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Social Security Reporter |
Exceptional circumstances relief payment: whether significant part of income derived from farm enterprise
(2007/1814)
Decided: 28th September 2007 by P. McDermott
Steger was in partnership with his parents in a farming property at Koorlagin. The locality of the farm had been in an area of severe drought for some time.
On 22 November 2006 Steger lodged a claim for drought assistance, which was rejected by Centrelink. By the time of the Tribunal hearing, the benefit was called exceptional circumstances relief payment.
The Centrelink ARO accepted that Steger was a farmer under the Act, but considered that he did not derive a significant part of his income from the farm enterprise. The SSAT affirmed that decision. Steger appealed to the AAT.
The AAT considered whether Steger was qualified for exceptional relief payment under s.8A of the Family Household Support Act 1999 (the Act). The main issue to determine was ‘whether he derived a significant part of his income from the farm enterprise’.
The Department conceded that Steger was a ‘farmer’ within the meaning of s.8A(1)(b)(i)(A) of the Act. ‘Farmer’ is defined as ‘a person who has a right of interest in the land used for the purpose of a farm enterprise’ (s.3 of the Act) The AAT accepted this concession as Steger had a one third interest in a partnership with his parents in the farming property at Koorlagin, and he was a joint owner of the property.
The AAT also accepted the property was used for the purposes of a ‘farm enterprise’. The evidence was that the property consisted of 344 acres, 80 acres devoted to crops, eight acres to lucerne, and 24 acres to barley. There were four grazing paddocks on the property, and a herd of more than 50 breeders on the property. The farm enterprise derived income from the sale of ‘weaners’ and the sale of pigs.
The AAT found that Steger had contributed a significant part of his labour and capital to the farm enterprises required by s.8A(1)(b)(i)(B) of the Act.
Once the AAT had satisfied itself of the above issues, it turned to the central issue in the case, namely, whether Steger derived a significant part of his income from the farm enterprise.
Steger had employment in Toowoomba. The individual tax return of Steger and the partnership tax return for the 2006 tax year showed that the predominant source of income for Steger was from his off-farm income. Steger earned $38,197, while the partnership derived income of $13,609 and made a loss.
The AAT noted that there was evidence that in the present drought many farmers were compelled to seek employment away from the farm. In Secretary, Department of Family & Community Services v Wallace [2002] FCA 784; (2002) 69 ALD 337at 342 Dowsell J warned against the undesirability of introducing the notion of ‘principal source of income’ in administering the Act.
The AAT held it was not required to adopt a mechanical approach of comparing the monetary amounts received by Steger from the farming enterprise and his employment in Toowoomba. It referred to Centrelink policy as supporting this, where it states gross income figures of a farming enterprise are to be used.
The AAT referred to Madgwick J’s remarks in Farrett v Secretary, Department of Family & Community Services [2002] FCA 716; (2002) 69 ALD 359at 371: ‘The legislation in question is beneficially intended for needy farmers and, in cases of doubt, should be liberally interpreted’. In Farrett at 373-4, Madgwick J derived support for a purposive approach having regard to the second reading speech of the responsible Minister who remarked that the Act: ‘provides income support for those farm families who find themselves suffering exceptional circumstances which are beyond their capacity to manage’ (at 366).
The AAT considered that Steger’s notional ‘share’ in the partnership income of $13,609 was ‘significant’ within the meaning of s.8A of the Act. Referring to the Compact Oxford English Dictionary’s definition: ‘1. extensive or important enough to warrant attention.2. having an unstated meaning; indicative of something’, the AAT ruled one third of the gross income ($4500) was ‘significant’. It was ‘important enough to warrant attention’ or ‘indicative of something’. The AAT held its approach was fortified by a purposive interpretation of the Act.
Noting MadgwickJ’s beneficial construction of the provision, the AAT added that this (Reasons,paras.31, 32):
...ensures that a claimant for relief who genuinely embarks on a farming enterprise during the drought will qualify for relief. ...
What is important is that a claimant for exceptional circumstances relief payment must have a genuine intention to gain income from a farming enterprise.
The AAT held that the key element was that the ‘claimant must intend that the farming enterprise be the principal source of income of the claimant’ (Reasons, para. 33).
The AAT concluded that Steger had ‘attempted’ to derive a significant part of his income from the farm enterprise but had been prevented from doing so due to ‘seasonal factors’ being the drought. The AAT issued an exceptional circumstances certificate from the date of Steger’s claim to the date of the hearing. It considered that it would not be appropriate to issue a certificate past the hearing date as the AAT would have no evidence of events subsequent to the hearing.
The AAT found that Steger qualified for exceptional circumstances relief under the Family Household Support Act 1999, and issued an exceptional circumstances certificate for the period 22 November 2006to 28 August 2007.
[J.F.]
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URL: http://www.austlii.edu.au/au/journals/SocSecRpr/2007/51.html