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Administrative Appeals Tribunal of Australia |
Last Updated: 20 August 2010
CATCHWORDS – SOCIAL
SECURITY – Carer Payment – transitional provisions
– entitled to have Carer Payment at more favourable rate under repealed
provisions if “receiving
Carer Payment” on 19 September 2009 –
entitled to Carer Payment but it not payable on that day on application of
income
- Carer Payment had not been cancelled - Carer Payment not received
– decision set aside.
Administrative Appeals Tribunal Act 1975 s 37
Social Security
Act 1991 ss 8(1), (1A) and (1B), 23(1) and (4AA), 197A(1)(b), 197C, 198A, 198D,
199(1), 210, 1061Q; points 1064-A1, 1068B-D1, 1068B-D22-1068B-D24, 1064-E1 to
E12, s 1206GF(1); and Sch 1A cl 146(2) and 146(3)
Social Security
(Administration) Act 1999 s 68, Sch 5 cl 6, Sch 6, cll 4, 5, 6, 7 and 8
Social Security and Other Legislation Amendment (Pension Reform and
Other 2009 Budget Measures) Act 2009 s 3 and Sch 4, item 58,
Sch 6 item 4 and Sch 7 item 1
Veterans’ Affairs and Other
Legislation Amendment (Pension Reform) Act 2009 s 3, Sch 4, item
84
Bond v Trustee of Property of Bond (a bankrupt) (1994) 34 ALD 385
Federal Commissioner of Taxation v Cooke and Sherden [1980] FCA 37; (1980) 10 ATR
696
Federal Commissioner of Taxation v Dixon [1952] HCA 65; (1952) 86 CLR 540; 5
AITR 443
Re Secretary, Department of Families, Housing, Community
Services and Indigenous Affairs and de Waal [2009] AATA 635
Re Waters
and Secretary, Department of Families, Housing, Community Services and
Indigenous Affairs [2010] AATA 428
DECISION AND REASONS FOR DECISION [2010] AATA 619
ADMINISTRATIVE APPEALS
TRIBUNAL )
) 2010/1018
GENERAL ADMINISTRATIVE DIVISION )
Re: SECRETARY, DEPARTMENT OF FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Applicant
And: DANIELLE PHELPS
Respondent
DECISION
Tribunal: Deputy President S A Forgie
Place: Melbourne
Date: 20 August 2010
Decision: The Tribunal:
(1) sets aside the decision of the Social Security Appeals Tribunal dated 29 January 2010; and
(2) substitutes a decision that the rate of Carer Payment payable to the respondent is assessed on the basis of the income test set out in Pension Rate Calculator A of the Social Security Act 1991 on the basis that she was not in receipt of Carer Payment on 19 September 2009.
S A FORGIE
Deputy President
REASONS FOR DECISION
Mrs Phelps has two severely disabled children and has received Carer Payment for each of them for some time. A little before 19 September 2009, her husband’s income increased after he had worked overtime. The application of the income test under Pension Rate Calculator A, which applies to the assessment of Carer Payment, meant that it was not payable to her. On 20 September 2009, the Social Security Act 1991 (SS Act) was amended to increase certain pension payments, to change the income test taper rate from 40 cents to 50 cents and to remove the higher income test free area for pensioners with dependent children. For all practical purposes, the amount of income that a person could receive before affecting the rate of Carer Payment payable to him or her was reduced. A person receiving Carer Payment on 19 September 2009 was not adversely affected by the changes as they would be assessed under both the old and the new rules until the new rules provided an equal or better outcome for them.
2. I have decided that Mrs Phelps was not receiving a Carer Payment on 19
September 2009. That means that she must be assessed under
the new rules and
cannot have the benefit of the more benevolent income test under the SS Act
before its amendment on 20 September
2009. It is Mrs Phelps’
understanding that the government announced that the changes to the SS Act would
not affect existing
pensioners. I understand that she thought that this applied
to persons who were qualified for the Carer Payment even if it were
not payable
to them at that time. The Centrelink Facts
Brochure[1] issued by
Centrelink refers to the fact that “pensioners at 19 September 2009
will not receive a payment reduction because of these changes”.
I
can see from the context that Centrelink intended its reference to a
“pensioner” to mean “... someone who is in receipt
of
pension”.[2]
That is an ordinary dictionary meaning of the word and its use of the word is
understandable.
3. While I am sympathetic to Mrs Phelps’ view, I am bound by the law.
I have no discretion to change it even though the practical outcome for her
has been very difficult. Although her husband’s
income had prevented
payment of the Carer Payment for a relatively short period before 20 September
2009, he was injured at work
shortly after that date. The consequent reduction
in his income and the effect of the new rules in the income test for the Carer
Payment have meant that the Phelps’ family has faced some challenging
times.
