Thompson and Department of Family and Community Services
[2001] AATA 88
•30 January 2001
DECISION AND REASONS FOR DECISION [2001] AATA 88
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W2000/349
GENERAL ADMINISTRATIVE DIVISION )
Re Ellen Kristene Thompson
Applicant
And Secretary, Department of Family and Community Services
Respondent
DECISION
Tribunal Mr RD Fayle, Senior Member
Date30 January 2001
PlacePerth
Decision Pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, the decision of the Social Security Appeals Tribunal of 16 August 2000 under review, is set aside and in substitution finds therefor: (i) that the applicant derived $3000 income from the said scholarship on 2 March 2000; and (ii) that the applicant derived a further $3000 income from the said scholarship on 17 July 2000; AND the matter be remitted to the respondent to recalculate the applicant's entitlement to DSP for the period under review accordingly.
………(-sgd RD Fayle)………
Senior Member
CATCHWORDS
SOCIAL SECURITY – Disability Support Pension – applicant in receipt of scholarship money – whether scholarship money is to be treated as income for the purpose of calculating Disability Support Pension – whether income "earned, derived or received".
Social Security Act 1991, ss8(1), 8(2), 8(8), 24A, 1064, 1073
REASONS FOR DECISION
30 January 2001
This is an application to review a decision of the Social Security Appeal Tribunal of 16 August 2000. That tribunal affirmed a decision of the Secretary, Department of Family and Community Services ("the respondent") to reduce the amount paid to Ms Ellen Kristene Thompson ("the applicant") in Disability Support Pension due to receipt of income from a university scholarship.
The Tribunal received into evidence the documents received pursuant to s37 of the Administrative Appeals Tribunal Act 1975 (T1-T15) ("the T documents"), together with seven exhibits lodged by the applicant (Exhibits A1- A6). The Tribunal also heard evidence from the applicant. In addition, the applicant subsequently supplied further evidence by mail. The applicant, assisted by Ms Su-Hsien Lee of People with Disabilities, represented herself and the respondent was represented by Mr S Ellis, a Departmental advocate.
BackgroundThe applicant has at all relevant times been in receipt of the Disability Support Pension ("DSP"). As at 23 December 1999 her fortnightly DSP payment was $348.20 (plus pharmaceutical allowance), based on an annual income of $3602.04 from her part time music teaching and bank interest.
In 1999 the applicant completed a Bachelor of Arts (English/Comparative Literature) at Murdoch University. Some time in late 1999, the applicant applied for a place in an Honours programme in the Faculty of Arts at the University of Western Australia ("UWA") for 2000. In response by letter dated 3 December 2000 (Exhibit A1), Ms Rosemary Ingham, Senior Administrative Officer (Faculty of Arts) advised the applicant of two Honours scholarships being offered for 2000. Ms Ingham advised that the scholarships are governed by the University's Regulations for Ad Hoc Honours Scholarships (available on the University website). The applicant provided a printout of that website (Exhibit A1(a)) which states:
Ad Hoc Honours Scholarships
Except where covered by specific University Regulations:
1. Scholarships shall be awarded for educational purposes only, and shall not be tied to a specific research project unless otherwise authorised by the Scholarships Committee.
…
By letter dated 13 January 2000, the applicant was advised of her admittance as an Honours candidate in the Bachelor of Arts in the Department of English at the University of Western Australia ("UWA") for 2000 (Exhibit A3).
By letter dated 2 February 2000, the applicant was advised by Dr TJ Dickson, Acting Executive Dean of the Faculty of Arts at UWA, that she had been awarded its 2000 Honours Scholarship for the most outstanding candidate from another university in Western Australia (T5 p32). Dr Dickson, in his letter, stated:
"The Scholarship is valued at $6000 and will be paid in two moieties, one at the commencement of each semester. Payment of the second moiety will be subject to you making satisfactory progress in the first semester of your studies. Payment of your first moiety will be forwarded as soon as possible. Please note that the retention of the scholarship is also contingent upon your continued enrolment in the Honours course."
A cheque from the university for $3000 was deposited into the applicant's bank account on 2 March 2000.
