Wesselbaum and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2010] AATA 241
•30 March 2010
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] AATA 241
ADMINISTRATIVE APPEALS TRIBUNAL )
)No: 2009/3457 & 3458
General Appeals Division )
Heinz Wesselbaum
Juana Wesselbaum
Applicants
And: Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
Respondent
TRIBUNAL: A Cunningham, Senior Member
DATE: 30 March 2010
PLACE: Hobart
DECISION:The decisions under review are affirmed
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A Cunningham, Senior Member
CATCHWORDS
SOCIAL SECURITY – age pension – overseas applicants – German international agreement – calculation of rate of pension on basis of income and assets – deemed income from investments – decision under review affirmed
Social Security Act 1991
International Social Security Agreement
Social Security (International Agreements) Act 1999
Cassaroto and Australian Postal Commission (1988) 17 ALD 321, 334
REASONS FOR DECISION
25 March 2010 A Cunningham, Senior Member
The applicants, Heinz and Juana Wesselbaum have both appealed decisions made by Centrelink with respect to the rates of their age pensions. On 20 January 2009 a Centrelink authorised review officer affirmed Centrelink’s calculation of the rates of age pension. The decisions were affirmed by the Social Security Appeals Tribunal (SSAT) on 23 April 2009.
The hearing of both appeals was held by telephone link to the applicants who currently reside in Spain. Heinz Wesselbaum appeared on behalf of himself and his wife and gave oral evidence with the assistance of an interpreter in the German language.
THE ISSUES
The applicants disagree with the way in which Centrelink has calculated the value of their income and investments. The issue for the Tribunal to determine is how the applicants’ assets and income are be to assessed in the calculation of their rates of age pension.
Mr Wesslebaum informed the Tribunal that the applicants do not dispute the Respondent’s assessment of the applicants’ Australian working life residence factor (AWLR) which is based on the number of months during a person’s working life in Australia when the person was an Australian resident. Mr Wesselbaum lived in Australia from 22 June 1967 to 21 March 1983 being a total of 190 months. Mrs Wesselbaum lived in Australia from 13 December 1963 to 21 March 1983 which is a total of 232 months for social security purposes.
Mr Wesselbaum’s claim for age pension was made on 22 May 2008. His age pension was granted from 29 July 2008 when he qualified on reaching 65 years of age. On that date Mrs Wesselbaum’s rate of age pension was accordingly varied.
In his correspondence to the Tribunal Mr Wesselbaum has queried the various calculations of the applicants’ income made by Centrelink on differing dates. Whereas adjustments have been made to the applicants’ rate of pension based on varying calculations of their income from time to time, for the purposes of this appeal the calculation of the applicants’ income relates to the date of entitlement for age pension. It was conceded by Mr Sparkes on behalf of the Respondent that the authorised review officer had incorrectly calculated the applicants’ income at the date of his decision, rather than the date of payment.
In calculating the applicants’ income, the respondent relied on information contained in the Applicant’s Claim Form and Income and Assets form completed by the applicants on 3 June 2008 and contained in the T-Documents at T4. Details of the applicants’ bank accounts were included at paragraph 11 and share holdings at paragraph 14.
At the hearing Mr Wesselbaum contended that some of the funds identified in the bank accounts at paragraph 11 were also reflected in the shares listed at paragraph 14. Mr Wesselbaum maintained that the savings account balance in the Acciones account is actually reflected in the share portfolio listed at paragraph 14. Mr Wesselbaum maintained that it was therefore not appropriate to include both the Acciones bank account balance as well as the share portfolio in the calculation of income and assets.
It does not appear that this submission had been raised by the applicants in the earlier reviews of Centrelink’s decisions. The two issues that were raised before the SSAT were firstly, whether Centrelink had correctly applied the taper rate and secondly, the manner in which Mr Wesselbaum’s German pension had been calculated for the purposes of the income test.
