YSDV and Secretary, Department of Social Services (Social security second review)
[2025] ARTA 375
•16 April 2025
YSDV and Secretary, Department of Social Services (Social security second review) [2025] ARTA 375 (16 April 2025)
Applicant:YSDV
Respondent: Secretary, Department of Social Services
Tribunal Number: 2023/4342
Tribunal:General Member A. Maryniak KC
Place:Melbourne
Date:16 April 2025
Decision:
The reviewable decision is set aside and the matter is remitted for reconsideration in accordance with the following directions:
(a)The Applicant’s rate of disability support pension is calculated having regard to her assessable assets of $283,052.03 as at 10 July 2018 and is to be reduced accordingly; and
(b)The Applicant’s disability support pension as at 25 September 2020 is cancelled having regard to her assessable assets of $803,052.03.
............................[SGD]...........................................
General Member A. Maryniak KC
Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 201(1A)-201(1B) of the Social Security (Administration) Act 1999 (Cth).
Catchwords
SOCIAL SECURITY – disability support pension – reduction of rate and subsequent cancellation – assets test – disposition of assets from proceeds of sale – disbursed to family members – no or inadequate consideration – reviewable decision set aside and remitted with recalculations
Legislation
Social Security Act 1999 (Cth)
Social Security (Administration) Act 1999 (Cth)Cases
Frendo and Secretary, Department of Social Security [1987] AATA 153
Ractivand and Secretary, Department of Family and Community Services [2004] AATA 1414Secondary Materials
Services Australia, A Guide to Australian Government Payments (1 July – 19 September 2018).
Services Australia, A Guide to Australian Government Payments (25 September - 31 December 2020)
Statement of Reasons
BACKGROUND
The Applicant seeks review of a decision of the Social Services & Child Support Division of the Administrative Appeals Tribunal (AAT1) of 24 May 2023 affirming a decision to:
(a) Reduce the rate of the Applicant’s Disability Support Pension (‘DSP’) from 10 July 2018; and
(b) Cancel the Applicant’s DSP from 25 September 2020 as her assets exceeded the asset limit.
2.At issue is whether:
(a) The proceeds of sale of her former principal place of residence (‘Property A’) from 10 July 2018 was an assessable asset hence reducing her DSP entitlement from that date; and
(b) Her half share of her late parents’ home (‘Property B’) inherited on 25 September 2020 was an assessable asset from that date, hence bringing about the cancellation of the Applicant’s DSP from that date.
CONSIDERATION
The Tribunal has considered the documentary evidence comprising exhibits R1 to R3 and A1 to A11, the testimony of the Applicant who was cross-examined, and the various written and oral submissions of the parties.
By way of background, and as summarised in the Respondent’s Amended Statement of Facts and Contentions dated 7 November 2024 (‘Amended RFIC’), from 6 October 1991 the Applicant was a member of a couple with Mr AP. The Tribunal is satisfied of this and the further facts set out below, based upon the material before it.
From 5 October 2005 the Applicant and her husband were joint proprietors of Property A.
By will dated 20 October 2014 the Applicant and her brother Mr BP were to, and subsequently did, inherit Property B as tenants in common in equal shares.
On 19 July 2016 the Applicant’s daughter Ms CP made transfers to the Applicant and her husband pursuant to the Holding Agreement (as discussed below) of:
(a) $100,000 to her parent’s offset [account 1]; and
(b) $25,000 to her parents’ home loan [account 2] which the Respondent accepts[1] was used to buy a motor vehicle for their daughter and hence this amount is not included in the calculations considered below.
[1] Amended RSFIC [72].
On 20 April 2017 the Applicant lodged a DSP claim stating she had separated from her husband and was still living at Property A. At April 2017 the Applicant’s assets were assessed at $412,015.00.[2]
[2] T12 p 693.
On 2 June 2017 the Applicant lodged a Real Estate details form noting shared ownership of Property A and another property (‘Property C’) estimated at $400,000.
In August 2017 the Applicant’s father passed away.
On 25 October 2017 the Applicant was granted the DSP from 6 April 2017.
On 10 July 2018 Property A was sold for $865,000 with proceeds going to the Applicant’s husband and her 3 children and the Applicant began living at Property C, which had been purchased in 2014.
In July 2019 the Applicant’s mother passed away.
On 25 September 2020 Property B was transferred to the Applicant and her brother as joint proprietors. The Applicant’s share was subsequently valued at $520,000.[3]
[3] T17 p 274.
On 27 September 2020 and 6 October 2020 notices were sent to the Applicant under section 63 of the Social Security (Administration) Act 1999 (Cth).
On 1 March 2021 Property B was sold for $1,225,858 and proceeds disbursed to the Applicant’s brother and children.
On 14 November 2022 the Applicant lodged a Real Estate details form identifying a half share in Property C and Property B.
