Kang and Secretary, Department of Social Services (Social services second review) [2019] AATA 758 (26 April 2019)

1. The Applicant received a DSP commencing 19 April 1985 and continued to receive the DSP until it was cancelled on 4 December 2014 when the delegate of the Respondent decided to cancel the Applicant's DSP and raise a debt of $163,426.44 in respect of the Debt Period.
2. The delegate of the Respondent determined that the Applicant was not entitled to any DSP payments during the Debt Period based on a finding that the Applicant's assets exceeded the requisite threshold under the Social Security Act 1991 (Cth) (the Act).
3. The Decision turned on the conclusion of the delegate that the assets of a discretionary trust known as the Kang Family Trust (the Trust) established by the Applicant's father, should be attributed to the Applicant personally pursuant to s 1207X of the Act.
4. The Applicant sought a review of the delegate's decision on the basis that the Applicant was not the sole beneficiary of the Trust and should not be attributed the whole of the assets of the Trust. The review, undertaken by an ARO, an independent officer of the Department of Human Services, affirmed the Decision.
5. The Applicant applied to the Social Security Appeals Tribunal (SSAT) for review of the Decision affirmed by the ARO. Shortly after the application was made the SSAT merged with the Tribunal and became the Social Services and Child Support Division of the Tribunal. Under transitional provisions, the review application lodged with the SSAT was deemed to be an application for Tribunal first review (AAT1). On 17 July 2015 the Tribunal affirmed the Decision (T2).
6. On 28 August 2015 the Applicant applied to the General Division of the Tribunal under

s 179(1) of the Social Security (Administration) Act 1999 (Cth) (the Administration Act) for a review of the AAT1 decision (AAT2). For the purposes of s 179(1) of the Administration Act, if the AAT1 affirmed the decision being reviewed in the AAT1, the AAT1 decision to be reviewed in the AAT2 review is the decision as affirmed in the AAT1. In the present case that is the Decision. 7. On 21 October 2016 the Tribunal affirmed the Decision and found the Applicant's DSP was correctly cancelled and decided to attribute 100% of the value of the Trust assets to the Applicant. The Tribunal remitted the decision pertaining to the quantum of the debt for recalculation (the Tribunal's Prior Decision). 8. On 18 November 2016 the Applicant filed a Notice of Appeal with the Federal Court of Australia appealing the Tribunal's Prior Decision. 9. On 4 August 2017 the Federal Court allowed the Applicant's appeal and set aside the Tribunal's Prior Decision (Kang v Secretary Department of Social Services [2017] FCA 895) (Kang). The Federal Court made the following relevant orders: * (a) The application be allowed and the decision of the Tribunal be set aside; and * (b) The matter be remitted to the Tribunal for determination in accordance with law. 10. The Federal Court relevantly found that the Tribunal had failed to take into account relevant considerations, namely, the Social Security (Attributable Stakeholders and Attribution Percentages) Principles 2017 (Cth) (the Attribution Principles), when exercising its discretion pursuant to s 1207X(2) of the Act (see paragraph [73] of Kang). The Respondent conceded the Tribunal's failure.

1. The following facts are taken from the Applicant's Statement of Facts, Issues and Contentions dated 18 December 2015. The Respondent did not dispute the facts (see 4 of Respondent's Statement of Facts, Issues and Contentions dated 15 February 2016):
   • (a) The Applicant was born in April 1968.
   • (b) The Applicant resides at [omitted], East Fremantle, Western Australia (the Property). The Property is owned by the Trust.
   • (c) The Trust was created by Deed dated 4 December 1987 between Robert William Hemphill as the Settlor and Vameze Pty Ltd (Vameze) as Trustee (the Trust Deed) (see [10] of Statement of Duncan Kang) .
   • (d) Vameze is still the trustee of the Kang Family Trust. The present director of Vameze is Duncan Kang. Duncan Kang was appointed a director on 18 May 1989. There is no secretary of Vameze. The capital of Vameze is two fully paid ordinary shares. Duncan Kang is the holder of one share. Pablo Chiho Kang, the Applicant's other brother, is the holder of the other share.
   • (e) Chong Soo Kang (the Applicant's father) was formerly a director of Vameze. Chong Soo Kang ceased as a director of Vameze on 18 May 1989. Chong Soo Kang was only a director of Vameze for approximately 18 months.
   • (f) Vameze became the registered proprietor of the Property on 28 January 1988.
   • (g) The Applicant, Duncan Kang and Duk-Kyong Kang, the Applicant's mother, reside at the Property. Duncan Kang has resided at the Property since 1989. The Applicant and the Applicant's mother have resided there since 1998.

1. The matter was heard on 13 December 2018. The Applicant was represented by his brothers, Duncan Kang and Pablo Kang and the Respondent was represented by Mr Ashley Burgess of Sparke Helmore. Oral submissions were made by both parties.

1. The following documents were admitted into evidence in the matter in the first hearing of the application prior to the Tribunal's Prior Decision:
   • Applicant's Statement of Contentions in Response to the Respondent's Statement of Facts, Issues and Contentions dated 29 March 2016 (Statement of Contentions) (Exhibit A2);
   • Applicant's Statement of Facts, Issues and Contentions dated 18 December 2015 (Exhibit A3);
   • Statement of Duncan Kang dated 13 September 2016 with attachment (Exhibit A4);
   • Statement of Dr David Alan Nelson dated 9 August 2016 (Exhibit A5);
   • Minutes of a meeting of the Trustee of the Kang Family Trust held at East Fremantle WA on 27 June 2014 (Exhibit A6); and
   • Copy of Transfer of Land made under the Transfer of Land Act 1893 (WA) and associated documents relating to the sale of Hoil Chon Heights, Karnup on 4 September 2013 (Exhibit A7).
2. The following documents were also before the AAT2 at the time of the Tribunal's Prior Decision:
   • Respondent's Statement of Facts, Issues and Contentions dated 15 February 2016 with attachment (Exhibit R2); and
   • Tribunal documents produced pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) (T1-T18) (Exhibit R5).
3. The following documents were admitted into evidence at the hearing on 13 December 2018:
   • Applicant's Outline of Submissions dated 30 July 2018 and the Deed document (Exhibit A9); and
   • Respondent's submissions dated 3 September 2018 with Annexures A and B (Exhibit R4).
4. The Tribunal also had before it the Supplementary Tribunal documents produced pursuant to s 37 of the AAT Act (ST1-ST2) (Exhibit R3).

1. The role of the Tribunal in such a review is to determine for itself what is the correct and preferable decision: see Shi v Migration Agents Registration Authority [2008] HCA 31; (2008) 235 CLR 286 (Shi). The Tribunal is not limited to reviewing the decision for legal or other error, but rather conducts its own de novo assessment and determination of the matter. Its role is 'to "do over again" what the original decision maker did': see Yao v Minister for Immigration and Border Protection (2014) 140 ALD 21at [41] per Perry J (White and Wigney JJ agreeing), referring to Shi at [100] (per Hayne and Heydon JJ) and at [37] (per Kirby J). See also Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 at [589] and reference to that case in CMHV and Director-General of Security and Minister for Foreign Affairs [2017] AATA 1547 at [37].

1. The first issue is to determine what the nature of this Tribunal's task is as a result of the orders made by the Federal Court. Whatever the basis or limited point on which the Federal Court found the Tribunal to have erred when this matter was before it last time, the effect of the orders made by the Federal Court is that the whole of the Tribunal's Prior Decision has been set aside and the matter has been remitted for determination by this Tribunal.
2. In Dunstan and Comcare [2012] AATA 567; (2012) 130 ALD 370 (Dunstan), Deputy President Forgie, with Member Dr B Hughson, made the following observations on the nature of the task to be undertaken by the Tribunal in these circumstances:
   1. On the remittal of a matter from the Federal Court, the tribunal is bound to decide what has been remitted to it and cannot reconsider what has not been remitted. There may be a difference between remitting "the matter" and remitting "the case". This arose for consideration in Repatriation Commission v Nation. [[1995] FCA 1277; [1995] FCA 1277; (1995) 57 FCR 25; 21 AAR 351; Black CJ, Jenkinson and Beaumont JJ]. On appeal to Mansfield J, his Honour had ordered that the Tribunal's decision be set aside and the matter be remitted to the Tribunal to be heard and determined according to law. On appeal from that judgment to the Full Court of the Federal Court, Beaumont J, with whom Black CJ and Jenkinson J agreed, noted that the order was made within the power conferred by s 44(4) of the AAT Act even though it referred to the "matter" rather than the "case" as provided for by s 44(5). Justice Beaumont observed that, in his opinion:

... the language of the order of remitter was susceptible of more than one meaning. The word "matter" could have meant the whole question being the determination of the respondent's claim for a further pension. But it could also have meant the specific dispute then agitated before the Court, that is, the sequelae issue. Although "matter" is sometimes used, in the constitutional sense, to describe the whole of the dispute dealt with by the judicial process, the language of the Veterans' Act indicates that, in other contexts, "matter" can have a narrower meaning. For instance, as has been noted, by s 18(1), it is provided that it is the duty of the Commission, inter alia, to determine all "matters" relevant to the determination. By s 18(2), certain provisions are made where the Board, the Tribunal or a court makes a decision remitting to the Commission "a matter" being the assessment of the rate of the pension, or the fixing of the date from which a decision is to operate.