BACKGROUND
Qualification for Carer Payment
4. The Secretary and Ms Phelps agreed about the facts leading to the
cancellation of the Carer Payment to her. In light of that
and the material in
the documents lodged under s 37 of the Administrative Appeals Tribunal Act
1975
(T documents), I have made the findings of fact set out in this
section of my reasons.
5. Mrs Phelps and her husband have two children aged 11 and 8 years of age.
Both children have severe multiple disabilities and
require constant care.
Mrs Phelps personally provides that care on a full-time basis in the home in
which the whole family lives. All are Australian residents.
Mrs Phelps is
severely restricted in her capacity to undertake paid employment. The children
clearly pass the income and assets
test set out in ss 198A and 198D of the SS
Act. She meets the qualifications set out in s 197C for a Carer
Payment.[3]
Payability of Carer Payment to Mrs Phelps before 20 September 2009
6. Meeting the qualifications is not enough for a Carer Payment to
be paid. It must also be payable and it is not payable if the
rate of payment
to the carer
is
nil.[4] Mrs Phelps
qualified for the Carer Payment and it was payable to her from
12 May
2008.[5] She was paid
until 17 August 2009 for the period 28 July to
10 August 2009. Each
fortnight, she was required to report to Centrelink the income she and her
husband received. On 13 August 2009,
Centrelink sent her a notice under s 68 of
the Social Security (Administration) Act 1999 (SSA Act) requiring her to
report her income for the fortnights beginning 11 August 2009 and ending
2
November 2009.[6]
7. The rate at which a person’s Carer Payment is paid to a carer is a
daily rate[7] worked out
using Pension Rate Calculator A at the end of s 1064 in Part 3.2 of the SS
Act.[8] It is worked
out by dividing by 364 the annual rate calculated when using Pension Rate
Calculator A.[9] That
calculator consists of a number of steps. The initial steps require the
calculation of a person’s maximum basic rate
using Module B at point
1064-B1, the amount of pension supplement using Module BA at point 1064-BA1 and
the amount of any rent assistance
in accordance with s 1070A(b). The total of
those three amounts is called the maximum payment rate.
8. Using Module B,
Mrs Phelps’ maximum basic rate on 19 September 2009 was $475.90. Under
point 1064-BA2, the amount of her
pension supplement is worked out by
calculating the amount, known as the provisional supplement amount, that is 4%
of her 1 July
2000 maximum basic rate and rounding off that amount in accordance
with points 1064-BA4 to 1064-BA6. It is also indexed in line
with CPI increases
in accordance with ss 1191 to 1194. Mrs Phelps’ pension supplement was
$16.30. Under Module C, Mrs Phelps
qualified for a pharmaceutical allowance of
$6.00 but she did not qualify for rent assistance under s 1070A(b). The total
of the
three amounts was $475.90 and this was Mrs Phelps’ maximum payment
rate on
19 September 2009.
9. Module E Part 3.2 is then used to work out the amount by which the maximum payment rate is reduced by reason of a person’s income. That amount is called the income reduction and is taken from the maximum payment rate. The amount that is left is called the income reduced rate. Module G is used to work out the amount by which the maximum payment rate is reduced by reason of a person’s assets. That amount is called the asset reduction and is also taken from the maximum payment rate. The amount that is left is called the assets reduced rate. The two amounts – the income reduction and the assets reduction – are then compared. The lower of the two amounts is the provisional annual payment rate. That rate is adjusted to allow for any special employment advance or advance payment deductions and any amount payable by way of remote area allowance. The amount that remains is the rate of pension.
10. I am concerned only with the effect of Mrs Phelps’ ordinary income on the maximum payment rate of Carer Payment in this case. That requires me to follow the method set out in MODULE E in point 1064-E1.
11. Point 1064-E1 of MODULE E sets out the six steps that must be followed
in working out the person’s ordinary income on a
person’s maximum
payment rate. I have reproduced them in the form in which they existed on
19 September 2009 and so the day before their amendment by the Social
Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget
Measures) Act 2009 (Amendment
Act).[10] Those six
steps are elaborated in points 1064-E2 to 1064-E12 but, for the purposes of this
case, it is enough to set out the six
steps. I will then refer to some of the
provisions that elaborate upon those six steps but I will not go into all the
qualifications
and elaborations upon them:
“Step 1. Work out the amount of the person’s ordinary income on a yearly basis.
Note 1: For the treatment of the ordinary income of members of a couple see point 1064-E2.
Note 2: Module F contains provisions that may apply to working out the ordinary income of a person, and the ordinary income of a partner of the person, for the purposes of disability support pension.
Step 2. Work out the person’s ordinary income free area (see points 1064-E4 to 1064-E9 below).
Note: a person’s ordinary income free area is the amount of ordinary income that the person can have without any deduction being made from the person’s maximum payment rate.
Step 3. Work out whether the person’s ordinary income exceeds the person’s ordinary income free area.
Step 4. If the person’s ordinary income does not exceed the person’s ordinary income free area, the person’s ordinary income excess is nil.