The Respondent has summarised how the DSP rate is assessed in paragraphs 33 to 36 of their Amended Statement of Facts and Contentions. In particular, section 11 of the Social Security Act 1999 (Cth) (‘the Act’) defines “asset” as ‘property or money’. As at 10 July 2018, the single homeowner (being the Applicant at this time) asset limit for a full DSP was $258,500, reducing to a cut off limit of $561,250, per Module G.[4]
[4] The Act s 1064, Pension Rate Calculator A; Services Australia, A Guide to Australian Government Payments (1 July – 19 September 2018).
Similarly, as at 25 September 2020, the limits were respectively $268,000 and $583,000.[5]
[5] See Services Australia, A Guide to Australian Government Payments (25 September - 31 December 2020) (‘the Guide’).
The principal home is to be disregarded as an asset pursuant to section 1118(1) of the Act. A person is a homeowner if the right or interest they have in their principal home relevantly gives them reasonable security of tenure, pursuant to section 11(4) of the Act. “Reasonable security of tenure” is defined in section 11A(10). The proceeds of sale of principal home exemption is defined in subsections 1118(1B) and(2B), and disposal of assets in covered by section 1123 of the Act.
In summary, the Applicant submits that she has worked hard and paid taxes throughout her working life, now has significant health challenges and did not intentionally dispose of assets, namely the proceeds of sale of Property A and Property B.
Whilst the Tribunal accepts that the Applicant’s intentions may have been well placed and that she did not act nefariously in intentionally hiding proceeds of sale from the two properties, such is not sufficient to displace the statutory tests and requirements which govern eligibility for the DSP. Unfortunately, the relevant steps taken by the Applicant have not assisted such eligibility. In fact, the Applicant appeared to acknowledge this during the first day of the hearing when she testified that “she wished she had done it a different way” and that in hindsight she would have done things differently. Hence the Tribunal is satisfied that the Applicant has not been intentionally dishonest on the material before it. It may be that she was ill advised in the past.
The Tribunal also notes that various arrangements were made between family members as to care and support between them. For example, the Advanced Care Directive of the Applicant’s father dated 22 November 2016. It is clear that the Applicant has a close and caring family.
The Respondent accepts and the Tribunal finds that Property A should be disregarded as an asset for the calculation of the DSP rate up to 10 July 2018 as it was the Applicant’s principal home.[6] However, as at 10 July 2018 and subsequently there is no evidence to support such proceeds being exempt pursuant to sections 1118(1B)-(2B). The Tribunal is satisfied that such proceeds were otherwise distributed on that day.[7]
[6] The Act s 1118(1).
[7] T20 p 650.
From 10 July 2018 Property A was not the Applicant’s principal home and there is no evidence to indicate that the Applicant applied a part or whole of the proceeds of sale to build, rebuild, repair, renovate or purchase another residence to be her principal home or that the other terms of sections 1118(1B) are satisfied. Documentary evidence establishes that such proceeds of sale were otherwise distributed.
Further, the proceeds of sale of Property B were not applied to another principal home to be used by the Applicant, again established by documentary evidence before the Tribunal. Those proceeds were otherwise distributed.
The Respondent submits that the Applicant’s conduct regarding the proceeds of sale of Property A and Property B represent a disposal of assets pursuant to subsection 1123(1)(a)(ii) and either of subsections 1123(1)(b)(i) or (ii) of the Act. Evidence in support of that submission includes the Settlement Statements for both properties[8] which unequivocally show the disbursement of the proceeds of each sale away from the Applicant and correspondence from the ANZ bank consistent with that.[9]
[8] T20 p 650; T12 pp 188, 339.
[9] ST7 pp 774-5.
The Settlement Statement for Property A and correspondence from the Applicant show that the Applicant and Mr AP instructed the conveyancers to distribute the following, inter alia, from the proceeds of sale:[10]
a)Mr AP, $55,000.
b)Ms CP (daughter), $109,931.01.
c)Mr DP (son), $109,931.02.
d)Ms EP (daughter), $109,931.02.
[10] T20 p 650 and pp 653-4.
Similarly, in respect of the Preston property documents confirm the Applicant’s instructions to disburse the proceeds of sale as follows:[11]
a)The Applicant & Mr AP, $220,000.
b)Ms EP (daughter), $170,000.
c)Mr DP (son), $150,000.
d)Ms CP (daughter,) $10,454.27.
[11] T12 p 188; T20 p 339.
One question arises as to what, if any, impact a written agreement between the Applicant, her husband, and their daughter Ms CP dated 31 August 2016[12] has upon the assessment of the Applicant’s assets. The agreement is for the Applicant and her husband to hold certain TAC proceeds on behalf of their daughter (‘the Holding Agreement’). Relevantly, the sum of $100,000 was transferred to the Applicant and her husband’s Mortgage offset account [account 1] on 19 July 2016.
[12] T4 p 32.
