Ringham and Secretary, Department of Social Services (Social services second review)

Ringham and           Secretary, Department of Social Services (Social services second review) [2019] AATA 1003 (28 May 2019)
Division:GENERAL DIVISION
File Number:2018/4425
Re:Elizabeth–Anne Ringham
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Senior Member D R Davies
Date:28 May 2019
Place:Brisbane

The Tribunal remits the decision under review.
............................[SGD]..................................
Senior Member D R Davies
CATCHWORDS
AGE PENSION – cancellation – rate of age pension calculation – whether applicant is an attributable stakeholder in a designated private trust – whether the overpaid amount is correct – matter remitted.
LEGISLATION

Social Security Act 1991 (Cth)

Social Security (Administration) Act 1999 (Cth)

Social Security (Attributable Stakeholders and Attribution Percentages) Principles 2017

Social Security (Attribution of Income Ineligible Deductions) Determination 2017

Social Security Guide

CASES
Secretary Department of Social Security v Hales (1998) 82 FCR 154
REASONS FOR DECISION
Senior Member D Davies
28 May 2019
INTRODUCTION

The Applicant, Ms Elizabeth–Anne Ringham (‘Ms Ringham’), seeks review of the decision made by the Social Services and Child Support Division of the Administrative Appeals Tribunal on 28 June 2018 (‘AAT1’).[1] In that decision AAT1 set aside the Department of Human Services’ (‘the Department’) decision made, 10 February 2017, to cancel payment of age pension to Ms Ringham, and a further decision made on 22 September 2017 to raise and recover a debt of $90,780.63, being age pension paid to her for the period

1 July 2012 to 6 December 2016 and remitted the matter to the Department for reconsideration having regard to the matters set out in the AAT1 decision.
[1] Exhibit 1, s 37 Tribunal Documents, T 2, p 5.
The Department implemented the AAT1 decision on 20 August 2018. Ms Ringham’s rate of age pension was recalculated and it was determined that she was overpaid $79,895.69 in age pension for the period 14 September 2012 to 6 December 2016.
The issues to be decided in this application are whether:
(a)The Ringham Family Trust (Trust) is a designated private trust;
(b)Ms Ringham is an attributable stakeholder, and if so, the correct attribution percentage;
(c)Ms Ringham was overpaid age pension in the amount of $79,895.69 for the period 1 July 2012 to 6 December 2016;
(d)The overpaid amount is a debt to the Commonwealth;
(e)The debt of age pension should be recovered; and
(f)Ms Ringham’s age pension was correctly suspended and subsequently cancelled from 10 February 2017.
BACKGROUND FACTS
The evidence before the Tribunal is contained in the Exhibits admitted by the parties at the hearing which include the Tribunal Documents and oral evidence given by Ms Ringham by telephone at the hearing. The parties also made supplementary written submissions in relation to matters which arose at the hearing and in accordance with directions made by the Tribunal. Those submissions are admitted as the following exhibits:
(a)Exhibit 5 - Email from Ms Ringham to the Tribunal dated 7 April 2019;
(b)Exhibit 6 – Respondent’s Supplementary Statement of Issues, Facts and Contentions with attachments dated 12 April 2019;
(c)Exhibit 7 – Respondent’s Further Supplementary Submissions dated 1 May 2019; and
(d)Exhibit 8 – Email from Ms Ringham to the Tribunal dated 9 May 2019.
On 1 July 2005, Ms Ringham signed the Trust Deed setting up the Ringham Family Trust (‘the Trust’).[2] Under this Trust Deed Ms Ringham was appointed as Trustee of the Trust as well as the Appointor and the Guardian. Ms Ringham was one of the five beneficiaries of the Trust along with her four adult children, Bess-Serena Ringham, Cass-Anna Ringham, Bree-Eliza Ringham and Shey Douglas Ringham.
[2] Exhibit 1, s 37 Tribunal Documents, T 5, p 195.
The Trustee was given a wide range of powers under the Trust, including the discretion to determine the allocation of income of the Trust to any of the beneficiaries. The Appointor was given the power to remove and appoint the Trustee and Guardian. The Trustee was required to obtain the Guardian’s consent in exercising some of the powers under the Trust Deed.
Ms Ringham gave evidence that the Trust had been set up at the suggestion of her accountant, Mr Crowe and he prepared the trust documents. She said that it was done because her children had put so much money into the house property which was her home, and it was to protect them if something happened to her.
On 16 July 2009, Ms Ringham and her daughter Bree-Eliza Ringham signed a Deed of Retirement and Appointment of Trustee (‘the Deed’).[3] In this document, the parties are described as Elizabeth-Anne Ringham, referred to as “Retiring Trustee” and separately as the “Appointor” and Bree-Eliza Ringham referred to as the “New Trustee”. It recites that the Retiring Trustee is a trustee of the Ringham Family Trust. In the operative part of the Deed it states:
“1. The Retiring Trustee does hereby declare that is desirous of being discharged from the trust of the said Trust and the existing Trustee does hereby consent to such discharge on and from the execution hereof by the said Retiring Trustee.”
The Deed then goes on to provide that the existing Trustee and the New Trustee release and discharge the Retiring Trustee in respect of any act or thing done under the Trust. However, I note that, nowhere in this Deed does it say that the Appointor appoints Bree-Eliza Ringham as Trustee. In this respect, I note that the previous decisions of the Respondent and that of AAT1 have accepted that by this Deed Ms Ringham retired as Trustee and Bree-Eliza Ringham was appointed the new Trustee. The Respondent in its Statement of Issues, Facts and Contentions also accepts this as having occurred.[4]
[3] Exhibit 1, s 37 Tribunal Documents, T 15, p 316.
[4] Exhibit 2, Respondent’s Statement of Facts, Issues and Contentions, para 6.
In her evidence, Ms Ringham said that the Deed was prepared by her accountant. However, I am concerned that this Deed may not have effectively appointed a new trustee because it does not state in the operative part of the Deed that Bree-Eliza Ringham is appointed as Trustee by the Appointor.
Ms Ringham gave evidence that she had purchased the rural property at Chesterfield Drive, Bonogin in 1989 and subsequently built a small home on it which was the family home ( ‘House Property’). The Applicant said that in 2006 a loan of $650,000.00 was obtained through Macquarie Bank and it was used to build an extension to the existing house, sheds, roads and fencing. She said that this loan and the work were arranged by her children. The loan contract was through Macquarie Mortgages Perpetual Limited and Ms Ringham in her own capacity and as trustee for the Ringham Family Trust for the total amount of $612,500.00.[5]
[5] Exhibit 1, s 37 Tribunal Documents, T 18, p 336.
On 21 February 2011, a Centrelink Complex Assessment Officer spoke to Ms Ringham’s then accountant and advised that the Deed of Retirement and Appointment of Trustee did not show that Ms Ringham had relinquished control of the Trust and if in fact she had relinquished control, for any other documents to be provided to Centrelink. No further documents were provided by Ms Ringham at that time.[6] On 4 November 2011, Ms Ringham’s then accountant is noted as advising Centrelink that the Trust’s sole asset was the settlement sum of $10.00 and it had no other assets or liabilities and that it will not trade in the future.[7]
[6] Exhibit 1, s 37 Tribunal Documents, T 70, p 1319.
[7] Exhibit 1, s 37 Tribunal Documents, T 70, p 1319.
On 10 November 2011, the Department issued Ms Ringham a notice under subsection 62(2) of the Social Security (Administration) Act 1999 (Cth) (‘Administration Act’) identifying that she was being paid age pension under the income test.[8]
[8] Exhibit 1, s 37 Tribunal Documents, T 6, p 219.
Ms Ringham gave evidence that the Trust did not operate any business nor have any income until 2012 when the family decided to set up Songbird Family Day Care business, operating out of the House Property and which would be operated by the Trust. She said that the primary idea was to produce an income that could be used to reduce the mortgage debt to Macquarie Bank. She said that her family asked her if she was prepared to be involved because a family day care business needed to have a person on the premises at all times who either had, or was studying for, a Certificate III in Family Day Care. She said that she agreed to be involved and she undertook the study necessary to obtain the Certificate III and it took her 18 months to complete and obtain that Certificate. She said that she agreed to be involved on the basis that she would not lose the pension and that she was to receive $100.00 per week at first and later $200.00 per week and at a later time she was also doing the books for the business.
Ms Ringham gave evidence that the Songbird Family Day Care business operated in an area adjoining the living area in the House Property. The necessary equipment was largely sourced at low cost from op-shops and other second hand purchases. She helped acquire the equipment and set up the centre. Her children also assisted in acquiring equipment and setting up the centre. Because she was the person studying for and later the one who held the Certificate III qualification, she was required to be present on the premises when the Family Day Care business was operating. She said that in the early stages, her daughters Beth-Serena Ringham and Bree-Eliza Ringham would come in and assist, but after that, the Trust employed some staff who were paid cash as well as engaging some students who were satisfying study requirements and who did not have to be paid. She said that profits from the business were paid into an offset account attached to the Macquarie Bank loan accounts.
The business Songbird Family Day Care Centre commenced operation in the 2012/13 financial year. The actual date of commencement, and when income was first earned, is unclear.
On 2 October 2012, Ms Ringham declared to the Department earnings from Songbird Family Day Care of $100.00 for 22 September 2012.[9]
[9] Exhibit 1, s 37 Tribunal Documents, T 70, p 1319.
Based on its tax return, in the first financial year 2012/13, the business operated as a partnership between Ms Ringham and her daughter, Bess-Serena Ringham, but confusingly under the partnership name “Ringham Family Trust”. The partnership income for the business for the 2012/13 financial year after expenses was $29,162.00 which in the tax return, was allocated $21,288.00 to Ms Ringham and $7,874.00 to Bess-Serena Ringham.[10]
[10] Exhibit 1, s 37 Tribunal Documents, T 13, p 290.
In her evidence, Ms Ringham said that this tax return was done by an accountant who had been suggested to them by C&K, the umbrella Child Care and Kindergarten Association with which they were affiliated. Doing it as a partnership tax return was a mistake by that accountant. She said that after the first year of operation they changed accountants and the tax returns for the business after that first year were prepared on the correct basis that the business was operated by the Trust.
Ms Ringham was paid age pension totalling $20,734.00 for the 2014/15 financial year.[11]
[11] Exhibit 1, s 37 Tribunal Documents, T 7, p 224.
In August 2016, in response to a request from the Department, Ms Ringham provided various documents to the Department, including a record of resolutions of the Trust dated 27 June 2016.[12] In this resolution, Ms Ringham, in her capacity as Trustee, proposed to distribute 100% of the income for the 2015/16 year to herself in her capacity as beneficiary.
[12] Exhibit 1, s 37 Tribunal Documents, T 8, p 251.
On 8 August 2016, the Department was provided with the Trust tax return in respect of the 2014/15 financial year.[13] The tax return declaring that Ms Ringham is the Trustee of the Trust and that the main business activity of the Trust is the provision of child care services under the business name of C&K Gold Coast Family Day Care at the property at Chesterfield Drive, Bonogin. The tax return for that financial year records that the Trust generated business income of $68,326.00 with a net income of $41,278.00 before deducting carried forward losses, resulting in a net income of $26,371.00. The tax return records that the net income was distributed as follows:
(a)$0.00 to Bess-Serena Ringham
(b)$6,592.00 to Elizabeth-Anne Ringham
(c)$6,953.00 to Shey Ringham
(d)$6,592.00 to Bree-Eliza Ringham
(e)$6,594.00 to Cass-Anna Ringham.
[13] Exhibit 1, s 37 Tribunal Documents, T 8, p 225.
On 10 August 2016, the Department received a completed MOD-PT Private Trust form dated 20 July 2016 in respect of the Trust,[14] which had been completed by

