Singh; Secretary, Department of Family and Community Services

DECISION AND REASONS FOR DECISION [2002] AATA 505

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2002/121

GENERAL ADMINISTRATIVE DIVISION       )
           Re      SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Applicant
           And    BHARAT SINGH
  Respondent

DECISION

Tribunal Ms N Bell, Member

Date25 June 2002
PlaceSydney

Decision      The decision under review is set aside and in substitution therefor the Tribunal decides that the Indian government pensions paid to the Respondent and to his wife, Mrs Kumar, should be treated as income when calculating the rate of payment of the Respondent's special benefit and Mrs Kumar's partner allowance.
  ..............................................
  Ms N Bell
  Member
CATCHWORDS
Social Security – special benefit and partner allowance – income test - Indian government pensions payable to Respondent and his wife in India – pensions paid into bank accounts in India – whether pensions constituted income for the purposes of the special benefit and partner allowance under the Social Security Act 1991

Social Security Act 1991 – sections 8, 746

Rose v Secretary, Department of Social Security (1990) 19 ALD 601
Re Menon and Repatriation Commission (1990) 20 ALD 466
Reinboth and Repatriation Commission (AAT 10764, 23 February 1996)

REASONS FOR DECISION

25 June 2002 Ms N Bell, Member

This is an application by the Secretary, Department of Family and Community Services ("the Applicant") for review of the decision of the Social Security Appeals Tribunal ("the SSAT") on 12 December 2001 to set aside the decision of the Applicant dated 4 July 2000 to assess Mr Singh's ("the Respondent's") and his wife's (Mrs Kumar's) Indian government pensions as income in determining the Respondent's rate of payment of special benefit and Mrs Kumar's rate of payment of partner allowance. The SSAT sent the matter back to the Chief Executive Officer of Centrelink for reconsideration in accordance with directions that the Respondent's and Mrs Kumar's Indian retirement pensions are not to be considered as income when calculating the rate of special benefit payable to the Respondent and partner allowance payable to Mrs Kumar while they are living in Australia. The Applicant's decision had been reviewed and affirmed by an authorised review officer on 20 July 2001.
At the hearing of the application, Mr George Lozynsky represented the Applicant and Mrs Kumar spoke to the Tribunal on behalf of the Respondent. The following documentary evidence was before the Tribunal:
Exhibit          Document    Date
TD1 Documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, T1-23, pp 1-52
A1      Applicant's Statement of Facts and Contentions with Attachments A-C       12 June 2002
R1      Respondent's submissions with Attachments A-C        17 June 2002
Issue
The issue to be considered by the Tribunal in this application is whether the Respondent's and his wife's Indian government pensions should be assessed as income when determining his rate of special benefit and her rate of partner allowance.
Section 746 of the Social Security Act 1991 ("the Act") provides that the rate of special benefit to be paid to a person is the fortnightly rate determined by the Secretary in his or her discretion. The combined income of the Respondent is a factor influencing the rate of special benefit to be paid to him. The term "income" is defined in section 8 of the Act:
"Income test definitions
8.(1) In this Act, unless the contrary intention appears:
"income", in relation to a person, means:
(a)an income amount earned, derived or received by the person for the person's own use or benefit; or
(b) a periodical payment by way of gift or allowance; or
(c) a periodical benefit by way of gift or allowance;
but does not include an amount that is excluded under subsection (4), (5), (7A) or (8);

Earned, derived or received
8.(2)A reference in this Act to an income amount earned, derived or received is a reference to:
(a)an income amount earned, derived or received by any means; and
(b)an income amount earned, derived or received from any source (whether within or outside Australia)."

