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[2002] AATA 163
appellant. The Tribunal set aside the decisions under review and determined the Applicant qualifies under Part 3.14A (RAFS). The Tribunal remitted assessment of the Applicant's age pension entitlement, rate...
The Tribunal held that Mrs Irene Cheney qualified under the Retirement Assistance for Farmers Scheme. It interpreted the $500,000 cap in s 1185B(2)(c) as applying to the value of the qualifying interests actually transferred (including equitable interests such as life interests) and not to the value of the whole farm. The Tribunal applied s 1185B(4) to reduce the value of transfers where the transferee already had an interest, concluded the total transferred qualifying interests fell below the $500,000 cap, set aside prior rejections, and remitted assessment of her age pension entitlement, rate and commencement date to the Secretary for recalculation.
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Mrs Irene Cheney, a former partner of a qualifying farmer (her late husband Alfred Cheney), held a half-share legal estate in the farm Koongowa and a life interest in the remaining half. She applied for consideration under the Retirement Assistance for Farmers Scheme (RAFS) on 3 February 2000 and lodged an age pension claim on 15 February 2000 (see Background [9]–[11], [31]). Delegates of the Secretary rejected RAFS consideration (9 March 2000) and the age pension claim (21 March 2000); those decisions were affirmed by an authorised review officer and by the Social Security Appeals Tribunal (SSAT) (see Background [11], [14]).
1 cited instrument linked from this judgment.
Mrs Cheney transferred her half-share legal interest by gift to her son Wayne on 23 June 2000; she renounced her life interest and the remainder was transferred to her four children on 19 December 2000 (see Background [12]–[13], Findings [26]). The AAT hearing was conducted 4 December 2001 and the Tribunal delivered reasons on 14 March 2002 (Decision header).
The factual and valuation stipulations were agreed. Key valuations included: Koongowa vacant possession $708,000; subject to tenancy $639,000; Applicant's life interest valued $75,330; Applicant's half share subject to tenancy valued at $319,500 (half of $639,000); Wayne's asset improvements $13,300; Wayne's contingent legal interest $59,035 (see Other evidence [15]).
Main legal question: whether Mrs Cheney satisfied the statutory conditions in Part 3.14A (in particular s 1185B(2)) so that the transferred qualifying interests would be disregarded for pension entitlement and rate, and how to apply the $500,000 cap in s 1185B(2)(c): did it apply to the whole farm(s) or to the qualifying interests transferred (see Issues [4], Consideration [37]–[38]).
The Tribunal concluded that Mrs Cheney met the statutory conditions, interpreted the $500,000 cap as applying to the value of the qualifying interests transferred (after application of s 1185B(4) where the transferee had a prior interest), set aside the earlier decisions, and remitted the pension assessment to the Secretary (Determination [42]; Reasons [39]–[41]).
Two principal interpretive moves underpin the Tribunal's decision.
Definition of "qualifying interest": s 17A(5) describes a qualifying interest as including "a legal estate or interest" and other categories (shareholder, licence, equitable estate as mortgagor). The Applicant had both a legal estate (half share) and an equitable life interest. The Tribunal rejected a narrow reading that would read into the statute "legal estate and legal interest" and thereby exclude equitable life interests (Reasons [33]–[34]). The Tribunal relied on the plain text and the statutory scheme (including s 1118 addressing life interest valuation) to hold that life interests are within the s 17A(5) concept of qualifying interest when the statutory conditions are met (Reasons [33]–[34]).
Construction of the $500,000 cap: s 1185B(2)(c) requires "the total value for the purposes of this section of the farm or farms, and the relevant farm assets, referred to in paragraph (a) does not exceed $500,000." The parties disagreed whether that meant the total value of the entire farm(s) or the value of the qualifying interests transferred. The Tribunal read the provision in the context of the Part's purpose (s 1185A), to provide that if conditions are met "the value of any such interests transferred ... will be disregarded", and applied s 1185B(4) which prescribes valuation rules (including the reduction where the transferee had an existing qualifying interest). The Tribunal concluded the correct reading is that the $500,000 cap applies to the qualifying interests being transferred (Reasons [27(a)], [37(a)–(g)], [38]).
Applying s 1185B(4), the Tribunal reduced the value of the life interest transfer by the value of Wayne's existing contingent interest, producing a smaller attributable transfer value for the December 2000 transfer (Reasons [37(f)–(g)]). Summed amounts of the transfers, after adjustment, fell below $500,000, so Part 3.14A applied (Reasons [37]–[41]).
Finally, because Part 3.14A applied, transferred qualifying interests are to be disregarded when determining whether a social security payment is payable or at what rate (s 1185A). The Tribunal therefore set aside the rejection and remitted pension assessment to the Secretary under s 1064 and s 1185E (Reasons [39]–[42]).
