Salas and Secretary, Department of Family and Community Services
[2002] AATA 635
•26 July 2002
DECISION AND REASONS FOR DECISION [2002] AATA 635
ADMINISTRATIVE APPEALS TRIBUNAL )
) No V02/269
GENERAL ADMINISTRATIVE DIVISION )
Re DANIEL SALAS
Applicant
And SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES
Respondent
DECISION
Tribunal Mr J. Handley, Senior Member
Date26 July 2002
PlaceMelbourne
Decision The decision under review is affirmed.
..........Sgd. Mr J. Handley...........
Senior Member
CATCHWORDS
Social Security - Newstart Allowance - liquid assets waiting period - applicant had monies reserved to pay income tax liability - assessment of liability not made until after waiting period - whether monies were liquid assets - unintended consequences of legislation - decision affirmed - recommendation to Minister.
REASONS FOR DECISION
26 July 2002 Mr J. Handley, Senior Member
This application involves a discrete but significant legal issue which has produced what I anticipate as an unintended consequence. The circumstances may be briefly described as follows-
Mr Salas has made an application to this Tribunal by way of appeal against a decision of the Social Security Appeals Tribunal made on 5 February 2002. The SSAT then heard an appeal lodged by Mr Salas against a decision made by a Centrelink officer on 11 October 2001 to impose a liquid assets waiting period of 9 weeks upon the commencement of payment of Newstart Allowance ("NSA").
The circumstances giving rise to the Newstart application arose out of the cessation of a contract between Mr Salas and Telstra on 5 October 2001. Immediately prior to that date, Mr Salas was a self-employed contractor and was personally liable for payment of income tax. He had set aside certain monies to meet his income tax and superannuation liabilities. There was a total of $14,930 held in two bank accounts jointly between Mr Salas and his wife, which were to be the source of the payment of income tax, when assessed, and his superannuation payments. The respondent regarded the sum of $14,930 as liquid assets and it applied a liquid assets waiting period of 9 weeks pursuant to a formula within the legislation.
There is no issue as to the amount held by Mr Salas, namely $14,930 at the date of claim, nor is there any issue concerning the calculation of the waiting period or the liability for taxation. The only issue is whether the waiting period should have been imposed.
Section 14(A)(1)(b) of the Social Security Act 1991 ("the Act") defines "liquid assets" as including amounts deposited into a bank account. It follows that I am satisfied that the amounts held by Mr Salas in his bank accounts were "liquid assets", as defined.
Section 14A(5) relevantly provides-
"If:
(a) a person has or had a debt not related to the person's principal home or to any other residential property in which the person holds or held, solely or jointly, any right or interest, and
(b) since becoming unemployed or incapacitated for work or study (as the case requires), the person has, in order to discharge the debt in whole or in part, made a payment that the person was not obliged to make, and
(c) since becoming unemployed or incapacitated for work or study (as the case requires), the person had not already made such a payment in order to discharge that debt in part;
the amount of the payment referred to in paragraph (b) is to be disregarded for the purposes of determining the amount of the person's liquid assets".
Section 14A(6) also relevantly provides-
"For the purpose of determining whether a liquid assets test waiting period applies in relation to a claim for a social security benefit, sub-section (5) can apply to a payment made after the claim if the payment is made before such a liquid assets test waiting period would end under s. ………".
As I understand the combined effects of ss 14A(5) and (6), any monies paid with respect to a debt not relating to a person's principal home or other residential property where the debt had been determined and had been paid before the end of the liquid assets test waiting period, could be disregarded from amounts deposited in a bank account as described in s 14A(1)(b).
It would follow, therefore, that in the case of Mr Salas, had his income tax liability been determined at 5 October 2001, and that sum been paid before the end of the liquid assets test waiting period, those monies would be disregarded, thereby reducing the duration of the liquid assets test waiting period.
Unfortunately in the case of Mr Salas, his income tax liability was not determined until June of 2002, when he then made the payment. Accordingly, the debt was not determined within the waiting period, nor was it paid.
It follows as a matter of law that the effects of ss 14A(5) and (6) require Centrelink to take account of the sum of $14,930 that he held at 5 October 2001 and to not have regard to the anticipated taxation liability.
The members of the SSAT concluded that the consequences of the legislation have caused unfairness to Mr Salas. I agree with that sentiment. There is no other discretion in the Act or elsewhere to disregard those monies.
On the one hand, Mr Salas acknowledged that he had a statutory liability for payment of income tax. He set monies aside in anticipation of having the extent of his liability determined in order to meet that liability. The effect, however, has been to preclude him from payment of NSA for a period of time.
It was learnt during the hearing that the Centrelink policy guidelines would interpret the above circumstances differently had Mr Salas had a liability for the Goods and Services Tax (GST). In fact, the example was given that if Mr Salas sold a business on 5 October 2001 and had a liability for GST payment in the following year, then the amount of that liability would be disregarded for the purposes of calculating his liquid assets. This would be so despite the payment not having been made within the liquid assets test waiting period and perhaps in the absence of the GST liability being determined.
Whilst a consequence of that type is to the benefit of persons who have a GST liability, it arguably is inconsistent with the interpretations of the legislation as above.
I would anticipate that there are many persons in a similar situation to Mr Salas. It follows, therefore, that the above legislation disadvantages many people. The intention of the Parliament in introducing legislation of this type was, I presume, to cause persons who claim a public benefit to draw on their own savings and resources for a period of time. Nonetheless, a limited discretion is available under sections 14A(5) and (6). The discretion does not extend, however, to the circumstances of Mr Salas and potentially other persons. Specifically, the effect of this provision is to discriminate against persons who were self employed, who were not PAYE tax payers and who held monies pending assessment of their taxation liability.
I am obliged in all of the circumstances to find, on the legislation, that the decision under review is to be affirmed. I would recommend, however, with respect, that the circumstance of this application be drawn to the attention of the Minister and consideration be given to amending the legislation to ensure other persons do not suffer the consequences Mr Salas endured.
I certify that the 17 preceding paragraphs are a true copy of the reasons for the decision herein of Mr J. Handley, Senior Member
Signed: Katherine Navarro............................
AssociateDate/s of Hearing 12 July 2002
Date of Decision 26 July 2002
Counsel for the Applicant Self represented
Solicitor for the Applicant N/A
Counsel for the Respondent Ms Pat D'Cunha
Solicitor for the Respondent N/A
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