At the hearing before the AAT there was some confusion as to the documentation referred to by Mr Wesselbaum in support of his contention and he was given 14 days in which to forward copies of the 5 pages he referred to in his evidence. Mr Wesselbaum confirmed that he had a copy of the Income and Assets form completed by the applicants on 3 June 2008 which contained details of his banks accounts and share portfolio, an AMP insurance policy and cash which had been used by Centrelink to calculate the applicants’ income for the purposes of the rate of age pension.
Mr Wesselbaum accepted that Centrelink had adopted the correct currency exchange rate from Euros into Australian dollars being 0.6289 for applicable period.
THE LEGISLATION
The general provisions referable to eligibility and payment of age pension are contained in the Social Security Act 1991 (the Act). The applicants qualify for an Australian age pension under the provisions of the International Social Security Agreement between Australia and Germany (the Agreement). Article 5 of the Agreement provides that a person is qualified if they live in another Agreement country such as Spain.
Article 8 of the Agreement provides that the rate of pension benefit is to be determined according to the Australian legislation. Further, that the portion of a German pension benefit is to be calculated by multiplying the number of whole months of Australian working life residence by the amount of German benefit and dividing that product by 300.
Section 12 of the Social Security (International Agreements) Act 1999 (The SSIAA) provides that:
(1) If
a) A social security payment is payable to a person under a scheduled international social security agreement; and
b) The person is outside Australia; and
c) The agreement provides for the rate of the social security payment to be determined by the law of Australia;
the rate of the social security payment is the person's international agreement portability rate worked out in accordance with Part 3.
(2) A reference in the agreement to a person’s period of residence in Australia is to be taken to be a reference to the period of the person’s Australian working life residence for the purposes of this Act.
The overall calculation process with reference to the international portability rate is detailed in section 13 of Part 3 of SSIAA.
Section 14 states that where an international agreement requires that certain amounts be treated as income of a person – those amounts are to be treated as income for the purposes of calculating the international agreement portability rates.
Section 18 of the SSIAA provides that where the person has a partner who also has an Australian working life residence (AWLR), the longer AWLR is able to be used to calculate the residence factor. As Mrs Wesselbaum’s AWLR is 232 months in comparison to Mr Wesselbaum’s residence factor of 190 months, Mrs Wesselbaum’s AWLR can be used to calculate his residence factor as 232 divided by 300 = 0.7733.
The relevant factors in section 13 of the SSIAA for calculation of a person's international agreement portability rate include the period of the person’s AWLR and a person’s income pursuant to section 14. As the legislation provides, the rate of payment of the Applicant’s age pension is calculated in accordance with the Australian legislation. Article 8 of the German agreement provides the proportion of any German benefit received is to be calculated by multiplying the number of whole months of AWLR by the amount of German benefit and dividing that product by 300. This is the same calculation as that used to derive the residence factor which as calculated above, is 0.7733.
Section 55 of the SSA states that a person’s age pension rate is worked out by using pension rate calculator A at the end of section 1064. Step 5 of Module A refers to the ordinary income test in Module E which identifies the manner in which a person’s ordinary income is calculated.
The term “ordinary income” is stated in section 1072 to include a person’s gross ordinary income from all sources for the period calculated. The term “ordinary income” is further defined in section 8 as meaning income that is not maintenance income or exempt income. “Income” is defined in section 8(1) as:
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) 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).
The reference to income “earned, derived or received” is further defined in sub-section 8(2) to:
“all income earned, derived or received by any means and from any source whether within or outside Australia”.
With respect to income from financial assets, section 1076(2) provides “a person who has financial assets is taken, for the purposes of this Act, to receive ordinary income on those assets in accordance with this section”. Section 1076 goes on to provide that if the total value of the person’s financial assets is equal to or less than the deeming threshold, the income received is worked out by multiplying the value of those assets by the below threshold rate. If the total value of the person’s financial assets exceeds the deeming threshold, the ordinary income received is worked out in accordance with the four steps provided in section 1076(3A).