[Repatriation Commission v Nation [1995] FCR 25 AAR 360 at [43]]

His Honour did not discuss the meaning of the word "case" and how it differs from a reference to "matter".

1. The powers of the Federal Court when hearing an appeal from the tribunal were considered by the Full Court of the Federal Court in Minister for Immigration and Ethnic Affairs v Gungor [[1982] FCA 99; [1982] FCA 99; (1982) 63 FLR 441; Fox, Fisher and Sheppard JJ]:

... Implicit in its powers are a number of restrictions. The appeal is expressly limited to error of law, which alleged error is the sole matter before this Court and is the only subject matter of any order made consequent on the appeal. The order which this Court can make after hearing the appeal is also similarly restricted to an order which is appropriate by reason of its decision. It follows that the only order which can be properly made is one the propriety of which is circumscribed by and necessary to reflect this Court's view on the alleged or found error of law. To go further I would see as amounting to exceeding the jurisdiction of this Court under this section.

... There is certainly no power to supervise the Tribunal in any other way and in particular to deal with the merits of the review. The error of law alleged has to be isolated out, a decision made on this question of law, and such order made and directions given as are appropriate only to the decision of this question of law, and not to the decision under review by the Tribunal."

1. The Tribunal's role in considering a case that has been remitted was considered by the Full Court of the Federal Court in Blackman v Commissioner of Taxation [1993] FCA 345; (1993) 43 FCR 449; 26 ATR 118; Sweeney, Keely and Gray JJ (Blackman). On appeal from a decision of the tribunal, Jenkinson J had decided that the decision was based upon an error of law in that it was inconsistent with a concession made in the hearing by Mr Blackman's counsel and upon which the Commissioner for Taxation (Commissioner) had conducted his case. His Honour had remitted the case to the Tribunal which accepted the Commissioner's submission that it should rehear the matter entirely. On appeal a second time, Mr Blackman submitted that the Tribunal had erred in law in concluding that it was open to it to make such findings of fact as appeared to it to be correct and without regard to the findings of the first Tribunal.
2. The Full Court rejected Mr Blackman's submission and accepted instead that of the Commissioner. Sweeney J, with whom Keely J agreed, said:

In my opinion this proposition is not well founded. The history of the matter shows clearly that the second Tribunal was free to decide the case upon the material put before it in accordance with the law including, of course, the propositions of law in the reasons for judgment of Jenkinson J.

1. The essential reasoning underpinning a conclusion of this sort when no order is made other than that to remit a matter is found in the judgment of the Full Court in Morales v Minister for Immigration and Multicultural Affairs [[1998] FCA 334; [1998] FCA 334; (1998) 82 FCR 374; 154 ALR 51; 51 ALD 519; 26 AAR 548; Black CJ, Burchett and Tamberlin JJ] when it said:

The order setting aside the AAT decision meant that there was no operative AAT decision and that a determination had to be made by the AAT. The remittal order required "the matter" to be dealt in accordance with law. The reference to "law" is of course a reference to the judgment of his Honour together with the relevant statutory and common law.

1. Having outlined Gray J's explanation in Blackman of the principles underpinning this reasoning at [209], Deputy President Forgie in Dunstan summarises the position as follows:
   1. We will not canvass other authorities that are relevant. Instead, we summarise what seem to us to be the particular propositions they establish:

(1) the Tribunal must determine the scope of its powers on a remittal by reference to the order made by the remitting Court:

(a) where the order is ambiguous or vague, it is permissible to have regard to extrinsic material including the reasons for judgment;

(2) the Tribunal is bound by the law as determined by the remitting Court; and

(3) unless the terms of the Federal Court's remittal require otherwise, the Tribunal is not bound by the findings of fact or concessions made by the Tribunal which heard the application on an earlier occasion:

(a) the Tribunal may choose to adopt findings of fact made by an earlier Tribunal or as stated by the Federal Court if to do so is not contrary to its fact finding duty; and

(b) consistent with its duty to find facts, the Tribunal may accept facts as agreed between the parties or conceded by one or other of them.

1. The Tribunal also refers to Dennis Pearce, Administrative Appeals Tribunal (Lexis Nexis Butterworths, 4th ed, 2015) at 13.47 wherein the learned author observed:

Depending upon the nature of the court's order, the facts in question and the attitude of the parties, it may not be necessary to rehear all of the evidence but the responsibility for the findings lies on the new AAT: Blackman v Federal Commissioner of Taxation [1993] FCA 345; (1993) 30 ALD 346; Nation v Repatriation Commission (No.2)(1994) [1994] FCA 1536; 37 ALD 63; Re McLean and Repatriation Commission [2000] AATA 504...

1. While the effect of the Federal Court's decision is that the whole of the Tribunal's Prior Decision is set aside, the appeal in the Federal Court and the proceedings before this Tribunal proceeded on the basis that only certain findings or omissions in the Tribunal's Prior Decision were to be determined. The Federal Court also made certain findings which would bind this Tribunal. Insofar as the Applicant did not raise issue with the Tribunal's Prior Decision either in the appeal to the Federal Court or in his submissions, written or oral, this Tribunal accepts the findings of the Tribunal's Prior Decision and accepts the parties' statements of facts as set out in their respective submissions. In that regard the parties' respective statements of facts are not materially different. The difference between the parties is as to the proper construction of the legislative provisions relating to those facts.
2. The matters of contention in the Tribunal's Prior Decision which went on appeal to the Federal Court, and which were agitated at the hearing in this matter, were the Tribunal's failure to determine the question of whether the Applicant should be an attributable stakeholder of the Trust under s 1207X(2)(c) of the Act and whether there was any basis to determine that his asset attribution percentage should be other than 100% under

s 1207X(2)(d) of the Act having regard to the Attribution Principles. It is those issues that fall for determination in the application before the Tribunal.

1. Part 3.18 of the Act creates a process whereby the assets and income of a private trust or private company may be treated as being attributed to an individual for the purposes of the Act. Pursuant to s 1208E of the Act, the value of an individual's assets includes the value of assets owned by a trust to the extent that an 'asset attribution percentage' is applicable. Section 1208E provides:

(a) an individual is an attributable stakeholder of a company or trust at a particular time on or after 1 January 2002; and

(b) at that time, the company or trust owns a particular asset (whether alone or jointly or in common with another entity or entities); and

(c) if, at that time, that asset had been owned by the individual instead of by the company or trust, the value of the asset would not be required to be disregarded by any express provision of this Act; and

(d) at that time, the asset is not an excluded asset (see subsection (2));

there is to be included in the value of the individual's assets an amount equal to the individual's asset attribution percentage of the value of the asset referred to in paragraph (b).

Note: For attribution of the assets of a special disability trust, see section 1209Y.

Excluded assets

(2) The Secretary may, by writing, determine that, for the purposes of the application of subsection (1) to a specified individual and a particular company or trust, a specified asset is an excluded asset.

(3) A determination under subsection (2) has effect accordingly.

(4) In making a determination under subsection (2), the Secretary must comply with any relevant decision-making principles.

