rate of INAIL payments:
12 x Euros 531.06 = Euros 6372.72
·Exchange rate $A = Euros 0.5964.
·Annual rate in Australian dollars $10,683.39.
28. As Mr Randazzo’s rate of INAIL compensation at the date of his claim for age pension exceeded his maximum rate of age pension (even before application of the ordinary income test to $4,401 per annum maximum), under s1173 of the Act, the applicant’s rate of age pension was nil.
To Summarise
(a)The Tribunal finds that payments received by the applicant INAIL should be treated as compensation payments in accordance with s17 of the Act for purposes of age pension qualification and calculation i.e. they should be regarded as ordinary income.
(b)The Tribunal finds Mr Randazzo was entitled to age pension, but at a nil rate.
Decision
29. The decision under review is affirmed.
I certify that the 29 preceding paragraphs are a true copy of the reasons for the decision herein of Associate Professor B W Davis A M (Part-time Member)
Signed: K L Miller (Administrative Assistant)
Date/s of Hearing Overseas application – matter decided on the papers.
Date of Decision 19 March 2004
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