Step 5. If the person’s ordinary income exceeds the person’s ordinary income free area, the person’s ordinary income excess is the person’s ordinary income less the person’s ordinary income free area.
Step 6. Use the person’s ordinary income excess to work out the person’s reduction for ordinary income using points 1064-E10 to 1064-E12 below.
Note 1: see point 1064-A1 (Steps 5 to 8) for the significance of the person’s reduction for ordinary income.
Note 2: the application of the ordinary income test is affected by provisions concerning:
12. I will begin with the concept of “ordinary income”. Section 1072 provides that:
“A reference in this Act to a person’s ordinary income for a period is a reference to the person’s gross ordinary income from all sources for the period calculated without any reduction, other than a reduction under Division 1A.
Note 1: For ordinary income see subsection 8(1).
Note 2: For other provisions affecting the amount of a person’s ordinary income see sections 1074 and 1075 (business income), sections 1076 to 1084 (deemed income from financial assets) and sections 1095 to 1099DAA (income from income streams).”
13. The concept of “ordinary income” means income that is not maintenance income or an exempt lump sum.[11] In relation to a person, the word “income” 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).”[12]
An “income amount” means:
(a) valuable consideration; or
(b) personal earnings; or
(c) moneys; or
(d) profits;
(whether of a capital nature or not).
14. Sections 8(1A) and (1B) also capture what is called “employment income” as “income”. Section 8(1A) provides:
“A reference in this Act to employment income¸ in relation to a person, is a reference to ordinary income of the person:
(a) that is earned, derived or received, or that is taken to have been earned, derived or received, by the person from remunerative work undertaken by the person as an employee in an employer/employee relationship; and
(b) that includes, but is not limited to, salary, wages, commissions and employment-related fringe benefits that are so earned, derived or received or taken to have been so earned, derived or received;
but does not include:
(c) a superannuation payment to the person; or
(d) a payment of compensation, or a payment to the person under an insurance scheme, in relation to the person’s inability to earn, derive or receive income from that remunerative work; or
(e) a leave payment to the person; or
(f) a payment to the person by a former employer of the person in relation to the termination of the person’s employment; or
(g) a comparable foreign payment.”
15. A “fringe benefit” is defined to mean:
“... a benefit that is provided to an employee or to an associate of an employee by:
(a) the employer of the employee; or
(b) an associate of the employer; or
(c) a person (the ‘arranger’) other than the employer or an associate of the employer under an arrangement between:
(i) the employer or an associate of the employee; and
(ii) the arranger or another person;
and that is provided in respect of the employment of the employee.”[13]
16. If a person is a member of a couple, point 1064-E2 provides that the couple’s ordinary incomes (on a yearly basis) are added together and divided by two to work out the amount of the person’s ordinary income for the purposes of this Module.
17. These provisions have applied at all times since Mrs Phelps was first
paid Carer Payment on 12 May 2008. On the face of them,
it would seem that
Mrs Phelps’ husband included the amount of money that he received in
monetary form whether it was paid to him in cash or deposited
in his bank
account. It would also seem that amounts paid by Mr Phelps’ employer to a
superannuation fund in circumstances
in which those amounts would otherwise be
paid into Mr Phelps’ hands must be treated as income. That would be so
whether the
amounts are paid from
pre-taxed or post-taxed income for both
would come within the notion of employment income and so of income. If they
were paid from
post-taxed income at the direction of Mr Phelps, they would be
ordinary income just as any payment of any liabilities such as health
fund
contributions or payment to gas and electricity suppliers would be income. They
are voluntary payments made from the income
Mr Phelps earned, derived or
received from his employer. If the employer paid the amounts from
pre-taxed
money, it may be that they were income on the same basis. If they were not,
they would be captured within the concept of
employment income on the basis that
they would be an employment-related fringe benefit. It is a benefit provided by
an employer
to an employee and is “... for the good of
...”[14]
that employee. Although I do not have any evidence about the particular
arrangements between Mr Phelps and his employer, I am satisfied
that it is
provided in respect of his
employment.[15]
18. I mention this because I have had difficulty in understanding the note of a conversation between Mrs Phelps and a Centrelink officer on 14 September 2009. The officer wrote that “... from 1/7/09 salary sacrifice is income: Legislation/Policy References: 4.3.3.60 Guide to the Social Security Law.”[16] Paragraph 4.3.3.60 of the Guide to Social Security Law states:
“Salary sacrifice into superannuation - employees
From 1 July 2009, an amount of salary voluntarily sacrificed into superannuation IS income for social security purposes.
Prior to 1 July 2009, salary voluntarily sacrificed into superannuation:
Superannuation contributions an employer is required to make under the Superannuation Guarantee, award, collective workplace agreement or superannuation fund rules are NOT assessed as income.
A person ‘voluntarily’ sacrifices income to superannuation where the person has the capacity to influence the size of the amount contributed or the way in which the contribution is made so as to reduce their assessable income.”
