Decision: The Tribunal affirms the decision under review.

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 201(1A) - 201(1B) of the Social Security (Administration) Act 1999

SOCIAL SECURITY - age pension - assets test - value of real property - granny flat - expert opinion evidence as to value - decision under review affirmed

Social Security (Administration) Act 1999

1. Mr TPJS' age pension was cancelled from 26 July 2024 when the value of his assessable assets was identified as exceeding the asset value limit above which age pension is not payable.
2. The crux of the matter turns on the value of a property at "BR" Avenue, or more precisely - that part of the property at BR Avenue that is the subject of a tenancy with a third party, and the part of that property that is Mr TPJS' principal home and exempt from the assets test. Mr TPJS is aggrieved that the respondent is no longer assigning 1/3rd of the total value of the property at BR Avenue as the value of the area subject to the tenancy, but is assigning the value identified by a licensed valuer who inspected the property, and expressed an opinion as to the differential value of the two parts of BR Avenue.

1. Mr TPJS has received age pension since 19 March 1998. A reassessment of the value of Mr TPJS' assets resulted in a decision by Centrelink (on behalf of the Respondent) to cancel Mr TPJS' age pension from 21 May 2024. On 4 October 2024, an authorised review officer reviewed that decision, and found that Mr TPJS' age pension should not have been cancelled from that date, but instead should be paid at a reduced rate until 26 July 2024, when it should then be cancelled.
2. Mr TPJS applied for review in the Administrative Appeals Tribunal (AAT) on 4 October 2024. On 14 October 2024, the AAT became the Administrative Review Tribunal (the Tribunal).
3. On 10 January 2025, the Tribunal found that Mr TPJS' real property assets had been correctly valued by Centrelink, rejecting Mr TPJS' arguments that the values were too high. The Tribunal had noted that in respect of two properties ("DW" Road and "AL" Avenue) Centrelink had not obtained valuation reports of the real estate, but had adopted instead the amounts paid by Mr TPJS for the properties as market value. In relation to BR Avenue, the Tribunal noted valuations had previously been obtained by Centrelink from the Australian Valuation Office and had been indexed, and accepted that value. The question of the differential valuation of the tenanted part of the property and the part of the property that was Mr TPJS' principal residence did not appear to have arisen as an issue. In any event, the Tribunal found that the assessable value of Mr TPJS' interests in these assets exceeded the applicable asset limit from 26 July 2024, finding a total assessable value of $711,746.
4. On 17 May 2025, Mr TPJS applied for social services second review of the decision of the Tribunal.

1. Age pension is payable subject to a means test consisting of an income test and an assets test. The test producing the lowest rate prevails: sections 55 and 1064 Rate Calculator A to the Social Security Act 1991 (the Act).
2. In relation to the assets test, Module G of Rate Calculator A provides that age pension reduces to nil when the value of a person's assessable assets reached $686,250 as at 26 July 2024, for people such as Mr TPJS who are single homeowners. Generally speaking in this regard, the rate of age pension dropped by $3.00 each fortnight for every $1000 in assessable assets above $314,000.
3. The Act provides for some assets to be exempt from the asset test. Relevantly, a person's principal home is exempt. The inclusive definition and associated provisions as to what constitutes a person's principal home are at sections 11(5) to 11(7) of the Act. In the following paragraph, I set out my reasons for concluding that part of BR Avenue is an assessable asset for Mr TPJS and part is not. Unfortunately, I cannot articulate those reasons without identifying both Mr TPJS and BR Avenue contrary to subsections 201(1A) - 201(1B) of the Social Security (Administration) Act 1999. I will make an order that the following paragraph, paragraph (10) is not to be published other than to the parties in this review. The part of BR Avenue that is assessable will be referred to as the 'BR Avenue tenancy', the part that is not will be referred to as the 'BR Avenue granny flat'.
4. [content not published pursuant to order of the Tribunal]
5. I restate the final sentence of the above paragraph. For these reasons I find that BR Avenue granny flat is Mr TPJS' principal home and BR Avenue tenancy is an assessable asset for which a value must be found.

1. Finally, as to identifying the value of an asset, I accept that the value is to be the market value of the asset. It is a settled reference to observe that the High Court in Spencer v Commonwealth (1907) 5 CLR 418, found as follows:

In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, i.e., whether there was in fact on that day a willing buyer, but by inquiring "What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?"

To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.

1. It is also to be observed that when there is no direct evidence of market value, for example in the absence of a transaction, the identification of market value is a matter of opinion. Decision makers in the position of the Tribunal will therefore resort to evidence from experts in the formation of such an opinion.

The valuation of Mr TPJS' assets on 26 July 2024

1. The Respondent contends that the combined value of Mr TPJS' assessable assets on 26 July 2024 was $1,113,526, but accepted at hearing that some aspects of some valuations required correction.