Before this decision, the statutory text in s 1185B(2)(c) and s 17A(5) left open competing readings about whether the $500,000 cap applied to whole farms or to transferred interests, and whether equitable life interests were excluded. The Tribunal's reasons:
Practically, the decision demonstrates application of s 1185B(4) where transferees already hold qualifying interests, showing how the valuation deduction operates (Reasons [37(d)–(g)]). That interpretation narrows the denominator of the cap and benefits transferors whose transferred interests form only part of a larger farm asset.
The Tribunal's approach is textually grounded and purposive: it reads provisions together (s 1185A, s 1185B(2)–(4), s 17A(5)) and uses agreed valuations to apply the statutory mechanics.
Quoted passage (Reasons [37(a)]): "the plain reading of the subsection nominates that the total value of the farm and relevant farm assets referred to in subsection 1185B(2)(a), namely the qualifying interests in the farm or farms and all the farm assets shall not exceed $500,000;"
Plain-English: The $500,000 limit applies to the qualifying interests and farm assets that the statute actually mentions, that is, the interests being transferred, not automatically to the price of the whole farm.
Quoted passage (Reasons [33]): "The Tribunal concludes that the half share ... transferred to Wayne was the transfer of a legal interest ... The surrender of the life interest (an equitable interest) ... constituted a surrender of an equitable interest."
Plain-English: The Tribunal treated the transferred half-share as a legal property interest and the life interest as an equitable property interest, both of which can be "qualifying interests" under the Act.
Quoted passage (Reasons [34]): "the Tribunal rejects the interpretation ... that the subsection should be read 'legal estate and legal interest' ... a plain reading of the subsection is to be preferred ..."
Plain-English: The Tribunal declined to add words to the statute to narrow 'interest' to only legal interests; equitable interests count where the statutory definition encompasses them.
Quoted passage (Reasons [40(a)]): Asset list at claim lodgement totaling $477,830.
Plain-English: On the day the pension claim was lodged, the Applicant's assessable assets summed $477,830 (half-share $319,500, life interest $75,330, home share $30,000, cash $53,000). This figure underpins the assets test analysis.
This decision is directly relevant where:
an eligible former partner or qualifying farmer transfers part or all of a legal estate and/or equitable interests in farm land during the statutory window (between 14 Sept 1992 and 1 July 2001 in this statutory regime) and seeks RAFS recognition (see s 1185B(2) and Background [6]–[13]);
transferees already possess a qualifying interest in the farm or asset (s 1185B(4) adjustment required; see Reasons [37(d)–(g)]);
the transferor's assets include life interests or other equitable interests where valuation and inclusion/exclusion under s 1118, s 1185D, and Part 3.14A are contested (see Reasons [22], [34], [27(f)]);
resolution depends on whether the $500,000 cap applies to transferred interests only or the whole farm (Reasons [37]–[38]).
Practitioners should compare the facts: timing of transfers, whether transfers were by gift, whether transferees are eligible descendants, valuations of interests, and whether the transferee had a prior qualifying interest.
The decision itself does not record later appellate treatment. The Tribunal's construction was a statutory interpretation by the AAT Member (Dr J D Campbell). Whether a higher court has adopted, rejected or modified this approach is not recorded in the decision. Users should check later cases and legislative amendment history for subsequent authoritative developments or appeals.
Appellate confirmation: The Tribunal's interpretation could be appealed; absent recorded appellate authority in the decision, the question whether a court of higher instance would accept the same construction remains open.
Treatment of trustee interests: The Tribunal treated the Applicant's trusteeship as having nil value here because the trustees were bare trustees (Reasons [25(f)(iii)], [19]). Whether similar trustee arrangements will always attract nil value may depend on facts and subsequent authority.
Interaction with s 1118 valuation and its exceptions: The treatment of life interests under s 1118 was influential here (Reasons [22], [34]). Further litigation could clarify interplay between s 1118 exceptions and Part 3.14A in different fact patterns.
Precise scope of 'qualifying interest': The Tribunal rejected a narrow reading that would require 'legal interest' only (Reasons [34]). But edge cases (e.g. complex equitable rights, licenses, company shareholdings) may present further interpretive challenges under s 17A(5).
Temporal sequencing and provisional commencement (s 1185E): The Tribunal noted that provisional commencement for payment requires both transfer of qualifying interests and a claim (Reasons [40(e)]). Questions about timing (e.g. transfers after claim but before finalisation) could raise practical issues for commencement dates.
Practitioners and decision-makers should verify whether subsequent appellate authorities or legislative changes have altered these interpretations.
