Tribunal: Member Mark Hyman
The applicant set aside money for each of her grandchildren at their birth and later transferred each of the accrued amounts to her children and grandchildren. In January 2017, the Department of Human Services (the Department) decided that the amounts transferred remained the applicant’s assets for the purposes of her age pension. The decision was affirmed by an authorised review officer and also the Tribunal at first review. The applicant sought further review and the matter came to the Tribunal for second review.
The applicant deposited $1000 on the birth of each of her five grandchildren into two accounts. The applicant stated she always intended that the funds would go to her grandchildren and that she did not withdraw any funds from the accounts at any stage. The applicant was advised by the Australian Taxation Office and her accountant that the interest she received on the two accounts were part of her taxable income. For that reason, she closed the two accounts and transferred the funds to the control of her children and grandchildren.
The Tribunal had to determine whether the amounts the applicant transferred to her children and grandchildren were her assets for the purposes of calculating her age pension.
The applicant had not contested the way in which her age pension was calculated up until the time the accounts were closed and the amounts transferred. The Department had calculated the rate of her age pension by including the accounts for her grandchildren.
The Social Security Act 1991 (the Act) has special provisions in governing trust funds, but as contended by the Department and acknowledged by the applicant, there was no formal trust arrangement. Therefore, the applicant still had control over the funds, even if she chose not to exercise that control except for her grandchildren’s benefit. The Tribunal was satisfied that up to the time of transfer, the funds in the two accounts remained the applicant’s assets. When the applicant closed the accounts and transferred the funds to her children and grandchildren, she disposed of the assets she previously held. The applicant acknowledged that she did not receive anything in return for the disposal, and therefore this disposal falls within the Section 1123 of the Act.
Subsection 1126AC (2) of the Act provides that the amount to be included in the applicant’s assets was the total amount transferred less the first $10,000. The legislation states that the assets would need to be taken into consideration by the Department when calculating her age pension for five years.
The Tribunal accepted that the applicant did not reduce her assets in order to gain the age pension or increase the rate at which it was paid. However, paragraph 1123(1)(b) of the Act makes it clear that the provisions on disposal of assets are not there just to capture those attempting to “game” the social security system. The Act also intentionally captured all those who reduce their assets through disposal, whatever the motivation or intention.
In recognition of the precise dates on which the funds were disposed of, the Tribunal varied the decision under review and decided that Mrs Forner had deprived assets of:
- $3,237.42 for five years from 13 November 2016; and
- $15,431.59 for five years from 27 December 2016.
Read the full written decision on AustLii.