In March or early April of 2000, the applicant received an Income and Assets Review Form from Centrelink. She telephoned Centrelink to ask advice about whether or not to include the scholarship money on the form. Ms Thompson states that she was advised to tick "No" for "lump sum payments" and to mention in the margin of the form the money and what it was for. The applicant she did so, posting the form to Centrelink on 9 April 2000.
By letter dated 10 April 2000, a Centrelink officer wrote to the applicant asking for information about her scholarship. Ms Thompson telephoned Centrelink on the 1300 number and explained the situation. Ms Thompson states that she was advised by the Centrelink officer to whom she spoke that the information would be forwarded to Fremantle Centrelink with an advice that the funds were being used for study related expenses. Ms Thompson was asked to send a copy of Dr Dickson's letter to Fremantle Centrelink. This she did on 20 April 2000, along with a photocopy of the deposit slip showing she had been paid $3000.
On 1 May 2000 a Centrelink officer decided to treat the scholarship money as income which then gave an annual income of $9630 including a lump sum of $6000. On 5 May 2000 the applicant received an advice that based on the new annual income, her DSP had been reduced to $237.81 (plus pharmaceutical allowance). That same day, the applicant spoke at length to an officer from Fremantle Centrelink. The officer said he would send copies of sections 8 and 24A of the Social Security Act 1991 and would also refer the matter to an authorised review officer ("ARO").
On 8 May 2000 the applicant received the sections of the Social Security Act and spoke to 'Steve' in the Disabilities section of Fremantle Centrelink. He advised the applicant to get UWA to fax a letter through to 'Dave' in the Disabilities section to forward to an area review officer stating exactly what the monies were for. Ms Thompson then arranged for Veronica Coram, UWA Senior Administrative Officer (Arts) to fax Dave a copy of a letter by her. That letter (T9, p39), faxed on 9 May 2000, states as follows:
"I write to confirm that the Faculty of Arts Honours Scholarship of $6000 ($3000 each semester) awarded to you this year is intended to assist you with study costs associated with your course, the Bachelor of Arts (Honours) in English. One of the conditions of the award of the Scholarship is that you remain enrolled in your Honours course throughout the year. Whilst you have discretion over your expenditure of the Scholarship award, the University would expect that the funds would go towards study expenses such as HECS fees, books, computing and other equipment necessary for the completion of your course. The Scholarship is NOT intended to cover ordinary living costs. Any further queries about the Scholarship can be directed to me at the details given above."
By letter dated 30 May 2000 (T14), an ARO advised the applicant that she (the ARO) had decided to affirm the decision to reduce the applicant's rate of DSP due to the level of her income. The ARO stated:
"Centrelink has reduced your Disability Support Pension rate because it says this scholarship is "income" which is "ordinary income" under section 8 of the Social Security Act 1991 and that under section 1064 Module E of the Act, the scholarship income when combined with your other income from music teaching and financial investments means that Centrelink cannot pay you the maximum rate of Disability Support Pension.
…
The letters from UWA indicate that you are not required to use the scholarship for any purpose specified by the scholarship giver."
The issues
The applicant raised the contention that the scholarship awarded to her by the University of Western Australia does not fall within the definition of "income" as provided in the Act and it was awarded for "educational purposes only – and NOT in any part for living expenses". Further, at the time of the original Centrelink decision the applicant had only been paid the first moiety of $3000 not the full $6000 and as such her pension – if affected – should only be affected by $3000. Finally, the applicant submitted that the respondent had incorrectly assessed her scholarship under s1073 of the Act. Section 1073 applies only to claims for certain specified allowances and not to Disability Support Pensions.
The Tribunal addressed in some depth the question of "income" and the scholarship being awarded "for educational purposes only".
The applicant stated that her scholarship should not be considered 'income' for income test purposes against her pension because:
(1) nowhere in the Act, nor in the Guide to the Act does it state that scholarships awarded in Australia are all to be considered income; and
(2) it was an educational scholarship awarded to her for educational purposes only.There is no mention specifically of 'scholarship' in the Act, however s 8(8) states :
"The following amounts are not income for the purposes of this Act:
…
(zj) a payment of an approved scholarship awarded on or after 1 September 1990;"
Note: for "approved scholarship" see subsection 8(1).
Is the applicant's scholarship an 'approved scholarship' for the purposes of the Act?