This is general legal information, not legal advice. I can make mistakes. Before you act on this, rely on it, or use any draft based on it, get a qualified Australian lawyer to check it.
DECISION AND REASONS FOR DECISION [2002] AATA 163
And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Decision The Tribunal determines that the decision under review be set aside and in substitution therefor determines that: (a) the Applicant qualifies and is eligible for access under the Retirement Assistance for Farmers Scheme pursuant to part 3.14A of the Social Security Act 1991; and (b) in relation to the Applicant's entitlement to age pension, the rate of and commencement date is remitted to the Respondent for assessment pursuant to sections 1064 and 1185E of the Social Security Act 1991 and to the matters mentioned in paragraph 40 of this decision.
SOCIAL SECURITY - Retirement Assistance for Farmers Scheme - qualifying farmer - former partner of a qualifying partner - qualifying interest in a farm - qualifying interest in a farm asset - valuation of farm and farm assets - valuation of a life interest - valuation of a future interest - issue as to whether $500,000 relates to the value of the qualifying interests in the farm and farm assets to be transferred on in the value of the farm and farm assets of which the transferor's qualifying interests are but part - claim for age pension - assets test - date on which provisional commencement date for payment of social security payment
Social Security Act 1991, sections 11, 17A, 55, 1064, 1118, 1185A, 1185B, 1185D, 1185E.
1. In this matter, Mrs Irene Cheney ("the Applicant") seeks a review of the decision of the Social Security Appeals Tribunal ("SSAT") dated 28 November 2000 that affirmed the decisions of authorised delegates of the Secretary, Department of Family Community Services ("the Respondent") dated 9 March 2000 and 21 March 2000 that the proposed arrangement of transferring the Applicant's half share in a farming property would not be a situation in which the Applicant could take advantage of the Retirement Assistance for Farmers Scheme ("RAFS") and to reject the Applicant's claim for age pension respectively. These two decisions were affirmed by an authorised review officer on 19 April 2000.
2. A hearing was held before the Admininistrative Appeals Tribunal ("the Tribunal") on 4 December 2001 at which the Applicant was represented by Mr J Atkin of Counsel. The Respondent was represented by Ms A Smith, an Advocate from the Advocacy and Administrative Law Team at Centrelink.
3. The following material was placed into evidence before the Tribunal:
T1-T30 pp1-135 Documents prepared pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("T-documents")
R1 Letter to Government Actuary from Ms Hampton 11 May 2001
R2 Government Actuary letter to Ms Hampton 12 June 2001
R3 Respondent's Statement of Facts and Contentions 23 August 2001
(a) whether the Applicant satisfies the requirements relating to Retirement Assistance for Farmers (Part 3.14A of the Social Security Act 1991); and
(b) whether the decision to reject the Applicant's claim for age pension is correct.
6. During the period 1946 to 1963 Alfred Cheney was a potato grower and share farmer on his father's farming and grazing properties "Willow Park" and "Killarney" near Barry in NSW. In 1963 Alfred Cheney became one of the registered proprietors of the father's two farming properties on the death of his father. In 1964 Alfred Cheney purchased the farming property known as "Koongowa" near Newbridge in conjunction with his wife Irene Cheney ("the Applicant"). The Applicant and her husband lived and worked at Koongowa until 1978. In 1978 the applicant and her husband moved to 24 Rowlands Street, Blayney because the applicant's husband was suffering from cancer. Mr Alfred Cheney died in 1978.
7. The Applicant remained living in Blayney following the death of her husband, because she was unable to drive. In August 1997, she was moved to Littlewood House at Blayney Hospital because of dementia. She was admitted to Bloomfield Hospital on 3 December 1997 for further assessment and transferred to Calare Nursing Home in January 2000 for permanent full time care.
8. From 1964 up to the time of Mr Cheney's death in 1978, the Applicant and Mr Cheney held a half share each in the property Koongowa as tenants in common. Following her husband's death in 1978, the Applicant continued to own a half share in the property and as a consequence of her husband's will, the Applicant became a trustee for the remaining half share as well as receiving a life interest in that half share. The Applicant and her co-trustees (Wayne Cheney and Mary Dent) held this remaining half share as joint tenants, which on the death of the Applicant is to pass to the four nominated sons and daughters as tenants in common with equal shares (T30).
9. The Applicant at the time of her application for consideration under the Retirement Assistance for Farmers Scheme on 3 February 2000 held the following assets:
* a half share as tenant in common in the property Koongowa;
* a life interest in the other half share in the property Koongowa;
* a one third interest in the house at Blayney, valued at $30,000; and
10. On 15 February 2000 the Applicant lodged a claim for age pension.
11. On 9 March 2000 the Respondent rejected the Applicant's claim for consideration under the Retirement Assistance for Farmers Scheme, and further on 21 March 2000 rejected the Applicant's claim for age pension.