Shey Douglas Ringham in respect of a claim by his partner for income support. In this form, Shey Douglas Ringham declared that:
(a)The Trust was set up and commenced trading on 1 August 2005 (at p255);
(b)The Trustee of the Trust is Elizabeth Ringham (at p257);
(c)No other person has informal control of the Trust or otherwise instructs the Trustee (at p258); and
(d)The beneficiaries of the Trust are Shey Ringham, Bess Ringham, Bree Ringham, Cass Ringham and Elizabeth Ringham (at p260).
[14] Exhibit 1, s 37 Tribunal Documents, T 9, p 253.
On 11 August 2016, the Department contacted Ms Ringham in relation to the MOD-PT form referred to in the previous paragraph. The Department’s records indicate that Ms Ringham said that:
“The Trust commenced the family day care from July 2012. Her two daughters looked after the business at start. The 2014/15 Trust tax return shows the trust was distributed among cus, her son and other two daughters… the accountant recommended the FDC business operated in the trust as the trust had some credits (prior year losses) in ATO.”[15]
[15] Exhibit 1, s 37 Tribunal Documents, T 70, p 1309.
The same file note records that Ms Ringham was asked to provide her tax return, trust tax return and financial statements for 2012/13 and 2013/14 and that she agreed to assess the Trust based on the 2014/15 Trust tax return now without waiting for the other two years tax returns.
On 12 August 2016 the Department issued a Notice to Ms Ringham requiring her to provide information to help determine her entitlement to receive the age pension.[16] It requested tax returns and financial statements for the Trust for the financial years 2012/13, 2013/14 and 2015/16 if lodged, and personal income tax returns for the same years. On the same date, the Department issued a letter to Ms Ringham advising that her age pension was being assessed on the basis that her annual income for the purpose of calculating her age pension entitlement is recorded as $41,278.31.[17]
[16] Exhibit 1, s 37 Tribunal Documents, T 10, p 265.
[17] Exhibit 1, s 37 Tribunal Documents, T 11, p 267.
Following a request from the Department, on 2 September 2016, Ms Ringham attended an appointment with the Department to discuss her financial circumstances.[18]
[18] Exhibit 1, s 37 Tribunal Documents, T 12, p 269.
On 2 September 2016, the Department received from Ms Ringham the Trust income tax returns and financial accounts for the 2012/13, 2013/14 as well as her personal income tax returns for the 2012/13 and 2013/14 financial years.[19]
[19] Exhibit 1, s 37 Tribunal Documents, T 13, p 272.
As previously mentioned, the tax return for 2012/13 was a partnership tax return in the name of Ringham Family Trust with the net income of $29,162.00 being allocated $21,288.00 to Ms Ringham and $7,874.00 to Bess Ringham.[20]
[20] Exhibit 1, s 37 Tribunal Documents, T 13, p 290.
The Trust income tax return for 2013/14 declared business income of $60,229.00, expenses of $15,776.00, with net income of $44,453.00. There were tax losses deducted of $44,453.00, resulting in total net income of nil. As a result, there was no income distribution to beneficiaries.
Ms Ringham’s personal income tax return for 2012/13 declares age pension income of $19,098.00, supplementary income from the partnership of $21,288.00 and taxable income of $40,386.00.[21]
[21] Exhibit 1, s 37 Tribunal Documents, T 18, p 336, T 13, p 301.
Ms Ringham’s personal income tax return for 2013/14 declares age pension income of $20,081.00, deductions of $191.00 and taxable income of $19,890.00.[22]
[22] Exhibit 1, s 37 Tribunal Documents, T 18, p 336, T 13, p 287.
In a letter dated 3 September 2016, Ms Ringham wrote to the Department following the meeting the previous day.[23] She stated:
“I was exempt from putting in tax returns for years because I was a pensioner. I decided to put in an individual tax return when Songbird opened up through the Ringham Family Trust in 2012/13.”
She also stated:
“I phoned Centrelink again closer to the opening of Songbird and told them that I would possibly be taking $250.00 per fortnight as a wage from the Trust and was once again told that it would not affect my pension… I did not contribute any monies or control over the opening of Songbird Family Day Care in our family home. I did not draw a wage and all monies were provided by my family to set up and run the business.”
[23] Exhibit 1, s 37 Tribunal Documents, T 18, p 336, T 14, p 310.
A further letter of the same date was sent to the Department by Cass-Anna Ringham on behalf of the Trust.[24] It stated that the opening of Songbird was a joint decision of the Ringham family. It stated that it was established in the family home also owned by the Ringham Family Trust where Ms Ringham resides. It stated that Ms Ringham had a Certificate III in Child Care and is required to be on the premises, hence it was a good opportunity to establish the business to assist with the mortgage. It stated:
“Elizabeth has never at any time contributed money or control over decisions to be made regarding Songbird.”
It went on to state:
“Distributions of monies from the Ringham Family Trust tax returns were all to the Ringham family who also contributed work and some financial assistance to the family home and Songbird Family Day Care.”
[24] Exhibit 1, s 37 Tribunal Documents, T 18, p 336, T 14, p 312.
On 4 October 2016 the Department issued a Notice to Ms Ringham requesting that she disclose information in relation to the House Property and financial information for the financial years ended 30 June 2014, and 30 June 2015.[25]
[25] Exhibit 1, s 37 Tribunal Documents, T 18, p 336, T 16, p 319.
On the same date, the Department wrote to Ms Ringham advising her as to her current age pension and that it was based on her annual income being $41,459.43.[26]
[26] Exhibit 1, s 37 Tribunal Documents, T 18, p 336, T 17, p 321.
On 1 November 2016, Ms Ringham completed a MOD-R Real Estate details form in respect of the House Property.[27] In this form, Ms Ringham declared that the House Property was purchased for $60,000.00 in 1991 and is estimated to have a current value of $800,000.00. She lives on the property, no rooms are used solely for business purposes and the land surrounding the home is not used primarily for commercial purposes. She also declared that it was only used as a rural residence, is not used to support a family member and does not have a potential commercial use. She declared that the property was owned 1/3 by the Trust and 2/3 by Macquarie Bank and that there was $650,000.00 owed on the mortgage over the property. In her evidence to the Tribunal, Ms Ringham said that the reference in this document to the property being owned 2/3 by Macquarie Bank was because of the mortgage over the property in favour of Macquarie Bank.
[27] Exhibit 1, s 37 Tribunal Documents, T 18, p 336, T 18, p 324.

