Samardzic And Secretary, Department of Education, Employment and Workplace Relations

[2011] AATA 620

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 620

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2011/0101

GENERAL ADMINISTRATIVE DIVISION		)
Re		George Samardzic

Applicant

And Secretary, Department of Education, Employment and Workplace Relations

Respondent

DECISION

Tribunal Ms N Bell, Senior Member

Date2 September 2011

PlaceSydney

Decision The Tribunal affirms the decision under review.

......................[sgd]........................

Ms N Bell, Senior Member 

CATCHWORDS –  SOCIAL SECURITY – Youth allowance – whether combined parental income prevented youth allowance being paid – appropriate tax year for assessing combined parental income when combined parental income increased – decision under review affirmed

Social Security Act 1991 s 1067G and 1067F

REASONS FOR DECISION

2 September 2011 Ms N Bell, Senior Member

1.      George Samardzic was paid Youth Allowance from May 2006. In December 2008, his Youth Allowance was cancelled on the basis that his parental income was in excess of the prescribed limit. Mr Samardzic applied for a reconsideration of the decision. The decision was affirmed by the original decision maker. Ordinarily, the decision would automatically be referred to an Authorised Review Officer for further reconsideration. However, for reasons that are unclear, this did not occur. The following months involved numerous contacts with Centrelink and advice to make a new claim. Mr Samardzic considered that he had already made his claim and was entitled to payment.

2.      Ultimately, an Authorised Review Officer affirmed the original decision in October 2010 and on 29 November 2010 the decision was affirmed by the Social Security Appeals Tribunal.

3.      The Secretary does not assert that Mr Samardzic was late in requesting a review by an Authorised Review Officer, which lateness would limit any arrears of payment were the decision to cancel to have been incorrect. Rather, the Secretary contends that, because of Mr Samardzic’s combined parental income, Youth Allowance was not payable to him and so his allowance was cancelled. Mr Samardzic contends that the income taken into account by Centrelink was in part a payment of compensation arrears and so was in respect of a period longer than the relevant financial year.

4.      The only issue for me to consider is whether the decision to cancel Mr Samardzic’s Youth Allowance on 16 December 2006 was correct, and, in particular, whether Mr Samardzic’s combined parental income was, during the relevant period, above the amount at which Youth Allowance was not payable to him.

which year is the appropriate tax year for the purposes of assessing mr samardzic’s combined parental income?

5.      There is no dispute that Mr Samardzic is not regarded as independent within the meaning of the Social Security Act 1991 for the purposes of receiving youth allowance. Mr Smardzic is therefore subject to the combined parental income test in assessing his rate of youth allowance. There is also no dispute that Mr Smardzic’s circumstances do not attract any of the exemptions from the combined parental income test in point 1067G-F3 of s 1067G.

6. Point 1067G-F10 of s 1067G provides that the combined parental income for a person is the sum of each of the parent’s taxable income, adjusted fringe benefits, foreign income, total net investment loss and reportable superannuation contributions for an appropriate tax year.

7. The combined effect of points 1067G-F4 and 1067G-F5 of s 1067G of the Act is that the appropriate tax year for which a person’s combined parental income is to be assessed is the tax year ending 30 June of the calendar year before the calendar year in which a payment period for youth allowance ends. Ordinarily, for Mr Samardzic, the appropriate tax year would be the tax year ending 30 June 2007.  However, subsection 1067F6 provides that in circumstances where:

(a)the payment period of youth allowance ends after 30 September; and

(b)the combined parental income increases by at least 125% after 30 June in the previous calendar year,

then the appropriate tax year changes to the tax year ending 30 June immediately before the date of the ending of the payment period, that is for Mr Samardzic, 2008.

8.      On 1 January 2008, Mr Samardzic began receiving youth allowance payments based on a combined parental income assessment of $29,317 for the tax year ending 30 June 2007, that is, the tax year ending 30 June of the calendar year before the calendar year of 2008.

9.       Australian Taxation Office (ATO) notices of assessment for Mr Sardmardzic’s father and mother show taxable incomes that total $78,102 for the year ending 30 June 2008. This is an increase more than 125% on the combined parental income assessed for the previous tax year. Therefore, on 16 December 2008, the appropriate tax year on which to assess Mr Sardmardzic’s combined parental income was the year ending 30 June 2008.

10. Mr Sardmardzic contended that on 5 June 2008, his father received $13,922 arrears of weekly workers’ compensation payments and that it is unfair to include this amount in assessing his combined parental income. However, this amount is included in the ATO’s assessment as being Mr Sardmardzic’s father’s taxable income for that year. Point 1067G-F10 of s 1067G does not provide for any exceptions to, nor discretion to disregard any component of, the taxable income of parents when assessing the combined parental income.

what was the rate of youth allowance payable to mr sardmardzic at 16 December 2008?

11. Points 1067G-F26 and 1067G-F27 of s 1067G provide the method of calculating the maximum rate of youth allowance payable. To determine the rate, the combined parental income is reduced by a parental income free area which includes a CPI adjusted figure at 16 December 2008 of $31,400 and a further reduction of $3,792 on account of Mr Sardmardzic’s sister who is a dependent child not eligible for youth allowance. The resulting figure is $42,910, which in turn is divided by 4 to obtain the parental income excess amount (point 1067G-F27 of s 1067G) of $10,727.26. This equates to $412.67 per fortnight and is the amount deducted from the maximum payment rate in order to calculate the youth allowance rate payable to Mr Sarmarzic.

12. As there is no issue that Mr Sardmardzic was not independent, was living at home and was a long term income support student as defined in s 1067F, the CPI adjusted maximum payment rate as at 16 December 2008 was $233.90. Deducting Mr Sardmazic’s reduction for parental income of $412.67 as calculated above, the resulting parental income test reduced rate of payment is nil.

13.     Therefore, youth allowance was not payable to Mr Sardmardzic at 16 December 2008. The Secretary’s decision to cancel Mr Sardmardzic’s youth allowance payments was correct.

Conclusion

14.     The Tribunal affirms the decision under review.

I certify that the 14 preceding paragraphs are a true copy of the reasons for the decision herein of  

Signed:         ...........................[sgd].....................................................
  Associate

Date of Hearing  15 July 2011
Date of Decision  2 September 2011  
Solicitor for the Applicant          Unrepresented

Solicitor for the Respondent     Mr J Larcombe, Centrelink Program Litigation & Review Branch