The deeming threshold originally provided for in section 108(1) was $50,000 in 1992. Section 1082 authorises the Minister to determine the rate by legislative instrument. Attached to the Respondent’s Statement of Facts and Contentions was a copy of the “Guide to Social Security Law” which at 4.4.1.20 included a table detailing the historical deeming rates and thresholds. On 29 July 2008 when Mr Wesselbaum became eligible for age pension the deeming threshold was $68,200. The deeming rate below threshold was 4% and above the threshold, 6% as determined by the minister pursuant to section 1082 on 3 March 2008.
CALCULATION OF AGE PENSION RATE
The basic rate of age pension for a member of a couple on 29 July 2008 was $11,876.80 or $456.80 per fortnight. (The Guide 5.2.2.10 – rates of pension). This is the maximum rate of pension to which the Applicant’s would be entitled before an assessment is undertaken of the effect of the income test in accordance with the above legislative provisions.
The effect of Mr Wesselbaum’s German pension is to be calculated in accordance with the provisions of Article 8 of the German Agreement using the residence factor of 0.7733. The Tribunal was advised that Mr Wesselbaum did not dispute that at the relevant time his German pension was €236.47 and using the accepted exchange rate of 0.6264 this equated to $377.50. The amount of German pension to assess is accordingly $377.50 X 0.7733 = $291.92 per month or $3503.05 per annum.
Whilst Mr Wesselbaum did not dispute the above calculations at the hearing before the AAT, he contended that the Respondent had incorrectly calculated the Applicants’ financial assets and therefore the income deriving from them.
Mr Sparkes advised that the Respondent relied on the information provided by the Applicants in their Income and Assets form completed on
30 June 2008 and included in the T-Documents at T4. Mr Sparkes submitted that between 1 July 2008 and 20 September 2008 there were no reported changes in these financial assets. It was accordingly appropriate to rely on the information contained in this form as at 29 July 2008 being the date from which Mr Wesselbaum was granted age pension.
Included in the attachments to the Respondent’s Statement of Facts and Contentions was a table of the Applicant’s financial assets taken from the information provided from the Applicant’s Australian pension Claim (T3) and the Income and Assets form (T4) which totalled $186,431. This comprised of savings of $94,088, shares $74,504, AMP insurance policy $17,601, cash $238. On the basis of the threshold amount for a couple of $68,200 the Respondent made the following calculations:
- The combined below threshold deemed income $68,200 X 4% = $2728 or $13,364 each per annum.
- The amount above the $68,200 threshold of $118,238 X 6% = $7094.28 or $3547.14 each per annum.
- In total, the Wesselbaum’s combined deemed income from financial assets was $9822.28 per annum.
The Respondent’s calculation of ordinary income for the relevant time was:
- The assessable portion of Mr Wesselbaum’s German pension $3503.05 per annum.
- Deemed income of $9822.28 from combined financial assets.
Using the Method Statement of module E – ordinary income test under step 1 the income amount assessable against each applicant is $6662.66 being one half of the total ordinary income amount. (section 1064-E2)
The ordinary income free area under step 2 for the relevant period was $3120 per person where that person was a member of a couple. (Guide to the Act 4.10.3)
The effect of the person’s ordinary income excess is calculated in accordance with step 6 which refers to 1064-E10 to 1064-E12. Under these sections the following calculations can be made. Mr Wesselbaum’s ordinary income was $6662.66 and his ordinary income free area was $3120. Therefore his ordinary income excess was $6662.66 - $3120 = $3542.66. The reduction for income was therefore $3542.66 X 0.4 =$1417.06. This was rounded up to $1417.10. From the maximum rate of age pension of $11,876.80 the sum of $1417.10 was subtracted resulting in a provisional pension amount of $10,459.70. This amount was then multiplied by the residence factor of 0.7733 resulting in a final payment rate of $8088.83 per annum.