12. On 23 June 2000 the transfer of the Applicant's half share as tenant in common of the Koongowa property was effected and completed to the applicant's son Wayne Cheney (T26, p125).
13. On 19 December 2000 the Applicant's life interest in the remaining half share of the Koongowa property was transferred to the Applicant's two sons and two daughters as tenants in common (T26, p126).
14. On 20 April 2000, an authorised review officer reviewed both decisions and affirmed each of the decisions (T12). The matter was further reviewed by the SSAT and affirmed in a decision dated 28 November 2000 (T2).
15. The Tribunal notes that there have been several valuations of the property Koongowa and the various interests, including a valuation of the Applicant's half share as tenant in common in Koongowa, her life interest in the other half share of Koongowa, the valuation of Wayne Cheney's future remainder interest and the calculation of Wayne Cheney's farm assets. The Tribunal notes that the parties have agreed on the following evaluation figures:
(i) valuation as undertaken by the Australian Valuer-General's Office (T23 at page 100):
(ii) value of the Applicant's life interest as nominated by the Australian Government Actuary is $75,330;
(iii) value of Wayne Cheney's farm assets is $13,300; and
(iv) value of Wayne Cheny's contingent legal interest as nominated by the Australian Government Actuary is $59,035.
(b) Applicant's share of the Blayney house is $30,000 and
16. The Tribunal also noted the existence of an existing Power of Attorney held by the nominated parties.
17. The Tribunal was also advised that the parties agree on the facts and the valuations as nominated. The issues remaining between the parties being essentially an interpretation of section 1185B(2) of the Act and in particular whether the total value ($500,000) of the farm and farm assets relates to the totality of the farm and farm assets in question, or whether it relates to the value of the farm and farm assets being transferred.
18. Counsel for the Applicant, in noting that the intention in the explanatory memorandum accompanying the introduction of the Bill, which became the Social Security & Veteran"s Affairs Legislation Amendment (Retirement Assistance for Farmers) Act 1998 nominated that when applying the means tests to application for the pension, farm and farm assets which have been gifted to eligible descendants during a window of opportunity which was extended to 30 June 2001, would be excluded.
19. Counsel submitted that the principle issue in this matter is determining the value of the property which was gifted by the Applicant. Counsel contends that the relevant valuation consists of:
* one half share in the property Koongowa, which because of an existing lease had a market value of one half of $639,000, namely $319,500;
* a life interest in the other half share of the property Koongowa valued at $75,330;
* a trustee in relation to the other half share of the property at Koongowa, together with two other trustees. Counsel contended that the trustees were bare trustees only and as such this interest would not constitute an asset of any value in relation to the means test.
20. Counsel further submitted that the SSAT had concluded that the total of the Applicant's assets was $471,180 (T2 at p 11), and that this total included qualifying interests in a farm. However in relation to the transferable interests:
(a) that a qualifying interest as defined in section 17A of the Act means a legal estate and interest in a farm not an equitable one (as was the Applicant's life interest in Koongowa);
(b) that there is no requirement for the Applicant to transfer all her qualifying interests in a farm or farms, whereas there is a requirement to transfer all her qualifying interests in farm assets (of which the Applicant has none) pursuant to section 1185B(2) of the Act; and
(c) that the Applicant satisfies the requirements of section 1185B(2)(c) of the Act in that she has transferred assets comprising farm and farm assets on 23 June 2000 to the value of $312,850 and again on 19 December 2000 assets comprising her life interest in a farm to the value of $75,330. Counsel contended that these are the assets that have been transferred to an eligible descendant of the farmer (his son) by the Applicant (an eligible former partner) and are less than $500,000 in value. Counsel further contended that such an interpretation of section 1185B(2) of the Act is in conformity with a plain reading of the section and the intention nominated in the explanatory memorandum, tabled at the same time the Bill was introduced, that is to assist farmers disposing of their assets so as to qualify for pension entitlements.
21. The Respondent, in introductory comments, contended that:
* the Applicant had not transferred any assets at the time she applied for age pension and that her interests in the property at Koongowa as valued formed an assessable asset for the purposes of determining her rate of age pension under s 1064 of the Act; and
* the Applicant is a non-home owner for the purposes of the pensions asset test as she has not lived on the property at Koongowa or at Blayney since 1997.
22. The Respondent noted the value of the Applicant's one half share in the Koongowa property is $312,850, and the value of her life interest in the remainder of the property is $75,330, and further contended that a qualifying interest in a farm as defined in section 17A(5) of the Act relates to both a legal estate or interest. The Respondent relied on the definitions for "interest in land" and " legal estate in land" as nominated in Butterworths Australia Legal Dictionary. The Respondent contended that both the Applicant's half share in the Koongowa and her equitable life interest in the remainder half share in Koongowa fall within such a definition. This is further reinforced in the Respondent's view by section 1118(1) of the Act which states that a life interest is not an exempt asset.