(1) For the purposes of this Part, a trust is a designated private trust unless:

(a) all of the following conditions are satisfied:

• (i) the trust is a fixed trust;

• (ii) the units in the trust are held by 50 or more persons;

• (iii) the trust was not created, continued in existence or operated under a scheme that was entered into or carried out for the sole or dominant purpose of enabling any individual or individuals to avoid the application of this Part and/or Division 11A of Part IIIB of the Veterans' Entitlements Act; or

(b) the trust is a complying superannuation fund (see subsection (3)); or

(c) the trust is an excluded trust (see subsection (4)).

(2) For the purposes of subparagraph (1)(a)(ii), an individual and his or her associates are taken to be one person.

(1) For the purposes of this Part, a trust is a controlled private trust in relation to an individual if the trust is a designated private trust and:

(a) the individual passes the control test set out in subsection (2); or

(b) the individual passes the source test set out in subsection (3).

(2) For the purposes of this section, the individual passes the control test in relation to a trust if:

(a) the individual, or an associate of the individual (other than an associate covered by paragraph 1207C(1)(j)), is the trustee, or any of the trustees, of the trust; or

(b) a group in relation to the individual was able to remove or appoint the trustee, or any of the trustees, of the trust; or

(c) a group in relation to the individual was able to vary the trust deed or to veto the decisions of the trustee; or

(ca) it could reasonably be expected that the trustee of the trust would make an application of the corpus or income of the trust to the individual if the individual could not meet his or her reasonable costs of living (within the meaning of subsection 19C(5)); or...

(a) a trust is a controlled private trust in relation to an individual; and

(b) the trust is not a concessional primary production trust in relation to the individual (see section 1208U);

(c) the individual is an attributable stakeholder of the trust unless the Secretary otherwise determines; and

(d) if the individual is an attributable stakeholder of the trust - the individual's asset attribution percentage in relation to the trust is:

• (i) 100%; or

• (ii) if the Secretary determines a lower percentage in relation to the individual and the trust - that lower percentage; and

(e) if the individual is an attributable stakeholder of the trust - the individual's income attribution percentage in relation to the trust is:

• (i) 100%; or
• (ii) if the Secretary determines a lower percentage in relation to the individual and the trust - that lower percentage.

(5) In making a determination under this section, the Secretary must comply with any relevant decision-making principles.

1. The starting point for the exercise is establishing that the Trust is a controlled private trust under s 1207V(1) of the Act. The Tribunal's Prior Decision found that the Trust was a controlled private trust although it did not specify which control test or tests under

ss 1207V(2)(a), 1207V(2)(b) or even 1207V(2)(ca) of the Act was, or were, satisfied. The Respondent had contended that all three control tests under ss 1207V(2)(a), (b) and (ca) of the Act were satisfied (T1 at [37]). In the end there was no need for that Tribunal to make that call as the Applicant had conceded that he passed the control test under

s 1207V(2)(a) of the Act at least. Paragraph B1.(b) of the Applicant's Contentions in Response to Respondent's Statement of Facts, Issues and Contentions dated

29 March 2016 filed prior to the original hearing was as follows (A2, B1(b)):

(b) The issue is whether the Kang Family Trust is a controlled private trust within the meaning given by section 1207V. For the reasons outlined in paragraph 2(c)(i) following, the Kang Family Trust is a controlled private trust. However, the Kang Family Trust is a controlled private trust because of the strict terms of the Act.

1. Paragraph 2(c)(i) of the Applicant's submissions of 29 March 2016 relevantly conceded that:

The trustee of the Kang Family Trust, Vameze Pty Ltd. is an associate of the Applicant (and accordingly paragraph 1207V(2)(a) applies) only because of the extended definition of associate in paragraph 1207C(I)(e) and (k)(ii) and by the application of section 1207D(b). That is, a relative of the Applicant (the Applicant's brother, Duncan Kang) is an associate of the Applicant and is an "entity" [who] sufficiently influences Vameze Pty Ltd. the trustee of the Kang Family Trust. It is a very technical and convoluted way of establishing that the Applicant passes the control test in relation to the Kang Family Trust.

1. It was noted by McKerracher J in Kang at [11] that it was 'common ground between the parties that the Trust is a "controlled private trust" as defined in subs 1207V(1) of the Act and there has been no suggestion that the Trust is a "concessional primary production trust" as defined in s 1208U of the Act.' The Tribunal's Prior Decision finding that the Trust was a controlled private trust was not subject to the appeal to the Federal Court. Although it is not specifically conceded by the Applicant in these proceedings, the Tribunal does not understand the Applicant to dispute that the Trust is a controlled private trust for the purposes of s 1207V(1) of the Act. The Tribunal finds that to be the case in any event. It is also the Tribunal's understanding that it is not contended by the Applicant that the Trust is a concessional primary production trust. Again, the Tribunal finds that to be the case.
2. At [12] of his judgment, McKerracher J says that ‛[h]aving satisfied para (a) and para (b) of subs 1207X(2)', (subsection (a) being that the Trust is a controlled private trust and subsection (b) being that it is not a concessional primary production trust) the section 'gives the decision maker the discretion to:
   • (a) determine whether the individual is not an attributable stakeholder of the trust; and
   • (b) determine whether, in the event that the individual is an attributable stakeholder, whether the individual's asset attribution percentage in relation to the trust will be either 100% or a lower percentage.'
3. In other words, as the Trust is a controlled private trust and is not a concessional primary production trust, the Applicant is an attributable stakeholder ‛unless the [Tribunal] otherwise determines' (s 1207X(2)(c)of the Act).

Is there any basis to determine that the Applicant is not an attributable stakeholder?

1. McKerracher J at [13] of Kang observes that:

There are no express criteria under the Act setting out when a person who is an attributable stakeholder should be determined to be otherwise, or when a person's asset attribution percentage should be determined to be lower than 100%. However, subs 1207X(5) of the Act provides that in making a determination under s 1207X, the respondent 'must comply with any relevant decision-making principles'. It is also common ground between the parties that the relevant decision-making principles are the Social Security (Attributable Stakeholders and Attribution Percentages) Principles 2000 (Cth) (the Attribution Principles).

(Original emphasis.)

1. Part 2 of the Attribution Principles governs the exercise of discretion in determining that an individual is not an attributable stakeholder. Section 5 of the Attribution Principles states the following purpose:

This Part sets out decision-making principles with which the Secretary must comply in making a determination, under paragraph 1207X(1)(a) or (2)(c) of the Act, that an individual is not an attributable stakeholder of a company or trust.

1. Sections 6 to 11 and 13 of the Attribution Principles set out various matters which the Respondent (and the Tribunal on review) must consider in the exercise of that discretion. The following principles are relevant to this matter:

(1) This Part applies if, but for a determination by the Secretary, the individual would be an attributable stakeholder of the company or trust.

(2) The Secretary must consider the relationship between the individual and the company or trust having regard to:

(a) the reason why, but for a determination, the individual would be an attributable stakeholder; and

(b) the circumstances mentioned in this Part.

(3) In particular, the Secretary must consider whether the effect of one or more of the circumstances mentioned in this Part, in relation to the individual and the company or trust, provides a sufficient basis on which to determine that the individual is not an attributable stakeholder of the company or trust.

7 Circumstances affecting relationship with company or trust

(1) The Secretary must consider whether there are relevant circumstances that make it inappropriate for the individual to be an attributable stakeholder of the company or trust.

(2) For subsection (1), relevant circumstances include the extent to which the relationship between the individual and the company or trust is affected by any of the following circumstances:

(a) circumstances arising from the legal structure of the company or trust;

(b) circumstances arising from the administrative arrangements of the company or trust;

(c) whether, having regard to the relationship between the individual and the company or trust, the individual can reasonably be expected to exercise effective control in relation to the company or trust.

If the individual has made a contribution to the company or trust, the Secretary must consider the circumstances in which the contribution was made and, in particular:

(a) the value of the contribution; and

(b) the proportion that the value of the contribution has to the total assets of the company or trust at the time of the contribution; and

(c) the effect of the contribution on the financial position of the company or trust; and

(d) if the individual received consideration for the contribution, the amount of consideration.

9 Past benefit from distributions by company or trust

(1) The Secretary must consider whether the individual has received a benefit from a distribution made by the company or trust.

(2) If an individual has received a benefit, the Secretary must also consider:

(a) the value of the benefit; and

(b) (b) if the individual has received a benefit on more than 1 occasion, the frequency with which the individual has received benefits.

