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Social Security Reporter |
Age pension: sharing lottery win as disposition of assets
(2011/0113-0114)
Decided: 11th October 2011 by K Bean
On 12 June 2010, Mr and Mrs Damhuis won $666,666 in a competition operated by SA Lotteries. There had been a family understanding that any such win would be shared with their two sons. However, Mr and Mrs Damhuis sought financial advice and were advised that any money they gave to their sons may be treated as a disposal of assets by Centrelink. Ultimately, they gave each of their sons $100,000.
Centrelink did treat the transfer as a disposal of assets and Mr and Mrs Damhuis each had their respective age pension entitlements reduced. The Damhuises sought review of the decision arguing that an arrangement existed within the family to divide any win equally between the four family members. Accordingly, the transfer was not a gift but a share of what was rightfully the sons’ money.
The Centrelink Authorised Review Officer (ARO) affirmed the original decisions and the SSAT affirmed the ARO’s decisions. The Damhuises sought review of the SSAT decision on 12 January 2011.
The Social Security Act 1991 (‘the Act’) - s.1126AC, s.1123, s.1124.
The case turned on whether the transfers of money were gifts or whether the sons had a legal or equitable right or interest in the money. If the transfers were gifts, then the Damhuises had disposed of assets within the meaning of the Act and their pension entitlements would be calculated on that basis.
One of the couple’s sons gave evidence that from a young age he understood that he would receive a quarter share of any significant win and, on that expectation, he and his brother forewent significant presents from their parents. He and his brother did not contribute to the purchase price of the tickets although the ticket was purchased in the name ‘Family Ties’. Mrs Damhuis, however, gave evidence that she preferred to make rather than buy gifts.
The son also gave evidence that the arrangement was a firm one although not recorded formally in writing. On the night of the win, he and his brother believed that they too had won. He said that ‘even if the arrangement did not have a legal footing, it certainly had a moral one’. (para. 17)
Mr Damhuis gave evidence that only two names could be put on the SA Lotteries form which is why the boys were not listed and this evidence was confirmed by exhibit. The Damhuises also gave evidence that, having received financial advice that their pensions would be affected by the winnings, they calculated how much they could give their sons and still afford to live.
The AAT was not satisfied, on the evidence, that the sons had either a legal or equitable right or interest in the winnings. The AAT referred to the rebuttable presumption that family arrangements are not intended to be legally enforceable and found little evidence to rebut the presumption. The arrangement was not in writing, the sons were not in fact paid quarter shares and neither son has taken any action to enforce the agreement. The AAT was also not satisfied that foregone presents in the expectation of sharing a lotteries win was adequate consideration or sufficiently connected to the expectation of a win to give rise to a legal contract.
The AAT therefore found that the whole of the winnings of $666,666 was an asset of Mr and Mrs Damhuis. By giving each of their sons $100,000, Mr and Mrs Damhuis together had disposed of $200,000 within the meaning of s.1126AC of the Act. Section 1126AC(2) requires that $10,000 of that amount be disregarded. The Damhuises are taken together to have disposed of $190,000 and that amount is to be included in their assets for five years for the purpose of calculating their respective AP entitlements.
The decision under review was affirmed.
M.O’H.
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URL: http://www.austlii.edu.au/au/journals/SocSecRpr/2011/30.html