23. The Respondent also contended that the Applicant had not transferred her half share in Koongowa to her son at the time of application for consideration under the Retirement Assistance for Farmers provisions of the Act and that this was not consistent with what was required by section 1185B(2)(a) of the Act.
24. The Respondent further argued that the total value of the farm and the farm assets referred to in section 1185(B)(2)(c) relates to the total value of the farm and farm assets and that this value must not exceed $500,000. The Respondent noted that section 1185B(2)(c) refers back to section 1185B(2)(a) and contended that it is intended there be a clear distinction between a qualifying interest and the farm itself, as the provision in section 1185B(2)(a) relates to a farmer's qualifying interest in the farm.
25. The Tribunal notes that the parties have agreed on the particular facts in this matter and therefore the Tribunal makes the following finding of facts:
(a) Mr Alfred Cheney was a share farmer on his father's properties near Barry in NSW between 1946 and 1963. Mr Alfred Cheney became one of the registered proprietors of his father's two properties in 1963. In 1964 Mr Alfred Cheney purchased a property named Koongowa in conjunction with his wife Irene Cheney, the Applicant, at which they both resided and continued to farm until 1978. In 1978 the Applicant and her husband moved to live in Blayney because Mr Alfred Cheney was suffering from cancer. Mr Blayney died in 1978;
(b) the Applicant remained living in Blayney until 1997 when she was admitted to an annexe at Blayney Hospital because of senile dementia. The Applicant was transferred to Bloomfield Hospital where she remained until she was transferred to Calare Nursing Home in January 2000 for permanent full time care;
(c) the Applicant held a half share in the property in Koongowa as tenant in common from 1964 until 23 June 2000 when it was transferred to a son Wayne Cheney, by way of gift;
(d) the Applicant also held a life interest in the remaining half share of the property Koongowa following the death of her husband. The remaining half share, for which the Applicant had a life interest, was held in trust with the three trustees (being Irene Cheney, Wayne Cheney, and Mary Dent) registered as joint tenants. The life interest held by the Applicant was relinquished on 19 December 2000, with the remaining half share being transferred to the Applicant's two sons and two daughters. Wayne Cheney is one of the Applicant's sons who received a share in Koongowa;
(e) the Applicant made an application for consideration by the Respondent under the Retirement Assistance for Farmers Scheme on 3 February 2000. The Applicant lodged a claim for age pension on 15 February 2000; and
(i) the Applicant's half share as tenant in common of the property Koongowa, which was subject to a tenancy agreement was $319,500, with the total value of the land being $639,000 (Valuation by Australian Valuation Office of 28 September 2000 (T23));
(ii) the Applicant's life interest in the remaining half of the property was valued at $75,330 (Australian Government Actuary (T24));
(iii) the value of the applicant's trustees role in that portion of the estate over which she had a life interest was nil;
(iv) the value of other assets owned by the applicant at the time of application were $30,000 for the one third share of a home at Blayney and $53,000 cash, held in a bank;
(vi) Mr Wayne Cheney, a son of the applicant and her husband, had worked the property Koongowa continuously since the death of his father and had made asset improvements (valued at $13,300). Mr Wayne Cheney also held a contingent interest in the half of the property over which the Applicant had a life interest. The value of Mr Wayne Cheney's future legal interest is $59,035 (Australian Government Actuary).
(a) the one half share held by the Applicant was transferred to Mr Wayne Cheney on 23 June 2000;
(b) the life interest held by Mrs Irene Cheney was relinquished and the remaining half share was transferred to the two sons and two daughters on 19 December 2000 in equal parts as tenants in common.
27. The Tribunal notes the following statutory framework:
(a) transfer of farming interests to family members of a younger generation;
Section 1185A. This Part deals with the transfer of farming interests to family members of a younger generation. The purpose of the Part is to provide that, if the conditions set out in the Part are met, the value of any such interests transferred by a qualifying farmer, his or her partner, or a former partner of the qualifying farmer, will be disregarded in determining:
(a) whether a social security payment is payable; or
(b) at what rate a social security payment is payable.
Part to apply to certain transfers of estates in farms etc.