(3) For this section, a distribution includes distributions:

(a) in the case of a distribution by a company - of the capital or income, or both, of the company; and

(b) in the case of a distribution by a trust - of the corpus or income, or both, of the trust.

10 Future benefit from distributions by company or trust

(1) The Secretary must consider whether it is reasonably foreseeable that the individual may receive a benefit from a future distribution by the company or trust.

(2) If subsection (1) applies, the Secretary must also consider the likely value of the benefit.

(3) For this section, the Secretary must have regard to:

(b) documents, if any, establishing the terms of the trust.

(4) For this section, a distribution includes distributions:

(a) in the case of a distribution by a company - of the capital or income, or both, of the company; and

(b) in the case of a distribution by a trust - of the corpus or income, or both, of the trust.

11 Benefit from assets and income of company or trust

(1) The Secretary must consider whether the individual receives or derives any kind of benefit (other than a benefit mentioned in section 9 or 10) from the assets or income, or both, of the company or trust.

(a) is not limited to a benefit to which the individual has a legal or equitable entitlement; and

(b) includes benefits received or derived in the form of property or services.

(1) The Secretary must consider whether the individual is:

(a) under the Act - an attributable stakeholder of any other company or trust; or

(b) under the Veterans' Entitlements Act 1986 - an attributable stakeholder of the company or trust, or of any other company or trust.

(2) If subsection (1) applies, the Secretary must also consider:

(a) the asset attribution percentage attributed to the individual, if any; and

(b) the income attribution percentage attributed to the individual, if any.

The Secretary must consider any other circumstance that affects the involvement of the individual with the activities or the administration of the company or trust

1. As the Respondent notes in her submissions (R1, 6.10), s 1207X(2)(c) of the Act 'does not create an onus of proof. The practical operation of the provision is that the Tribunal must consider whether it should determine that the Applicant should not be an "attributable stakeholder". If the Tribunal is left is [sic] a state of doubt, then the Applicant remains an "attributable stakeholder"'. The Respondent cites McDonald v Director-General of Social Security (1984) 1 FCR 354. The Tribunal agrees that that is a correct statement of the operation of s 1207X(2)(c) of the Act.

Attribution Principles - Section 6

1. The Respondent points to what she says are ‛multiple reasons why, but for a determination, the Applicant is an "attributable stakeholder"' (R1, 6.13(a)). These reasons include the fact that the Applicant's brother, Duncan Kang, is the Trustee of the Trust and that therefore the control test under s 1207V(2)(a) of the Act is met. It is submitted by the Respondent that this is more than a ‛mere technical matter' because the brother, Duncan Kang, is also the housemate of the Applicant and closely involved in the Applicant's affairs. The Tribunal assumes that the reference to the control test under s 1207V(2)(a) being satisfied is not ‛merely technical', is a response to the assertion in the Applicant's submissions of 29 March 2016 referred to at [29]-[30] above (A2, 2(c)(ii)). While at one level the Respondent's point may seem circular, that is relying on the circumstance that caused the Applicant to be an attributable stakeholder under s 1207X(2)(c) of the Act in the first place as a reason for him not to be 'otherwise determine[d]' for the purposes of the same section, the Tribunal agrees that the Applicant passing the control test under

s 1207V(2)(a) of the Act by virtue of the trustee of the Trust being an ‛associate', namely his brother, Duncan Kang, is not, as the Applicant submits, ‛a very technical and convoluted way of establishing that the Applicant passes the control test' (A2, 2(c)(i)). On the contrary, the fact that the Applicant's brother is effectively the trustee of the Trust is precisely the sort of association and circumstance that s 1207V(2)(a) of the Act is meant to include in the control test. 2. In this regard a significant proportion of the submissions made by the Applicant, both oral and written, argued that the Applicant had no control over the trust because of his severe mental incapacity. Those submissions are, in the Tribunal's view, misguided and confuse control and the ‛control test' for the purposes of s 1207V(2) of the Act with control in the ordinary sense of that word. That, however, is the purpose of s 1207V(2) of the Act, to define ‛control' of a trust for the purposes of the Act to go beyond the normal meaning of the word control and to include in that concept such things as the trustee of the Trust being an associate of the individual, or control for the purposes of s 1207V(1) of the Act including the situation of the individual being reasonably expected to receive corpus or income in the future. That is not a ‛technical' way of passing the control test, it is the precise circumstance that the legislation intends to cover to establish an attributable stakeholder for potentially attributing assets of a trust to the individual under s 1208E of the Act. 3. The Respondent also points to the Applicant passing the control test for the purposes of ss 1207V(2)(b) and (ca) of the Act (R1, 6.13(a)). While the Tribunal understands that the Applicant argues against the Applicant passing the control tests under subsections (2)(b) and (ca), the Tribunal, for reasons set out later in this decision, is of the view that it could be reasonable to expect that the Trust would make an application of corpus or income to the Applicant if the Applicant could not meet his reasonable costs of living, therefore passing the control test under s 1207V(2)(ca) of the Act. Again, this is not merely a ‛technical' application of a section which renders an unfair or unintended consequence, it is precisely the sort of circumstance which the legislation intends to cover. 4. The Respondent's submissions (R1, 6.13(c)) refer to the Tribunal's Prior Decision and the reference therein to the evidence of Duncan Kang when his attention was drawn to the AAT1 decision which stated:

[43] During cross-examination, the Respondent drew Mr Duncan Kang's attention to paragraph 27 of AAT1's decision, which states:

Mr Duncan Kang wrote in a letter to Department [sic] on 27 November 2012:

"Mr Chong Soo Kang's disabled son's name is Hoil kang [sic]. He is one of the beneficiaries of the trust. The remaining beneficiaries of the trust are Mr Kang's other children only. The properties held by the trust are used for recreational purposes for his disabled son. However there is an unwritten understanding that if these properties are sold the proceeds are to be used to the benefit of his disabled son."

[44] Mr Duncan Kang agreed that he did say that at the time.

1. The Applicant seeks to address this point in paragraphs 18-20 of his submissions dated 30 July 2018 as follows (A1):
   1. So on what remaining basis could the respondent argue that it is reasonably foreseeable that the applicant may receive a benefit from a future distribution of the Trust? It would appear that the sole grounds for the Tribunal's previous rulings that the applicant is a 100% attributable stakeholder of the Kang Family Trust are based on testimony given by the Father, not in these proceedings, but to the Tribunal (differently constituted) in support of the Father's separate claim to an age pension.

The Father told that Tribunal that his sole purpose in establishing the Trust was to make sure that the applicant would be provided for after the Father had passed away and to avoid disputes over the Father's will that might jeopardise the applicant's welfare in the future.

1. The Applicant's submissions then quotes the passage from Duncan Kang's letter dated 27 November 2012 cited in [41] above and goes on to submit (A1, 19-20 and 23):
   1. Centrelink and the Tribunal appear to have relied exclusively on these testimonies in determining that the applicant is the sole beneficiary of the Kang Family Trust and therefore a 100% attributable stakeholder. Without knowing the full reasoning behind the Tribunal's previous decisions, we can only conclude that the Tribunal preferred this testimony over the actual terms of the Trust Deed, if indeed the Tribunal considered the terms of the Trust Deed at all.
   2. ... Even if we accept the testimonies on their face value - although they were made in other proceedings and in the context of supporting an age pension claim - there is nothing to stop the Trustee from deciding to reconsider the initial intention in establishing the Trust and, in so doing, change the Trust's purpose to focus on beneficiaries other than the applicant.

1. The applicant concedes that the testimonies given in support of the Father's age pension claim could and should have been worded differently. For example, if the Kang Family Trust had been set up to avoid disputes over the Father's will and guarantee financial security for the applicant, the terms of the Trust Deed do not give effect to any such intention.
2. The Tribunal appreciates that the primary submission that the Applicant is seeking to make in the above submissions is that the Tribunal needs to take into account the terms of the Trust Deed rather than the evidence of the actual purpose of the Trust. However, to seek to dismiss the unequivocal statements made by the Applicant's father to the Tribunal reviewing his pension cancellation and the statement to the Department by the Applicant's brother, Duncan Kang, who is in effect the trustee of the Trust, as being ‛made in other proceedings and in the context of supporting an age pension' and 'that the testimonies given in support of the Father's age pension claim could and should have been worded differently' (A1, 23) must be rejected. The proposition seems to be that Chong Soo Kang and Duncan Kang can say one thing when it suits their purpose in arguing for the maintenance of Chong Soo Kang's age pension and say something different when it suits another purpose. The statements made by Chong Soo Kang and Mr Duncan Kang are not open to interpretation because of the ‛context' in which they were made; they are unequivocal statements that were made to the Department or to Tribunal and can be taken as true and accurate. This Tribunal so takes those statements.
3. The Tribunal finds that the considerations raised by s 6 of the Attribution Principles do not weigh in favour of the Applicant not being an attributable stakeholder.