19. There was no legislative change to the SS Act that came into effect on 1 July 2009. On my understanding of the SS Act, [4.3.3.60] would seem to me to reflect the meaning of “income” in the SS Act both before and after 1 July 2009. As policy adopted by the Executive arm of government cannot dictate the interpretation of legislation enacted by the Legislative arm, [4.3.3.60], the paragraph must be read as a change in the Secretary’s understanding of the proper interpretation of the SS Act.
20. The practical effect of my conclusion for Mrs Phelps is that the Secretary was correct in taking into account the amounts paid into Mr Phelps’ superannuation when assessing the employment income, and so, the income attributable to Mrs Phelps.
21. The question of whether the superannuation contributions were part of
the income that Mrs Phelps should declare to Centrelink
was the subject of
conversations between her and Centrelink officers on 11 and 14 September
2009.[17]
It is
apparent that her income after that date included her husband’s
superannuation contributions of $250 per week. For the
fortnight beginning on 8
September 2009 and ending on 21 September 2009, Mr and Mrs Phelps’
combined income was $2,920.79.
Therefore, Mrs Phelps’ ordinary income was
half that sum or $1,460.39 by virtue of point 1064-E2.
II. Step 2: ordinary income free area
22. Point 1064-E4 is concerned with a person’s ordinary income free area:
“A person’s ordinary income free area is worked out using Table E-1. Work out which family situation in Table E-1 applies to the person. The ordinary income free area is the corresponding amount in column 3 plus an additional corresponding amount in column 5 for each dependent child of the person.”
For a person who is partnered but the partner is receiving neither a pension nor a benefit, the basic free area on a yearly basis is $1,820 and on a fortnightly basis is $70. The person’s ordinary income free area is increased by $639.60 on a yearly basis for each dependant child and $24.60 on a fortnightly basis.[18] Mrs Phelps’ two children are both dependent children. These amounts are indexed annually in line with CPI increases according to ss 1190-1194.
23. Step 3 requires the calculation of the amount, if any, by which a person’s ordinary income exceeds that person’s ordinary income free area. That becomes the person’s “ordinary income excess”.[19] When I deduct Mrs Phelps’ ordinary income area of $173.20[20] from her ordinary income of $1,460.39, I come to the figure of $1,287.19. That is the amount of Mrs Phelps’ ordinary income excess.
24. The amount of Mrs Phelps’ ordinary income excess is relevant to the amount of any pension payable to her. Point 1064-E10 provides that a person’s reduction for ordinary income is that person’s ordinary income excess multiplied by 0.4. The practical effect of that calculation is that any Carer Payment that would otherwise be payable to a person is reduced by 40 cents for every dollar that is ordinary income excess. That is to say, the amount of Carer Payment is reduced by 40 cents for every dollar by which a person’s income exceeds the amount that Parliament has determined is the amount that a person may earn, derive or receive without affecting the payment of Carer Payment. In Mrs Phelps’ case, this means that Mrs Phelps’ reduction for ordinary income was $1,287.19 x 0.4 i.e. $514.876.
25. As the maximum payment rate of Carer Payment, including Pension Supplement, on 19 September 2010 was the total of $475.90 , Mrs Phelps’ income reduced rate of Carer Payment was that sum minus $ 514.876 being the reduction for ordinary income. That calculation leads to a negative amount. As Mrs Phelps is not entitled to remote area allowance, that amount cannot be increased to a positive amount. Her income reduced rate of Carer Payment must be nil as it cannot be a negative figure.
26. There is no point in applying the assets test in Module G and working out the reduction for assets once a nil figure is reached for an income reduced rate of payment. Even if Mrs Phelps asset reduced rate was a positive amount, it would not assist her position. Step 11 of Pension Rate Calculator A in point 1064-A1 requires me to take the lower of the income reduced rate and the assets reduced rate. One the income reduced rate is nil, that will necessarily be the rate that is regarded as the provisional annual payment rate. That will follow either from the fact that it is the lower of the income reduced rate and the assets reduced rate or, if the two are the same, from the fact that Step 11 requires me to have regard to the income reduced rate.
27. The effect of s 199(1) of the SS Act is that that a Carer Payment was not payable to Mrs Phelps on 19 September 2010. That section provides that a Carer Payment is not payable if the person’s Carer Payment rate would be nil. The qualification found in s 199(2) does not apply in Mrs Phelps’ circumstances for it applies to a situation in which a person’s rate is nil merely because an advance of pharmaceutical allowance has been paid.[21]
D. Carer Payment paid to Mrs Phelps
28. A printout from Centrelink’s computerised records shows that Carer
Payment in the sum of $39.80 was paid to Mrs Phelps
on 17 August 2009 in respect
of the fortnight ending 10 August 2009. It was not paid to Mrs Phelps on 31
August 2009, 15 September
2009 or 24 September 2009 relating to the fortnights
ending
24 August 2009, 7 September 2009 or 21 September 2009. A payment of
$82.85 appears against 24 September 2009 and that is described
as
“Lst+otp”, which
I understand to refer to the payment
being $62.65 as utilities allowance and $17.60 as telephone
allowance.[22] It
would appear from the record that Mrs Phelps was not paid Carer Payment for
those periods because she had not notified Centrelink
of her income for the
relevant periods.
