Trajkovski and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2008] AATA 145

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 145

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          N° 2007/2913

GENERAL ADMINISTRATIVE  DIVISION		)
Re		BORIS TRAJKOVSKI

Applicant

And

SECRETARY,

DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Mr C. Ermert, Member

Date25 February 2008

PlaceMelbourne

Decision The Tribunal sets aside the decision under review and in substitution decides that an income maintenance period be imposed on the payment of disability support pension to Mr Trajkovski from 14 December 2006 to 25 May 2009 inclusive.

(sgd) C. Ermert

Member

SOCIAL SECURITY – disability support pension – pension rate calculator - ordinary income – termination payment – income maintenance period – whether Secretary may determine income maintenance period does not apply – severe financial hardship – liquid assets - decision affirmed

Administrative Appeals Tribunal Act 1975

Social Security Act 1991

REASONS FOR DECISION

25 February 2008  Mr C. Ermert, Member

INTRODUCTION

1.      On 14 December 2006 Mr Trajkovski received a voluntary redundancy package from his employer, the Ford Motor Company, receiving $111,701 net in payments.  Prior to receiving the payout, the company arranged for financial advice for Mr Trajkovski.  However, he did not accept the advice.  He spent much of his $111,701 on paying off his mortgage and buying a new car.  On 20 December 2006 Mr Trajkovski applied to Centrelink, the service delivery agent for the respondent, for a disability support pension (DSP).  A DSP was granted to Mr Trajkovski with effect from 8 December 2006 (the date of his first contact with Centrelink regarding the claim) to 13 December 2006.  On 14 December 2006 Centrelink cancelled his DSP on the basis that he had to serve an income maintenance period.  Centrelink calculated the period to apply from 14 December 2006 to 22 May 2009.  

2.      On 27 April 2007, a Centrelink authorised review officer affirmed the decision to cancel the DSP and apply the income maintenance period.  Mr Trajkovski sought a review of the decision by the Social Security Appeals Tribunal (SSAT).  The SSAT affirmed the decision on 4 June 2007.  This hearing is a review of the SSAT decision.

THE HEARING

3. At the hearing Mr Trajkovski represented himself. The respondent was represented by Ms Ailsa Bramley, a Centrelink advocate. The Tribunal was assisted by the services of an interpreter. I had before me the documents lodged by the respondent under section 37 of the Administrative Appeals Tribunal Act 1975 (the T-documents) and I took into evidence six documents lodged by the applicant (Exhibits A1 to A6).

THE ISSUES

4.      The issues in this case are whether the payment of DSP to Mr Trajkovski is subject to an income maintenance period and, if so, whether the Secretary can determine that the whole or part of the income maintenance period does not apply in this case.

Is Mr Trajkovski subject to an income maintenance period?

5. Section 117 of the Social Security Act 1991 (the Act) states that a person’s rate of DSP is worked out using the Pension Rate Calculator at the end of section 1064 of the Act.  Module A provides the overall rate calculation process.  The note to Step 5 of section 1064-A1 advises that Module F contains provisions that may apply to working out the ordinary income of a person for the purposes of the payment of DSP.  Section 1064-F5 provides that if a person receives a termination payment the person is taken to have received ordinary income for a period equal to the period to which the payment relates (the income maintenance period).

6.      Section 1064-F2 of the Act determines the start date for the income maintenance period.  This section states that if a person’s employment has been terminated and the person is entitled to a lump sum payment from his former employer, the person is taken to have received the lump sum payment on the day on which the person’s employment terminated.  The length of the income maintenance period is determined by section 1064-F13.  This section states that if a person receives a single payment in respect of different kinds of termination payments, then each part of the payment is taken to be a separate payment and the income maintenance period is worked out by adding the periods to which the separate payments relate. 