None of the exclusions in subsections 4, 5, 7A or 8 of section 8 of the Act apply to the Respondent or to Mrs Kumar.
Applicant's evidence and submissions
Mr Lozynsky, for the Applicant, provided to the Tribunal, as Attachment B to Exhibit A1, a copy of the Indian Foreign Exchange Management (Deposit) Regulations 2000, made under the Indian Foreign Exchange Management Act, 1999. Most relevantly those regulations provide at paragraph 3(B)(ii) of Schedule 3:
"3.       Permissible Credits/Debits
(A)      Credits
…
(B)      Debits
(i)All local payments in rupees including payments for investments subject to compliance with the relevant regulations made by the Reserve Bank.
(ii)Remittance outside India of current income in India of the account holder net of applicable taxes."
The Applicant also provided, as Attachment C to Exhibit A1, a copy of a circular from the Reserve Bank of India to Authorised Dealers in Foreign Exchange dated 14 May 2002, which refers to the above regulation and states as follows:
"Authorised Dealers may, henceforth, allow repatriation of current income like rent, dividend, pension, interest, etc. of NRI's (non resident Indians) who do not maintain an NRO (non resident ordinary) account in India based on an appropriate certification by a Chartered Accountant, certifying that the amount proposed to be remitted is eligible for remittance and that applicable taxes have been paid/provided for."
Mr Lozynsky also referred the Tribunal to document T19 which is a letter to the Applicant from the State Bank of India Representative Office in Sydney dated 29 January 2002 which advises that remittance of pension payments outside India has been allowed by the Reserve Bank of India.
Mr Lozynsky submitted that, on the basis of Attachments B and C and document T19, the Respondent's pension is not blocked and can be transferred to Australia.
Mr Lozynsky also referred the Tribunal to a number of decisions by the Tribunal and by the Federal Court. These included the decision of the Full Federal Court in Rose v Secretary, Department of Social Security (1990) 19 ALD 601 and the decisions of the Tribunal in Re Menon and Repatriation Commission (1990) 20 ALD 466 and Reinboth and Repatriation Commission (AAT 10764, 23 February 1996). Mr Lozynsky submitted these decisions establish that the ability of the Applicant to access his pension is irrelevant to the question of whether the pension is "income" as defined in the Act.
Respondent's evidence
Mrs Kumar gave evidence to the Tribunal and, with his permission, spoke on behalf of the Respondent. Her evidence was unchallenged by the Applicant and the Tribunal has no reason to reject her evidence. Accordingly, the Tribunal finds as follows.
The Respondent and his wife had originally come to reside permanently in Australia in 1996 and the Respondent first received special benefit in 1998. The Respondent had been paid an Indian government pension since 1988 and Mrs Kumar was first paid an Indian government pension in 1995.
Due to family illness, Mrs Kumar returned to India in 1996 and the Respondent joined her some 9 months later. They returned in February 1998. They returned to India in September 1998 for three months, went to India again in 1999 for seven months and their last visit to India was in November 2001. They returned to Australia in May 2002.
The Respondent and Mrs Kumar have separate accounts with the Punjab Sindh Bank in India into which their respective pensions are paid monthly. They have never accessed the funds in these accounts while in Australia but have accessed them while in India. No one else can access their pension payments in these accounts in India. They last withdrew from their accounts in May 2002 just before they returned to Australia.
The Respondent and Mrs Kumar have approached the Punjab Sindh Bank in New Delhi in order to transfer their funds to Australia but have had no response to this request. They have also contacted Citibank in New Delhi to no avail. They have not enquired of the Reserve Bank of India or the State Bank of India.
The Respondent and Mrs Kumar are not aware of any impediment to them changing banks in India apart from the signing of some documents and the provision of notice in writing.
Both the Respondent and Mrs Kumar suffer from diabetes and told the Tribunal that they will find it difficult to manage on the lesser amount of special benefit and partner allowance they would receive should it be decided that the Indian government pensions be treated as income pursuant to the Act.
Other evidence
The Respondent provided to the Tribunal a photocopied document said to be an extract from the Indian Central Civil Services (Pension) Rules (Attachment A to Exhibit R1). The extract provides:
"All pensions including gratuities admissible under these rules shall be payable in rupees in India only."
The Respondent also provided to the Tribunal copies of a number of pages downloaded from the websites of the Reserve Bank of India and from the State Bank of India and submitted that these show that none of the accounts made available by these banks allow for the repatriation of Indian rupees or for the remittance of funds abroad.
Consideration