29. On 7 September 2009, Centrelink wrote to Mrs Phelps advising that, on the basis of her total combined assets of $21,664.00 and combined annual income of $13.28, her regular payment of Carer Payment would be $464.20 from 7 October 2009 together with a Pension Supplement of $42.30 being a total of $506.50. The letter went on to advise that information about changes to Australian Pension payments was included in the letter. Those changes had been announced in the 2009-2010 Federal Budget. Reference was also made to transitional arrangements:
“Transitional arrangements have been put in place to make sure that customers are not disadvantaged by the new rules. Centrelink has calculated what your pension payment would be at 20 September 2009 under both the new rules and the transitional rules and is paying you at the higher rate.”[23]
The letter also required Mrs Phelps to notify Centrelink within 14 days of any changes in the gross income received.[24]
30. Mrs Phelps advised Centrelink of her income, which was different from that shown in the letter of 7 September 2009. For the reasons I have already given, the application of the income test meant that Carer Payment was not payable to her in the fortnights to which I have referred. When she provided her income details, a delegate of the Secretary decided that Carer Payment was not payable to her because of the amount of that income.
Change in pension rates from 20 September 2009
31. From 20 September 2009, the amendments effected by the Amendment Act came into operation.[25] Schedule 5 of the Amendment Act amended the SS Act to repeal and substitute Division 8 of Part 3.16. Section 1206GF was inserted and provides that “The main object of this Division is to increase certain amounts that affect the rate at which social security payments are made to certain recipients of [certain named] payments on account of the Carbon Pollution Reduction Scheme’s estimate cost of living increase ...”.[26] Among the certain named payments was a Carer Payment. A further object of this Division is to adjust indexation of those amounts that are increased to reflect the inclusion in the increases of elements brought forward from the Carbon Pollution Reduction Scheme’s estimated cost of living increase.
32. The effect of the amendments was to increase the maximum basic rate of Carer Payment for single persons and to increase the Pension Supplement payable to couples. At the same time, amendments were made to Module E at point 1064-E1.[27] In particular, it amended point 1064-E4 by omitting the reference to the inclusion of “an additional corresponding amount in column 5 for each dependent child of the person”. Columns 5 and 6 in Table E-1 showing the additional free area per year and per fortnight respectively were also omitted to correspond with the amendment to point 1-64-E4. Only columns 3 and 4 showing the basic free area per year and per fortnight respectively remained with their figures unaltered.[28]
Transitional provisions
33. Schedule 10 of the Amendment Act added clauses to Schedule 1A in the SS Act relating to transitional arrangements. In particular, it added cl 146 which provides:
“This clause applies if:
(a) on 19 September 2009 a person was receiving one of the following payments:
(i)-(iii) ...
(iv) carer payment;
(v)-(xi) ...; and
(b) the person continues (without a break) to receive one of those payments (whether or not of the same sort as the one person received on that day).”
34. Clause 146 has effect for the purpose of working out the rate of Carer Payment for a day, described as the “relevant day” after 19 September 2009 under point 1064-A1.[29] Clause 146(3) provides that a person’s provisional annual payment rate is taken to be the amount worked out under cl 146(4) if the total of 1/364 of that amount and the amount of any DFISA Allowance[30] is greater than the total of 1/364 of the person’s provisional annual payment rate apart from cl 146 and the amount of any DFISA Allowance that would be payable on the relevant day.[31] Clause 146(4) provides that the amount is the total of the amount worked out under the relevant provision in cll 147(1), (2), (3) and (4) and any amount for rent assistance calculated under s 1070A(b) less any minimum pension supplement amount that is applicable. Clause 147(2) applied to Mrs Phelps’ circumstances. It set out the steps that had to be followed in working out the amount of provisional annual payment rate applicable to a partnered Australian resident in Australia.
35. Clause 148 of Schedule 1A of the SS Act provides:
“(1) This clause applies if clause 146 applies to a person who is a member of a couple and that clause affects the rate at which a social security pension is payable to the person.
(2) In working out the amount of a social security payment payable to a partner of the person, assume that the social security pension payable to the person is payable at the rate at which it would be payable if clause 146 had not been enacted.”
A “social security pension” includes a Carer Payment.[32]
Cancellation of Mrs Phelps’ Carer Payment and subsequent restoration
36. In a letter dated 20 November 2009, Centrelink advised Mrs Phelps that
her Carer Payment had been cancelled from 22 September
2009. The reason for the
cancellation was her not having been paid Carer Payment for the previous
12
weeks due to the amount her husband had earned in that
period.[33] The power
to make that decision is found in s 80 of the SSA Act. It applies to a Carer
Payment, which is a social security payment.