By letter dated 7 December 2016, the Department advised Ms Ringham that her age pension was suspended.[28]
[28] Exhibit 1, s 37 Tribunal Documents, T 18, p 336, T 21, p 713.
On 9 December 2016, Ms Ringham wrote to the Department and amongst other things stated that she worked for 9 hours per day for 3 days per week for 2012/13 and 4 days per week for 2015/16.[29]
[29] Exhibit 1, s 37 Tribunal Documents, T 18, p 336, T 22, p 716.
On 12 January 2017, C&K Gold Coast Family Day Care responded to a Notice from the Department and advised that Ms Ringham registered as a Family Day Care Educator under the name Songbird Family Day Care with them on 11 June 2012.[30]
[30] Exhibit 1, s 37 Tribunal Documents, T 18, p 336, T 25, p 746.
On 10 February 2017, the Department wrote to Ms Ringham advising that it had cancelled her age pension on the basis that her income of $64,617.43 exceeded the allowable limit.[31]
[31] Exhibit 1, s 37 Tribunal Documents, T 18, p 336, T 31, p 819.
On 22 September 2017, the Department raised a debt of $90,780.63 against Ms Ringham in respect of the overpayment of age pension for the period 1 July 2012 to

6 December 2016.[32]
[32] Exhibit 1, s 37 Tribunal Documents, T 18, p 336, T 35, p 1088.
On 24 February 2017 an Authorised Review Officer (ARO) of the Respondent, affirmed the decision to cancel Ms Ringham's age pension. However, he amended the debt raised to $90,780.58.[33]
[33] Exhibit 1, s 37 Tribunal Documents, T 18, p 336, T 37, p 1091.
On 30 June 2017 the Social Services and Child Support Division of the Administrative Appeals Tribunal reviewed the ARO's decision setting it aside and remitting it back to the Department for reconsideration in accordance with the matters set out in its reasons (AAT1-2017 Decision).[34]
[34] Exhibit 1, s 37 Tribunal Documents, T 18, p 336, T 38, p 1096.
On 1 August 2017, Wallace Partners Accountants prepared financial statements and tax returns for the Trust for the 2015/16 financial year which refer to the Trustee of the Trust, being Bree-Eliza Ringham.[35] The Trust had a total income of $75,289.50 and a net profit after expenses of $48,834.01. This was distributed: $6,500.00 to Ms Ringham; and, $42,334.01 to Shey Ringham. Ms Ringham's personal tax return was also provided and it declared her taxable income to be $27,582.00, which included the distribution from the trust of $6,500.00 and the pension of $21,082.00.[36]
[35] Exhibit 1, s 37 Tribunal Documents, T 39 p 1099.
[36] Exhibit 1, s 37 Tribunal Documents, T 39 p 1116.
On 12 September 2017, the Department notified Ms Ringham that it had completed its review of the attribution decision for the Family Trust pursuant to the directions of the AAT1. The Department notified Ms Ringham that:
"There are a number of factors that are considered when determining the attribution decision. As you have formal control of the Ringham Family Trust by being Appointor for the Trust, and also having formal control of the Trust as you hold the licence for the Family Day Care, the attribution decision remains unchanged. Therefore you are continuing to be assessed 100% with the attributable income and assets of this entity."[37]
[37] Exhibit 1, s 37 Tribunal Documents, T 41 p 1124.
On 22 September 2017 the Department raised the age pension debt of $90,780.63 against Ms Ringham.[38]
[38] Exhibit 1, s 37 Tribunal Documents, T 42 p 1126; T 43 p1154.
On 5 October 2017, Ms Ringham wrote to the Department requesting a review of the Department's decisions and of the AAT1-2017 Decision. In this letter she also stated "I have no control over the finances of the Trust as that is the role of the Trustee. I relinquished this position in 2005."[39]
[39] Exhibit 1, s 37 Tribunal Documents, T 44 p 1156.
On 16 November 2017, an ARO confirmed the Department's further decision in respect of the Applicant's age pension in raising the debt. The ARO further determined that the debt raised ought to be recovered in full.[40]
[40] Exhibit 1, s 37 Tribunal Documents , T 46 p 1160.
On 27 November 2017, Ms Ringham requested further review of the decisions by the AAT1.[41] She subsequently filed with the Tribunal a statement of her financial circumstances dated 6 January 2013.[42]
[41] Exhibit 1, s 37 Tribunal Documents , T 53 p 1200.
[42] Exhibit 1, s 37 Tribunal Documents , T 50 p 1190.
On 15 February 2018, Ms Ringham was granted age pension.[43]
[43] Exhibit 1 Respondent's Statement of Issues, Facts and Contentions Annexure A.
On 25 January 2018 Ms Ringham emailed the Department attaching ‘Minutes of Meeting of Trustee of the Trust’ dated 12 October 2017.[44] These minutes recorded a meeting at 1:30 pm on 12 October 2017 at Caningeraba State School Staff Room. They note that:
(a)Present was "Bree-Eliza Ringham Trustee, Elizabeth Anne Ringham Appointor";
(b)“Chairperson – Bree-Eliza Ringham”;
(c)"4 Resolutions and discussion points
Deed of Retirement
Elizabeth-Anne Ringham of 251 Chesterfield Drive, Bonogin resigns the description of Appointor".
The Minutes are signed by Bree-Eliza Ringham as Chairperson and at the foot of the page of Minutes by Bree-Eliza Ringham and Elizabeth-Anne Ringham and witnessed by Fiona Maud.
[44] Exhibit 1, s 37 Tribunal Documents, T 52 pp 1198-1199.
In her evidence to the Tribunal, Ms Ringham said that this meeting took place at the school where her daughter Bree-Eliza Ringham was a teacher. She said that the document was prepared by either herself or Bree with the words of what the lady at Centrelink told her to put so she could get the pension. She said that the witness was the assisting principal at the school at the time. Ms Ringham said that apart from what was written in the document, she doesn’t recall anything else about the meeting. She gave evidence that the items listed in "4- Resolutions and discussion points" were just discussed. She said that there wasn’t any resolution of those items.
On 15 June 2018, Ms Ringham wrote to the Department to advise that the Family Trust was being closed down.[45]
[45] Exhibit 1, s 37 Tribunal Documents, T 55, p 1211.
On 20 June 2018, Ms Ringham wrote to the Department to confirm that the Trust had been closed down and that the appropriate deed to implement it was being prepared by the solicitor.[46]
[46] Exhibit 1, s 37 Tribunal Documents, T 56, p 1212.
On 20 June 2018, a Vesting Deed was entered into between Bree-Eliza Carter, described as "the Trustee" and Elizabeth-Anne Ringham described as "the Appointor".[47] It recites that the Trustee has resolved to vest the Ringham Family Trust pursuant to the powers conferred upon it by the Trust Deed. The operative part of the deed provides that the Trustee appoints 1 July 2018 as the Vesting Date of the Trust. It provides that the Trustee shall distribute all income and capital (if any) solely to Shey Douglas Ringham before the Vesting Date. It further provides that:
"The Appointor by its execution hereof acknowledges the authority of the Trustee under the Trust Deed to so vest the Trust."
It is signed by Bree-Eliza Carter and Ms Ringham.
[47] Exhibit 1, s 37 Tribunal Documents, T 57, p 1216.
On 28 June 2018, AAT1 set aside the Department's decisions made on 10 February 2017 and 22 September 2017, and remitted them back to the Department for further consideration in accordance with its reasons.[48]
[48] Exhibit 1, s 37 Tribunal Documents, T 2, p 5.
On 17 July 2018, the Deed of Retirement and Appointment of Appointor was entered into between Elizabeth-Anne Ringham, described as the "Retiring Appointor", Bree-Eliza Carter, described as the "New Appointor" and Bree-Eliza Carter, described as the "Trustee".[49] This deed recites that:
"A.      The parties resolved on 12 October 2017 that the Retiring Appointor would retire as Appointor.
B.       That Bree-Eliza Carter accepted the Appointment as Appointor."
The operative part of the Deed provides:
"1.       As at 12 October 2017, the Appointor of the Ringham Family Trust is Bree-Eliza Carter in accordance with the Minutes attached.
2.        That Elizabeth-Anne Ringham had as at 12 October 2017 advised the Trustee that she renounced all beneficial interest in the Ringham Family Trust."
The Deed is signed by Elizabeth-Anne Ringham as Retiring Appointor, Bree-Eliza Carter as New Appointor and Bree-Eliza Carter as Trustee and attaches a copy of the Minutes of Meeting of Trustees of 12 October 2017, to which I have previously referred. I have concerns about the efficacy of these documents to appoint the new Appointor because they do not provide that Elizabeth-Anne Ringham, as Appointor, appoints Bree-Eliza Ringham as the New Appointor. Furthermore, Ms Ringham’s evidence was that these matters were only discussed at the meeting of 12 October 2017 and that there were no resolutions.