Attribution Principles - Section 7

1. The Respondent acknowledges (R1, 6.13(h) of submissions) the findings of the Federal Court as outlined at [81] in Kang where McKerracher J stated that 'it is clear the applicant does not have effective control of the Trust' (R1, 6.13(h)). The Respondent, however, refers to a number of cases to support the proposition that ‛effective control' is just one consideration. The Respondent submits (R1, 6.13(h)(i)):

In Re Secretary, Dept of Families, Housing, Community Services and Indigenous Affairs and Egberts [2007] AATA 2102 the applicant was a person with an intellectual disability and the Tribunal in considering the Attribution Principles stated as follows:

[40] In respect of the Principles, it is correct to say that it is necessary to have regard to the degree of control exercised by the Respondent. But this is one element only. All of the other elements point towards a 100 percent attribution. The terms of the Trust are such that only the Respondent can benefit. There is nothing in the evidence which can, or does, defeat this design. Moreover, that there is a lack of control on the part of the Respondent arises, apart from any other considerations, from the fact that the Trust is a discretionary trust. The Respondent would be in exactly the same position if, as the only discretionary object of the Trust, she were not handicapped.

1. The Tribunal also notes that while s 7 of the Attribution Principles requires consideration of the circumstances affecting the individual's relationship with the Trust, one of those circumstances is whether the individual exercises ‛effective control' in relation to the Trust (s 7(2)(c) of the Attribution Principles), the fact that the Applicant does not exercise effective control (which the Tribunal accepts is the case) cannot be, and is not, determinative. The whole point of the control tests under s 1207V(2) of the Act is that the individual is to be treated as ‛controlling' the trust if he or she ‛passes the control test set out in subsection (2)' (s 1207V(1)(a) of the Act). The circumstances identified in the various control tests under s 1207V(2), in particular s 1207V(2)(ca) of the Act, are clearly meant to cover more than actual or effective control. The fact that the Applicant may not be in ‛effective control in relation to' the Trust is a matter to be taken into account along with all of the other circumstances identified in Part 2 of the Attribution Principles, however, it cannot, of itself, mean that he should therefore be determined to be other than an attributable stakeholder under s 1207X(2)(c) of the Act. That would defeat the purpose of the various control tests under s 1207V(2) of the Act.
2. It is a circumstance, however, to which the Tribunal has regard, in combination with the other considerations raised in Part 2 of the Attribution Principles, including the fact that the structure of the Trust (s 7(2)(a)) and the administrative arrangements of the Trust

(s 7(2)(b)) do not favour the Applicant over other beneficiaries, in determining whether the Applicant should be considered to be other than an attributable stakeholder.

Attribution Principles - Section 8

1. The Respondent accepts that the Applicant has not made a contribution to the Trust and submits that this is a neutral factor in considering whether the Applicant is an attributable stakeholder (R1, 6.13 (j)).
2. The opening words of s 8 of the Attribution Principles are ‛If the individual has made a contribution to the company or trust'. The consideration is not whether the individual has made a contribution to the company or trust. Where there has been no such contribution

s 8 has no application. Rather than it being a neutral factor s 8 is a consideration that does not arise. 3. Whether this consideration is treated as the Respondent suggests, as neutral

(R1, 6.13(j)), or whether it is treated as not having any application because no contribution was made, the result is that it is not a factor which would weigh in favour of the Applicant being determined under s 1207X(2)(c) of the Act to be other than an attributable stakeholder.

Attribution Principles - Section 9

1. Distribution is, relevantly, defined in s 9(3) of the Attribution Principles as follows:
   • (a) ...
   • (b) in the case of a distribution by a trust - of the corpus or income, or

1. The Respondent accepts the Applicant has not received past benefit from distributions from the Trust but submits that this is only because the Applicant was in receipt of DSP. She therefore submits that this principle weighs in favour of the submission that the Applicant is an attributable stakeholder (R1, 6.13(l)).
2. How the fact that the Applicant has not received past benefits from distributions weighs in favour of the Applicant being considered an attributable stakeholder is not explained by the Respondent. The Tribunal finds that argument hard to follow given the purpose of

Part 3.18 of the Act ‛...sets up a system for the attribution to individuals of the assets and income of private companies and private trusts...' (simplified outline). In that light the Tribunal understands this consideration in s 9 of the Attribution Principles to be indicating that if there have been previous distributions, this is a factor which would weigh against determining that the individual was not an attributable stakeholder. 3. Again, however, it is simply one factor to be taken into account in determining whether the Applicant should be determined not to be an attributable stakeholder notwithstanding he meets the requirements of s 1207X(2)(a) and (b) of the Act.

Attribution Principles - Section 10

1. The Applicant submits, in effect, that it is not reasonably foreseeable that the Applicant may receive a benefit as it ‛would patently jeopardise his Disability Support Pension entitlement' (A1, 27).
2. The Respondent argues that the Trust was established for the sole purpose of ensuring that the Applicant was provided for. The expectation of the Applicant's father, mother and brother, (the Trustee), is that the Trust will provide for the Applicant. There is an

‛unwritten understanding' that if any Trust properties are sold, the proceeds will be used for the Applicant's benefit (A1, 18; R2, 17.4). The Respondent relies on the evidence given to the Tribunal in the original hearing and points to the Tribunal's Prior Decision. The Respondent refers to [43]-[44] of the Tribunal's Prior Decision (see [41] above) and then continues to cite that decision as follows:

[45] I also drew Mr Duncan Kang's attention to paragraph 26 of the AAT1 decision which referred to information Mr Chong Soo Kong [sic] had given to the Department and repeated in sworn evidence in a separate matter before the Social Security Appeals Tribunal (SSAT) in 2014, Choo [sic] Soo Kang and Secretary and Chief Executive Centrelink SSAT 2014/PO66159 (20 May 2014) (T5 page 51). Paragraph 26 of the AAT1 decision reads:

Mr Chong Soo Kong [sic] previously advised the Department and the tribunal that his sole purpose in establishing the Kang Family Trust was to make sure that his son Mr Ho Kang, who has an intellectual disability, would be provided for after he, Mr Chong Soo Kang, was no longer around. Mr Chong Soo Kang said that Mr Ho Kang who is now 45 years hold [sic] has an intellectual age of four or five years old. Mr Chong Soo Kang said he wanted to avoid disputes over his will that might jeopardise Mr Ho Kang's welfare in the future.

[46] Mr Duncan Kang conceded that that was an accurate representation of what his father had told the SSAT hearing in 2014, but said that evidence was given in the context of his father's aged pension claim.

1. The Respondent also relies on the Applicant's submissions which relevantly state as follows (A1, 16; R1, 6.13(q)):

[16] For example, upon the sale of one of the Trust properties in October 2013 (valued at $580,000 as of January 2013) the Kang Family Trust's accountant, in accordance with instructions from the Trustee, made no distributions to the applicant from this sale. The vast majority of the sale proceeds were distributed to Duncan Kang, and accordingly he paid personal tax on those distributions. This was prior to the decision to cancel the applicant's Disability Support Pension.

