SUSAN THOMPSON and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
[2012] AATA 585
[2012] AATA 585
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2012/0691
Re
SUSAN THOMPSON
APPLICANT
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
RESPONDENT
Decision
Tribunal Ms K Hogan, Member
Date 22 August 2012 Place Perth The Tribunal affirms the decision under review.
Ms K Hogan, Member
…..(sgd)..Ms K Hogan……..
Catchwords
Social Security- Low Income Health Care Card – Income - Redundancy Payment
Legislation
SocialSecurity Act 1991
Social Security (Administration) Act 1999
Cases
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Secondary Materials
Guide to the Social Security Law
REASONS FOR DECISION
Ms K Hogan, Member
22 August 2012
History
As a consequence of the termination on 1 July 2011 of the applicant’s employment with Centrelink she became entitled to a final gross payment, including leave and redundancy payments of $60,768.72.
On 11 November 2011 the applicant lodged a claim for a low income health care card.
On 24 November 2011 a Centrelink officer decided to reject her claim on the grounds that her income exceeded the allowable limit.
The decision was reviewed by a Centrelink Authorised Review Officer (“ARO”).
On 6 December 2011 the ARO decided that the applicant’s income exceeded the allowable limit and affirmed the decision.
On 13 December 2011 the applicant lodged an application for review of the decision with the Social Security Appeals Tribunal ("SSAT") who affirmed the decision under review on 19 January 2012.
The applicant then lodged an appeal with this Tribunal.
THE IssueS
What is the applicant's ascertained income?
At the time of her claim, was the applicant qualified to receive a low income health care card.
EVIDENCE
The Tribunal was provided with a number of documents including:
(a) the section 37 documents;
(b) written submissions from the applicant and the respondent.
The Tribunal heard oral submissions on behalf of the parties.
CONSIDERATION OF THE ISSUES
The legislation relevant to this decision is contained in the Social Security Act 1991 (the Act) and the Social Security (Administration) Act 1999 (the Administration Act). Provisions relating to whether a person is qualified for a low income health care card are contained in Part 2A.1 of the Act. The method to work out whether a person satisfies the health care card income test is contained in Part 3.9A of the Act.
Social Security legislation is interpreted by Centrelink officers with the aid of the Guide to Social Security Law (“the Guide”). The Tribunal follows policy as expressed in the Guide unless the policy is inconsistent with the legislation, or there is a cogent reason not to so do (see Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634).
APPLICANT
The applicant contended that Centrelink should not have applied an income maintenance period in the application of the health care card income test because the health care card is not included in either the allowances listed in subsection 1073(2); section 1061ZO of the Act or among the sections listed in subsection 23(1) of the Act or in Part 4.3.4.10 of the Guide relating to income maintenance periods.
The applicant contended that the effect of paragraph (e) of subsection 8(1A) of the Act is that her leave payment should not have been taken into account in the calculation of her income for the purposes of the health care card. She also referred to paragraph (f) of subsection 8(1A) which refers to the exclusion of a termination payment by a former employer.
The applicant queried whether her termination payment should be treated as an exempt lump sum pursuant to subsection 8(11) of the Act.
The applicant contended that if her redundancy payment and leave payments were required to be taken into account then they should be treated like an income maintenance period for any other payment.
respondent
The respondent did not contest that the applicant satisfied the criteria in ss (b) or (c) of s 1061ZO(2) of the Act.
The respondent submitted that the applicant did not satisfy the health care card income test (s1061ZO(2) (d) of the Act).
The respondent contended that the lump sum payment to the applicant was not maintenance income as defined in section 3 of the Family Assistance Act 1991.
The respondent contended that there has been no determination by the Secretary so that any of the amounts paid to the applicant are considered an “exempt lump sum” under the provisions of section 8(11) of the Act.
The respondent contended that the final gross payment received by the applicant on 20 July 2011 is ordinary income as defined in section 8 of the Act.
The respondent contended that the lump sum payment received by the applicant was not business income as so could not be reduced by deductions under section 1072 of the Act.