First it is necessary to determine how any sum remaining held pursuant to the Holding Agreement, as at 10 July 2018 (being the sale date of Property A) should be characterised and dealt with under the Act. Part 3.12 Division 1, sections 1118 to 1122 of the Act are silent as to how an agreement of this nature should be treated. It may appropriately be considered closest in form to an unsecured loan to the Applicant and her husband. Relevantly, the Social Security Guide states:
Unsecured Loans
If a customer has an unsecured loan and provides evidence that the loan was specifically obtained to purchase the asset, the outstanding amount of the loan is deducted from the value of the asset.[13]
[13] the Guide at 4.6.6.30 ‘Encumbrances & Loans against Assets’; Ractivand and Secretary, Department of Family and Community Services [2004] AATA 1414 at [17].
As the Holding Agreement was entered into by the Applicant and her husband years after Property A was originally purchased on 5 October 1999, it cannot be specifically related to that property purchase. Therefore, any sum remaining held pursuant to that Holding Agreement as at 10 July 2018 cannot be used to reduce the Applicant’s assessable assets as at that date.
The Respondent further submits that the purported ‘consideration’ the Applicant claims to have received in respect of the distribution of the proceeds of sales is essentially an illusory construct and not real, with the Applicant maintaining, inter alia, that “The payments were in Consideration for Carer and non-Carer in Lieu”.[14] The Respondent says that “consideration” is not real where assets are disposed of under informal and internal family arrangements.
[14] See ST8 p 776.
Having considered the evidence, the Tribunal finds that no binding legally enforceable arrangement or agreement exists. Arguments that purported legal obligations to family members arise where the only foundation is informal “family understandings” do not withstand close scrutiny and do not amount to any requisite “consideration”. Apart from the Applicant’s testimony there is no corroborating evidence to satisfy the Tribunal that ‘consideration’ in the ordinary legal sense passed to the Applicant in respect of any of the proceeds of sale of either property.[15] It is well established that family or cultural arrangements without more do not equate to the requisite ‘consideration’ as it is understood in the ordinary legal meaning.
[15] See also Frendo and Secretary, Department of Social Security [1987] AATA 153.
The Applicant submits that the purported consideration is set out in the Excel Spreadsheet she prepared, as updated in February 2024.[16] The Applicant was cross-examined on this document. Critically she conceded that no discussions had taken place regarding any hourly rates to underpin any of the ‘Cost Estimate’ entries in the Spreadsheet and that she had simply estimated each amount herself. Further, the Applicant agreed in respect of the purported “Capped” totals that had the sale proceeds been higher or lower then those “Capped” amounts would have simply mirrored any such variation in the sales proceeds. Hence, the Tribunal is not satisfied that there is any legitimate basis to the calculations within the Spreadsheet. The Tribunal is also not satisfied that any enforceable rights to funds for past efforts underpin any of the cost estimates in the Spreadsheet and that there was no requisite consideration.
[16] Exhibit A1.
Rather, the Spreadsheet represents nothing more than a subjective set of purported estimated amounts originating from the Applicant. Internal familial expectations of receiving a monetary benefit for helping out and caring within one’s family, without more, does not objectively or within the terms of section 1123 of the Act amount to consideration.
On the material before the Tribunal, it is satisfied that the Applicant disposed of the proceeds of sale for both Properties A and B to family members without the necessary ‘consideration’ as required under the Act. In such circumstances those proceeds of sale must be included in the assessment to determine the Applicant’s entitlement (or otherwise) to the DSP from 10 July 2018 and then 25 September 2020 respectively.
The sum of the proceeds of sales attributable is to be calculated in accordance with section 1124 of the Act.
Consistent with, and based upon the contemporaneous documentary evidence pertaining to the sale settlements of the Property A and Property B respectively, the Tribunal is satisfied (following some calculation adjustments by the Respondent finalised during the final day of the hearing, which the Tribunal finds correct), that the relevant amounts are $265,037.03 for Property A and $520,000 from Property B.
The Tribunal finds that as at 10 July 2018 the Applicant’s total assessable assets were $283,052.03 and at 25 September 2020 they were $803,052.03.
DECISION
The reviewable decision is set aside and the matter is remitted for reconsideration in accordance with the following directions:
(a)The Applicant’s rate of disability support pension is calculated having regard to her assessable assets of $283,052.03 as at 10 July 2018 and is to be reduced accordingly; and
(b)The Applicant’s disability support pension as at 25 September 2020 is cancelled having regard to her assessable assets of $803,052.03.
I certify that the preceding 41 (forty-one) paragraphs are a true copy of the reasons for the decision herein of General Member A. Maryniak KC
..........................[SGD]...................................
Associate
Dated: 16 April 2025
Dates of hearing: 7 August and 5 December 2024 Applicant: Self-represented Solicitors for the Respondent: HWL Ebsworth Lawyers
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