As stated above the Respondent based it’s calculations on the information provided by the Applicants at the time of Mr Wesselbaum’s claim for age pension.
The information submitted by Mr Wesselbaum following the hearing of the evidence on 9 February 2010 does not persuade me that there is a duplication of the Acciones saving account money and the share investments as he contended at the appeal hearing. Mr Wesselbaum submitted copies of various bank transaction documents. One of the documents contains handwritten figures and reference numbers and although they allegedly refer to the same date as the income and asset statement, some of the figures vary quite significantly from those contained in the Income and Assets form of the same date. The handwritten list does not include the disputed Acciones account and Mr Wesselbaum provides no explanation for this. I have difficulty in reconciling the balance of the documents with the summary table prepared by the Respondent from the information contained in T3 and T4.
Whilst there is strictly no onus of proof in Tribunal proceedings, it is the Applicant’s responsibility to provide such relevant material upon which the Tribunal can make a decision on the balance of probabilities. As the Federal Court said in Cassaroto and Australian Postal Commission (1988) 17 ALD 321, 334:
“Nevertheless as a practical matter an applicant for review in the tribunal in a case such as the present is asserting a claim for a right to compensation and ultimately the Tribunal in considering the claim can only act on the evidence before; to do otherwise would be to commit an error of law. Thus in a practical sense, if not in a strict legal sense, it will be the responsibility of an applicant for review to ensure that there is laid before the Tribunal all material which it will be necessary for the Tribunal to have before it to come to a decision.”
Despite Mr Wesselbaum’s contention that Centrelink did not use the correct financial information in it’s assessment of the rate of age pension in that there was no money in the Caja Madrid account from 3.06.2008, the Assets and Income form completed by the Applicants as at that date clearly indicates savings of €368.17 and €7150 respectively. Mr Wesselbaum has not provided an adequate explanation for the discrepancy, if there is indeed one.
The Applicant has failed to persuade me on the balance of probabilities that the final rate of payment of age pension as calculated by the Respondent in the sum of $8088.33 is incorrect on the information provided.
Mr Sparkes urged the Tribunal to affirm the original decision of Centrelink made on 22 July 2008, which assessed the rate of age pension at $8088.83. The Respondent’s Statement of Facts and Contentions refers to attachment 7 page 1 for confirmation of Mr Wesselbaum’s annual payable rate in the sum of $8088.83. This figure however, is not the same figure calculated by the authorised review officer (ARO) in his decision of
20 January 2009 which determined the rate of age pension as $353.80 per fortnight. In his decision, the ARO assessed the deemed investment income in January 2009 at $3461.52 per annum and the German pension at $4338.55 per annum totalling $7800 per annum.
In the SSAT decision, the Tribunal commented that Mr Wesselbaum did not dispute the value of the Applicant’s combined income used by Centrelink to calculate their rates of payment which was a total of €48,814 in investments and Mr Wesselbaum’s German pension of €236.47 per month, amounting to a combined annual income $7800. This equates to the figure used by the ARO in his decision of 20 January 2009.
In the ARO’s decision the list of investments varies from that presented to the AAT and does not appear to be consistent with that contained in the Applicant’s Income and Assets form at T4.
The Tribunal understands Mr Wesselbaum’s confusion regarding the various amounts used to calculate his rate of pension. However, on the basis of the evidence presented at this hearing, the Tribunal is satisfied that the original decision which calculated the Applicant’s rate of pension in the sum of $8088.83 was correct and should be affirmed.
I certify that the 40 preceding paragraphs are a true copy of the reasons for the decision herein of A Cunningham (Senior Member)
Signed: .............................................................................
H Healy, Associate
Date of Hearing 9 February 2010
Date of Decision 30 March 2010
Applicant Self Represented
Solicitor for the Respondent Brian Sparkes, Centrelink
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