Subject to qualifications in ss
80(2) and (3) that
are not relevant in this case, s 80(1) provides:
“If the Secretary is satisfied that a social security payment is being, or has been, paid to a person:
(a) who is not, or was not, qualified for the payment; or
(b) to whom the payment is not, or was not, payable;
the Secretary is to determine that the payment is to be cancelled or suspended.”
37. Cancellation of the Carer Payment had the consequence of cancelling her Pensioner Concession Card and its associated benefits.
38. Mrs Phelps subsequently claimed Carer Payment and it was reinstated for the care she gives her elder child from 23 September 2009. Centrelink advised her of this in a letter dated 8 April 2010.[34] That letter reads as if a Carer Payment is also made for the care she provides her younger child but I do not need to make any findings about that.
The submissions to and decision of the Social Security Appeals Tribunal
39. Mrs Phelps had instructed a solicitor who represented her at the SSAT. He had prepared a submission in which he noted that, if the transitional arrangements do not apply to Mrs Phelps, her eligibility must be determined by reference to the law that applied on and from 20 September 2009. I agree with his submission on that point but it is his second submission that is at the heart of this case. He wrote:
“... It is submitted that whilst the customer had not received a payment as at 20 September 2009 (‘the relevant date’) she was ‘receiving payments’ for the purposes of the transitional arrangements. This is because at the relevant date the customer’s carer payment had not been cancelled. It is clear that Centrelink was itself treating the Customer as still being entitled to the pension up to 20 November as it continued to pay the maximum family assistance payment up until this date. There is no explanation as to why the notice of 20 November purports to retrospectively cancel the entitlement to the carer payment some two months earlier than the notice date.”[35]
40. I do not agree with this submission for it seems to me that the issue
that determines the matter is whether Mrs Phelps “was
receiving” a Carer Pension on 19 September 2009. It has nothing to do
with whether Centrelink was treating
Mrs Phelps as still entitled to be
paid, and paying her, Family Assistance up to that date. It has nothing to do
with the fact that
the Secretary had not cancelled
Mrs Phelps’ Carer
Payment for it is all about whether she “was receiving” Carer
Payment. Cancellation is a step that the Secretary may take under s 80(1) of
the SSA. It is a step that may be taken
if a Carer Payment is not payable to a
person but the mere fact that a Carer Payment is not payable does not mean that
the Secretary
automatically makes that decision. As the rate of Carer Payment
is assessed as a daily rate, it may change frequently in light of
a
person’s circumstances. It would be a bureaucratic maelstrom to cancel a
Carer Payment whenever it was not payable and require
a person to apply afresh.
Minimising difficulties for both Centrelink and for the recipients of Carer
Payments by not cancelling
them immediately whenever they are not payable cannot
be taken as any suggestion that they are taken to be payable.
41. The SSAT set out its findings of fact which are consistent with those
I have made above. It referred to the submissions made to it on behalf of
Mrs Phelps and to ss 23(4), (4A) and (4AA) of the SS Act,
to which I will
return. It then concluded:
“20. The Tribunal does not accept that qualification for a payment
means that the payment is payable, as ... [Mrs Phelps’ solicitor]
argued. He conceded that there is a difference between qualification and
payability but he did not take account of the difference
in his submissions.
However, the Tribunal considers that the combined effect of subsections 23(4),
(4A) and (4AA) of the Act in
this case, is that
Ms Phelps can be
deemed to have been ‘receiving a pension’ until the end of 12 weeks
after the end of the instalment period
in which the cessation day occurs. The
Tribunal considers Ms Phelps can be deemed to have received CP, in the legal
sense, until
it was cancelled on 22 September 2009.
Was Mrs Phelps “receiving” Carer Payment on 19 September 2009?
42. The ordinary meanings of the word “receive” are “...to get, be given or accept (something offered, sent, etc) ...”.[37] Mrs Phelps was not receiving a Carer Payment on 19 September 2009 within the ordinary meaning of “receive” as she was neither given nor accepted that payment on that day or a payment that related to that day.
43. The ordinary meaning of “received” is extended by s
23(4) of the
SS Act when it makes provision for payments which are payable
to a person but which the person does not get or are not sent and so
are not
received. It provides:
“For the purposes of this Act, a person is taken to be receiving a social security payment until the latest day on which the payment is payable to the person even if the last instalment of the payment is not paid until a later day.”
44. Section 23(4), therefore, represents an extension of the normal meaning of the word “receive”. Mrs Phelps does not come within the extension either because, for the reasons I have already given, it was not payable to her in respect of that day. Carer Payment is calculated at a daily rate and is not payable if it is nil. For the reasons I have given, it was nil on 19 September 2009.