1. The Respondent submits that the direction to not distribute proceeds from the above sale to the Applicant was purely because the Applicant was in receipt of DSP at that time as the sale occurred 'prior to the decision to cancel the Applicant's DSP' and had the Applicant not been in receipt of DSP then the Applicant would have received income distributions from the above sale (R1, 6.13(q)).
2. The Respondent submits therefore it is 'reasonably foreseeable' that the Applicant may receive a benefit from a future distribution from the Trust and this principle weighs heavily in favour of the submission that the Applicant is an attributable stakeholder (R1, 6.13(r)).
3. While the Tribunal does not necessarily agree with the Respondent's above argument, the Tribunal does believe that it is reasonably foreseeable that the Applicant may receive a benefit from the Trust. The test is not whether it is reasonably foreseeable that he

will receive a benefit, but rather whether it is reasonably foreseeable that he may receive a benefit. It is, in the Tribunal's view, hard to argue that it is not reasonably foreseeable that the Applicant may receive a benefit given the Applicant's father's evidence that 'the sole purpose in establishing the Trust was to make sure that the Applicant would be provided for after the father had passed away' (see [42] above) and, as Mr Duncan Kang put it, the 'unwritten understanding that if these properties are sold the proceeds are to be used to the benefit of his disabled son' (see [41] above). 4. The Applicant's argument that it is not reasonably foreseeable that the Applicant may receive a benefit from a future distribution appears to be based predominantly, if not solely, on the proposition that there will not be a future distribution because that would impact the Applicant's entitlement to the DSP. The fallacy in that argument is that it assumes that things will remain as they are now, in particular the law relating to the impact of income on DSP entitlement and the needs of the Applicant. It is accepted that the Applicant is severely disabled. He is presently looked after by his mother and his brother, Duncan Kang. It is, however, reasonably foreseeable that this may change. The Applicant's need may become greater as he gets older or his mother, who is herself obviously elderly, may not be able to look after the Applicant. In those circumstances, the DSP may not be able to cover the cost of caring for the Applicant in which case it is reasonable to assume that the trustee of the Trust, the Trust set up for the benefit of the Applicant, will apply the assets or income of the Trust for the benefit of the Applicant. Not to do so would be in breach of the purpose for which the Trust was set up. 5. The Applicant also places significance on the fact that the Trust is a discretionary trust and that the Applicant does no more than come within the class of beneficiaries. In that regard the Applicant points to s 10 of the Attribution Principles and the requirement to have regard to the documents establishing the Trust. The fact that the Trust is a discretionary trust is not, in the Tribunal's view, significant in considering the Attribution Principles. As was pointed out to Duncan Kang at the hearing, the Attribution Principles are drafted primarily to address how assets and income of discretionary trusts are to be treated. If the trust was not discretionary but rather directed the trustee how, to whom and how much of the income or corpus was to be distributed, then there would largely be no need for the Attribution Principles. It would simply be a matter of looking at the terms of the trust instrument. The Attribution Principles are created for the purpose of addressing attribution of income and corpus under discretionary trusts. It is therefore not an argument to say that there cannot be attribution of assets and income because the trust in question is discretionary. The following exchange took place at the hearing (Transcript, P-8):

[DEPUTY PRESIDENT]: So, I suppose that is the point, isn't it really, Mr Kang? Clearly if it's a specific trust with a nominated beneficiary with nominated distributions or winding up with the trust and distribution of the assets at a point to identify beneficiaries, then this would never be an issue because you would just go straight to it. So, the attribution principles, I think, are only dealing with discretionary trusts. Would that be a characterisation that you think would be correct?

[MR P KANG]: Yes, I would agree with that, Deputy President, and that's why if you look at the principles and then look also at the guidelines that support those principles, in relation to a discretionary trust, one of the key factors is the issue of control, which is a point that we have been arguing for quite some time in terms of the applicant not having it. In relation to the case that the respondent's referred to...

1. The above argument about control of the trust being the critical consideration is, as noted earlier in these reasons, in the Tribunal's view, misconceived. While in a number of the cases to which reference was made control was the relevant issue, the Applicant's emphasis on control being the critical consideration, and by control the Applicant refers to actual control, overlooks the sections in the Act, in particular s 1207V(2) of the Act, which cause an individual to be an attributable stakeholder when he or she clearly does not have control of the trust. Similarly, the Attribution Principles are largely considering factors other than control such as receipt of benefit or possible future receipt of benefit, to determine whether a person who qualifies as an attributable stakeholder under s 1207X(2) of the Act because they satisfy s 1207X(2)(a) and s 1207X(2)(b) of the Act should be determined to be other than an attributable stakeholder.
2. The Tribunal is satisfied for the reasons set out above that it is reasonably foreseeable that the Applicant may receive a benefit from a future distribution by the Trust.

Attribution Principles - Section 11

1. The Respondent submits that the Tribunal must also consider whether the Applicant receives or derives any kind of benefit (other than a benefit mentioned at ss 9 or 10 of the Attribution Principles) and submits that the Applicant has received the ongoing benefit of living in the house owned by the Trust since 1998. The Respondent submits that 'benefit' includes benefits received or derived in the form of property or services and the provision of a principal place of residence for the Applicant is a substantive benefit.
2. The Respondent submits that this principle weighs heavily in favour of the submission that the Applicant is an attributable stakeholder.
3. There was discussion at the hearing as to how the family home is to be treated given that it were in the Applicant's name it would be not be treated as an asset for the purpose of calculating the Applicant's entitlement to DSP. The Respondent submitted that while that may be the case, the fact is that the Applicant did receive a benefit from the Trust in that he resided in the house, albeit with other beneficiaries of the Trust.
4. The Tribunal agrees that the benefit that the Applicant derives from living in the house owned by the Trust is a relevant consideration and weighs in favour of the Applicant being considered an attributable stakeholder under s 11 of the Attribution Principles. The issue of how that part of the Trust's assets would be attributed, if at all, against the Applicant for the purposes of s 1208E of the Act is a different issue.

Attribution Principles - Section 12

1. The Respondent accepts that the Applicant is not an attributable stakeholder of any other company or trust and the Secretary submits that this is a neutral factor in considering whether the Applicant is an attributable stakeholder. The Tribunal agrees.

1. The starting point for the consideration under s 1207X(2)(c) of the Act is that, unless there is some reason to treat the Applicant as not being an attributable stakeholder notwithstanding that he is an attributable stakeholder by virtue of the Trust being a controlled trust (s 1207X(2)(a)) of the Act and the Trust not being a concessional primary trust (s 1207X(2)(b)), then the Applicant is an attributable stakeholder. Taking into account the matters set out in the Part 2 of the Attribution Principles it is the Tribunal's view that there is no reason why the operation of ss 1207X(2)(a) and (b) of the Act, causing the Applicant to be an attributable stakeholder should be displaced. In particular, for the reasons set out above, the Tribunal finds that it is reasonably foreseeable that the Applicant may receive a benefit from a future distribution by the Trust. The fact that the Applicant may not come within the operation of other sections of Part 2 of the Attribution Principles does not alter the applicability of s 10 indicating that the Applicant should be treated as an attributable stakeholder, or more correctly, not to be treated as other than an attributable stakeholder under s 1207X(2)(c) of the Act.

Is there any basis to determine that the Applicant's 'asset attribution percentage' should be lower than 100% under s 1207X(2)(d) of the Act?

1. Part 3 of the Attribution Principles sets out the decision making principles to apply in making a determination under ss 1207X(1)(b)(ii) and 1207X(2)(d)(ii) of the Act (s 14 of the Attribution Principles). The relevant principles are:

14 Purpose

This Part sets out decision-making principles with which the Secretary must comply in making a determination, under subparagraph 1207X(1)b)(ii) or (2)(d)(ii) of the Act, that an attributable stakeholder's asset attribution percentage, in relation to a company or trust, is a specified percentage lower than 100%.

15 Application

(1) This Part applies if, but for a determination by the Secretary, the asset attribution percentage of the attributable stakeholder, in relation to the company or trust, would be 100%.

(2) The Secretary must consider the relationship between the individual and the company or trust, having regard to the circumstances mentioned in this Part.

(3) In particular, the Secretary must consider whether the effect of one or more of the circumstances mentioned in this Part, in relation to the individual and the company or trust, provides a sufficient basis on which to determine a percentage lower than 100% as the asset attribution percentage.

16 Circumstances affecting relationship with company or trust

(1) The Secretary must consider whether there are relevant circumstances that make it inappropriate for the individual to have an asset attribution percentage of 100%.

(2) For subsection (1), relevant circumstances include the extent to which the relationship between the individual and the company or trust is affected by any of the following circumstances:

(a) circumstances arising from the legal structure of the company or trust;

(b) circumstances arising from the administrative arrangements of the company or trust;

(c) whether, having regard to the relationship between the individual and the company or trust, the individual can reasonably be expected to exercise effective control in relation to the company or trust and, if so, the extent of that control.