The decision of the Full Federal Court in Rose v Secretary, Department of Social Security (supra) concerned a pension paid into a bank account in the German Democratic Republic (GDR) which could not be transferred outside the GDR but could be used by the pensioner when he was in the GDR. The Full Court decided that the pension payments were income for the purposes of the Act. The Full Court said at ALD 605:
"19. The entitlement of the appellant to his GDR pension arises at the latest
once the pension payments have been paid into the relevant account of the
appellant in the GDR. He is then free to draw upon them and spend them in the
GDR. His capacity to remove the pension payments from the GDR and to spend
them outside the GDR is prohibited by the law of the GDR; the restraint is
upon his transferring the moneys outside the GDR.
20. The pension payments made to the appellant in the GDR are moneys
"received" by him in the sense of "realised" by him in the GDR. It is not to
the point that those moneys are in that sense received by him outside
Australia. The payments answer the description of moneys "earned, derived or
received" (in the sense of "realised") by him for his own use or benefit from
a source outside Australia and fall within the definition of "income" in s. 3."
The Tribunal's decision in ReMenon and Repatriation Commission (supra) applied the decision in Rosev Secretary, Department of Social Security (supra) in circumstances similar to those of this application. The Tribunal said at ALD 470:
"In view of the decision of the Federal Court in Rose and the reasons stated by the court for that decision, I have come to the conclusion that the Tribunal is bound to hold that the pension paid by the Government of India into the applicant's bank account in India is moneys received by him and is "income" for the purpose of ascertaining the rate at which his service pension and the wife's service pension payable to his wife should be paid to them."
A more recent decision of the Tribunal is Reinboth and Repatriation Commission (supra) which also concerned an Indian pension and in which the Tribunal applied the decision in Rosev Secretary, Department of Social Security (supra) and referred to the Tribunal's decision in ReMenon and Repatriation Commission (supra).
The Tribunal considers that the similarity between the circumstances of this application and those in Rose v Secretary, Department of Social Security (supra), Re Menon and Repatriation Commission (supra) and Reinboth and Repatriation Commission (supra) leave no option for the Tribunal but to apply the Full Court's decision in Rose v Secretary, Department of Social Security (supra). That is, even if the Respondent's Indian pension is only accessible to him when he is in India, that pension, having been "received" by him, is income within the meaning of the Act.
The Tribunal having reached this conclusion, it is not necessary to decide the rather vexed question of whether the Respondent's pension may in fact be transferred to him in Australia. There appears to be some inconsistency between the information available on the websites of the Reserve Bank of India and the State Bank of India, relied on by the Respondent to show that he cannot access his pension from Australia, and the provisions of the Indian Foreign Exchange Management (Deposit) Regulations 2000, the circular from the Reserve Bank of India to Authorised Dealers in Foreign Exchange dated 14 May 2002 and the letter to the Applicant from the State Bank of India dated 29 January 2002.
While the existence of a regulation and a circular to the effect that pension payments may be remitted out of India strongly suggests the possibility of doing so, the requirement for certification by a chartered accountant and the payment of applicable taxes together with the existence of apparently contradictory information on the Reserve Bank of India website and from other sources, suggests that, as a practical matter, some impediments may still remain. The Tribunal also notes that the circular relied on by the Applicant is dated 14 May 2002, whereas the Applicant's relevant decision was made on 4 July 2000.
The Tribunal urges the Respondent to test the availability to him of the procedure outlined in the Reserve Bank of India circular and in the letter to the Applicant from the State Bank of India at T19.
Determination
The decision under review is set aside and in substitution therefor the Tribunal decides that the Indian government pensions paid to the Respondent and to his wife, Mrs Kumar, should be treated as income when calculating the rate of payment of the Respondent's special benefit and Mrs Kumar's partner allowance.

I certify that the 27 preceding paragraphs are a true copy of the reasons for the decision herein of MS N BELL, Member
Signed: H. Sim        .....................................................................................
  Associate
Date of Hearing  17 June 2002
Date of Decision  25 June 2002
Solicitor for the Applicant Mr G Lozynsky
Solicitor for the Respondent    Mrs Kumar, wife of Respondent

[2002] AATA 505

25 June 2002

Key Legal Topics

Areas of Law

Social Security Law

Legal Concepts

Income

Statutory Construction

Adverse Possession