Editors --- "Pension bonus scheme: qualification; timing of application; meaning of 'gainful work'" [2011] SocSecRpr 7; (2011) 13(1) Social Security Reporter, Article 7

• COOK and SECRETARY TO THE DFHCSIA
• Background
• Legislation
• The evidence
• Application of the legislation
• Decision

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Pension bonus scheme: qualification; timing of application; meaning of 'gainful work'

COOK and SECRETARY TO THE DFHCSIA

(2010/1030)

Decided: 17th December 2010 by C. Ermert

Background

Mr and Mrs Cook, a married couple, worked in paid employment to age 71 and 74 respectively. They applied for entitlements under the pension bonus scheme. Their applications were refused as they applied more than 13 weeks after they became qualified for age pension, and Centrelink decided that they did not qualify for an extension of the registration time limit. The decisions to reject their applications were affirmed by the SSAT on 15 April 2010. Mr and Mrs Cook then appealed to the AAT.

Legislation

Section 92H of the Social Security Act 1991 (the Act) relevantly states:

92H Timing of application and registration

Age pension qualification date on or after 1 July 1998

(1) If a person’s date of qualification for the age pension occurs on or after 1 July 1998:

(a) the person must lodge an application during the period that begins 13 weeks before the person’s date of qualification for the age pension and ends 13 weeks after that date; and

(b) if registration occurs as a result of an application lodged within that period—the registration takes effect on the person’s date of qualification for the age pension.

Note: The Secretary may extend the period: see subsection (3)...

Late applications

(3) The Secretary may extend the period within which a person must lodge an application. If registration occurs as a result of an application lodged during an extended period, the registration takes effect:

(a) on the date on which the application is lodged; or

(b) if the Secretary decides that it should take effect on another date — on that other date.

(4) The Secretary must not make a decision to extend the period within which a person must lodge an application unless, if it were assumed that the person had been a member of the pension bonus scheme throughout the pre application period:

(a) the person would have been a non accruing member for all of the pre application period; or

(b) both:

(i) the person would have been an accruing member for some or all of the pre application period; and

(ii) the person would have passed the work test for each test period that is applicable to the person.

Note 1: Pre application period is defined by subsection (5).

Note 2: Test period is defined by subsection (6).

(5) For the purposes of this section, the pre application period is the period beginning on:

(a) in the case of a person whose date of qualification for the age pension occurs on or after 1 July 1998—the person’s date of qualification for the age pension; or

(b) in the case of a person whose date of qualification for the age pension occurs before 1 July 1998—1 July 1998;

and ending on the date on which the person lodged the application...

Section 92X of the Act provides the general definition of ‘gainful work’:

92X Gainful work—basic rule

(1) For the purposes of this Part, gainful work is work for financial gain or reward, whether as an employee, a self employed person or otherwise, where:

(a) the work involves a substantial degree of personal exertion on the part of the person concerned; and

(b) the work is carried on within or outside Australia.

(2) Subsection (1) is to be ignored in determining the meaning of an expression used in a provision of this Act other than this Part.

Section 92Y provides an alternative method of deeming what is ‘gainful work’:

92Y Secretary’s discretion to treat activity as gainful work

(1) If a person satisfies the Secretary that:

(a) the person, or the person’s partner, has engaged in a particular activity; and

(b) the activity involves a substantial degree of personal exertion on the part of the person or the person’s partner, as the case may be; and

(c) the activity does not consist of voluntary work for a charitable, welfareor community organisation; and

(d) because of special circumstances, the activity should be treated as gainful work;

the Secretary may determine that this Part has effect as if the activity were gainful work.

(2) The determination has effect accordingly.

The evidence

Mr and Mrs Cook gave evidence of their employment history, which most recently involved running a children’s day care centre. They had also accepted the foster care of Allan when he was only two years old. Their foster son lived with an intellectual disability and required substantial care. At the time of the hearing Allan was an adult and was still in the care of Mr and Mrs Cook.