[49] Exhibit 1, s 37 Tribunal Documents, T 59, p 1243.
On 8 August 2018, the Applicant applied to the General Division of the Administrative Appeals Tribunal (the tribunal) for further review.[50]
[50] Exhibit 1, s 37 Tribunal Documents, T 1, p 1.
On 20 August 2018, the Department recalculated Ms Ringham’s entitlement to receive age pension pursuant to the directions of AAT1, and determined that she was overpaid $79,895.60 for the period 14 September 2012 to 6 December 2016.[51]
[51] Exhibit 1, s 37 Tribunal Documents, T 63, p 1259.
On 5 September 2018, Ms Ringham wrote advising that she intended to further dispute the debt of age pension to the Tribunal.[52]
[52] Exhibit 1, s 37 Tribunal Documents, T 66, p 1263.
Ms Ringham is presently in receipt of age pension at the rate of $913.30 per fortnight, with deductions of $20 per fortnight being applied against her extant debt.[53]
[53] Exhibit 2, Respondent’s Statement of Facts Issues and Contentions, para 47.
RELEVANT LEGISLATIVE PROVISIONS
The legislative provisions relevant to this application are:
(a)Social Security Act 1991 (Cth) (the Act);
(b)Social Security (Administration) Act 1999 (Cth) (the Administration Act);
(c)Social Security (Attributable Stakeholders and Attribution Percentages) Principles 2017 (the Attribution Principles);
(d)Social Security (Attribution of Income Ineligible Deductions) Determination 2017 (the Determination); and
(e)Social Security Guide (the Guide).
Section 1064 of the Act provides the method for calculating the rate of age pension payable to a person otherwise qualified for payment. Module A of section 1064 contains a method statement for the overall rate calculation and sets out that the rate must be worked out separately under both the income test and the assets test. The rate payable under each test is then compared and the lower rate is the one that becomes payable, if a nil rate is payable then the pension if previously payable is cancelled.
In determining a persons’ income and assets, the income and assets of a private company or trust they control are to be taken into account. “Control” is for the purposes of social security law broader than what might be the case under general company of trust law. Income and assets can be attributed to a person even though no income, or a much reduced amount is received by them or no assets are held in their name. this occurs because of trust and company attribution laws in Part 3.18 of the Act.
Attribution is explained in general terms by section 1207 of the Act as follows:
“ 1207 simplified outline
The following is a simplified outline of this Part:
(f)This Part sets up a system for the attribution to individuals of the assets and income of private companies and private trusts (Sections 1207Y and 1208E).
(g)Attribution starts on 1 January 2002.
(h)For an asset or income to be attributed to an individual:
(i)the company must be a designated private company or the trust must be a designated private trust (Sections 1207N and 1207P); and
(ii)the company must be a controlled private company in relation to the individual or the trust must be a controlled private trust in relation to the individual (Sections 1207Q and 1207V); and
(iii)individual must be an attributable stakeholder of the company or trust (Section 1207X).
(i)A company or trust will be a controlled private trust or a controlled private company if the individual passes a control test or a source test (Section 1207V).
(j)An individual will not be an attributable stakeholder of a trust if the trust is a concessional primary production trust in relation to the individual.
(k)The asset deprivation rules and the income deprivation rules are modified if attribution happens.”
Where a particular entity is a designated private company or designated private trust and is a controlled entity within Part 3.18 in relation to an individual, the scheme of the Act is to presume that individual to be an "attributable stakeholder" of the entity with a default attribution percentage of 100% unless a lower percentage is determined by the Secretary (and now this Tribunal), having regard to the decision making principles established under legislative instrument by the Secretary under Section 1209E of the Act.
The applicable instrument is the Attribution Principles.
CONSIDERATION
House Property
In relation to the House Property where the Songbird Family Day Care business was conducted by the Trust, it is owned by Ms Ringham. The title search of the property shows that it is registered in her name.[54] Whilst Ms Ringham has in various communications with the Department to which I have referred, asserted that the property is owned by the Trust, there is no evidence to establish that. I note that the Trust Deed in the Declaration of Trust states that if the Trust acquires real estate then a caveat should be lodged over the real estate asserting that the Trustee only holds the real estate as trustee for the trust.[55] No such caveat has ever been lodged. Nor has a declaration of trust ever been made by Ms Ringham that she holds the House Property on trust for the Trust. The House Property has never been listed as an asset in the Trust’s financial records, nor has the loan and mortgage with Macquarie Bank ever been listed as a liability in the Trust's financial records. As there is no evidence to the contrary, I am satisfied that at all relevant times, the House Property was solely owned by Ms Ringham.
[54] Exhibit 1, s 37 Tribunal Documents, T 20, p 687.
[55] Exhibit 1, s 37 Tribunal Documents, T 5, p 197.
Ms Ringham has been in receipt of age pension from 30 June 2007. Prior to that she had been in receipt of social security income support payments. Her age pension payments were suspended on 7 December 2016 and cancelled on 10 February 2017 because of the attribution to her of 100% of the income of the Trust for the period since 1 July 2012. A debt being age pension paid to her from 1 July 2012 to 6 December 2016 was subsequently raised on the same basis. The documentation before the Tribunal in Exhibit 1, the Tribunal Documents, contains significant material in relation to Ms Ringham's assets. Whatever those assets might be, their nature and amount is not relevant to either the cancellation of her pension or the debt.
Designated Private Trust
As previously mentioned, the Trust was constituted in 2005 as a discretionary family trust, with Ms Ringham being the Trustee, the Appointor, the Guardian and one of the five beneficiaries along with her four adult children. Therefore, in accordance with Section 1207P of the Act, the Trust is a designated private trust for the purpose of assessing Ms Ringham's income.
Controlled Private Trust
A trust will be a controlled private trust if the individual passes a control test or a source test in accordance with Section 1207V of the Act. Under Section 1207A of the Act "control" is defined to include control as a result of, or by means of, trusts, agreements, arrangements, understandings and practices whether or not having a legal or equitable force and whether or not based on legal or equitable rights.
Section 1207V(2) of the Act relevantly provides that an individual passes the control test in relation to a trust if:
(l)the individual or an associate of the individual is the trustee of the trust; or
(m)a group in relation to the individual was able to remove or appoint the trustee of the trust.
Section 1207C of the Act provides that a relative of the individual is an associate of the individual. Under Section 1207B of the Act a child of a person is a relative of that person. Section 1207B(4) provides that a group in relation to an individual is a reference to the individual acting alone or an associate of the individual acting alone.
In the present case, Ms Ringham was the Trustee and the Appointor of the Trust under the Trust Deed when it was constituted in 2005. As previously mentioned, on 16 July 2009 by the Deed of Retirement and Appointment of Trustee,[56] Ms Ringham purported to retire as Trustee and Bree-Eliza Ringham was purported to be appointed as the new Trustee. I have previously expressed concern about whether this deed was effective to appoint Bree-Eliza Ringham as the new Trustee, and if it was not Ms Ringham may have remained as Trustee. It should be noted that there have been a number of trust documents and records after 2009 which refer to the Trustee as still being Ms Ringham including the Trust tax returns for financial years 2014 and 2015[57] and the Resolution of 27 June 2016.[58] Ms Ringham's son, Shey Ringham, in his MOD-PT form dated

