This Decision of the Administrative Review Tribunal affirmed the Respondent’s, Secretary – Department of Social Services, (DSS) decision that the age pension rate of each Applicant would be lowered due to having annual income above the income test lower threshold.
It was Services Australia (Centrelink) on behalf of DSS that decided to lower the age pension rate of the Applicants to $256.10 per fortnight for each of them as from 26 June 2023.
The Applicants made their claim for the age pension on 23 June 2023. With their claim application, among other things, they provided financial statements for their discretionary trust, the QSFT Family Trust, which they controlled, for the financial year ended 30 June 2022.
The Applicants also had a number of other private companies and/or private trusts and shares and other assets in their own names. It was not disputed as to how these were taken into account by Centrelink for separately assessing the lowering of the Applicants’ respective age pension rates.
In that financial year, the QSFT Family Trust received $11,569.91 of dividend income which was rounded and attributed to their ordinary income for age pension means test purposes under Division 7 of Part 3.18 (Attribution of Income – Controlled Private Trusts).
After some calculation, it was stated at paragraph 34 of the Decision:
[…] it is appropriate that only $11,242 be assessed as attributable income to Mr QSFT and Mrs WKXH from 30 June 2023, with 50% assessed as part of each of their ordinary income, that is 100% in total, from 30 June 2023.
Also, under the current liabilities of the QSFT Family Trust as at 30 June 2022 was a beneficiary loan of $143,201.39 to the QSFT Family Trust between the QSFT Family Trust and one of the Applicants, Mr QSFT.
Separately to the attributed income above, the deemed income on all of the financial assets, including the $143,201.39 loan to the Family Trust, was calculated at $4,681, to also be included in the ordinary income of the Applicants in assessing their age pension rate reductions.
It was stated at paragraph 24:
The [DSS]’s position is that the assessable income of Mr QSFT and Mrs WKXH for the purposes of assessing their age pension entitlement includes income referrable to the [QSFT] Family Trust as follows:
(a) $11,242 being net dividend income received by the Family Trust and therefore attributable 50/50 to Mr QSFT and Mrs WKXH as income; and
(b) deemed income of $4,618 in relation to the financial assets owned by Mr QSFT and Mrs WKXH which includes a loan of $143,201 from Mr QSFT to the Family Trust.
The Applicants claimed this was double counting, stated at paragraph 23:
Mr QSFT said that they put money into the trust, they received $11,000 (approximately) back for the year and [DSS is claiming] it is being said that they should have received another $4,000 or so more. He does not understand.
[…] You can only put money into one place and whatever you get from it, that’s what it is.
[…] The loan to the Family Trust was a loan to themselves, which they cannot repay, and they do not understand why it is counted.
[…] They therefore query why an extra $4,000 or so is taken into account.
The Applicants claimed they received advice via a Legal Aid lawyer to consider the 2001 Tribunal Decision of Harris v Repatriation Commission [2001] AATA 905. But this case was in relation to the Veterans’ Entitlements Act 1986 and not the Social Security Act 1991 (SSA), which the Applicants were assessed under by DSS.
The Decision stated at paragraph 40:
[…] the case of Harris related to entitlements under the Veterans Entitlements Act 1986, which has some similarities with the Social Security Act 1991 and yet is not the same. The relevant legislation in Harris included a provision that prevented actual income and deemed income for the same source being counted twice. That does not arise in relation Mr QSFT and Mrs WKXH. Income has not been counted twice in Mr QSFT’s and Mrs WKXH’s case.
[…] Actual income from the loan and deemed income from the loan is not being counted twice. I acknowledge that that is what Mr QSFT and Mrs WKXH consider has been done but it is simply not the case. The dividend income received by the [QSFT] Family Trust has been included. Separately and distinctly from that, deemed income on the loan by Mr QSFT and Mrs WKXH has been included. That is not double counting.
[…] Dividend income and deemed income on a loan are not the same income. One is income the [QSFT] Family Trust earned and one is referrable to the loan recorded as owed to Mr QSFT. The social security legislation does not treat these as the same thing – it requires both to be counted – once each. Harris has no application in these circumstances.
Both Acts have No Double Counting sections (46K and 1207Z respectively) but these are designed to exclude actual distributions to beneficiaries from being counted in the same calculation as the attributed income (which is attributed for the purposes of DSS calculations and is not actually amounts distributed to the beneficiaries).
Here, it was the income of the QSFT Family Trust that was attributed and there was no actual distribution to any of the Applicants for the double counting provisions to have any effect. While there was reference in the Harris Decision at paragraph 20 to actual income distributions being made to the applicants in that case.
Therefore the ordinary income of the Applicants for determining their reduction in age pension rate from the maximum, alongside other financial assets that were also taken into account and not disputed here, included the sum of the attributed income (SSA section 1207Y) from their deemed stakeholdings in the QSFT Family Trust plus their deemed income (SSA section 1077) from their financial asset being the loan to the QSFT Family Trust.
As stated at paragraphs 43 and 45 of the Decision:
- I acknowledge that this issue has been upsetting and confusing for Mr QSFT and Mrs WKXH. However, the legislation requires certain distinctions. […]
- The law requires that these be treated separately: 1) actual income – the Family Trust’s dividend income and 2) deemed income on Mr QSFT’s loan to the Family Trust.
[…] The law treats the Family Trust and Mr QSFT and Mrs WKXH as separate legal entities. The income of the Family Trust is counted and deemed income on the loan from Mr QSFT is also counted.
[…] Even though this ‘feels like the same money’, legally they are different types of income and each one is counted. The same money (income) is not being double counted. These amounts are assessable pursuant to different provisions of the social security legislation.
[…] The Tribunal cannot override the legislative provisions, nor can it create an exception where Federal Parliament has not provided one.