The respondent submitted that divisions 1B and 1C of the Act relate to deemed income and income streams and do not apply to the lump sum payments received by the applicant.
The respondent submitted that the lump sums received are not ordinary income from remunerative work undertaken by the applicant but are payments for redundancy, in lieu of notice, unused annual leave and long service leave.
The respondent contended that none of the exclusions at section 1073(2) to (b)(iii) of the Act apply and the ordinary income, totalling $60,594.03, received by the applicant on 20 July 2011 is taken to be 1/52 of the total amount each week for 12 months from 20 July 2011 under section 1073 of the Act.
The respondent contended that section 1073(2) of the Act does not exclude the application of the section in any way, but simply modifies or reinforces its application in respect of the entitlements at subsections (a) to (f) even if the conditions at (g) to (h) exist.
The respondent submitted that applying the steps in section 1071A – 1 of the Act and the definitions contained at section 1071A – 4 of the Act, the applicant’s ascertainable income in the 8 weeks to 11 November 2011 was $11,345.97. The applicant’s allowable income was $834.00 per week or $6,672.00 for the relevant 8 week period.
The respondent contended that as the applicant’s ascertainable income is higher than her allowable income she does not satisfy the health care card income test and is not qualified, in accordance with section 1061ZO(2)(d) of the Act, to receive a health care card.
The respondent submitted that the term “income maintenance period” is specific to the social security entitlements that arise under 1064-F4 and 1064-F5, 1066A-G4 and 1066A-G5, 1067G-H11 and 1067G-H12, 1067L-D5 and 1067L-D6, 1068-G7AG and 1068-G7AH, 1068A-E3 and 1068A-E4, 1068B-D9 and 1068B-D10.
The respondent submitted that the term “income maintenance period” is not generally defined so that it might apply to entitlements other than those specified.
The respondent contended that the term “income maintenance period” is not referred to in relation to qualifying for a health care card or the health care card income test calculator (sections 1061ZO and 1071A of the Act) and does not apply in this application.
IS THE APPLICANT QUALIFIED FOR A HEALTH CARE CARD?
Relevant Law
Subsection 1061ZO(2) of the Act provides that a person is qualified for a health care card if the person: is an Australian resident or a special category visa holder residing in Australia; and the person is neither an FTB child, nor a regular care child, aged over 16 years; and the person satisfies the health care card income test.
Section 1071A of the Act provides that the Health Care Card Income Test Calculator (“the Calculator”) is to be used in working out whether a person satisfied the health care card income test on the day on which the person claims the card. The Calculator in subsection 1071A-1 requires the following method to be followed:
Step 1.Work out the amount of the person’s ascertained income for the period of 8 weeks ending on the day on which the person lodged the claim.
Step 2.Work out the amount of the person’s allowable income for the period.
Step 3.If the person’s ascertained income for the period is less than the person’s allowable income for the period, the person satisfies the health care card income test.
Step 4.If the person’s ascertained income for the period equals or exceeds the person’s allowable income for the period, the person does not satisfy the health care card income test.
The meaning of allowable income, ascertained income, and income for the purposes of the Calculator are set out in subsection 1071A-4 of the Act. Allowable income is the person’s average weekly income for the 8-week period immediately before the date of the person’s claim. Ascertained income in relation to a period means the income of the person and her/his partner in respect of that period. Income is defined in the subsection as ordinary income, and to the extent that they are not ordinary income, certain other payments such as a social security pension or benefit.
Ordinary income is defined in subsection 8(1) of the Act as income that is not maintenance income or an exempt lump sum. Part 3.10 of the Act contains General provisions relating to the ordinary income test. Division 1 of Part 3.10 includes provisions relating to the ordinary income concept: section 1072 (General meaning of ordinary income and section 1073 (Certain amounts taken to be received over 12 months).
Section 1072 of the Act provides that a reference to a person’s ordinary income is a reference to the person’s gross ordinary income from all sources calculated without any reduction, other than a reduction relating to business income. Section 1073 of the Act provides for certain amounts to be taken to be received over 12 months. Subsection 1073(2) provides that an income maintenance period applies to a person who has claimed newstart allowance, sickness allowance, youth allowance, widow allowance, partner allowance and mature age allowance.
