Akamas and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2012] AATA 162 (15 March 2012)

Last Updated: 15 March 2012

[2012] AATA 162

Division: GENERAL ADMINISTRATIVE DIVISON

File Number(s) 2011/3525

Re	JOHN AKAMAS
	APPLICANT
And	SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
	RESPONDENT

DECISION

Tribunal	Ms A F Cunningham (Senior Member)
Date	15 March 2012
Place	Hobart

The decision under review is affirmed.

[Sgd Ms A F Cunningham]
Ms A F Cunningham (Senior Member)

CATCHWORDS

SOCIAL SECURITY - age pension –overseas resident- disposal of property in Australia for no consideration - application of provisions relating to deemed income - applicant claimed he not owner of the property - Tribunal found deemed income provisions applied - decision under review affirmed

LEGISLATION

Social Security Act 1991, ss 9, 1064, 1076, 1081, 1082, 1123, 1126AA

Social Security (Administration) Act 1999, s 79

Administrative Appeals Tribunal Act 1975

REASONS FOR DECISION

Ms A F Cunningham (Senior Member)

1. The applicant, John Akamas, seeks the review of a decision of the Social Security Appeals Tribunal (SSAT) dated 28 July 2011, which affirmed a Centrelink decision reducing his rate of age pension from 13 September 2010 following the transfer of a property at Vaucluse in New South Wales (the property) to his children.
2. Mr Akamas resides in Cyprus and both parties agreed that the Tribunal would determine the appeal on the basis of the written material before it. The material includes Mr Akamas’ written application for review dated 16 August 2011 and subsequent correspondence dated 7 September 2011, 19 October 2011, 29 November 2011, the T Documents submitted pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the AAT Act), the Secretary’s Statement of Facts and Contentions, list of authorities and final submissions.
3. It is Mr Akamas’ contention that the decision to reduce the rate of his age pension on the basis of a transfer of the subject property to his children is incorrect because his daughter, Stavri Akamas, has been the owner of the property since its purchase.

BACKGROUND FACTS

4. The Tribunal accepts the following which appear to be undisputed facts:
   • (i) Mr Akamas has been in receipt of age pension since 23 January 1977.
   • (ii) The property was purchased in 1978 and registered in the joint names of John Akamas and his former wife Androulla Akamas.
   • (iii) On 30 July 2010 title to the property was transferred to Mr Akamas’ children, Nicolaos and Stavri Akamas for no consideration (see T1 and T12).
   • (iv) From the time of purchase until the title transfer on 30 July 2010, the property was tenanted pursuant to a tenancy agreement and Mr Akamas and his former wife received the market value rental as income.
   • (v) At 22 January 2010 the property was valued at $400,000.00 (T3/9) and Mr Akamas’ share of the rent was assessed at $5,150.00 per annum (T21/79).
   • (vi) On 13 September 2010 Centrelink received advice from Mr Akamas that the property had been transferred to his children and that no money had changed hands. Mr Akamas asked that the rental income from the property be no longer assessed against his pension (T5/12).
   • (vii) Centrelink decided that Mr Akamas had disposed of an asset without receiving adequate consideration and that the value of that disposal should be assessed in determining Mr Akamas’ rate of pension (T5/12 and T21/58 and 59).
   • (viii) The value of the property was deemed to be earning interest of $7,900.00 per annum and assessed as income against Mr Akamas’ age pension (T21/60 and 81). As the interest was more than the rent $5,150.00, it resulted in a reduction of Mr Akamas’ age pension.
   • (ix) Mr Akamas appealed to the Authorised Review Officer (ARO) who affirmed the decision on 11 March 2011 (T13/26).
   • (x) On 28 July 2010 the SSAT also affirmed the decision (T2/4).
   • (xi) Mr Akamas appealed to the AAT on 16 August 2011 (T1).

CONTENTIONS

5. It is Mr Akamas’ contention that the value of the property should not be considered in the assessment of his age pension because the property did not belong to him. He maintained that his brother, Andreas Akamas, contributed towards the purchase of the property on behalf of his god-daughter Stravi Akamas. Mr Akamas claims that his bank manager advised that title to the property could not be registered in his daughter’s name because she was under age at the time of the property’s purchase. The property was accordingly registered in the joint names of Mr Akamas and his former wife. Mr Akamas submits that he is being discriminated against as in Cyprus his pension would be unaffected by the transfer of property to children for no consideration.
6. It is submitted on behalf of the Secretary that the Tribunal is limited to a consideration of the application of the provision of the Social Security Act 1991 (the Act) that relates to deemed income from the disposal of financial assets. Mr Akamas has previously contended that the asset value of the property or its income should not be taken into account in the assessment of his age pension on the basis that the property belongs to his daughter.
7. It was submitted that an earlier decision of the SSAT in 2008 decided that Mr Akamas was joint owner with his former wife in the property and that 50% of the income (rent) was to be assessed against his age pension (T2/7 at 12). Mr Akamas appealed the decision of the SSAT to the AAT and an order was entered by consent pursuant to section 42C of the AAT Act varying the decision of the SSAT by reducing the amount of the debt.
8. It is contended on behalf of the Secretary that the SSAT’s decision regarding Mr Akamas’ ownership of the property was subsequently endorsed by the AAT.
9. Mr Akamas had previously claimed that the property was owned by his daughter when seeking the review of a decision of Centrelink to include rental income received from the property in calculating his rate of age pension.
10. The Secretary submits that whilst part of the debt was waived, the decision of the AAT entered with the consent of the parties otherwise affirmed the SSAT’s finding regarding ownership of the property. It is submitted that the evidence is that Mr Akamas was a registered proprietor jointly with his wife and exercised ownership rights over the property in that he let it and received the rent and entered into a residential tenancy agreement in which he was named as the landlord. It is contended that on the basis of the order entered by the AAT, the SSAT’s finding that there was no dispute over ownership of the property was confirmed.