7.      There is no disagreement between the parties that when Mr Trajkovski ceased work with Ford he received a voluntary redundancy payment on 14 December 2006, and that the net amount of the payout was $111,701.00.  This was confirmed by Mr Trajkovski in his oral evidence to the Tribunal.  There is also no disagreement that the total payout included payments for unused annual and sick leave, long-service leave and redundancy.  These are all termination payments as defined by section 1064-F14 of the Act. 

8.      Accordingly, I find that Mr Trajkovski received a termination payment.  Applying the provisions of section 1064-F5 of the Act, I find that Mr Trajkovski is taken to have received ordinary income for an income maintenance period equal to the period to which the termination payment relates. 

9.      There is no disagreement with the method of calculating the income maintenance period as set out in the respondent’s Statement of Facts and Contentions, dated 18 December 2007.  During the hearing Ms Bramley further explained the calculations of the income maintenance period to Mr Trajkovski, which he accepted.  Ms Bramley’s detailed explanations included the calculations which extended the income maintenance period from 22 May 2009 to 25 May 2009.  Accordingly, I find Mr Trajkovski’s income maintenance period has been correctly calculated as applying from 14 December 2006 to 25 May 2009.

Can the Secretary determine that the income maintenance period does not apply?

10.     Section 1064-F11 of the Act states that the Secretary may determine that the whole or any part of the income maintenance period does not apply if the Secretary is satisfied that the person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure.

11.     The term severe financial hardship is defined in section 19C(3) of the Act, which states that a person is in severe financial hardship if the value of the couple’s liquid assets is less than twice the fortnightly amount of the maximum payment rate of the pension that would be payable.  The term liquid assets is further defined in section 14A of the Act and includes amounts deposited with, or lent to, a bank or other financial institution by the person (whether or not the amount can be withdrawn or repaid immediately). 

12.     On his claim form for DSP (T6, p21), Mr Trajkovski stated that he had $10,495 in a Commonwealth Bank account, of which 50 per cent was his share.  In his oral evidence he also stated that he had about $80,000 in his superannuation account, but, in his opinion, … that money, which is not much, has to stay there and be there because you never know what the future is going to bring …  I accept that amounts in a bank account and in a superannuation account are amounts deposited with, or lent to, a bank or other financial institution by the person and are therefore liquid assets in accordance with the definition in section 14A of the Act.  The amounts, singly and combined, easily exceed twice the fortnightly amount of the maximum rate of DSP that is payable to a partnered homeowner.  Therefore, despite the fact that Mr Trajkovski says he has no way of supporting his wife and himself financially after paying his debts, I find that Mr Trajkovski is not in severe financial hardship in terms of section 19C(3) of the Act. 

13.     As I have found that Mr Trajkovski is not in severe financial hardship, the provisions of section 1064-F11 of the Act cannot apply.  As a consequence, I find that the Secretary may not determine that the whole, or any part, of the income maintenance period does not apply to Mr Trajkovski. 

Conclusion

14.     I have found that Mr Trajkovski’s DSP payment is subject to an income maintenance period and that the period has been correctly calculated to apply from 14 December 2006 to 25 May 2009.  I have found further that, as Mr Trajkovski is not in severe financial hardship as defined in the Act, the Secretary may not determine that the income maintenance period does not apply in whole or in part.  Accordingly, I set aside the decision of the SSAT and make a new decision incorporating the change of the end date of the income maintenance period accepted by the parties at the hearing.  This means that Mr Trajkovski is not successful in his application.

DECISION

26.      The Tribunal sets aside the decision under review and in substitution decides that an income maintenance period be imposed on the payment of DSP to Mr Trajkovski from 14 December 2006 to 25 May 2009 inclusive.

I certify that the twenty-six [26] preceding paragraphs are a true copy of the reasons for the decision herein of:

Mr C. Ermert, Member

(sgd)     Ursula Noye
                 Clerk

Date of Hearing:  16 January 2008

Date of Decision:  25 February 2008

Advocate for the applicant:                 Mr Boris Trajkovski, self represented

Advocate for the respondent:             Ms Ailsa Bramley, Centrelink Legal Services