Straker and Repatriation Commission (Veterans’ entitlements)

[2016] AATA 937

Straker and Repatriation Commission (Veterans’ entitlements) [2016] AATA 937 (12 October 2016)

Division	VETERAN’S APPEALS DIVISION
File Number	2016/1255
Re	James Straker
APPLICANT
And	Repatriation Commission
RESPONDENT

DECISION

Tribunal	Senior Member T. Tavoularis
Date	12 October 2016
Date of written reasons	24 November 2016
Place	Brisbane

The decision under review was:

1.Affirmed insofar as that decision determined that the Applicant did not meet the requirements of the work test because I find the Applicant’s gainful work performed outside Australia cannot be treated as gainful work in Australia pursuant to section 45TU(1) of the Veterans Entitlement Act 1986 (Cth) (“the VEA”); and

2.Remitted to the Respondent to consider the question of whether the Applicant may alternatively satisfy the requirements of the work test in section 45TS of the VEA on a pro rata basis for gainful work performed in Australia.

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

Senior Member T. Tavoularis

VETERAN’S AFFAIRS - PENSION BONUS SCHEME - Application for registration rejected - did Applicant satisfy work test – whether work performed outside Australia could be treated as gainful work performed within Australia – work outside Australia did not meet special circumstances requirements – work test does not appear to be satisfied – decision under review affirmed in part and remitted in part.

Legislation

Veterans Entitlement Act 1986, ss 45T, 45TH, 45TS, 45TU, 45TV

Income Tax Assessment Act 1936, ss 23AF, 23AG

Cases

Carroll and Secretary, Department of Family and Community Services [2005] AATA 346 

Secondary Materials

Department of Veteran’s Affairs - Compensation and Support Policy Library, Part 5 Income Support Allowances and Benefits

WRITTEN REASONS FOR DECISION

Senior Member T. Tavoularis

24 November 2016

INTRODUCTION

1. This is an application by Mr James Straker (“the Applicant”) for review of the decision by the Repatriation Commission (“the Respondent”) to refuse his registration as a member of the Pension Bonus Scheme (“PBS”).

2. The Applicant lodged an Application to register with the PBS on 24 February 2014. After providing the requested information about his work history he then made an application for payment of Pension Bonus on 9 June 2015. On 23 June 2015 the Respondent rejected the Applicant’s registration for PBS application on the basis he did not work the required number of hours within Australia.

3. Upon the Applicant’s request, that decision was further reviewed by a delegate of the Respondent. On 14 December 2015 the delegate affirmed the decision and determined that the Applicant was not eligible to register with the PBS due to the provisions of section 45TH of the Veterans Entitlement Act 1986 (Cth) (“the VEA”). 

4. In good faith, the Applicant made an application to participate in the PBS. That application recognises the fact that he stayed in the workforce for 10 years beyond his retirement age.

5. At the conclusion of the resumed hearing in this matter I delivered oral reasons for the decision I reached. What follows is a largely transcribed version (with relevant and necessary amendments) of that oral decision.

CONSIDERATION

1. The applicable legislation is the Veterans Entitlement Act 1986 (Cth) (“the VEA”).  There are several relevant provisions to be met, much as occurs in many other instances where the grant of a pension or other kind of government payment is sought by an Applicant. A simplified outline of the requirements for the pension bonus is contained in section 45T of the VEA. Simply stated, the requirements are as follows.

2. The first requirement is that the Applicant is able to get a lump-sum pension bonus because he became eligible for an age service pension but deferred claiming it. The answer, simply put, is that he satisfies this requirement. The Applicant is clearly eligible for a lump sum payment because he rendered qualifying service and thus at 60 years of age he was eligible for the Age Service Pension[1] but deferred claiming it and kept performing his regular work as part of the workforce.

   [1] See Veteran’s Entitlements Act 1986, s 36 – Eligibility for age service pension; and s 5QA(2) – Pension age for male veterans is 60 years.