17 Contribution to company or trust

If the individual has made a contribution to the company or trust, the Secretary must consider the circumstances in which the contribution was made and, in particular:

(a) the value of the contribution; and

(b) the proportion that the value of the contribution has to the total assets of the company or trust at the time of the contribution; and

(c) the effect of the contribution on the financial position of the company or trust; and

(d) if the individual received consideration for the contribution, the amount of consideration.

18 Past benefit from distributions by company or trust

(1) The Secretary must consider whether the individual has received a benefit from a distribution made by the company or trust.

(2) If an individual has received a benefit, the Secretary must also consider:

(a) the value of the benefit; and

(b) if the individual has received a benefit on more than 1 occasion, the

frequency with which the individual has received benefits.

(3) For this section, a distribution includes distributions:

(a) in the case of a distribution by a company - of the capital or income, or both, of the company; and

(b) in the case of a distribution by a trust - of the corpus or income, or both, of the trust.

19 Future benefit from distributions by company or trust

(1) The Secretary must consider whether it is reasonably foreseeable that the individual may receive a benefit from a future distribution by the company or trust.

(2) If subsection (1) applies, the Secretary must also consider the likely value of the benefit.

(3) For this section, the Secretary must have regard to:

(a) the constituent documents of the company; or

(b) documents, if any, establishing the terms of the trust.

(4) For this section, a distribution includes distributions:

(a) in the case of a distribution by a company - of the capital or income, or both, of the company; and

(b) in the case of a distribution by a trust - of the corpus or income, or both, of the trust.

20 Benefit from assets and income of company or trust

(1) The Secretary must consider whether the individual receives or derives any kind of benefit (other than a benefit mentioned in section 18 or 19) from the assets or income, or both, of the company or trust.

(a) is not limited to a benefit to which the individual has a legal or equitable entitlement; and

(b) includes benefits received or derived in the form of property or services.

(1) The Secretary must consider whether the individual is:

(a) under the Act - an attributable stakeholder of any other company or trust; or

(b) under the Veterans' Entitlements Act 1986 - an attributable stakeholder of the company or trust, or of any other company or trust.

(2) If subsection (1) applies, the Secretary must also consider:

(a) the asset attribution percentage attributed to the individual, if any; and

(b) the income attribution percentage attributed to the individual, if any.

1. As can be seen from the above, the principles in Part 3 to be applied in determining whether the Attributable Stakeholder's asset attribution percentage should be less than 100% are in very similar terms to the principles in Part 2 applicable to determining whether the attributable stakeholder should be determined to be otherwise than an attributable stakeholder.
2. That being the case, the same factual circumstances that the Tribunal set out above in applying the principles identified in Part 2 of the Attribution Principles apply to the principles set out in Part 3.

Attribution Principles - Section 15

1. In the context of determining whether the Applicant should be attributed with lower than 100% of the assets of the Trust, the fact that he is only one of a class of beneficiaries and others have received a benefit or may foreseeably receive a benefit weigh in favour of the Applicant being attributed less than 100% of the assets of the Trust. These considerations are dealt with below in relation to the other applicable sections of Part 3 of the Attribution Principles.

Attribution Principles - Section 16

1. The Tribunal refers to [46]-[48] above.
2. The Respondent submits (R1, 6.20(b)) as follows:

...there are no circumstances affecting the Applicant's relationship with the Kang Family Trust which make it inappropriate for him to have a 100% attribution percentage. The Principles refer to the legal structure of the Trust, the "administrative arrangements" of the Trust, and whether "the individual can reasonably be expected to exercise effective control in relation to the ... trust". The Secretary relies on the submissions at paragraph 6.13(h) in support of this submission.

1. It is not clear how the Respondent's submissions at 6.13(h) of her submissions, which are set out in [46] above, support the Respondent's submission to the effect that the Applicant's asset attribution percentage should be 100%. Insofar as s 16(2)(c) of the Attribution Principles is directing the decision-maker to consider whether the individual exercises effective control in relation to the trust, which must be taken as being distinct from merely passing one of the control tests under s 1207V(2) of the Act, it must be taken to be suggesting that the individual not exercising effective control is a factor weighing in favour of the asset attribution percentage being lower than 100%.
2. It is not disputed that the Applicant does not ‛exercise effective control in relation to the ...trust'. The Tribunal accepts that, in accordance with s 16(2)(c) of the Attribution Principles, this fact weighs in favour of the Applicant's asset attribution percentage being lower than 100%.
3. Similarly, the fact that the Trust is a discretionary trust with no particular direction or statement of objective which would favour the Applicant over other beneficiaries would, applying the principles set out in ss 16(2)(a) and 16(2)(b) of the Attribution Principles, weigh in favour of the Applicant's asset attribution percentage being less than 100%.

Attribution Principles - Section 17

1. The Tribunal refers to [49]-[51] above.
2. The Respondent's position set out in 6.20(d) of her submissions, is:

It may be accepted that the Applicant has not made a contribution to the Kang Family Trust. The Secretary submits that this is a neutral factor in considering whether the Applicant's attribution percentage should be lower than 100%.

1. Like s 8, s 17 of the Attribution Principles starts with the words ‛If the individual has made a contribution to the ...trust, the Secretary must consider'... On the ordinary meaning of the opening words of this section the decision-maker is only obliged to consider the principle set out in the section if the individual has made a contribution. No such contribution was made by the Applicant so, on the strict construction of its wording, this is not a principle which has any application in the present case.
2. As noted above, the Respondent's view is that this principle does apply but that it is neutral in determining whether the Applicant's asset attribution percentage should be lower than 100%. If the Tribunal is wrong in the view that this principle does not apply because no contribution has been made, then in the Tribunal's view the fact that no contribution has been made by the Applicant would weigh in favour of a determination that the Applicant's asset attribution percentage should be lower than 100%.
3. Given that no contribution has been made (assuming that the section has any application) it is difficult to see how the factors referred to in subsections (a)-(d), which presumably go to how much lower than 100% the asset attribution percentage should be, are to be applied. They are unhelpful in determining what an appropriate asset attribution percentage is.

Attribution Principles - Section 18

1. The Tribunal refers to [52]-[55] above.
2. The Respondent accepts the Applicant has not received past benefit from distributions from the Trust but submits that this is only because the Applicant was in receipt of DSP. The Secretary submits that this principle weighs in favour of the submission that the Applicant's ‛asset attribution percentage' is 100% (R1, 6.20(f)).
3. For the same reasons that the Tribunal did not agree with the Respondent's similar submission in relation to s 9 of the Attribution Principles (see [54] above), the Tribunal does not agree with the Respondent's submission in relation to s 18 set out in

[87] above. 4. The Tribunal accepts that under the principle set out in s 18 of the Attribution Principles the fact that the Applicant has not received a distribution of capital or income weighs in favour of the asset attribution percentage being lower than 100%. However, for the same reasons that subsections (a)-(d) of s 17 are unhelpful in determining what the asset attribution percentage should be, subsections (2) and (3) of s 18 are equally unhelpful. 5. The Tribunal does accept that the Applicant not having received the benefit of a distribution to date weighs in favour of the Applicant's asset attribution percentage being less than 100%.

Attribution Principles - Section 19

1. The Tribunal refers to [56]-[65] above.
2. The Respondent's position, set out in paragraph 6.20(h) of her submissions, is that it is ‛reasonably foreseeable that the [Applicant] may receive a benefit from a future distribution by the ... trust'. The Respondent relies on the submissions made in relation to s 10 of the Attribution Principles which are set out in [57]-[60] above.

The Respondent submits that this principle weighs heavily in favour of the submission that the Applicant's 'asset attribution percentage' is 100%. 3. For the reasons set out in [56]-[65] above, the Tribunal finds that it is reasonably foreseeable that the Applicant may receive a benefit from future distribution by the Trust. The Tribunal accepts, however, that, while ‛the sole purpose in establishing the Kang Family Trust was to make sure that his son Mr Ho Kang, who has an intellectual disability, would be provided for after he, Mr Chong Soo Kang, was no longer around'

(the words of Chong Soo Kang - see [42] and [57] above) and that there is an ‛unwritten understanding that if these properties are sold the proceeds are to be used to the benefit of his disabled son' (Duncan Kang's words - see [41] above), the Trust is a discretionary trust and there are other beneficiaries and that the Applicant's asset attribution percentage should be lower than 100%.

