Editors --- "Debt due to income: whether monies derived from gambling activities is 'income' for the purposes of the Act; meaning of 'income'" [2007] SocSecRpr 48; (2007) 9(4) Social Security Reporter, Article 6

• SECRETARY TO THE DEWR and RUAN & CUI
• Background
• The issues
• Discussion
• Formal decision

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Debt due to income: whether monies derived from gambling activities is ‘income’ for the purposes of the Act; meaning of 'income'

SECRETARY TO THE DEWR and RUAN & CUI

(2007/1758)

Decided: 13th September 2007 by R.W. Dunne

Background

Ruan and Cui, who were married, came to Australia in 1989. Since his arrival in Australia, Ruan had engaged in gambling activities. The AAT found that, during the period 10May 2003 to 4 October 2005, Ruan received $132,412from gambling activities in Australia and New Zealand.

Following an investigation into his gambling activities, Centrelink determined that Ruan and Cui had been overpaid social security benefits and that the overpayments were recoverable debts. Ruan and Cui challenged this decision. The decision was affirmed (albeit with some variations to the debt amounts) on internal review.

Ruan and Cui appealed the decision to the SSAT. The SSAT set aside the decisions and substituted a decision that no debts existed.

The Secretary applied to the AAT for a review of this decision.

The issues

The issue for determination by the AAT was whether the gambling receipts were ‘income’ for the purposes of the Social Security Act 1991 (the Act).

Discussion

The AAT found that the definition of ‘income’ in s.8(1) is expressed in extremely wide terms and would include monies from gambling receipts, provided the monies were earned, derived or received by a person for their own use and benefit.

The AAT noted that monies from gambling activities had not been determined as exempt lump sums under s.8(11)(d) of the Act. The AAT further considered that it would be difficult to describe gambling receipts as ‘one-off’ receipts or gifts for the purposes of s.8(11).

The AAT found that the gambling receipts in the present case were received by Ruan for his own use and benefit. The AAT was also satisfied that the receipts did not represent a one-off windfall, nor were they amounts which could not be foreseen or predicted or expected or which were unlikely to occur again. The AAT considered that there had been a course of conduct by Ruan which took his gambling receipts outside the ambit of the exempt lump sum provisions.

The AAT observed that, following the amendments to the Act in 1991, ‘ordinary income’ means gross income from all sources without deduction, other than allowable deductions against business income as provided for in section 1075. The Tribunal found that, in the present case, Ruan was not ‘carrying on a business’ in relation to his gambling activities. It noted that he kept no records of his gambling activities, had no system or regularity in his approach and did not conduct the gambling activities in a measured and professional way.

In the circumstances, the AAT found that the full amount of the gambling receipts were to be taken into account in calculating the rate of social security benefits payable to Ruan and Cui.

However, the AAT remitted the debts to Centrelink for recalculation in accordance with s.1073 of the Act, which provides for certain income amounts to be taken to have been received over a twelve month period.

Formal decision

The AAT set aside the decision under review and remitted the matter to Centrelink for recalculation of the debt amounts in accordance with the AAT’s reasons for decision.

[S.O.]