45. If the circumstances set out in ss 23(4A)(a) to (g) are met then, for the purposes of the provisions of the SS Act specified in s 23(4AA), ss 23(4A)(h) to (k) provide that the person is taken to be receiving a pension or benefit for certain periods or purposes.
46. The circumstances arise:
“... if:
(a) a person is receiving a social security pension or social security benefit; and
(b) the person’s rate of payment of the pension or benefit is worked out with regard to the income test module of a rate calculator in Chapter 3; and
(c) the person has not reached pension age; and
(d) the person or the person’s partner earns, derives or receives, or is taken to earn, derive or receive, employment income; and
(e) the person would, but for this subsection, cease to be receiving the pension or benefit on and from a day (the cessation day):
(i) if paragraph (d) applies to the person—because of the employment income of the person (either alone or in combination with any other ordinary income earned, derived or received, or taken to have been earned, derived or received, by the person) (and after any working credit balance or student income bank balance of the person is reduced to nil); or
(ii) if paragraph (d) applies to the partner—because of the employment income of the partner (either alone or in combination with any other ordinary income earned, derived or received, or taken to have been earned, derived or received, by the partner) (and after any working credit balance or student income bank balance of the partner is reduced to nil); and
(f) but for the employment income, or the combined income, referred to in paragraph (e), the pension or benefit would continue to be payable to the person on and from the cessation day; and
(g) the person:
(i) in the case of a woman who would, but for this subsection, cease to be receiving wife pension because of the employment income, or the combined income, referred to in subparagraph (e)(ii)—continues, but for that employment income or combined income, to be qualified for wife pension on and from the cessation day; and
(ii) in any other case—continues to be qualified for the pension or benefit on and from the cessation day;
...”
47. Mrs Phelps meets each of these criteria. Carer payment is a social security pension, her rate of payment is worked out with regard to the income test module in Pension Rate Calculator A which is a rate calculator in Chapter 3, she has not reached pension age as that term is defined in s 23(1) of the SS Act with reference to ss 23(5A), (5B), (5C) or (5D), her husband earned, derived or received employment income, she ceased “to be receiving” Carer Payment on and before 19 September 2009 because of her husband’s employment income and, but for that income, the Carer Payment would have continued to be payable to her.
48. Section 23(4A) sets out the purposes for which and the circumstances in which a person is taken to be receiving a pension or benefit even though a person has ceased to do so by reason of employment income. It provides that:
“... for the purposes only of the provisions of this Act that are specified in subsection (4AA), the person is taken to be receiving the pension or benefit until:
(h) 12 weeks after the end of the instalment period in which the cessation day occurs; or
(i) the day the person reaches pension age; or
(j) the day the pension or the benefit would cease to be payable to the person for a reason other than the employment income, or the combined income, referred to in paragraph (e); or
(k) the day the person ceases to be qualified as mentioned in paragraph (g);
whichever happens first.”
“(a) provisions in Chapter 2 that provide for an increase in a person’s rate of payment by an amount to be known as the approved program of work supplement;
(aa) provisions in Chapter 2 that provide for an increase in a person’s rate of payment by an amount to be known as the training supplement;
(ab) provisions in Chapter 2 that provide for an increase in a person’s rate of payment by a National Green Jobs Corps supplement;
(b) section 1048;
(c) section 1061PJ;
(d) section 1061Q;
(e) point 1067G-F3;
(f) 1070W;
(g) 1070X;
(h) provisions within the income test module of a rate calculator in Chapter 3 prescribing the partner income free area or the partner income excess for a person.”[38]
50. The nature of the payments to which ss 23(4AA)(a), (aa) and (ab) relate
is self evident from the provisions. They have nothing
to do with a Carer
Payment.
51. The provisions referred to in ss 23(4AA)(b) to (g) relate
respectively to language, literacy and numeracy supplement (s 1048),
pensioner
education supplement (s 1061PJ), telephone allowance (s 1061Q), parental income
test in Youth Allowance Calculator (point
1067G-F3), partner with a rent
increased pension
(s 1070W) and partner with a rent increased benefit (s
1070X). They have nothing to do with a Carer Payment.
52. Section 23(4AA)(h) refers to provisions such as those found in points 1068-G1 and 1068-G9 to 1068-G11 of the income test in Module G, of Benefit Rate Calculator B.[39] Those points prescribe the partner income free area or the partner income excess for a person. There are no provisions in any Module in Rate Calculator A that prescribe the “partner income free area or the partner income excess for a person. There are no provisions of this sort to be found in Pension Rate Calculator A under which the rate of Carer Payment payable to a person is assessed.
53. It follows that s 23(4AA)(h) does not bring within the specified
provisions any provision relating to a Carer Payment and nor
do any of the other
paragraphs of s 23(4AA). Therefore, the provisions of s 23(4A) and (4AA) have
no application to the payment
of a Carer
Payment.[40] In
particular, they do not apply to permit me to find that Mrs Phelps was receiving
Carer Payment when she was not actually receiving
it. I must give s 23(4) full
force and effect. That means that
Mrs Phelps was not receiving Carer
Payment on 19 September 2009.