1. The following table sets out the assessable asset, the value of the assessable asset, the Respondent's corrected values, and through identifying Mr TPJS' position, the issues in dispute:

Mr TPJS contends the value should be 33.3% of the overall value of BR Avenue: $316,666.66

Mr TPJS contends that the exempt value should be 66.6% of the overall value of BR Avenue: $633,333

1. The Tribunal has before it a valuation report dated 8 May 2025 prepared by a certified practising valuer, Mr C, and a supplementary report. Both reports indicate that the valuation date is 26 July 2024. These reports were commissioned by the Secretary. Mr TPJS has not provided any alternative reports by a certified valuer. Mr C also gave sworn oral evidence to the Tribunal.
2. The valuation report concludes that the market value of the property as a whole is $950,000, and identifies a 'curtilage' value of $235,000. The supplementary report of 22 May 2025, among other matters, clarifies that the reference to $235,000 is a reference to what I refer to as the BR Avenue Granny flat, while the value of what I refer to as the BR Avenue tenancy is $715,000.
3. The report describes the BR Avenue property as a whole, identifying it to be a circa 1984 two-level brick property consisting of two dwellings. The BR Avenue granny flat is described as a tile roof granny flat with 1 bedroom, 1 bathroom and a single car garage of approximately 195sqm. The BR Avenue tenancy is described as a five-bedroom, 2 bathroom double carport dwelling of approximately 243sqm. The report describes the condition of the property as fair overall.
4. Market evidence of four recent sales in the vicinity of the property is identified, entirely consistent with the overall value identified by Mr C.
5. In examination and cross examination, Mr C demonstrated that he had taken into account and noted features of the property Mr TPJS considered were important, although emphasised that as a valuer he does not undertake a building inspection as to any structural issues. Mr C appears in my assessment to have approached his task with care and logic, and taken into account all the features of the property highlighted by Mr TPJS. I accept Mr C's opinion as to the value of the property overall, and the differential value of the BR Avenue tenancy and the BR Avenue granny flat, noting that his methodology in this regard was essentially to apportion value by square meter.
6. Mr TPJS called Mr P, a property manager. Mr P confirmed that he manages the property I have described as the BR Avenue tenancy. He explained that the property has challenges in its marketing because it has a common door in the laundry with the BR Avenue granny flat, and many people might find this undesirable. The property is currently rented for $545 per week. Mr P also confirmed that he manages other properties for Mr TPJS, and rental proceeds are disbursed into Mr TPJS' account. Mr P said he had a general understanding that Mr TPJS manages the arrangement on behalf of his wife and son.
7. Ultimately, Mr TPJS' argument in relation to the valuation of the BR Avenue tenancy and granny flat is that the "1/3rd rule" should have been preserved. By this, Mr TPJS refers to Centrelink apparently having historically attributed 1/3rd of the valuation of BR Avenue as a whole to the BR tenancy. This approach for example can be seen in the authorised review officer's approach to the valuation.
8. In light of the opinion of the valuer, identifying different values for the BR Avenue tenancy and the BR Avenue granny flat, I appreciate that Mr TPJS confronts a different basis upon which the Secretary contends the decision to cancel his age pension is correct. Previously, Mr TPJS' grievance with Centrelink's decision was based on quibbling with the overall value of the properties and arguing that he had paid above market price. Mr TPJS now faces a different argument in that essentially, Centrelink's approach had been to treat only 1/3rd of the value of BR Avenue as a whole as assessable, without the justification for that approach ever being explained insofar as I can see in the material before me, but Centrelink is now asserting on the basis of the evidence of the valuer that a much higher proportion of the value of that property is assessable.
9. There is no 1/3rd rule provided for in social security law or policy. It may have simply been a convenient administrative approach for Centrelink to have taken given that Mr TPJS' interest in the property, and the nature of the property consisting of an assessable and exempt component is somewhat atypical. The documentary evidence before me does not reveal when this approach was first adopted or on what basis it was ever justified.
10. Assigning only 1/3rd of the of the overall value of BR Avenue to the BR Avenue tenancy is contrary to Mr Centofanti's expert opinion, and contrary to logic and lay experience. Although I understand Mr TPJS' grievance that Centrelink have now changed the approach, I cannot accept that the previous approach had been correct. There can be no cogent basis upon which only 1/3rd of the value of the property can be assigned to the 5 bedroom dwelling made available for tenants, and 2/3rds of the value attributed to the much smaller granny flat in which Mr TPJS resides. I therefore reject the approach contended for by Mr TPJS, and adopt the valuations of each part of the property offered by Mr C.
11. I therefore find that the value of the BR Avenue tenancy is $715,000. This asset is not exempt from the asset test, and of itself alone exceeds the asset value limit above which age pension was not payable on 26 July 2024 when Mr TPJS' age pension was cancelled.
12. As highlighted in the table above at paragraph 14, Mr TPJS has also put in issue the value of his assets in the form of funds held in his bank account. As I understand it, Mr TPJS considers that some of these funds have their source in rental payments for properties that he does not have a 100% ownership interest, and the balance has changed over time This argument was not well developed, and is not supported by evidence other than assertions from Mr TPJS. Mr TPJS' argument in this regard furthermore does not have strong support at law (on the face of it) in circumstances where he appears to control the funds in accounts in his name. There is insufficient evidence to demonstrate, for example, that funds held in his bank accounts on 26 July 2024 were held on trust.
13. Ultimately, it is not necessary to conclusively address Mr TPJS' arguments and reach findings in this regard, because as observed above, the value of the assessable interest in the BR Avenue tenancy of itself exceeds the asset limit.
14. Section 80 of the Social Security (Administration) Act 1999 obliges the Secretary (and therefore the Tribunal) to cancel or suspend a social security payment if satisfied it is not payable. I am satisfied that Mr TPJS' age pension was not payable from 26 July 2024 as the value of his assets exceeded $686,250, and in that regard my finding is that the value of Mr TPJS' assessable assets is at least $1,040,260, exclusive of his bank accounts and cash on hand.
15. The decision to cancel Mr TPJS' age pension was correct. I will affirm the decision under review.

[1] The property is valued at $620,000, an encumbrance of $525,576.10 and Mr TPJS has a 33.3% interest

[2] The property is valued at $870,000 and Mr TPJS has a 33.3% interest in the property