Editors --- "Newstart Allowance: non payment period: move to area with reduced employment prospect" [2005] SocSecRpr 23; (2005) 7 Social Security Reporter, Article 23

• CARROLL and SECRETARY TO THE DFaCS
• Background
• Legislation
• The issue
• Discussion
• Formal decision

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Pension bonus scheme: treatment of overseas work

CARROLL and SECRETARY TO THE DFaCS

(2005/346)

Decided: 19th April 2005 by R. Hunt

Background

Carroll claimed age pension on 29October 2003. The claim form sought payment under the pension bonus scheme for the period 26 June 1999 to 30 November 2003.

Carroll was granted age pension on 9 December 2003 but not the pension bonus payment because Centrelink considered that she had not met the requirement that a certain number of hours be worked in Australia.

It was not disputed that Carroll was working in Singapore for the period which she wished to be taken into account in order to qualify for the bonus.

Carroll gave evidence that she had made a number of enquiries about her entitlement under the scheme and had told Centrelink officers that she would be working in Singapore. She was not told of the requirement to work 640 hours in Australia and this requirement was not included in the newsletter she had obtained.

She further submitted that she had deferred her access to the age pension and had worked from the age of 61 to64 although she would by then have been able to receive the pension. She argued that she had therefore met the main object of the pension bonus scheme by continuing to remain in employment past retirement age and thereby benefiting the taxpayer. Carroll argued also that she had tried unsuccessfully to obtain work in Australia and further that she had paid income tax in both Australia and Singapore during the period in question.

It was found by the AAT that Carroll was appropriately registered with the scheme as she was able to produce letter confirming her registration, despite the Secretary’s assertion that there was evidence that Carroll had never registered with the scheme.

Legislation

Section 92T of the Social Security Act 1991 (the Act) requires the person to pass a “work test”. Section 92U states that a person passes this test if the Secretary is satisfied that the total number of hours worked ‘was at least 960 and that at least 640of that total number of hours were worked in Australia”. Section 92W provides a discretion to treat gainful overseas work as though the work had been performed in Australia where the Secretary is satisfied that there are ‘special circumstances’.

The issue

The issue to be decided was whether there were special circumstances such that the s.92W discretion to treat the work carried out overseas as if it were carried on in Australia should be exercised.

Discussion

The AAT noted that ‘the legislation governing Carroll’s situation is beneficial legislation designed to encourage older Australians to continue to work and to reduce the burden on the taxpayer by postponing the pension entitlement’ (Reasons, para. 21). It was accepted that Carroll had taken numerous steps to ascertain the qualification requirements for the scheme and had relied on the information received from Centrelink.

The AAT looked to the Guide to Social Security Law which had adopted the example for exercising the discretion given in the Explanatory Memorandum to s.92W. That section was amended by the Social Security and Veterans Affairs Legislation (Pension Bonus Scheme) Bill 1998. It was found that the Guide had listed the example as ‘the only circumstance in which the discretion may be exercised and added a further restriction that the discretion should only be exercised where the customer’s employment overseas is a normal part of their employment in Australia and is short in duration’. (Reasons, para. 24)

The AAT compared this provision with the Explanatory Memorandum itself which stated:

It is intended that the Secretary should favourably exercise this discretion only in unusual situations where the exercise of the discretion in this manner would be consistent with the objects of the pension bonus scheme. (Reasons, para. 25)

The Explanatory Memorandum then went on to give an overseas secondment as an example for exercise of the discretion.

The AAT found that Carroll was given misleading advice by Centrelink officers to her considerable inconvenience and financial detriment. In view of the poor handling and incompetence on the Secretary’s behalf, the AAT expressed its temptation to exercise the s.92W discretion. However, in spite of its finding that the policy was ‘more rigid than the parliament intended’, the AAT concluded that as Carroll’s situation did not fall within the policy guidelines it was not appropriate to exercise the discretion.

Formal decision

The AAT affirmed the decision under review.

[A.M.]