Editors --- "Age pension: meaning of income; waiver due to administrative error or special circumstance" [2013] SocSecRpr 21; (2013) 15(3) Social Security Reporter, Article 6

• NOCON and SECRETARY to the DFHCSIA
• Background
• Issue
• Legislation
• Consideration of the issues
• Formal decision

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Age pension: meaning of income; waiver due to administrative error or special circumstance

NOCON and SECRETARY to the DFHCSIA

(2013/390)

Decided: 11th June 2013 by A.K. Britton

Background

Nocon was in receipt of a pension paid by the Polish government from 2002. Prior to 1 October 2010 the pension could only be paid into a Polish bank account. In 2010 the Australian government entered into an agreement with the Polish government the effect of which was to enable Polish pensions to Australian residents to be paid into an Australian bank account. On 13 July 2012 an authorised review officer affirmed the Centrelink decision to:

(i) treat pension payments made to Nocon by the Polish Government, since April 2004, as ‘income’ when calculating his rate of Australian age pension;

(ii) raise and recover a debt as a result of the alleged overpayment of age pension received between April 2004 and September 2011 (the debt period).

This decision was affirmed by the Social Security Appeals Tribunal (SSAT). Nocon sought a review of these decisions.

Issue

The issues to be determined were (a) whether pension payments made to Nocon by the Polish Government throughout the debt period were ‘income’ for the purposes of the Social Security Act 1991 (Cth) (the Act) and, if so, (b) whether the power to waive the resultant debt could or should be exercised.

Legislation

The rate of the age pension is calculated by applying the Pension Rate Calculator in s.1064 of the Act and ‘ordinary income’ can affect the rate of pension (ss.1064-A1 and 1064-E1).

‘Ordinary income’ is defined in section 1072 of the Act to mean a person’s gross ordinary income from all sources for the period calculated without any reduction.

‘Income’ in relation to a person is defined in section 8(1) to mean:

• an income amount earned, derived or received by the person for the person’s own use or benefit...

Section 8(2) provides that a reference in the Act to an ‘income amount earned, derived or received’ includes:

• an income amount earned, derived or received by any means; and

...from any source (whether within or outside Australia).

Section 1237A(1) of the Act provides:

... the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.

Section 1237AAD of the Act gives the decision-maker the power to waive all or part of a debt if satisfied, among other things, that ‘there are special circumstances (other than financial hardship alone) that make it desirable to waive (the debt)’.

Consideration of the issues

The Tribunal noted that the definition of income was broad and income could be ‘received’ even if it was temporarily not accessible (Rose v Secretary, Department of Social Security [1990] FCA 59; (1990) 21 FCR 241 at 245.)

The Tribunal referred to paragraph 4.3.6.10 of the Guide to Social Security

Law (the Guide) which provides that even if a person only has limited access

to a foreign pension this does not mean that the pension is considered ‘blocked’. In each case it is necessary to consider whether the prospect of receiving the money is so remote that the monies are not ‘earned, derived or received’ for the person’s own use or benefit.

In this case Nocon visited Poland during the debt period and used the pension payments in his Polish bank account to meet his daily living and

other expenses. The Tribunal found tha the monies were ‘derived or received’ by Nocon for his use and benefit and therefore constituted ‘income’ within the meaning of the Act.

The Tribunal then considered whether the debt could be waived pursuant to s.1237A or s.1234AAD. Nocon’s evidence was that:

• he and other members of the Polish Community had attended meetings in Sydney in January 2001 and April 2002 where Centrelink representatives told them that as Australia did not have an agreement with the Polish government, the Polish pension constituted ‘blocked pension’ and not income;

• on or about 10 April 2002 shortly after receiving notice that he would be paid the Polish pension he rang Centrelink to advise;

• in late 2010 he attended a meeting organised by the Polish consulate at which a Centrelink representative stated that if, prior to Australia entering into the agreement with Poland on 1 October 2010, a person had notified Centrelink that they had been receiving the Polish pension there would be ‘no problem’ and each case would be dealt with individually;

• he lodged an Income and Asset Review form dated 27 February 2004 in which he was asked: Do you (and /or you partner) receive income from outside Australia? This includes ... ‘Other ...overseas pensions, benefits or allowances’ - he answered ‘no’ to that question because this was consistent with the advice he had received at the 2001 and 2002 meetings.

The Tribunal accepted Nocon’s evidence about the advice he was given at the meetings in 2001 and 2002. It accepted that he notified Centrelink that he would be receiving a Polish pension and that he believed the answer he gave on the 2004 review form to be truthful. However, the Tribunal found that Centrelink had not advised members of the Polish community not to disclose receipt of the Polish pension. The Tribunal concluded that Centrelink’s error was not the sole cause of the overpayment and so waiver under section 1237A was not possible.

The Tribunal found that the debt did not arise as a result of Nocon knowingly making a false statement or representation, or failing or omitting to comply with a relevant statutory provision and so considered waiver due to special circumstances. It referred to the cases where the meaning of the term special circumstances had been considered and to the relevant paragraph of the Guide (para 6.7.3.40). The Tribunal noted that it was not bound to apply the policy expressed in the Guide, but will usually do so unless there are cogent reasons in a particular case for not doing so (Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60). The Guide notes that ‘an administrative error may sometimes combine with other circumstances to create a situation that is, overall, special’. It also states that special circumstances waiver is only appropriate ‘if the person’s particular circumstances made it unjust for the general rule to apply’.

The Tribunal found that Nocon’s financial position alone did not constitute special circumstances but when combined with the fact that incorrect information by Centrelink ‘brought about’ the debt it was satisfied that ‘special circumstances’ were established and it was desirable to waive 50 per cent of the debt for the period to 1 October 2010.

Formal decision

The decision was set aside and in substituted a decision was made that 50 per cent of the debt for the period up to 1 October 2010 be waived.

[C.E.]