3. The second requirement is that the Applicant registered as a member of the PBS. This he did, but he did so late, indeed quite late. The Applicant’s special date of eligibility was on 14 January 2005, the day he turned 60.[2] However, his application for the PBS was only lodged on 24 February 2014. Obviously, the application was lodged outside the provisions of section 45TH of the VEA. Section 45TH provides that an application to get on the PBS has to be lodged in the period which starts 13 weeks before an applicant’s special date of eligibility and ends 13 weeks after that date. In this case, between 15 October 2004 and 15 April 2005. The Applicant lodged his application to register for the PBS on 24 February 2014 making it something in the order of nine years out of time.

   [2] See Veteran’s Entitlements Act 1986, s 45TB(1) – special date of eligibility for the Age Service Pension is the first day on which the person becomes eligible for an age service pension.

4. Be that as it may, there was previously a provision in the VEA, specifically, section 45TH(3)[3], to the effect that the Respondent may extend the period within which a person must lodge an application.

   [3] Note: this subsection has since been removed from the VEA.

5. My understanding of the evidence is that no issue is taken by the Respondent with regard to the late lodgement of this application to qualify or register for the PBS. Therefore, the second requirement, which involves the completion and lodgement of an application for registration under section 45TH, is met.

6. The third requirement is that to get the pension bonus the applicant must accrue between one and five bonus periods (a bonus period runs for 1 year) and pass the work test for each accrued bonus period. The work test for a full-year period appears in section 45TS of the VEA. To pass the work test for a year, the applicant or their partner must gainfully work for at least 960 hours during that year and at least 640 of that total number of hours must have been worked in Australia. 

7. The test involves the application of a work test across individual years worked by an applicant, from the period of the special eligibility date, which was 14 January 2005, on a year by year basis, up until 24 February 2014, which was the date on which the Applicant lodged his application to register with the PBS.   

8. In the decision under review,[4] the delegate of the Respondent correctly recorded the relevant period of work years to run from 14 January 2005 right up until 24 February 2014 (“the relevant period”). That list of years appears in tabulated form at page 13 of the
   

   [4] See Exhibit 5, T Documents, T2, pp 7 – 16.

   T Documents.  Helpfully, the delegate also, at page 14 of the T Documents, inserted the applicable hours that the Applicant worked both in Australia and overseas for the period 2005, on a year by year basis, right up to 2014.

9. My understanding for present purposes is that neither side cavils with the itemisation of hours worked for each relevant year. There is an anomaly with regard to the work test and that anomaly could have been a problem for the Applicant. However, the Respondent, through its representative, Mr Williams, acting as a model litigant, told me the position of the Respondent is that by application of a Special Instrument, the deficiency for the quantum of hours worked for the 2011 year could be remedied. In particular, only 480 hours were worked by the Applicant in 2011. The minimum number of working hours required per year is 960. The Respondent, for the purposes of this application, has applied the Special Instrument discretion and has deemed that the 2011 year was satisfied in terms of this Applicant meeting the work test of a minimum of 960 hours, even though the 960 hours were not actually worked.

10. Therefore, the requirement under section 45TS that the Applicant work at least 960 hours has been met. However, the problem that this Applicant faces is that at least 640 of the total number of hours in each period must have been worked in Australia. The Applicant did not satisfy this criterion for the years 2006, 2007, 2008, 2009, 2010 and 2011, as he was working overseas. The Respondent has the discretion under section 45TU of the VEA to remedy this shortfall by treating gainful work outside Australia as gainful work in Australia.

11. Before I continue my discussion of section 45TU, I am satisfied that the work done in Qatar by the Applicant was in fact gainful work for the purposes of section 45TV of the VEA. To the best of my recollection of the evidence at the hearing and resumed hearing, there is no objection from the Respondent that the work claimed to have been done by the Applicant, is gainful work for the purposes of the legislation. 