8.(1) In this Act, unless the contrary intention appears:
"approved scholarship" means a scholarship in relation to which a determination under section 24A is in force;
Section 24A(1) of the Act states:
"The Minister may determine in writing that a scholarship, or a class of scholarships:
(a) awarded outside Australia; and
(b) not intended to be used wholly or partly to assist recipients to meet living expenses;is an approved scholarship, or a class of approved scholarships, as the case may be, for the purposes of this Act."
There was no evidence provided by the applicant or the respondent to show that the scholarship in question had been determined as an 'approved scholarship' by the Minister responsible. Further, the first requirement for such a determination is that the scholarship be "awarded outside Australia". That is not the case in this instance.
Therefore, the scholarship granted to the applicant cannot be considered an 'approved scholarship'.
The next step is to determine whether the scholarship satisfies the requirements as 'income' under the Act.
Under s8(1):"earned, derived or received" has the meaning given by subsection (2);
"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)."income amount" means:
(a) valuable consideration; or
(b) personal earnings; or
(c) moneys; or
(d) profits;
(whether of a capital nature or not);
Section 8(2) of the Act defines 'income' as:
(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).
The respondent submitted that the applicant 'earned' the scholarship when it was awarded simply because "the scholarship itself … is awarded for academic achievement … rather than anything else" (Transcript, p41).
On the issue of 'derived', the respondent submitted that:
·"derived" covers a wider field than "received". Moneys can be derived before they are received, so long as a person has a "present legal entitlement" to them; and
·the fact that an account-holder must make a claim for the money before he receives it does not affect the fact he has already derived it.
stating that of the $6000 scholarship, it was submitted $3000 was received and was therefore derived. The balance, it was submitted, of $3000 is therefore an amount to which the applicant has a present entitlement because she continued throughout the academic year to be enrolled in the Honours course and made satisfactory progress in first semester (see: UWA letter 8 December 2000 received after hearing concluded.) Therefore, for the purpose of the s8(1) definition of "income" the entire amount was "derived or received" by the applicant at least once the second semester commenced.
The Tribunal finds that the scholarship amount was not a payment for the rendering of personal services, nor for the giving of any consideration on the part of the applicant. The amount was an award for scholastic achievement and purposes. It was awarded in accordance with the University's Ad Hoc Honours Scholarship regulations (Exhibit A1a). These state:
Except where covered by specific University regulations:
1. Scholarships shall be rewarded for educational purposes only, and shall not be tied to a specific research project unless otherwise authorised by the Scholarships Committee.
2. Scholarships shall be offered on the authority of the Executive Dean(s) concerned, and the Executive Dean(s) may delegate to Head(s) of Department(s) the authority to allocate the scholarships.
3. Scholarships shall normally be available to full-time students enrolled in the final year of an honours course, but may in special circumstances be offered to other honours students.
4. Students accepting a scholarship shall not be required to enter into any bond either during the course of, or at the conclusion of, their studies.
5. The faculty or department awarding a scholarship shall publicly and appropriately advertise the award, and the award shall be made on academic merit after receiving advice from a representative selection panel.
6. In respect of the awarding of scholarships, the Executive Dean(s) concerned shall take due care that the University's equity policies are observed and that legal proprieties, especially concerning taxation matters, are observed.
The scholarship was for $6000 payable in two equal instalments and as such it was paid periodically. The scholarship therefore, in the opinion of the Tribunal, falls within the genre of "a periodical payment by way of gift or allowance".
The applicant however, has contended that the scholarship was awarded specifically for educational purpose only, and not to be used for general living expenses. She stated that "the intention and purpose for which an amount is granted is always relevant to the question of whether the amount falls within the definition of income".
In addition to Exhibit A1a quoted above, evidence on the nature of the scholarship was provided by way of two letters from the Faculty of Arts, University of Western Australia to the applicant.