20 July 2016[59] also declared that Ms Ringham was the Trustee and no other person had informal control of the Trust. Whilst Mr Garvin of SBMS Accounting in a letter date 6 June 2017[60] stated that the 2014 and 2015 Trust tax returns had the incorrect name of the Trustee and that it should have been Bree-Eliza Ringham as Trustee, the situation has been, at the very least, inconsistent, confused and poorly understood.
[56] Exhibit 1, s 37 Tribunal Documents, T 15 p 316.
[57] Exhibit 1, s 37 Tribunal Documents, T 8 pp 225, 273.
[58] Exhibit 1, s 37 Tribunal Documents, T 8 p 251.
[59] Exhibit 1, s 37 Tribunal Documents, T 9 p 257.
[60] Exhibit 4, SBMS Accounting letter dated 6 June 2017.
However, even if this Deed of Retirement and Appointment of Trustee was effective to appoint Bree-Eliza Ringham as Trustee, Ms Ringham still passes the control test as her daughter Bree-Eliza Ringham is her associate and she has been the Trustee since 16 July 2009. Accordingly, on that basis Ms Ringham meets the control test. Furthermore, Ms Ringham would also pass the control test because she is the Appointor of the Trust and had the power to remove and appoint the Trustee.
Whilst the Minutes of the Meeting of the Trustee of 12 October 2017[61] and the updated Deed of Retirement and Appointment of Appointor of 17 July 2018[62] purport to provide for Ms Ringham to retire as Appointor and for Bree-Eliza Carter (Ringham) to be appointed as the Appointor and for Ms Ringham to renounce all beneficial interest in the Trust, and whilst I also have some concerns about the efficacy of those documents to appoint the new Appointor, they are not relevant to the position in relation to the control of the Trust during the period 1 July 2012 to 6 December 2016 because those events occurred after 6 December 2016. I am satisfied that Ms Ringham was Appointor of the Trust until at least 12 October 2017.
[61] Exhibit 1, s 37 Tribunal Documents, T 52 p 1199.
[62] Exhibit 1, s 37 Tribunal Documents, T 59 p 1242.
Accordingly I find that Ms Ringham meets the control test in respect of the Trust and it follows that the Trust is a controlled private trust in respect of Ms Ringham.
Attributable Stakeholder
Where a trust is a controlled private trust, Subsection 1207(X)(2) of the Act presumes that individual is an attributable stakeholder of that entity and as a default attributes 100% of the entity's income to them unless a percentage is determined to be appropriate with regard to be had to the decision making principles established by the Secretary pursuant to Section 1209E of the Act under the legislative instrument which is the Attribution Principles.