12. That then leads me to a discussion of the provisions of section 45TU of the VEA. During the relevant period the Applicant spent something in the order of five years (2006 – 2011) working as a senior resident engineer on a waste management project in Qatar. His employer was an Australian registered corporate entity called the Snowy Mountains Engineering Corporation (“SMEC”).   

13. The Applicant worked as an employee of SMEC for this total period of approximately five years in Qatar doing the work he has done throughout his life, which is in high level waste management/waste control consultancy. To extend the discretion under section 45TU, the Respondent, must be satisfied of two things. First, the Applicant has carried on gainful work outside Australia. Clearly he has done that. Second, because of special circumstances, a phrase to which I will return shortly, the gainful work that was done by the Applicant outside Australia should be deemed as gainful work carried on in Australia.  

14. The question that arises, which to my mind, creates a difficulty for the Applicant revolves around the nature of the special circumstances necessary to be demonstrated in order to establish whether certain work performed outside of Australia is to be treated as work undertaken in Australia. The waste management consultancy work that was done by the Applicant in Qatar is in my view clearly gainful employment for the purposes of the VEA. The question to be decided is: whether the work done in Qatar was gainful work that should be treated as gainful work carried on in Australia?  

15. There is a certain non-exhaustive guide that can be referred to for assistance in the characterisation of gainful work done outside Australia. This guide appears in what is known as the “Compensation and Support Policy Library” on the Department of Veteran’s Affair’s website[5] (“the Guide”). The Guide contains three items of assistance of what may constitute special circumstances. I note they are only examples.

    [5] See: Department of Veteran’s Affairs - Compensation and Support Policy Library > Part 5 Income Support Allowances and Benefits > Part 5.6 Pension Bonus Scheme > 5.6.4 Membership Requirements > Work Requirements of the Pension Bonus Scheme > Hours worked outside Australia.

16. The first example relates to a person performing work outside Australia who then cannot return to Australia due to circumstances either unforseen or beyond the person’s control. (In my mind examples would include: a natural disaster, the closure of an airport, a death, etc.) On the evidence before me, I find that this element does not apply.   

17. The second example relates to a person’s work overseas being, firstly a normal part of their employment in Australia and secondly, of short duration. The Applicant was working in Qatar as a normal part of his employment with SMEC (an Australian company). The difficulty for the Applicant is that the work he did in Qatar was not of a short duration.  I turned my mind to the possibility of reaching a finding that the phrase “short duration” could possibly be applied by comparing the number of years that the Applicant worked in Qatar to the totality of his working life, as proportion. When viewed in that way, there is an argument that the phrase “short in duration” could be justified. The Applicant has been working since the mid 1960’s until 2014 in the same line of work. That is a period of approximately 45 years. His work period in Qatar was for barely five years. Therefore, we are talking about one-ninth or one-tenth of his total working life being spent in Qatar performing the work that he has done throughout his working life. However, to my mind there is a difficulty with proceeding on that basis. The difficulty is twofold.

18. First, only the relevant period must be considered for the purposes of the PBS and not the totality of the Applicant’s working life. The relevant period in this case is approximately a nine year period.  The Applicant has spent at least half that period (four and a half years) working in Qatar. Therefore, it cannot be regarded as short in duration.

19. A previous authority, handed up to me at the resumed hearing by the Respondent’s representative is the case of Carroll and Secretary, Department of Family and Community Services [2005] AATA 346. In that case, the Tribunal was dealing with an Applicant on a similar factual basis except that it related to a virtually identical scheme under the applicable social security legislation. There, the phrase “short duration” was defined to be a period more in line with a work stint or a short working phase away from Australia. The short duration in that case was something in the order of 6 weeks across a given year.[6] I therefore accept the contention of the Respondent that the phrase “short in duration” must surely be limited to the relevant period and the shortness of the duration (of the overseas work) must apply to each given year (of the relevant period).

    [6] Carroll and Secretary, Department of Family and Community Services [2005] AATA 346 at [24].