54. As Mrs Phelps was not receiving Carer Payment, cl 146 of Schedule 1A of the SS Act does not apply to her and the ameliorating provisions of cl 148 cannot apply to her. The rate of Carer Payment payable from 22 September 2009 had to be assessed according to the amendments that came into force on 20 September 2009.
55. This means that I do not agree with the decision reached by the SSAT and I:
(1) set aside the decision of the Social Security Appeals Tribunal dated 29 January 2010; and
(2) substitute a decision that the rate of Carer Payment payable to the respondent is assessed on the basis of the income test set out in Pension Rate Calculator A of the Social Security Act 1991 on the basis that she was not in receipt of Carer Payment on 19 September 2009.
I certify that the fifty five preceding paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie,
Signed: .......................................................................
Kate Conners, Associate
Date of Hearing 15 July 2010
Date of Decision 20 August 2010
Advocate for Applicant Ms Ailsa Bramley
Centrelink
Representative for Respondent Unrepresented
[1]
CO597.0909
[2]
Chambers 21st Century Dictionary, 1999, reprinted 2004, Chambers
[3] See also s
197A(1)(b)
[4] SS
Act, s 199(1)
[5] T
documents at 57
[6] T
documents at
12-14
[7] SS Act,
point 1064-A1. The annual rate is divided by 364 to work out the daily
rate.
[8] SS Act, s
210
[9] SS Act, point
1064-A1
[10] Act No
60 of 2009, s 3 and Schedule 6, cl 4 and Schedule 7, cl
1
[11] SS Act, s
8(1)
[12] SS Act, s
8(1)
[13] SS Act, s
10A(2)
[14]
Macquarie Dictionary, 3rd edition, 2001, The Macquarie Library Pty Ltd
[15] See
generally, Bond v Trustee of Property of Bond (a bankrupt) (1994) 34 ALD
385 (Cooper and Carr JJ, French J dissenting) (meaning of
“income” in s 139L of the Bankruptcy Act 1966),
Federal Commissioner of Taxation v Cooke and Sherden [1980] FCA 37; (1980) 10 ATR 696
(Brennan, Deane and Toohey JJ) and Federal Commissioner of Taxation v Dixon
[1952] HCA 65; (1952) 86 CLR 540; 5 AITR 443 (Dixon CJ and Williams J) (meaning of
“income” in Income Tax Assessment Act
1936).
[16] T
documents at
91
[17] T documents
at 90-91
[18] Table
in SS Act, point 1064-E4, item
2
[19] SS Act,
point 1064-E11
[20]
The sum of $173.20 comprises $124 (which is the basic income free area per
fortnight adjusted for CPI) and $49.20 (which is the total
additional free area
per fortnight for Mrs Phelps’ two dependent
children).
[21]
Section 199(2) has since been amended by the Social Security and Other
Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Act
2009, No 60 of 2009, s 3 and Schedule 4, item 58 and by the
Veterans’ Affairs and Other Legislation Amendment (Pension Reform) Act
2009, No 81 of 2009, s 3, Schedule 4, item
84.
[22] T
documents at
72
[23] T documents
at 17
[24] T
documents at
18
[25] SS Act, s
1206GF(1) inserted by Amendment Act, Schedule 5, item
6
[26] Amendment
Act, Schedule 5, cl
6
[27] Amendment
Act, Schedule 6, cll
4-8
[28] Amendment
Act, Schedule 6, cll 5, 6 and 7 and see also cl 8 repealing points E1064-E5 to
1064-E9
[29] SS
Act, Schedule 1A, cl
146(2)
[30] Defence
Force Income Support Allowance under Part VIIIAB of the Veterans’
Entitlements Act 1986: SS Act, s
23(1)
[31] SS Act,
Schedule 1A, cl
146(3)
[32] SS Act,
s 23(1)
[33] T
documents at
27
[34] T documents
at 51-53
[35] T
documents at
41
[36] T documents
at 10
[37] Chambers
21st Century Dictionary, 1999, reprinted 2004, Chambers. See also Re
Secretary, Department of Families, Housing, Community Services and Indigenous
Affairs and de Waal [2009] AATA 635 at [37] per Deputy President
Jarvis and Re Waters and Secretary, Department
of Families, Housing, Community Services and Indigenous Affairs [2010] AATA
428 at [18]- [19] per Senior Member
McDermott
[38] SS
Act, s 23(4AA)
[39]
See also, points 1068B-D1 and 1068B-D22 to 1068B-D24 of the income test in
Module D of the Benefit PP (Partnered) Rate
Calculator
[40]
They do apply to a telephone allowance, because of the specification of s1061Q
and this explains why Mrs Phelps continued to receive
a telephone allowance
after Carer Payment ceased to be payable to her
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