Subsection 8(1) of the Act defines the term income maintenance period as having the meaning given in points 1064-F4 and 1064-F5, 1066A-G4 and 1066A-G5, 1067G-H11 and 1067F-H12, 1067L-D5 and 1067L-D6, 1068-G7AG and 1068-G7AH, 1068A-E3 and 1068A-E4 and 1068B-D9 and 1068B-D10 of the Act.
Subsection 8(1A) of the Act defines employment income. It provides that employment income is ordinary income of the person that is earned, derived or received or that is taken to have been earned, derived or received, by the person from remunerative work as an employee. Paragraphs (e) and (f) of subsection 8(1A) provide that employment income does not include:
(e)if the person is not engaged on a continuing basis in that employer/employee relationship – a leave payment to the person; or
(f)a payment to the person by a former employer of the person in relation to the termination of the person’s employment.
Subsection 8(11) of the Act states than an amount received by a person is an exempt lump sum if:
(a)the amount is not a periodic amount (within the meaning of subsection (11A)); and
(b)the amount is not a leave payment within the meaning of points 1067G-H20, 1067L-D16 and 1068-G7AR; and
(c)the amount is not income from remunerative work undertaken by the person; and
(d)the amount is an amount, or class of amounts, determined by the Secretary to be an exempt lump sum.
Note:Some examples of the kinds of lump sums that the Secretary may determine to be exempt lump sums include a lottery win or other windfall, a legacy or bequest, or a gift – if it is a one-off gift.
Subsection 36(1) of the Administration Act provides that the Secretary (Centrelink) must, in accordance with the social security law, determine a claim for a social security payment or a concession card, either granting or rejecting the claim.
Evidence, finding of fact and application of the law
It was not in dispute and the Tribunal finds that on 1 July 2011 the applicant ceased her employment and became entitled to a final gross payment, including leave and redundancy payments of $60,768.72; and on 11 November 2011 the applicant lodged a claim for a low income health care card.
The Tribunal finds that, in this case, the allowable income amount for the purposes of the health care card income test in section 1071A-1 of the Act is $6,672.00.
The applicant's argument, cannot in the Tribunal's view, be upheld. There is nothing in s1073 which indicates that the list of allowances set out in the subsection is intended to be exhaustive or exclusive. The fact that the aged pension is not specifically mentioned in s1073 does not mean that s1073 does not apply.
As a principle of statutory interpretation, the Tribunal did not consider that the absence of specific reference to health care card in subsection 1073(2) or absence of reference to section 1061ZO in subsection 23(1) should be interpreted as meaning that a claim for health care card is to be excluded from the operation of the provisions relating to income maintenance periods.
The Tribunal observed that subsection 8(1A) specifically applies to employment income, and paragraphs (e) and (f) of that subsection relate to income that is not to be included as employment income. Subsection 1071A-4 on the other hand requires the ordinary income of the person to be used in the applying the Calculator.
The Tribunal did not consider that the applicant’s termination payment fell within any of the amounts referred to in subsection 8(11) and therefore could not be treated as an exempt lump sum.
It is clear from section 1071A that in determining whether a person qualifies for a health care card, the Calculator at the end of that section must be applied.
The Tribunal found that the applicant’s ascertained income of $9,349.00 (calculated in accordance with Step 1 of the method statement in subsection 1071A-1) exceeds her allowable income of $6,672.00. The Tribunal found that applicant does not satisfy the health care card income test and is not qualified for a health care card.
The Tribunal determined under subsection 36(1) of the Administration Act that the applicant’s claim must be rejected.
DECISION
The Tribunal affirms the Decision under review.
I certify that the preceding 51 (fifty-one) paragraphs are a true copy of the reasons for the decision herein of Ms K Hogan, Member .
....(sgd) T Freeman.......................
Associate
Dated 22 August 2012
Date of hearing 30 July 2012 Applicant In person Advocate for the Respondent Mr Dube
instructed by Mr Maishman
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