The various considerations to be taken into account to decide whether a person should not be an attributable stakeholder, or should be attributed with less than 100% of the income of a controlled private trust under the Attribution Principles 2017, are essentially identical. It is therefore appropriate to consider both matters together.
The Tribunal must take into account circumstances arising from the legal structure of the trust: Part 2, paragraph 7(2)(a) and Part 4, paragraph 25(2)(a) of the Attribution Principles.
Ms Ringham was Trustee of the Trust from when it was constituted in 2005 until at least 2009. If the Deed of Retirement and Appointment of New Trustee of 16 July 2009[63] was effective, then the Trustee from that date was her daughter, who is her associate. Ms Ringham was the Appointor of the Trust until at least 12 October 2017 which is after the period relevant to the current application. Ms Ringham was Guardian of the Trust throughout this period and in that capacity the Trustee could only exercise certain powers in consultation with her or which her consent. Ms Ringham was one of the general beneficiaries of the trust until she renounced those rights in the Deed of Retirement and Appointment of Appointor dated 17 July 2018[64] which was after the Trust was vested on 1 July 2018. Ms Ringham therefore, throughout the period from 1 July 2012 to

6 December 2016, had the ability to both control the Trust and receive direct benefit from trust distributions.
[63] Exhibit 1, s 37 Tribunal Documents, T 15, p 316.
[64] Exhibit 1, s 37 Tribunal Documents, T 59, p 1242.
The Tribunal must take into account circumstances arising from the administrative arrangements of the Trust: Part 2, paragraph 7(2)(b) and paragraph 25(2)(b) of the Attribution Principles. Whilst Ms Ringham and her daughter Cass-Hannah Ringham, in letters of 3 September 2016 to which I have previously referred, state that Ms Ringham "was not involved in the cost of setting up, or the control of Songbird Family Day Care",[65] her son Shey Ringham in his MOD-PT form dated 20 July 2016 declared that Ms Ringham was Trustee of the Trust and that no other person had informal control of the Trust or otherwise instructed the Trustee.[66] The evidence is that Ms Ringham was actively involved in the operation of Songbird Family Day Care as it operated from premises in her home; she was present and worked for 9 hours per day on the three or four days per week that the family day care was operating; and she was the person who held the required Certificate III accreditation to enable it to operate; as well as doing the books.
[65] Exhibit 1, s 37 Tribunal Documents, T 14, pp 310, 312.
[66] Exhibit 1, s 37 Tribunal Documents, T 9, pp 257-258.
The Tribunal must take into account whether, having regard to a relationship between Ms Ringham and the Trust, she could reasonably be expected to exercise effective control in relation to the Trust: Part 2, paragraphs 7(2)(c) and 25(2)(c) of the Attribution Principles. In view of the matters referred to in the two previous paragraphs, because of Ms Ringham's formal control of the Trust structure and her position as beneficiary, I am satisfied that at all relevant times she would be expected to exercise effective control in relation to the Trust.
The Tribunal must take into account whether Ms Ringham has made a contribution to the Trust and consider the circumstances in which the contribution was made: Part 2, paragraph 8 and paragraph 26. As previously mentioned, Ms Ringham undertook qualifications to be able to manage the Trust's business and was actively engage in the setting up and operation of the business. The business operates from a property owned by Ms Ringham.
The Tribunal must take into account whether Ms Ringham has received a benefit from the distribution made by the Trust, including the value and frequency of any distribution:

Part 2, paragraphs 9 and 27 of the Attribution Principles. There is a history of Ms Ringham having received a distribution from the Trust for each year that it operated the business apart from the 2013/14 financial year.
The Tribunal must take into account whether it is reasonably foreseeable that Ms Ringham may receive a benefit from a future distribution by the Trust and its likely value: Part 2, section 10 and section 28 of the Attribution Principles. As the Trust was vested on 1 July 2018 and its income and assets were distributed to Shey Ringham, she will not receive any future benefits from the Trust.
The Tribunal is to consider whether Ms Ringham receives or derives any kind of benefit from the assets or the income of the Trust including any income received or derived in the form of property or services: Part 2, sections 11 and 29 of the Attribution Principles. Ms Ringham has received indirect benefits from the Trust in the form of the payment of interest and reduction of the liability under the mortgage debt secured over the House Property. The operation of the business form the House Property has also allowed further apportionment of repair and maintenance expenses of the property and outgoings which would otherwise be payable by Ms Ringham.
The Tribunal must take into account whether Ms Ringham is an attributable stakeholder of any other company or trust under the Act or equivalent legislation: Part 2, sections 12 and 30 of the Attribution Principles. There is no evidence that Ms Ringham is an attributable stakeholder of another company or trust.
The Tribunal must take into account any other circumstances that effect the involvement of Ms Ringham in the activities or administration of the Trust: Part 2, sections 13 and 31 of the Attribution Principles. The Trust business is operated by Ms Ringham from her property which is also her home. The business cannot, in law, operate without her direct and personal involvement in the day to day activities of the business. The evidence is that she was involved at the practical level of providing care of the children at the centre. She personally operated the business with casual employees who were paid cash and with student assistance. She has said that she maintained the books of the business.
Having regard to all of these circumstances and the Attribution Principles generally, I find that Ms Ringham is an attributable stakeholder of the Trust and that the appropriate income and asset attribution percentage to be attributed to her in relation to the Trust is 100%. Accordingly Ms Ringham's rate of age pension is to be determined having regard to this 100% attribution of the income and assets of the Trust.
However, in respect of the 2012/13 financial year, AAT1 found that for that year, the tax return indicates that in its first year of operation the Family Day Care Business operated as a partnership between Ms Ringham and her daughter Bess-Serena Ringham. Accordingly it found that for that year the attribution of 100% of the profit of the business was incorrect and that it is to be assessed on the basis of her receipt of 73% of the partnership income.[67] The Respondent in its Statement of Facts Issues, and Contentions[68] accepts this assessment.
[67] Exhibit 1, s 37 Tribunal Documents, T 2, para 40
[68] Exhibit 2, Respondent’s Statement of Facts, Issues and Contentions at para 73
Ms Ringham in her evidence said that treating the Family Day Care business as a partnership in the 2012/13 year was a mistake by the accountant who prepared the tax return at that time and it was supposed to be operated by the Trust. However, it is apparent that the effect of trust documentation and how a trust operates was very poorly understood by Ms Ringham, her family and the accountants who prepared much of the trust documentation and tax returns. Accordingly, I consider that the distribution of income in the partnership tax return for 2012/13 financial year is appropriate and that Ms Ringham's rate of age pension for that year is to be assessed on the basis of her receipt of 73% of the partnership income for that year.
Deductions and Expenses
Section 1075 of the Act provides generally for ordinary income from a business to be reduced by losses and outgoings that are allowable deductions for the purposes of Section 8-1, Division 40 or Section 290-60 of the Income Tax Assessment Act 1999 (Cth). Income after expenses as disclosed to the ATO, does not, however bind the Secretary for the purposes of assessment for social security purposes. For the Secretary's purposes in determining if a deduction is allowable, regard must be had to the Attribution Determination. Evidence may be required to substantiate claimed deductions for taxation purposes. Of particular significance to Ms Ringham's position and the profits from the Trust business, is that prior year business losses are an ineligible deduction.
Departmental policy contained in the Guide at 4.3.3.50 provides assistance for determining deductions for family day care businesses in the absence of full substantiation of amounts claimed.
In its decision, AAT1 noted [at para 45] that:
"The Secretary's determination of net partnership and trust income over the years in issues before the Tribunal was made by a complex assessment officer within Centrelink…having regard to the Guide… The Tribunal considers that certain of the disallowed expenses were properly claimable as business expenses and are therefore to be allowed.” AAT1 then went on to consider and make determinations in relation to a number of expenses for different years including motor vehicle expenses, water expenses, electricity expenses, repair and maintenance expenses, casual labour expenses and other adjustments made by the Secretary to the expenses claimed by the Trust in respect of the operation of the Family Day Care business.[69]
[69] Exhibit 1, s 37 Tribunal Documents, T 2, para 46-52.
The Respondent in its Statement of Facts, Issues and Contentions[70] accepted that the determinations made by AAT1 regarding the deductions. The Respondent confirmed this position at the hearing. At the hearing, Ms Ringham also accepted the determinations made by AAT1 in relation to the deductions. I am also satisfied as to the appropriateness of those determinations in relation to the deductions to be made in relation to the assessment of Ms Ringham's income from the Trust for the relevant period.
[70] Exhibit 1, s 37 Tribunal Documents, T 2, para 77-79.
As previously mentioned on 20 August 2018 the Respondent recalculated Ms Ringham's entitlement to receive age pension in accordance with these determinations of AAT1 and it determined that she had been overpaid $79,895.69 for the period 1 July 2012 to 6 December 2016.[71] However, I was not satisfied on the evidence available at the hearing that the Respondent had recalculated the debt in accordance with AAT1's determinations because there was no evidence provided by the Respondent as to the details of the recalculations. Accordingly, I made further directions for the Respondent to provide a further submission with details of its calculations along with the evidence relied upon in relation to the Trust's and Ms Ringham's income for the 2016/17 financial year in relation to the period 1 July 2016 to 6 December 2016.
[71] Exhibit 1, s 37 Tribunal Documents, T 62, p 1258.
The Respondent has provided Further Supplementary Submissions dated 1 May 2019[72] which details the calculation of the amount of the debt as a consequence of the determinations made by AAT1 and which have been accepted by the parties. I note that in paragraph 5 of those Further Supplementary Submissions it is stated:
"In relation to the period from 1 July 2016 to 6 December 2016 the income attributed to the Applicant is $64,446.00. This amount is derived from the 2014/2015 Ringham Family Trust tax return (T9, 229) which was the evidence available at the time. If the Applicant were to provide evidence of the actual income of the Trust then her attributable income may be amended."
[72] Exhibit 7, Respondent’s Further Supplementary Submissions dated 1 May 2019.
I also note that in the Comparative Table which is attached to the Respondent’s Further Supplementary Submissions,[73] that it appears that the Respondent has relied on Ms Ringham’s income for the 2014/15 financial year as being her income for 2015/16 and 2016/17 financial years when calculating her pension entitlement for those years. In fact, the evidence in the Trust’s accounts and tax return for the 2015/16 year is that its gross and net income for the 2015/16 financial year was respectively $75,289.50 and $48,834.01 which were some $7,000.00 higher than for the 2014/15 financial year.[74]
[73] Exhibit 7, Respondent’s Further Supplementary Submissions dated 1 May 2019.
[74] Exhibit 1, s 37 Tribunal Documents, T 39, pp 1099-1121.
Accordingly, I am not satisfied that in determining the income to be attributed to Ms Ringham for the 2015/16 and 2016/17 financial years and as a consequence the pension entitlement and any overpayment of pension, the Respondent has relied upon the actual financial accounts and tax returns of the Trust and Ms Ringham for those years. In fact, it appears the Respondent has relied on the income attributed to Ms Ringham for the 2014/15 financial year as forming the basis for its calculations for the 2015/16 and 2016/17 financial years. Given the time which has elapsed I consider that this is unsatisfactory.
Whilst it may well be that Ms Ringham’s attributable income for the 2015/16 and 2016/17 financial years will be above the level at which she would be entitled to a pension, I consider that the Respondent needs to undertake the calculation for those years on the basis of the actual financial accounts and tax returns for the Trust and Ms Ringham for those years. It appears that the financial accounts and tax returns for the Trust and Ms Ringham for the 2015/16 financial year were provided to the Respondent in August 2017.[75] The financial information for the 2016/17 financial year is now some two years ago, there is no reason why the Respondent cannot now obtain from Ms Ringham and undertake its calculation for those two years on the basis of the actual information rather than the extrapolation of the 2014/15 income.
[75] Exhibit 1, s 37 Tribunal Documents, T 39.
Accordingly, the Tribunal is not able to determine whether the overpayment of pension, and consequential debt, have been accurately calculated in respect of the 2015/16 and 2016/17 financial years. The matter is remitted to the Respondent for reconsideration of Ms Ringham’s pension entitlement and any resulting overpayment in respect of the 2015/16 and 2016/17 financial years.
However, I am satisfied that Ms Ringham has been overpaid the age pension in respect of the period 1 July 2012 to 30 June 2015. The Respondent’s Further Supplementary Submission dated 1 May 2019[76] and Supplementary Statement of Issues, Facts and Contentions dated 12 April 2019[77] establish that Ms Ringham’s pension position is summarised as follows:
Ms Ringham age pension calculation
[76] Exhibit 7, Respondent’s Further Supplementary Submissions dated 1 May 2019.
[77] Exhibit 6, Respondent’s Supplementary Statement of Issues, Facts and Contentions with attachments dated 12 April 2019

103.    Financial Year

104.    Pension Received

105.    Pension Entitled

106.    Amount Overpaid

107.    2012/13

108.    $15,682.48

109.    $6,504.36

110.    $9,178.12

111.    2013/14

112.    $21,486.22

113.    $333.26

114.    $21,152.96

115.    2014/15

116.    $22,174.58

117.    nil

118.    $22,174.58

119.    2015/16

120.    $23,414.59

121.    nil

122.    $23,414.59

123.    2016/17

124.    $3,975.44

125.    nil

126.    $3,975.44

127.    $79,895.69

Accordingly, I am satisfied that the total amount of age pension overpaid to Ms Ringham for the period 1 July 2012 to 30 June 2015 is $52,505.66.
Cancelation of age pension

