Evans and Repatriation Commission [2009] AATA 7 (8 January 2009)

Last Updated: 8 January 2009

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 7

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2008/1489

VETERANS' APPEALS DIVISION		)
	Re		KENNETH EVANS AND KATHLEEN EVANS

Applicants

And

REPATRIATION COMMISSION

Respondent

DECISION

Tribunal

Mr J G Short (Member)

Date 8 January 2009

Place Adelaide

Decision

The Tribunal affirms the decision under review.

JG Short
(Signed)
(Member)

CATCHWORDS

VETERANS' AFFAIRS - veterans' entitlements – service pension – treatment of lump sum payment of arrears of British pension – decision affirmed

Veterans’ Entitlements Act 1986 (Cth) ss 5H, 5H(12), 5K(1A), 46A

REASONS FOR DECISION

8 January 2009

Mr J G Short (Member)

1. At all material times Kenneth Evans has been entitled to a service pension and his wife, Kathleen Evans, to a wife’s pension. On 21 May 2007, Mr and Mrs Evans advised a change to their income, particularly a lump sum payment approximating $19,436 paid by the United Kingdom government and representing arrears of English pension accrued over a period of approximately 7½ years.
2. On 7 June 2007, the respondent (the Commission) made a decision to maintain the arrears payment as if it were received over a 12 month period. This consequently reduced Mr and Mrs Evans’ pension entitlement. On 18 January 2007, a review officer affirmed the decision.
3. Mr and Mrs Evans pointed out, and the Commission’s advocate accepted, that if their English pension had been paid over the 7½ year period represented by the lump sum payment, then it would have had no effect on Mr and Mrs Evans’ pensions paid under the Veterans’ Entitlements Act 1986 (Cth) (the VE Act). Mr and Mrs Evans said that as their United Kingdom pension entitlement was paid as a lump sum arrears payment through no fault of their own, they should not be disadvantaged through the treatment of such a lump sum payment, under the VE Act.
4. Mr and Mrs Evans said that a treatment of a lump sum payment more favourable to the recipient is provided under the Social Security Act 1991 (Cth).

APPLICABLE LEGISLATION

5. Section 46 of the VE Act defines “ordinary income” as a person’s gross ordinary income from all sources for the period calculated without any reduction, other than a reduction under Division 2. Division 2 refers to business income.
6. Section 46A of the VE Act reads as follows:

“46A Certain amounts taken to be received over 12 months
If a person receives, whether before or after the commencement of this section, an amount that:
(a) is not income within the meaning of Division 3 or 4 of this Part; and
(b) is not:
(i) income in the form of periodic payments; or
(ii) ordinary income from remunerative work undertaken by the person; or
(iii) an exempt lump sum;
the person is, for the purposes of this Act, taken to receive one fifty-second of that amount as ordinary income of the person during each week in the 12 months commencing on the day on which the person becomes entitled to receive that amount.”

7. An exempt “lump sum” is defined in s 5H(12) of the Act as follows:

“5H Income test definitions
...
(12) An amount received by a person is an exempt lump sum if:
(a) it is not a periodic amount (within the meaning of subsection 5K(1A)); and
(b) it is not income from remunerative work undertaken by the person; and
(c) it is an amount, or one of a class of amounts, that the Commission determines to be an exempt lump sum.”

8. Section 5K(1A) of the VE Act reads as follows:

“5K Maintenance income definitions
...
(1A) For the purposes of subsection (1), an amount is a periodic amount if it is:
(a) the amount of one payment in a series of related payments, even if the payments are irregular in time and amount; or
(b) the amount of a payment making up for arrears in such a series.”

CONSIDERATION

9. Section 46 of the VE Act defines “ordinary income” in a wide sense, that is including a person’s gross ordinary income from “all sources”.
10. Section 46A is to the effect that when a person receives an amount which, amongst other things, is not “income in the form of periodic payments” or an exempt lump sum, then for the purposes of the VE Act, the person is “taken to receive 1/52nd of that amount as ordinary income of the person during each week in the 12 months commencing on the day on which the person became entitled to receive that amount”.
11. The first question is whether the receipt of a lump sum payment representing arrears can be considered to be “income in the form of periodic payments”.
12. I have reached the view that a single payment representing arrears of periodic payment is not “income in the form of periodic payments”. This last mentioned phrase connotes the receipt of more than one payment, received in the form of episodic payments. In accord with this view of s 46A(b)(i) the lump sum payment received by Mr and Mrs Evans falls within the scope of s 46A unless I can regard the payment as a payment described in s 46A(b)(iii), that is, “an exempt lump sum”.
13. Section 5H(12) of the VE Act describes an “exempt lump sum”. To fall within this definition, three concepts must be met. The first is described in s 5H(12)(a) as an amount which “is not a periodic amount” (within the meaning of s 5K(1A)) of the VE Act. A periodic amount is described in this last mentioned sub-section as “the amount of one payment in a series of related payments even if the payments are irregular in time and amount” or (b), the amount of a payment making up for arrears in such a series.
14. I consider that the arrears payment of United Kingdom pension falls squarely within the concept described in sub-s (b) above. As such, even if the other two conditions described in s 5H(12) existed, and I make no finding in that regard, the payment received by Mr and Mrs Evans could not be considered an exempt lump sum.
15. In the light of the above mentioned analysis, I find that the payment received by Mr and Mrs Evans falls for treatment in the way described in s 46A of the VE Act. This is the way in which the Commission has treated the payment.
16. It does appear that the treatment of a payment such as that received by Mr and Mrs Evans, under the VE Act, is different to the treatment such a payment would receive under the Social Security Act 1991 (Cth). Whether this is intended or not is a matter which may require Parliamentary consideration. I simply point out that it appears that had Mr and Mrs Evans’ United Kingdom pension been paid in instalments over the years of entitlement, then their receipt of such payments would have been treated more favourably by the Commission than the receipt of a lump sum payment representing arrears of an entitlement to a United Kingdom pension.

DECISION

17. For the above mentioned reasons, the decision under review is affirmed.
    

I certify that the 17 preceding paragraphs are a true copy of the reasons for the decision herein of Mr J G Short (Member)

Signed: .....................................................................................

B Bills Admin Assistant

Date/s of Hearing 5 December 2008

Date of Decision 8 January 2009

Applicants Mr Kenneth Evans and Mrs Kathleen Evans - self represented

Advocate for the Respondent Mr Adrian Crowe

DVA