The first letter, from Ms Rosemary Ingham, Senior Administrative Officer (Arts) dated 3 December 1999 (Exhibit A1) acknowledges that the applicant has applied for a place in an Honours programme in the Faculty of Arts in 2000. The letter goes on to mention two Honours scholarships being offered for 2000 and states that "[T]hese scholarships are governed by the University's Regulations for Ad Hoc Honours Scholarships".The second letter was from Ms Veronica Coram, Senior Faculty Administrative Officer (Arts) to the applicant , dated 9 May 2000 (T8, p39):
"I write to confirm that the Faculty of Arts Honours Scholarship of $6000 ($3000 each semester) awarded to you this year is intended to assist you with study costs associated with your course, the Bachelor of Arts (Honours) in English. One of the conditions of the award of the scholarship is that you remain enrolled in your Honours course throughout the year. Whilst you have discretion over your expenditure of the Scholarship award, the University would expect that the funds would go towards study expenses such as HECS fees, books, and computing and other equipment necessary for the completion of your course. The Scholarship is NOT intended to cover ordinary living costs…".
Included in the T documents was a letter from Dr T J Dickson, Acting Executive Dean to the applicant, dated 2 February 2000 (T5, p32). This letter advised and congratulated the applicant on her outstanding achievement at being awarded the Faculty of Arts 2000 Honours Scholarship for the most outstanding candidate from another university in Western Australia. It stated that the $6000 will be paid in two moieties and that payment of the second moiety will be subject to [the applicant] making satisfactory progress in the first semester of [her] studies.
During the hearing, the applicant stated that her understanding of the scholarship was that it was only for educational purposes. She stated that she understood the constraints upon her spending the money were such that "the money should be spent [either] for equipment that enables me to study from home, for materials or books etc… I would think it were up to me to prioritise, but I think that it would be things that would be directly to do with me being able to do the work that is required of me to complete that course". The Tribunal asked the applicant whether there is a requirement by the university for her to account for the money. The applicant responded by saying:
"I haven't been asked for receipts, no. … But … I was not a completely unknown person to the university and they knew that I was a responsible person and they knew that I would not take the money and go and have a good time. …I don't think the university would send anybody to come and check up on me as such, no. … If someone says that there is money available that could help me with purely educational costs and I apply for that money in the understanding that it is for purely educational costs and I use it for anything other than that, I don't see that it makes it right for me to misuse it, whether anybody asks me for a receipt or not."
The Tribunal considered the nature of the Regulations for Ad Hoc Scholarships (Exhibit A1a). Those regulations make no mention that there is an expectation on the part of the University that the scholarship must be spent only on study expenses and not for ordinary living costs. Indeed the Faculty of Arts letter of 9 May 2000 (T8) states in this regard:
"… you have discretion over your expenditure of the scholarship award…"
It then adds that:
"… the University would expect that the funds would go towards study expenses such as HECS fees, books, and computing and other equipment necessary for the completion of your course."
Ultimately however, the applicant has complete discretion as to how she spends the money. There is no requirement by the University or the Faculty for the applicant to account for the money or to retain and show receipts proving the scholarship is spent on education purposes. The Tribunal finds that the expected use of the applicant's scholarship for educational purposes is not sufficient to exempt it from being considered "income" for the purposes of the Act.
As mentioned, the applicant submitted that as the second moiety had not been claimed or paid at the time of the original decision, it should not form part of the income assessment with regard to her pension. The Tribunal responded that the decision under review was that of the Social Security Appeals Tribunal ("SSAT"). The SSAT hearing was held on 16 August 2000. The second semester had begun on 17 July 2000.
The nature of the scholarship is such that the $6000 is paid in two amounts - $3000 at the commencement of first semester and $3000, upon application and satisfactory first semester progress, some time after the commencement of second semester.
With regard to whether the second moiety of $3000 was "derived" by the applicant, the Tribunal adopts the respondent's submissions above. Evidence was provided by the applicant and by reference to the letter of Dr Tom Dickson dated 2 February 2000 (Exhibit T5, p 32). In his letter, Dr Dickson states that:
"[P]ayment of the second moiety will be subject to you making satisfactory progress in the first semester of your studies."
The applicant stated she had made satisfactory progress in first semester with her seminar, but (in her opinion) not as far as her dissertation was concerned. The completed dissertation was due by 27 October 2000, but the applicant said she was "way behind" and had requested an extension. Despite this, the applicant said there had been no suggestion from the Faculty of Arts that she had not had satisfactory progress in first semester. And she remained enrolled in the Honours course for the entire 2000 academic year. In her evidence the applicant admitted that the question of her progress being other than satisfactory, had not been raised by her supervisors, nor the relevant Heads of the Departments of Music and English.
