Editors --- "Disability support pension: trust; attribution of assets; approach prior to and after 1 January 2002; whether trustee an attributable stakeholder; assessment of attribution percentage" [2010] SocSecRpr 31; (2010) 12(2) Social Security Reporter, Article 17

• HOPKINS and SECRETARY TO THE DFHCSIA
• Background
• Discussion

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Disability support pension: trust; attribution of assets; approach prior to and after 1 January 2002; whether trustee an attributable stakeholder; assessment of attribution percentage

HOPKINS and SECRETARY TO THE DFHCSIA

(2010/50)

Decided: 27th January 2010 by R.P. Handley

Background

On 27 February 1982, the Hopkins Children’s Trust (the Trust) was established by Hopkins’ father, with Hopkins as the trustee and her four children as the beneficiaries. Hopkins’ father died in May 1995. Following the death of her father, Hopkins inherited $31,500 which she applied towards the purchase of a cafe business in the name of the Trust in 1997.

The Trust’s assets included a number of real properties and businesses. The Trust derived income from renting its real properties and from the cafe business owned by the Trust. Pursuant to the Trust Deed, Hopkins received some monies from the Trust, in the name of a commission for clerical duties and reimbursement of expenses. There was some suggestion that the Trust paid at least some of Hopkins’ living expenses.

On 13 July 1995, Hopkins was granted DSP. She was paid at the maximum rate until November 2004, when Centrelink discovered through data-matching that she had an interest in the Trust. Her pension was suspended and later cancelled due to her failure to respond to requests for information from Centrelink.

On 15 May 2006, a Centrelink complex assessment officer determined, pursuant to Part 3.18 of the Social Security Act 1991 (the Act), that 100% of the Trust’s assets and income were attributable to Hopkins. On 19 July 2006, her entitlement to DSP was recalculated and a debt of $84,046.16 in relation to the period 20 December 1995 to 2 November 2004 was raised. The debt amount was varied to $84,584.12 on 11 December 2006.

Hopkins applied to the SSAT for a review of Centrelink’s decision. The SSAT affirmed the decision on 23 October 2007. On 3 December 2007, Hopkins applied to the AAT for review.

Discussion

The AAT observed that the treatment of trusts changed after 1 January 2002, with the introduction of the attribution of income and assets of controlled private trusts to their attributable stakeholders.

In respect of the period prior to 1 January 2002, the AAT was satisfied on the available evidence that real properties held in the name of Hopkins at that time (with the exception of her principal home) were assets of the Trust and not of Hopkins personally. The AAT found that whilst legal title to the properties was vested in her, equitable title was vested in the Trust.

The AAT further found that, as Hop-kins was not a beneficiary of the Trust and was not otherwise entitled to receive any assets or income of the Trust, it was not appropriate to include the income and the assets of the Trust when assessing Hopkins’s entitlement to DSP prior to 1 January 2002.

In respect of the period after 1 January 2002, the AAT found that the Trust was a designated private trust and that Hopkins passed the ‘control test’ in s.1207V(2) of the Act, because she was the sole trustee of the Trust, with powers to appoint and remove trustees and to amend the Trust Deed. The AAT noted that Hopkins had full control over the assets and income of the Trust and was the source of its assets.

The AAT found that, unless the Secretary otherwise determined, the assets and income of the Trust were attributable to Hopkins in a percentage to be determined by it. The AAT concluded that there was no basis, on the evidence before it, to determine that Hopkins was not an attributable stakeholder in relation to the Trust.

On the limited evidence available to the AAT, it was not possible for the AAT to make an accurate assessment of the personal benefit Hopkins had received from the Trust. Clause 9 of the Trust Deed entitled the trustee to be reimbursed from the Trust Fund for all expenses incurred and to receive commission for acting as Trustee of the Trust. There was no evidence before the Tribunal as to what the relevant entitlement was during the period in question. The AAT noted that, because Hopkins was not a beneficiary of the Trust, she was not otherwise entitled to receive any assets or income of the Trust, and any attempt to alter the Trust Deed to add herself as a beneficiary and delete the current prohibition on her doing so in clause 16 could be regarded as a breach of Trust. In the circumstances, the AAT estimated what it considered to be a fair asset attribution percentage in this case.

Having regard to the circumstances of the Trust, Hopkins’ contribution to its assets and administration, and the past benefits she may have received and possible benefits she might receive in the future, the AAT was satisfied that the asset attribution percentage should be 40% for the period 1 January 2002 to 2 November 2004 (on the basis that 60% was attributable to the four beneficiaries - ie 15% each).

The AAT observed that, based on its decision, the overpayment to Hopkins would need to be recalculated but that a debt was likely to remain. The AAT went on to consider whether any remaining debt should be recovered. The AAT found that there were no special circumstances in this case and directed that the recalculated overpayment be recovered.

[S.O.]