Section 1185B(2) Subject to subsection (3), this Part also applies to a person if:
(a) at any time after 14 September 1992 but before 1 July 2001, the person, being then an eligible former partner of a qualifying farmer, transferred by way of gift to one, or more than one, eligible descendant of the farmer (either solely to the eligible descendant or jointly to him or her and his or her partner):
(i) his or her qualifying interest in the farm or farms in which he or she had such an interest; and
(ii) all the qualifying interests that he or she had in relevant farm assets; and
(b) the person has reached pension age or will reach pension age before 1 July 2001; and
(c) the total value for the purposes of this section of the farm or farms, and the relevant farm assets, referred to in paragraph (a) does not exceed $500,000; and
(d) during the last 3 years before the transfer was completed, the eligible descendant or each of the eligible descendants:
(i) had been actively involved with the farm or any of the farms; or
(ii) would, in the opinion of the Secretary, have been so involved but for exceptional circumstances beyond his or her control; and
(e) the person satisfies the farmers' income test for the purposes of this Part."
is defined in section 17A(3) of the Act as a person who has had a continuous qualifying interest in a farm for at least fifteen years and the person or the person's partner has contributed significant part of his or her labour and capital to development of the farm, and has derived a significant portion of his or her income from that farm. A qualifying farmer is also alternately defined in section 17A(4) of the Act as an individual who has held a qualifying interest in a farm which was acquired prior to 15 September 1997 and that either the person or the person's partner had been involved in farming in Australia for a continous period of 20 years or for periods that add up to 20 years by contributing a significant part of his or her labour to the farm enterprises as well as receiving a significant part of his or her income from such farm enterprises.
(c) Eligible former partner of a qualifying farmer is defined in section 17A(2) of the Act.
(d) Qualifying Interest in a farm and in a farm asset:
"17A.(5) A person has qualifying interest in a farm if:
(a) the person has a legal estate or interest in the farm; or
(b) the person has a transferable legal right or a transferable licence to occupy the farm for particular purpose of the farm enterprise; or
(c)as the mortgagor of a legal estate or interest in the farm (being an estate or interest that is not registered under a relevant State land law), the person has an equitable estate or interest in the farm; or
(d) the person is a shareholder in a proprietary company that has a legal estate or interest in the farm.
17A.(6) A person has a qualifying interest in a relevant farm asset if the person:
(b) is a shareholder in a proprietary company that has a legal estate or interest in the farm asset."
(e) Value of the farm or relevant farm assets where transferee has a qualifying interest in the farm or farm assets:
"1185B.(4) If a person transfers a qualifying interest that the person has in a farm or a relevant farm asset, then:
(a) if paragraph (b) does not apply-the value for the purposes of this section of the farm or relevant farm asset is its value when the transfer is completed; or
(b) if, immediately before the transfer by the person of his or her qualifying interest in the farm or relevant farm asset, the transferee had a qualifying interest in the farm or relevant farm asset - the value for the purposes of this section of the farm or relevant farm assests is its value when the transfer is completed less the value of the transferee's qualifying interest in it at that time."
(f) Effect of disposal of a qualifying interest in a farm or farm assets:
"1185D.(2) If this Part applies to a person because of subsection 1185B(2), then, subject to subsections (4) and (5), the transfer by the person of his or her qualifying interest in a farm or in a relevant farm asset is taken not to be a disposal of an asset (within the meaning of section 1123)."
(g) Section 1185E of the Act provides the conditions which must exist and this includes the transfer of qualifying interests by the person, with the provisional commencement date being the date on which a claim for benefits is made, the transfer of qualifying interests being a condition precedent.
Section 1064 of the Act sets out the method for calculating the rate of a person's age pension with reference to income and assets. It was noted that at the time of the Applicant's pension claim, the rate of pension for a single non-home owner was reduced to nil if the person's assessable assets exceeded $343,250 with the assets limit for a single home owner at the time was $251,750.
28. With regard to section 1185B(2)(a) of the Act, the Tribunal observes that the following circumstances must exist for the subsection to be satisfied:
(b) the transfer must occur after 14 September 1992 and before 1 July 2001; and
(c) the transferor must be an eligible former partner of a qualifying farmer; and
(d) the transferee(s) must be an eligible descendant(s) together with, but not necessarily so with their partner(s); and
(e) the transferor must transfer by way of gift his or her qualifying interest in farm or farms in which he or she had such an interest; and
(f) the transferor must transfer by way of gift all the qualifying interests that he or she had in relevant farm assets.
29. The Tribunal notes that Mr Alfred Cheney had held a qualifying interest in a farm since 1963 until his death in September 1978. Between 1946 and 1963 he had worked as a potato grower and share farmer on his father's properties during which he contributed a significant part of his labour to farm enterprises and derived a significant part of his income from such farm enterprises.Throughout the period 1963 to 1978 he had contributed a significant part of his labour and capital to the development of the farm(s) and had derived a significant part of his income from those farm(s) as well. The tribunal therefore concludes that Mr Alfred Cheney satisfied the statutory requirements of "a qualifying farmer "as nominated in either section 17A(3) or section 17(4) of the Act.