In the opinion of the Tribunal it is not relevant, for the present purposes, whether the applicant believes that her progress with her thesis is not satisfactory. The only relevant facts determining her entitlement to the second instalment of $3000 are whether, after first semester she remained enrolled in the Honours course (T8 and see Exhibit A3) and whether she made satisfactory progress in first semester (T5). As at the date of the decision under review both conditions were met.
At the adjournment of the Hearing, the Tribunal directed the applicant to provide further written evidence of her entitlement (if any) to be paid the second $3000 instalment.
Subsequently the Tribunal received a letter from Associate Professor Alan Dench, Acting Executive Dean, Faculty of Arts, dated 8 December 2000. In that letter Associate Professor Dench stated:
"Ms Thompson was paid the first moiety of her Scholarship, amounting to $3000, early in Semester 1. Following the end of Semester 1, the Faculty was advised by the department in which she was studying that she had made satisfactory progress in Semester 1 in both her seminar and dissertation work. She is therefore eligible for payment of the second moiety of $3000. Payment of the second moiety can be forwarded as soon as Ms Thompson requests that this occur.
Ms Thompson has been advised that such a request should be made… before 31 January 2001 (extended from 18 December 2000). After 31 January, Ms Thompson will no longer be eligible for payment of the second moiety of the Scholarship.
…As a recipient of a Faculty of Arts Honours Scholarship, Ms Thompson is also bound by the regulations and conditions pertaining to that Scholarship unless she chooses to relinquish all monetary entitlements associated with the Scholarship."
Based on the evidence before it, the Tribunal finds that the applicant was entitled to payment of the second instalment of $3000 "following the end of Semester 1" when the Faculty was advised that the applicant had made satisfactory progress in semester 1. Therefore, the second $3000, while not received, has been derived and is income within the meaning of the definition of that term in s8 of the Act. However, the second instalment was not derived until she was entitled to be paid, that is, the beginning of second semester, 17 July 2000. So, for the purposes of the provisions of s1064 (and the relevant Disability Support Pension rate calculator) the applicant derived $3000 on 2 March 2000 and a further $3000 on 17 July 2000.
The applicant submitted that her scholarship was incorrectly assessed according to s1073 of the Act. Section 1073 applies to a variety of allowances, but not to Disability Support Pension.
The Tribunal has reviewed the evidence before it in the T documents and exhibits tendered at the hearing. The decision of the ARO (T13, p44) to "D Bosisto, Pensions Manager, Fremantle" dated 30 May 2000 includes a note to "David" saying:
"Decision affirmed…
We appear to have used s1073 in this case. I am not sure this is the appropriate provision; however, the result is fair and I have left this part alone as I think what is happening is a better result than raising a debt."
In the letter of decision from the ARO to the applicant (T14, p46) dated 30 May 2000, there is no reference to s1073. The ARO quotes s1064, at 1064 – E1 that Centrelink must "Work out the amount of the person's ordinary income on a yearly basis". Section 1064 and s1064 Module E do apply to Disability Support Pension and are the correct sections under which to assess income "earned, derived or received" by a person on DSP.
In the written decision of the SSAT (T2, pp 5, 10) dated 29 August 2000, the Tribunal referred to s1064 as being the appropriate provision under which to assess a person's DSP rate. There is no reference to s1073 in the SSAT decision.
Accordingly, as s1073 does not form any part of the decision under review, the Tribunal has not considered it.
DecisionFor the above reasons, pursuant to s43 of the Administrative Appeals Tribunal Act 1975 the Tribunal sets aside the decision under review and substitutes therefor:
(i) that the applicant derived $3000 income from the said scholarship on 2 March 2000; and
(ii) that the applicant derived a further $3000 income from the said scholarship on 17 July 2000;
AND the matter be remitted to the respondent to recalculate the applicant's entitlement to DSP for the period under review accordingly.
I certify that the 43 preceding paragraphs are a true copy of the reasons for the decision herein of
Signed: ...............(-sgd W.Treasure-).…………
AssociateDate/s of Hearing 28 November 2000
Date of Decision 30 January 2001
Counsel for the Applicant In person
Counsel for the Respondent Mr S EllisSolicitor for the Respondent Advocacy & Administrative Law Team, Centrelink
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