Mrs Cook gave evidence of the financial difficulties experienced while running the day care centre, and the resulting stress on the family, leading to Mr Cook’s attempted suicide. Mrs Cook agreed that she may have received letters from Centrelink informing her of the requirements of the pension bonus scheme, but that she could not deal with them at the time given the combined pressure on the family from financial, health and other difficulties.

Application of the legislation

There was no dispute about the facts in this case. The central issue to be determined was whether the Secretary could exercise the discretion in s.92H(4) of the Act to extend the period of time for the application for the pension bonus to the dates of the Cooks’ applications.

Neither Mr or Mrs Cook met the time limit set out in s.92H(1)(a) to lodge their applications for the pension bonus payment within 13 weeks of the day they qualified for age pension. The Tribunal then considered whether this time limit could be extended according to s.92H(4). Subsection 92H(4)(b)(i) required the applicants to have been accruing members for ‘some or all of the pre-application period’. This provision was satisfied according to the facts of the case. However, ss. 92H(4)(b)(ii) also required the person to have ‘passed the work test for each test period that is applicable to the person’. The ‘work test’ is governed by ss.92U and 92V, which require the work to meet the definition of ‘gainful’ set out in ss.92X and 92Y. Section 92X provides that, to be considered ‘gainful work’, the work must be for financial gain or reward.

Mrs Cook was in paid employment for all of the pre-application period and met the requirements of ‘gainful work’, with the exception of the period 1 July 2007 to 2 January 2008, which was the period after which she ceased paid employment but before she had applied for her pension bonus entitlements.

Section 92Y gives the Secretary discretion to treat an activity as ‘gainful work’ if the conditions set out in its four subsections are met. The Tribunal addressed these four conditions in relation to Mr and Mrs Cook:

(1)(a) the person, or the person’s partner, has engaged in a particular activity- in this case Mr and Mrs Cook argued that the relevant ‘activity’ was caring for their adult foster son.

(1)(b) the activity involves a substantial degree of personal exertion on the part of the person or the person’s partner- in relation to this provision the Tribunal accepted the evidence of Mr and Mrs Cook that the care provided to their foster son involved considerable personal exertion.

(1)(c) the activity does not consist of voluntary work for a charitable, welfare or community organisation-the Tribunal considered the definition of ‘gainful work’ in the Guide to Social Security law, which states:

The work must involve the member being engaged in some form of gainful activity for financial reward rather than a contrived situation

A member is NOT considered to be engaged in gainful work if they are:

• Managing their own, or their family’s financial investments...

• Performing domestic duties at their, or their partners’ place of residence; or

• Engaged in any form of voluntary work.

- in this case the Tribunal found that the care of Allan was not ‘contrived’ and did not fit into any of the specifically excluded examples provided in the Guide. In particular, the Tribunal decided that the care of Allan was not the ‘performance of domestic duties’ as it primarily involved performing functions for Allan which he was incapable of performing for himself. The Tribunal further decided that the care of Allan did not satisfy the definition of ‘voluntary work’.

(1)(d) because of special circumstances, the activity should be treated as gainful work- in this case the Tribunal considered that the care of an intellectually disabled adult foster son constituted ‘special circumstances’.

As a consequence the Tribunal was satisfied that all the provisions of s.92Y were met and determined that Mrs Cook’s care of Allan was ‘gainful work’ for the period she was not in paid employment.

This finding allowed the discretion in s.92H(3) to be exercised to extend the allowable period to lodge a claim for the pension bonus to the date on which the application was made.

Decision

The decision under review was set aside and the matter was remitted to the Department with the direction that the entitlement to the pension bonus for Mr and Mrs Cook was to be reassessed in accordance with provisions of the Act on the basis that Mrs Cook was engaged in gainful work for the period 1 July 2007 to 2 January 2008.

[D.A.]