30. The Tribunal, in noting that the Applicant was the partner of Mr Alfred Cheney, who the Tribunal has concluded was a qualifying farmer at the time of his death, and that the Applicant did not again become a member of a couple and that she has a qualifying interest in the farm in which Mr Alfred Cheney had a qualifying interest, concludes that the Applicant is an eligible former partner of a qualifying farmer pursuant to section 17A(2) of the Act.
31. Further the Tribunal finds that the transfer of both qualifying interests in a farm were undertaken by way of gift on 23 June 2000 and 19 December 2000, with the further recognition that the Applicant had no ownership of any farm assets.
32. Further the Tribunal concludes that the qualifying interests in a farm were transferred by the Applicant to eligible descendants, namely her son Wayne, in relation to the transfer of the qualifying interest in the property Koongaowa on 23 June 2000 and to her four children in relation to the transfer on 19 December 2000.
33. In addressing the issue of the Applicant's qualifying interest in a farm, the Tribunal notes that a qualifying interest includes any legal estate or interest in the farm pursuant to section 17A(5)(a) of the Act. The Tribunal concludes that the half share of the property Koongowa transferred to Wayne was the transfer of a legal interest by the Applicant and as such constitutes a legal estate. The surrender of the life interest (an equitable interest) in the other half of the property Koongowa and the transfer of the remaining half of the property to the four children constituted a surrender of an equitable interest.
34. The Tribunal, in noting the Applicant's ownership of a half share of Koongowa as tenant in common (legal estate) and her life interest in the remainder (equitable estate) concludes that both interests are qualifying interests in terms of section 17A(5)(a) of the Act. In so finding, the Tribunal rejects the interpretation of the subsection proposed by the Applicant that the subsection should be read "legal estate and legal interest". The Tribunal considers that a plain reading of the subsection is to be preferred as any imputed word of "legal" before the word "interest" would be restrictive of the ambit of the intention clearly defined within the Act to transfer interests which clearly are of value and because of the transfer of such valuable assets, the transferor may be able to become a recipient of a social security benefit. Moreover the Tribunal notes that such an interpretation is consistent with section 1118(c)(iii) of the Act which states that the value of any life interest of a person is to be disregarded other than a life interest created on the death of a person's partner, and as such the value of such a life interest is to be included in the value of a person's assets, unless the transfer of the estate in a farm or farm assets falls within section 1185D of the Act. In such circumstances as stated in section 1185D of the Act, the transfer of the asset by way of gift is not taken to be a disposal of an asset, which would have otherwise been subject to section 1123 of the Act.
35. As a consequence of the Tribunal's considerations and findings, the Tribunal finds that the Applicant satisfies subsection 1185B(2)(a) of the Act in that the Applicant satisfies all the necessary requirements nominated in that subsection.The Tribunal also finds that the Applicant had no qualifying interests in farm assets and hence any question of transfer of such assets is not an issue.
36. In further findings, the Tribunal concludes the following:
(a) the Applicant had reached pension age before 15 September 2000 (born 17 January 1914) pursuant to section 1185B(2)(b) of the Act;
(b) the Applicant's total farm and non farm income for the financial years 1996/97, 1997/98 and 1998/99 was $6,952; $6,355; and $12,699 (T15 p 68). As the total of this amount ($26,006) is less than the maximum basic age pension rate during the three test years, the Applicant satisfies the farmer's income test nominated in section 1185K of the Act, and in so doing satisfies section 1185B(2)(e) of the Act.;and
(c) during the last three years prior to the transfer, the eligible descendant Wayne Cheney, had been actively involved with the farm as defined in subsection 1185B(5) of the Act. Accordingly the Tribunal concludes that subsection 1185(B)(2)(d)(i) is satisfied.
37. With regard to subsection 1185B(2)(c) of the Act, the Tribunal makes the following observations:
(a) the plain reading of the subsection nominates that the total value of the farm and relevant farm assets referred to in subsection 1185B(2)(a), namely the qualifying interests in the farm or farms and all the farm assets shall not exceed $500,000;
(b) the assets in this matter pursuant to subsection 1185B(2)(a) of the Act are the Applicant's qualifying interest in the farm(s) and all the qualifying interests she has in relevant farm assets;
(c) section 1185A of the Act details the purpose of the legislation concerning retirement assistance for farmers, namely:
"The purpose of this part is to provide that if the conditions set out in this part are met, the value of any such interests transferred......will be disregarded in determining
(a) whether a social security payment is payable; or
(b) at what rate a social security payment is payable."