Attribution Principles - Section 20

1. The Tribunal refers to [63]-[66] above.
2. The Respondent submits the Applicant receives a benefit from the assets of the Trust. The Respondent submits the Applicant has received the ongoing benefit of living in the house owned by the Trust since 1998 and the provision of a principal place of residence for the Applicant is a substantive benefit. The Respondent also relies on their submissions in relation to s 11 of the Attribution Principles (set out in [63]-[64] above) and submits that this principle weighs heavily in favour of the submission that the Applicant's ‛asset attribution percentage' is 100% (R1, 6.20(j)).
3. For the reasons set out in [66]-[69] above, the Tribunal finds that the Applicant does receive a significant benefit from living in the house owned by the Trust. It is the case, however, that the Applicant's mother and his brother, Duncan Kang, also have the benefit of living in the house (Transcript, P-10; A1, 25). Accordingly, it is not appropriate that the Applicant's asset attribution percentage, when considered in light of this consideration, should be 100%.

Attribution Principles - Section 21

1. The Respondent says that the Applicant is not an attributable stakeholder of any other company or trust and the Secretary submits that this is a neutral factor in considering whether the Applicant's ‛asset attribution percentage' should be lower than 100%.
2. The Tribunal agrees. The Applicant makes no submission in relation to this section.

If the Applicant's asset attribution percentage is to be lower than 100%, what should it be?

1. The Applicant refers to Social Security Guide Version 1.246, released 2 July 2018 (the Guide), and points to section 4.12.3.10 which advises that ‛attribution among attributable stakeholders of the trust should be determined according to the degree of control capable of being exercised in the trust by the stakeholder/s'. Although the language of this section is somewhat ambiguous, it appears to be dealing with 'attribution among attributable stakeholders', that is attribution as between multiple attributable stakeholders, not attribution to a single stakeholder.
2. The second section of the Guide to which the Applicant refers is 4.12.2.10. This section confirms the above construction of section 4.12.3.10 that that section of the Guide is dealing with attribution between attributable stakeholders.
3. The relevant parts of section 4.12.2.10 are set out in the table of attribution percentages. That table advises that:

If the individual is a sole attributable stakeholder...then (you are to) attribute 100% of the assets AND the income of the structure to the sole attributable stakeholder.

And

If the individuals are multiple stakeholders...then (you are to ) attribute assets AND income of the structure in the percentage determined by the level of control exhibited by the individuals.

1. The Applicant is the sole attributable shareholder. While there are other beneficiaries, they are not attributable stakeholders for the purposes of the Act. Accordingly, far from assisting the Applicant's argument, these provisions indicate that the asset attribution percentage should be 100%.
2. In any event, even if that construction of the provisions of the Guide is not correct, the Tribunal is not bound to follow the Guide. This issue was considered in the matter of Ferreira and Secretary, Department of Social Services [2018] AATA 1290 (15 May 2018) in which Senior Member Dr M Evans observed:

[46] The Guide to Social Security Law (the Guide) is a policy which, among other things, provides clarification (at para 4.3.8.30) as to the expenses which are permissible or impermissible for the purpose of calculating income under the Act. With respect to whether the Tribunal should apply policy, in Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 (Drake (No 2)), Brennan J stated at 642:

In point of law, the Tribunal is as free as the Minister to apply or not to apply that policy. The Tribunal's duty is to make the correct or preferable decision in each case on the material before it, and the Tribunal is at liberty to adopt whatever policy it chooses, or no policy at all, in fulfilling its statutory function.

[47] Later in his judgment, Brennan J (at 645) explained how the AAT should apply government policy when reviewing administrative decisions:

In my view, the Tribunal, being entitled to determine its own practice in respect of the part which ministerial policy plays in the making of Tribunal decisions, should adopt the following practice.

When the Tribunal is reviewing the exercise of a discretionary power reposed in a Minister, and the Minister has adopted a general policy to guide him in the exercise of the power, the Tribunal will ordinarily apply that policy in reviewing the decision, unless the policy is unlawful or unless its application tends to produce an unjust decision in the circumstances of the particular case. Where the policy would ordinarily be applied, an argument against the policy itself or against its application in the particular case will be considered, but cogent reasons will have to be shown against its application, especially if the policy is shown to have been exposed to parliamentary scrutiny.

1. If the Guide has the effect apparently contended by the Applicant, namely that asset attribution percentage is governed solely by the level of control that the attributable stakeholder has over the trust, then that would render the Guide contrary to the provisions of the Act which provide for an individual to be an attributable stakeholder on the basis of considerations other than control and the Attribution Principles, in particular Part 3, which require consideration of percentage of asset attribution on grounds other than control. They would be rendered pointless if, as the Applicant apparently argues, those matters are to be determined solely by reference to control.
2. Accordingly, even if the construction of the Guide proposed by the Applicant were correct, this Tribunal is not bound to follow the Guide as to do so would frustrate the purpose and intent of Part 3.18 of the Act. In any event, as set out above, given that the Applicant is the sole attributable stakeholder, application of the Guide would result in the Applicant's asset attribution percentage being 100%. There are, however for the reasons set out above, applying the Attribution Principles, in particular Part 3, grounds to determine that the asset attribution percentage should be less than 100%.
3. The Tribunal considers the following facts relevant to the Attribution Principles as being relevant in determining what percentage, lower than 100%, is appropriate:
   • The Applicant is the sole attributable stakeholder;
   • The Applicant derives a benefit from the Trust in that he shares the house, one of the Trust's main assets, with his mother, who is not a beneficiary under the Trust, and his brother, Duncan Kang, who is a beneficiary under the Trust;
   • That, as stated by the Applicant's father, 'the sole purpose in establishing the Kang Family Trust was to make sure that his son Mr Ho Kang, who has an intellectual disability, would be provided for after he, Mr Chong Soo Kang, was no longer around' (the words of Chong Soo Kang - see [42] and [57] above) and that there is an 'unwritten understanding that if these properties are sold the proceeds are to be used to the benefit of his disabled son' (Duncan Kang's words - see [41] above):
   • There are other beneficiaries of the Trust although those other beneficiaries are unlikely to be as dependent on the Trust as the Applicant;
   • It is reasonably foreseeable that the Applicant may receive a benefit from a future distribution.
4. Taking all of these considerations into account the Tribunal is of the view that an appropriate asset attribution percentage is 50%.

1. The Tribunal finds that :
   • (a) the Applicant is an attributable stakeholder of the Trust and there is no basis on which the Tribunal should otherwise determine (s 1207X(2)(c) of the Act);
   • (b) there are grounds to determine the Applicant's asset attribution percentage in relation to the Trust at lower than 100% (s 1207X(2)(d)(ii) of the Act); and
   • (c) the lower asset attribution percentage in relation to the Trust is 50%

(s 1207X(2)(d)(ii) of the Act). 2. The decision which this Tribunal is reviewing is the Decision set out in [1] above, namely the decision that: * (a) the Applicant's DSP was correctly cancelled on 4 December 2014 as his assets exceeded the allowable limit; * (b) the Applicant is an attributable stakeholder of a trust and the attribution to him is 100%; and * (c) the amount of the debt due and payable by the Applicant for the period

4 January 2007 to 2 December 2014 was $163,426.44. 3. The correctness of the decision to cancel the Applicant's DSP and to raise a debt against the Applicant in the sum of $163,426.44, or any sum, is not only dependent on finding that the Applicant was an attributable stakeholder, but also a finding as to the Applicant's asset attribution percentage and the value of the assets of the Trust. This Tribunal has not been asked to, nor could it on the information presented, make a determination as to the value of the Trust's assets which are to be attributed to the Applicant. This will have to be done by the Respondent. 4. Accordingly, the Tribunal sets aside the decision under review and remits the matter for reconsideration by the Respondent with the direction that: * (a) the Applicant is an attributable stakeholder of the Trust; * (b) the Applicant's asset attribution percentage in relation to the Trust is 50%; * (c) the Respondent is to determine the Applicant's entitlement to a Disability Support Pension in the period from 4 January 2007 to 4 December 2014 on the basis of the Applicant's asset attribution percentage of the assets of the Trust being 50%; and * (d) the Respondent is to determine the debt, if any, that the exercise in (c) causes the Applicant to owe.

I certify that the preceding 111 (one hundred and eleven) paragraphs are a true copy of the reasons for the decision herein of Deputy President Boyle

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