Section 68 of the Administration Act provides that the Secretary may issue a notice that requires a person to inform the Department of a change in circumstances, and give the Department one or more statements about a matter that might affect the payment of social security payments made to them. Section 72 of the Administration Act relevantly provides that a person must advise the Department of such changes to their circumstances within 14 days.
Section 94 of the Administration Act provides that where a person fails to notify the Department of an occurrence or an event within the statutory timeframe as required under a Section 68(2) Notice, and as a result they cease to be qualified to receive the payment, or the payment ceases to be payable, the person’s social security payment is cancelled.
In a letter dated 10 November 2011, Centrelink notified Ms Ringham in relation to her obligation to advise Centrelink of relevant changes to her financial circumstances within 14 days of those changes occurring.[78]
[78] Exhibit 1, s 37 Tribunal Documents, T 6, p 217.
It is apparent on the evidence that Ms Ringham did not provide information to the Respondent in relation to the Trust and the business being controlled by it until after August 2016 when the Respondent made enquiries of Ms Ringham as a consequence of information regarding the Trust provided by her son Shey Ringham in respect of an unrelated claim by his partner for income support.
In the period between 2 September 2016 and 2 February 2017 the Respondent received various information from Ms Ringham or by persons on her behalf in relation to the Trust and financial circumstances.[79] As a consequence, I consider that following the Respondent’s review of the information provided, it was entitled to suspend Ms Ringham’s age pension from 6 December 2016 and subsequently cancel it on 10 February 2017 by reason of attribution of trust income.
[79] Exhibit 1, s 37 Tribunal Documents, T13, T14, T15, T18, T19, T20, T22, T23, T24, T25, T26, T27, T28 and T30.
Debt raising
Subsection 1223(1) of the Act provides that where a social security payment is made and the person to whom it was paid was not entitled to receive it, the amount of the overpayment is a debt due to the Commonwealth.
In Secretary Department of Social Security v Hales (1998) 82FCR 154, French J stated:
“The taxpayer is entitled to expect that in the ordinary course money paid to people which they are not entitled to receive will be recovered, albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the persons concerned.”
I am satisfied that Ms Ringham has been overpaid the amount of $52,505.66 for the period from 1 July 2012 to 30 June 2015 and that this amount is a debt due to the Commonwealth pursuant to section 1223(1) of the Act.
Debt recovery – write off
Section 1236 of the Act provides the criteria under which a determination can be made to write off a debt. The only ground for write off which could be relevant here is that the debtor has no capacity to repay the debt.[80] However, Section 1236(1C) of the Act provides that where a debt is recoverable by means of deductions from a social security payment, the debtor is taken to have a capacity to repay the debt unless recovery by deductions would cause the debtor severe financial hardship. The evidence in this case is that since February 2018, Ms Ringham has been in receipt of the age pension and that the debt has been reduced by deductions of $20.00 per fortnight. Ms Ringham has not provided any evidence of severe financial hardship.
[80] Exhibit 1, s 37 Tribunal Documents, section 1236(1A)(b) of the Act
I find that Ms Ringham does have a capacity to repay the debt from social security payments which she receives and that this will not cause her severe financial hardship. I find that there is no basis to write off the debt.
Waiver
Section 1237 of the Act provides that the Commonwealth’s right to recovery may only be waived in certain circumstances. Section 1237A of the Act provides:
“(1) Subject to subsection 1A, the Secretary must waive the right to recover the proportion of the debt that is attributable solely to and administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.
Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).”

Ms Ringham’s submission to the Tribunal is in part that before the family day care business was set up, she spoke to Centrelink and was told that she could earn $200.00 per week without her pension being affected and that the income could come from a family trust. Whilst there does not appear to be any record in the Tribunal Documents of this advice having been given to Ms Ringham, even if it was, in general terms this advice is not necessarily incorrect. There is no suggestion that Ms Ringham, during the period she was in receipt of the age pension, fully disclosed to Centrelink the actual trust arrangements and her involvement in the Trust and the business or was told that the attribution of income would not apply to her. To the contrary, as I have previously mentioned, the evidence is that it was not until after August 2016 when the Respondent made enquiries of her as a consequence of information provided to it by her son Shey Ringham in relation to an unrelated claim, that Ms Ringham provided the information in relation to the Trust and the business. As I have previously mentioned, she then provided various information to the Respondent in relation to the Trust and her financial circumstances over the period from 2 September 2016 to 2 February 2017.
Casual enquiry before or at the time of commencing a business does not satisfy Ms Ringham’s obligation pursuant to Section 68 of the Administration Act to respond to notices requiring her to fully inform the Respondent on a continuing basis as to her income from a business or trust. I am satisfied that the overpayments of age pension did not result from any administrative error of the Respondent.
Section 1237AAD of the Act provides that:
“The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a)The debt did not result wholly or partly from the debtor or another person knowingly:
(a)making a false statement or a false representation;
(b)failing or omitting to comply with a provision of this Act, the Administration Act…; and
(b)There are no special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c)It is more appropriate to waive then to write off the debt or part of the debt.”
In relation to the requirement that the debt did not result from Ms Ringham knowingly making a false statement or representation, I have considered all of the evidence before the Tribunal, including the evidence Ms Ringham gave at the hearing which I consider to have been frank and honest. I am satisfied that there was no deliberate or conscious intent by Ms Ringham to make false statements or representations or to fail to comply in relation to reporting her income and financial circumstances to the Respondent.
I find that Ms Ringham did not knowingly make a false statement or representation or fail to comply with the Act by failing to report her income and financial circumstances in relation to the Trust.
Special circumstances
Accordingly it is now necessary to consider whether there are special circumstances making it desirable to waive the debt.
The meaning of “special circumstances” for the purposes of the Act and other social security legislation has been considered in many cases. In Groth and Secretary Department of Social Services [1995] FCA 1708, the Court formulated that these were circumstances that distinguished the Applicant’s case from others and take it “out of the usual or ordinary case”. That formulation was also adopted in Angelakos and Secretary Department of Employment and Workplace Relations [2007] FCA 25.
Whilst there is a letter from a doctor dated 31 May 2018,[81] that at that time Ms Ringham was required to have surgery for a chronic medical condition, there is no other evidence in relation to that. Ms Ringham in her evidence at the hearing did not suggest any matter which could be considered to be a special circumstance. I am not satisfied that in this case there are any special circumstances.
[81] Exhibit 1, s 37 Tribunal Documents, T 57, p 1215.
I find that there are no special circumstances for the purposes of Section 1237AAD of the Act.
CONCLUSION
In relation to the issues to be decided, I find that:
(a)The Trust is a designated private trust;
(b)Ms Ringham is an attributable stakeholder and the attribution percentage in respect of income of the Trust is 100%;
(c)Ms Ringham was overpaid age pension in the amount of $52505.66 for the period 1 July 2012 to 30 June 2015;
(d)The overpaid amount is a debt due to the Commonwealth and recoverable in full; and
(e)Ms Ringham’s age pension was correctly suspended and subsequently cancelled from 10 February 2017.
Subject to the Tribunal’s findings in this decision, in accordance with subsection 43(1)(c)(i) of the Administrative Appeals Tribunals Act 1975 (Cth), the decision under review is set aside and in substitution, it is decided that the debt of $52,505.66, in respect of overpaid amounts of age pension to the Applicant, in respect of the period 1 July 2012 to 30 June 2015, is recoverable in full.
In accordance with Section 42D of the Administrative Appeals Tribunal Act 1975 (Cth), the matter is remitted to the Respondent for reconsideration, having regard to the findings in this decision, within 60 days of:
(a)The attributable income to the Applicant for the financial years 2015/16 and 2016/17;
(b)The entitlement of the Applicant to the age pension in respect of the period 1 July 2015 to 6 December 2016;
(c)The amount (if any) of age pension overpaid to the Applicant in respect of the period 1 July 2015 to 6 December 2016; and
(d)The amount of any debt in respect of any amounts overpaid to the Applicant in respect of the period 1 July 2015 to 6 December 2016.

I certify that the preceding one-hundred-and-twenty-five (125) paragraphs are a true copy of the reasons for the decision herein of Senior Member D R Davies

.........................[SGD]...................................
Associate
Dated: 28 May 2019

Date of hearing: 5 May 2019

Applicant: Elizabeth Ringham

Solicitors for the Respondent: Christopher Bishop

[2019] AATA 1003

28 May 2019

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Jurisdiction

Procedural Fairness

Statutory Construction

Standing

Remedies

103. Financial Year	104. Pension Received	105. Pension Entitled	106. Amount Overpaid
107. 2012/13	108. $15,682.48	109. $6,504.36	110. $9,178.12
111. 2013/14	112. $21,486.22	113. $333.26	114. $21,152.96
115. 2014/15	116. $22,174.58	117. nil	118. $22,174.58
119. 2015/16	120. $23,414.59	121. nil	122. $23,414.59
123. 2016/17	124. $3,975.44	125. nil	126. $3,975.44
127. $79,895.69