(d) section 1185B(4) nominates that unless the qualifying interest in a farm or farm asset is being transferred to a person, who already has a qualifying interest in the farm or farm asset, the value for the purposes of the section of the farm or farm asset is its value when the transfer is completed. In the situation where the transferee has a qualifying interest in the farm or farm assets, the value of the relevant farm and farm assets is the value when the transfer is completed less the value of the transferee's qualifying interest at that time;
(e) in this matter the value of the Applicant's qualifying interests in the farm are :
(i) the half share of the property (legal interest) $319,500
(ii) the life interest in the remaining half share of the property $75,330
(f) pursuant to section 1185(B)(4) the value of the Applicant's qualifying interest in the farm when the transfer is completed is $312,850; a sum of $6,650 having been expended on capital improvements by the transferee, Wayne Cheney to the totality of the property. This is the value relating to the transfer of the Applicant's legal interest when completed on 23 June 2000;.and
(g) the value of the Applicant's life interest, being a qualifying interest in the farm when the transfer is completed is the value of the life interest ($75,330) less the transferee's qualifying interest in the land being transferred, namely $59,035. The value relating to the transfer of the Applicant's life interest when completed on 19 December 2000 was $16,295.
38. The Tribunal, in noting the Respondent's contentions regarding the interpretation of subsection 1185B(2)(c) of the Act, concludes that such an interpretation is inconsistent with a literal interpretation of the subsection, and the clear intention nominated, as well as being inconsistent with the purpose nominated in this part of the Act. In so stating the Tribunal refers to the observations made in the previous paragraph.
39. In addressing the consequences arising as a result of its findings, the Tribunal in noting that the application for consideration under the Retirement Assistance for Farmers Scheme was lodged by the Applicant on 3 February 2000, concludes that the Applicant's claim for consideration under the Retirement Assistance for Farmers satisfies the requirements nominated in Part 3.14A of the Act, and that as such the decision under review should be set aside.
40. In relation to the Applicant's claim for age pension on 15 February 2000, the Tribunal sets aside the decision at paragraph 34 of the SSAT decision dated 28 November and remits the matter to the Respondent to assess the Applicant's entitlement to age pension, the rate of such pension and the variation .of such pension, if any and the date there of in the light of the following facts and considerations:
(a) at the time of lodgement of application for age pension, the Applicant had the following assets with the following values:
(b) following the transfer of the qualifying interest (half share in farm) to her son on 23 June 2000, the Applicant continued to own the following assets with the following values:
These total assets following transfer of qualifying interest in the farm on 23 June 2000 to her son is $158,530;
(c) while the renouncement of a life interest by the Applicant and transfer of the remainder interests did not occur until 19 December 2000, the Tribunal considers that this event has no bearing on the assessment as to eligibility or rate of the Applicant's age pension as the Applicant was not a member of a couple or home owner at the time in question and does not exceed the assets value limit;
(d) the Tribunal would also comment that there is no requirement under section 1185B(2)(a) of the Act that the Applicant transfer all her qualifying interests in a farm where as there is a necessity under subsection 1185B(2)(a)(ii) that all the qualifying interests in farm assets must be transferred: and
(e) section 1185E determines the provisional commencement day for the payment of a social security payment (subsection (d) through to (g)) and such a date can only be set once there has been a transfer of qualifying interests (subsection 1185E(b)) and a claim for social security payment has been made (subsection 1185E(g)).
41. In summary the Tribunal concludes that the Applicant does qualify and is eligible for consideration under the Retirement Assistance to Farmers Scheme pursuant to Part 3.14A of the Act in that the total value of her qualifying interests in the farm which were transferred to an eligible descendant does not exceed $500,000. The Tribunal further concludes that her entitlement to and the rate of age pension is to be assessed in accordance with section 1064 of the Act, with the provisional commencing day for payment of such pension to be set in accordance with section 1185E of the Act.
42. The Tribunal determines that the decision under review be set aside and in substitution there for determines that:
(a) the Applicant qualifies and is eligible for access under the Retirement Assistance for Farmers Scheme pursuant to Part 3.14A of the Act; and
(b) in relation to the Applicant's age pension, the entitlement to, rate of and commencement date is remitted to the Respondent for assessment pursuant to section 1064 and 1185E of the Act and to the matters mentioned in paragraph 40 of this decision.
I certify that the 42 preceding paragraphs are a true copy of the reasons for the decision herein of Dr J D Campbell, Member
Signed: .....................................................................................
The Tribunal set aside the decisions under review and determined the Applicant qualifies under Part 3.14A (RAFS). The Tribunal remitted assessment of the Applicant's age pension entitlement, rate and commencement date to the Respondent for reassessment under ss 1064 and 1185E, applying the Tribunal's valuation findings (Determination [42]; Reasons [39]–[41]).