DISCUSSION

11. The two issues raised by Mr Akamas were firstly, with respect to ownership of the property and secondly, the fact that under the law in Cyprus, the gift of the property to his children would not be taken into account in the assessment of his age pension.
12. The International Agreement between Australia and Cyprus provides that the laws of Australia apply with respect to the payment of an Australian age pension to a person who is outside Australia (Article 2 and Article 9).
13. With respect to ownership of the property, despite Mr Akamas’ contention that the property did not belong to him, the weight of the evidence before the Tribunal suggests that Mr Akamas was both the legal and the beneficial owner of the property. The former decision of the SSAT was based on the rental income received by Mr Akamas. Apart from contending that he was a joint owner of the property, Mr Akamas did not dispute that he received the rental income. Mr Akamas submitted no evidence that his children received the rental income during the relevant period. He did contend that he forwarded his Cyprian pension to his daughter because she was unable to work due to psychological problems. However this is not a relevant issue in these proceedings.

ISSUES

14. The issue for the Tribunal to determine is whether all or part of the value of the property transferred by Mr Akamas to his children should be assessed in determining the rate of his age pension pursuant to the deemed income provisions of the social security legislation.

LEGISLATION AND FINDINGS

15. The applicable law is the Social Security Act 1991 and the Social Security (Administration) Act 1999. There was no argument that the applicant meets the qualification provisions for the payment of age pension. The rate of a person’s age pension is worked out in accordance with the Pension Rate Calculator A at the end of section 1064 of the Act. This calculator takes into account a person’s ordinary income and assets. The deemed income from a person’s financial assets is taken into account in accordance with the provisions of section 1076 of the Act which states that a person who has financial assets is taken to receive ordinary income on those assets in accordance with this section.
16. Sub-section 1076(3A) provides that where the total value of the person’s financial assets exceeds the person’s deeming threshold, the ordinary income that the person is taken to receive is worked in accordance with the stated method statement. Section 1081 provides that the deeming threshold for a person who is not a member of a couple is $39,400.00.
17. Section 9 of the Act defines financial assets which includes deprived assets. A deprived asset is defined by sub-section 9(4) as an asset disposed of by the person, where the value of that asset must be included in the person’s assets by the operation by a number of different sections contained in Division 2 of Part 3.12 of the Act. The applicable section that applies to Mr Akamas’ circumstances is section 1126AA.
18. Section 1123 provides (in part) that a person “disposes of an asset” if the person disposes of the asset and receives no consideration in money or money’s worth. It was Mr Akamas’ evidence that he disposed of the property and received no consideration in money or money’s worth for the property.
19. Section 1126AA provides that where the disposal of an asset is the only one in an income year that the value of the disposal is the amount by which it exceeds $10,000.00. Mr Akamas’ transfer of his share of the property, (being one half of the valuation at $400.000.00) to his children was the only disposal in that income year. Thus the amount to be taken into account is $190,000.00 and must by definition as a deprived asset be treated as a financial asset, subject to the deeming provision of section 1076 of the Act.
20. There was no contention that the Secretary’s assessment of the reduction of Mr Akamas’ rate of age pension was incorrect and the Tribunal is satisfied that it was correctly calculated in accordance with the relevant provisions of the Act, namely sections 1076, 1081, 1082 and 1064-A1.
21. Sections 79 of the Administration Act provides that where a person is receiving a higher rate of payment than provided for by the Act then the rate must be reduced to the rate provided for under the Act.

CONCLUSION

22. On the basis of the Tribunal’s findings as outlined above and its consideration of the applicable legislative provisions, the Tribunal determines that the original decision to reduce Mr Akamas’ age pension be affirmed.

I certify that the preceding 22 (twenty two) paragraphs are a true copy of the reasons for the decision herein of Ms A F Cunningham (Senior Member).

[Sgd R Hunt]
Administrative Assistant

Dated 15 March 2012

Date(s) of hearing

Hearing on the papers