IVAN KRASEVAC and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

[2009] AATA 824

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 824

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2009/2780

GENERAL ADMINISTRATIVE DIVISION		)
Re		IVAN KRASEVAC

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Mr R G Kenny, Senior Member

Date26 October 2009

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

...................[Sgd].......................

Senior Member

CATCHWORDS

SOCIAL SECURITY – pensions, benefits and entitlements – age pension – cancellation due to exceeding relevant asset level – disregard of encumbrances on assessable assets only – decision under review affirmed.

Social Security Act 1991 (Cth), ss 44, 55, 1064, 1118, 1121
Social Security (Administration) Act 1999 (Cth), s 80

Achkar and Department of Family and Community Services [2001] AATA 684

REASONS FOR DECISION

26 October 2009 Mr R G Kenny, Senior Member    

background

1.      Ivan Krasevac received the age pension from August 2000.  It was paid at a reduced rate because of the value of his assets.  Centrelink cancelled his age pension payments from 23 January 2008 after receiving, on that date, a report from the Australian Valuation Office (“AVO”) concerning the valuation of Mr Krasevac’s property at Manilla Street, Beenleigh.  This was because the value of that property and of Mr Krasevac’s other assets exceeded the level which enabled age pension to be paid to him.  An authorised review officer and, in turn, the Social Security Appeals Tribunal (“the SSAT”) affirmed that decision on 9 February 2009 and 25 May 2009, respectively.

issues and legislation

2.      Age pension is paid in accordance with the Social Security Act 1991 (“the Act”) and the Social Security (Administration) Act 1999 (“the Administration Act”). The rate of age pension is determined under the Pension Rate Calculator A at the end of s 1064 of the Act[1].  In Mr Krasevac’s case, the maximum level of assets, as at 23 January 2008, was $529,250[2].  Where assets exceed that amount, the rate of age pension is nil and age pension is not payable[3].  Where age pension is not payable, it is cancelled[4].  The value of an asset is reduced by the value of any charge or encumbrance over it[5].  The issue for the Tribunal is whether, as at 23 January 2008, the value of Mr Krasevac’s assets was in excess of the applicable limit.

[1] See s 55 of the Act.

[2] See Guide to Australian Government Payments for 1 January to 19 March – Chart A.

[3] See s 44 of the Act.

[4] See s 80 of the Administration Act.

[5] See s 1121 of the Act.

evidence 

3.      It is not disputed that, on 23 January 2008, Mr Krasevac’s assets comprised the land at Manilla Street, Beenleigh; a house and land at Angourie Crescent, Pacific Pines; savings in a bank account in the amount of $2,059; a car valued at $500; and household effects valued at $1,000.  He also owns the unit in which he lives at Thornton Street, Surfers Paradise and this is exempted from the assets test[6]. 

[6] See s 1118 of the Act.

4.      Mr Krasevac purchased the Angourie Crescent land on 3 November 2006 for $171,000.  In January 2009, he sold it, after building a house there, for $453,000.  He was responsible for the construction of the house and financed this with a line of credit and a series of loans.  The first was a $200,000 line of credit from Mortgage House which was secured over his unit at Thornton Street.  This was done before he purchased the Angourie Crescent land.  He then borrowed $132,000 which was secured over the Angourie Crescent land.  His next loan was for $101,060 from Pepper Homeloans which was secured over the Manilla Street land.  At some time in 2009, Mr Krasevac consolidated the two loans with the ANZ Bank.  However, as at 23 January 2008, the two loans for $132,000 and $101,060 were separate and secured as noted above.   

5.      The first AVO report, dated 23 January 2008, valued the Manilla Street land at $715,000.  Further valuations were completed by the AVO on 27 February 2008 and 17 September 2008.  These took into account recent land sales and information obtained from the Gold Coast City Council.  There, the AVO valued the Manilla Street land at $890,000 and $860,000, respectively, as at 23 January 2008.  Also in evidence was a report, dated 11 August 2009, from Propell National Valuers.  It valued the Manilla Street land at $850,000.  Although this report was obtained by Mr Krasevac, he was critical of it for not taking into account the impact of an easement over the land for local council access purposes.

contentions 

6.      Mr Krasevac considered the Angourie Crescent house to have been worth approximately $480,000 in January 2008.  This was based on the amount he expended in building it.  He said that the house sold for about $40,000 less than he had outlaid on it.  He also considered that Centrelink failed to take into account an amount of approximately $200,000 which he had spent on the Angourie Crescent house and which was referrable to the line of credit he had with Mortgage House.

7. Mr R McQuinlan, advocate for the respondent, submitted that Centrelink used conservative values for both properties. For the Angourie Crescent house and land, it was less than the value Mr Krasevac ascribed to it and was reduced by the value of the mortgage over that property. For the Manilla Street land, it was the lowest of all three AVO valuations and considerably below that of the valuation Mr Krasevac had obtained from Propell National Valuers. Mr McQuinlan also submitted that the value of the line of credit could not be relied upon to reduce the value of Mr Krasevac’s assets as it was secured over his own residence which is an exempt asset under the Act.

consideration

8.      Centrelink valued Mr Krasevac’s assets in the following way:

Description	Value	Loan/mortgage	Asset value
The Angourie Crescent house and land	$351,000	$132,000	$219,000
The Manilla Street land	$715,000	$101,060	$613,940
Bank accounts	$2,059	-	$2,059
Car/household effects	$1,500	-	$1,500
Total			$836,499

9. Unusually, in this matter, the values contended by Mr Krasevac would have the effect of increasing the overall value of his assets. Nevertheless, I accept Mr McQuinlan’s submissions. The value ascribed to the Angourie Crescent house and land is less than that sought by Mr Krasevac. The value adopted for the Manilla Street land is the lowest of all valuations in evidence. Mr Krasevac’s criticism of the reports for neglecting the effect of the easement is unfounded. The report he obtained makes specific reference to the easement, as do the later AVO reports. Further, while the Act allows encumbrances to be disregarded when assessing asset valuations, this is only the case where the encumbrance relates to an assessable asset[7].  This does not include Mr Krasevac’s residence and, accordingly, the encumbrance against his unit cannot be taken into account.

[7] See s 1121 of the Act and Achkar and Department of Family and Community Services [2001] AATA 684.

10.     I am satisfied that the values set out in the table above were applicable as at 23 January 2008 and are appropriate in this matter.  That value is in excess of $529,250 which is the limit beyond which age pension may be paid to Mr Krasevac.

decision

11.     The Tribunal affirms the decision under review.

I certify that the 11 preceding paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Senior Member.

Signed:......................[Sgd]........................................................
  Emily Clarke, Associate

Date of Hearing  20 October 2009

Date of Decision  26 October 2009
The Applicant was self-represented
Advocate for the Respondent   Mr R McQuinlan