Editors --- "Age Pension: assessment of ordinary income on a yearly basis; computation of underpayments" [2013] SocSecRpr 12; (2013) 15(2) Social Security Reporter, Article 5

• WESTBROOK and SECRETARY to the DFHCSIA
• Background
• Consideration
• Third period from 5 June to 30 June 2009:
• Second period from 10 April to 4 June 2009:
• First period from 27 March to 9 April 2009:
• Formal decision

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Age Pension: assessment of ordinary income on a yearly basis; computation of underpayments

WESTBROOK and SECRETARY to the DFHCSIA

(2013/247)

Decided: 24th April 2013 by D.G. Jarvis

Background

Westbrook claimed that Centrelink had overstated income amounts earned by his wife during the 13-week period commencing on 27 March 2009 and therefore underpaid his age pension entitlement during those periods.

An authorised review officer (ARO) reviewed the assessment of Westbrook’s pension during the period 27 March to 30 June 2009 which was the period referred to by Westbrook in a telephone conversation with a Centrelink officer on 19 September 2011.

In summary, the ARO decided:

(a) Westbrook’s entitlement to Age Pension from 27 March to 9 April 2009 had been the subject of a previous review with a decision of the AAT dated 28 January 2011. It was therefore not appropriate for Westbrook’s entitlement in this period to be revisited. (First period)

(b) For the period 10 April 2009 to 4 June 2009, Westbrook had been underpaid by $62.10. (Second period)

(c) For the period from 5 June to 30 June 2009, Westbrook’s entitlement could not be reviewed because he did not seek review within 13 weeks of being notified of the assessment. He was notified on 7 September 2009. (Third period)

Westbrook sought review by the SSAT which affirmed the ARO’s decision. He then applied to the AAT for review.

Consideration

The AAT considered each of the periods identified in the ARO decision in turn.

Third period from 5 June to 30 June 2009:

The AAT said that the proceedings in respect of this period were futile because of the effect of s.109 (2) of the Social Security (Administration) Act

1999 (the Administration Act). This section provides in effect that where an application for review is made more than 13 weeks after notice has been given of the decision, then any favourable decision takes effect on the day on which the application for review was made was made. Therefore no arrears would be payable.

Westbrook sought review by letter dated 10 February 2011 and later by telephone on 19 September 2011. These requests were made more than 13 weeks after the letter from Centrelink dated 7

September 2009 which notified of the age pension fortnightly rates payable to him from the pay period starting on 5 June 2009.

The AAT then went on to consider whether the part of Westbrook’s application for review for the period from 5 to 30 June 2009 should be dismissed pursuant to s.42B of the Administrative Appeals Tribunal Act (the AAT Act). The AAT decided that on its proper construction s.42B did not apply to part of a proceeding. It was also not proper to dismiss the entire application because the AAT did have jurisdiction to consider the period from 10 April to 4 June 2009.

Accordingly, the AAT determined not to investigate Westbrook’s contentions in respect of the third period, 5 to 30 June 2009 by exercising the broad discretion conferred on the AAT by s.33(1)(a) of the AAT Act. That broad discretion in effect provides that the procedure of the AAT is within its own discretion. The section authorises the AAT to adopt a flexible approach to the resolution of applications thereby facilitating a mechanism of review that is ‘fair, just, economical, informal and quick’ as required by s.2A of the AAT Act.

Second period from 10 April to 4 June 2009:

Although Westbrook had conceded at the SSAT that the income detailed by Centrelink for this period appeared to be correct, at the AAT he contended that it was incorrect for various reasons. The AAT said that some of those reasons were misconceived. However, in a written submission following the AAT hearing Westbrook raised further matters some of which led the AAT to conclude that the reviewable decision should be set aside.

Westbrook contended that Centrelink had included some income that he himself earned along with his wife’s earnings in the calculation of entitlement for this period.

West brook also contended that his wife’s income should have been calculated by working out the total of her income for the year ended 30 June 2009 and then dividing by 26. The resulting figure should then have been used to calculate his pension for each of the fortnights under consideration.

The AAT found that the annual rate of a claimant needed to be assessed and that different methods of assessing the annual rate should be used depending on whether the earnings received were regular or not. The AAT referenced Secretary, Department of Family and Community Services v Rolley [2000] FCA 806; (2000) 175 ALR 4 where a pensioner received income from casual employment of a 16-week period. The Full Court of the Federal Court held in this case that ‘the determination of whether a payment received is to be treated as recurring income from which an annual rate may be extrapolated requires an evaluative judgment, according to the circumstances of each case’. (para. 18).

The AAT also considered the Guide to Social Security Law (the Guide) in force prior to 20 September 2009 with respect to annual income assessment and also the treatment of variable income. Mrs Westbrook’s payslips and other evidence showed that her income was not being earned at a regular constant rate but rather fluctuated. The AAT therefore decided, relying on the Guide, that the correct way to assess Mrs Westbrook’s income in this period was to average her income over the 13 weeks prior to 4 June 2009.

With respect to Westbrook’ s employment income, he received one payment for the fortnight he worked in the relevant 13-week period before 4 June 2009 and received no other income from employment in the financial year ended 30 June 2009. Accordingly, relying on Secretary, Department of Family and Community Services v Rolley (2000), the AAT found that Westbrook’s income should be averaged over 52 weeks, not 13 weeks.

Westbrook also contended that his wife’s work-related expenses of $3,173 as claimed in her tax return should be deducted from her income before the calculation of his entitlement was undertaken. Westbrook relied on Haldane-Stevenson v Director - General of Social Security (1985) 9 FCR 73 and some paragraphs from the Guide to support his contentions. The AAT had no evidence as to the nature of the work- related expenses and was not clear about whether the Guide paragraphs relied upon were relevant. The AAT also noted that Haldane-Stevenson was decided under the predecessor to the Social Security Act 1991 (the Act). Further the Secretary had not had an opportunity to investigate or consider this issue. The AAT therefore referred the matter to the Secretary for reconsideration. In particular:

(a) Westbrook’s earnings were to be averaged over a period of 52 weeks being the financial year ended 30 June 2009;

(b) Mrs Westbrook’s earnings were to be averaged over the 13 weeks prior to 4 June 2009;

(c) the claimed reduction for work-related expenses should be further investigated (if the expenses could be used to reduce income for social security purposes, then another decision would be required regarding the period over which those expenses would be apportioned); and

(d) investment earnings should be taken into account and there should be an adjustment for the ordinary income free area.

First period from 27 March to 9 April 2009:

This period had previously been considered by the AAT in earlier proceedings and as a general rule would not be reconsidered by the AAT. However, the AAT decided that because fresh evidence was available and for the justice of the case, this period would be reconsidered. The first period and the second period both fell within the 13-week period which the AAT believed should be used to calculate Mrs Westbrook’s annual rate of income. In hindsight, it seemed inappropriate to use different calculations for these successive fortnightly periods.

Formal decision

The AAT remitted the decision under review for reconsideration pursuant to s.42D of the AAT Act. [M. O’H.]