20. I therefore find that the Applicant’s work overseas, although a normal part of his employment in Australia, was not short in duration. Therefore, he does not qualify for the special circumstance outlined in example two of the Guide.

21. The third special circumstance example relates to whether the Applicant was undertaking aid work funded by the Australian Government. I seriously considered this submission. It was to the effect that the definitional breadth of aid work is not only limited to impoverished countries or countries that may be affected by an emergent calamity. The Applicant submitted that the concept of aid work can be extended to the provision of consultancy services by Australian companies and their employees to already wealthy countries, such as Qatar that may be at an infant stage in the development of their landfill management systems and waste management processes. I understand and appreciate that contention. 

22. I have difficulty in accepting that submission when I have regard to the nature of the Applicant’s engagement, the nature of SMEC itself, the nature of its engagement with Qatar and the remuneration of SMEC employees in completing that work in Qatar.   SMEC is, as I understand the evidence, an Australian registered corporation just like any other category of existent Australian corporations. SMEC presumably approached the Qatari government or perhaps participated in a tendering process to secure the work, just as any other commercially minded company would do. To my mind, that is not akin to the provision of aid work or aid-based relief.

23. SMEC then presumably contracted with the Qatari government for the provision of waste management consultancy services over the course of four and a half or five years. The Applicant was an employee of SMEC for the duration of that period. The Applicant received the benefit of a tax exemption for his income earned in overseas employment for an approved overseas project, pursuant to sections 23AF and 23AG of the Income Tax Assessment Act 1936.

24. Viewed in total, the net effect of that legislation is that an employee or contractor of SMEC, in the position of the Applicant, received his or her income with a tax advantage that an Australian based employee doing identical work within Australia would not have received. Further, the Applicant derived the benefit of the tax advantage as far as I can understand for the totality of his time in Qatar.    

25. Taking into account the three elements I have described, that is, (1) the nature of SMEC as an independent profit-derived entity, (2) the nature of the contractual relationship or similar relationship between SMEC and the Qatari government and (3) the way that SMEC’s employees or contractors based in Qatar were remunerated through that process, I cannot find that the work the Applicant did in Qatar qualifies as aid work funded by the Australian Government.

26. I therefore find that the discretion under section 45TU of the VEA cannot be extended to the Applicant as he does not qualify for any of the anticipated special circumstances. Consequently, I find that the Applicant does not satisfy the work test under section 45TS of the VEA because he did not work at least 640 hours per full-year period in Australia.

    APPLICANT’S ADDITIONAL REQUEST

27. At the conclusion of my oral reasons, the Applicant enquired whether he might have satisfied the work test on a pro rata basis for the years in which he did engage in the required hours of work within Australia. This issue was outside the scope of my review. The Respondent’s representative told me he could not there and then definitively respond to that question and therefore suggested that this particular question be remitted back to the Respondent for further consideration.

    CONCLUSION

28. Accordingly, the sealed version of my oral decision was couched in these terms.

29. For the reasons outlined above and given orally at the conclusion of the hearing in this matter:

    (a)I affirm the decision under review insofar as that decision determined that the Applicant did not meet the requirements of the work test because I find the Applicant’s gainful work performed outside Australia cannot be treated as gainful work in Australia pursuant to section 45TU(1) of the VEA.

    (b)However, I remit to the Respondent the question of whether the Applicant may alternatively satisfy the requirements of the work test in section 45TS[7] of the VEA on a pro rata basis for gainful work performed in Australia.

    [7] I note this was mistakenly transcribed as section 45TH in my Oral Decision.

I certify that the preceding 34 (thirty -four) paragraphs are a true copy of the reasons for the decision herein of Senior Member T. Tavoularis

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

Associate

Dated 24 November 2016

Dates of hearing	16 September 2016 & 12 October 2016
Applicant	In person
Advocate for the Respondent	Bruce Williams, Department of Veterans' Affairs