B07/1994 RENT ASSISTANCE - RENT PAID/PAYABLE

DATE OF ISSUE:  10 FEBRUARY 1994

RENT ASSISTANCE - RENT PAID/PAYABLE

ISSUE

Whether the amount of rent assistance to be paid to a veteran and/or his partner is to be assessed on the amount of rent actually paid or the amount of rent payable.

BACKGROUND

2.  A veteran wrote to the Minister asking for an explanation of why the Department of Social Security (DSS) and the Department of Veterans' Affairs (DVA) were paying different amounts of rent assistance to people in exactly the same residential circumstances.

3.  The facts of the particular case are these:

The occupiers of a motor home village are in dispute with the owners of the park.  The owner has determined that the rent per fortnight was to increase from $112 (approx) per fortnight to $154 per fortnight.  The occupiers disputed this increase and the case is to be decided in the Supreme Court.  In the meantime the occupiers of the park have all agreed to pay only $117.60 per fortnight in rent until the Court makes its ruling.  Among the occupiers are DVA and DSS pensioners.  DSS are paying rent assistance based on rent of $154 and DVA is paying rent assistance based on rent of $117.60.

LEGISLATION

4.  The Veterans' Entitlements Act 1986 (VEA) defines rent in s5N.  The definitions relevant to this discussion are:

" "rent" has the meanings given by subsections (2), (3) and (4);

(2) Amounts are rent in relation to the person if:

(a) the amounts are payable by the person:

(i)  as a condition of occupancy of premises, or of a part of premises, occupied by the person as the person's principal home; or

(ii)  for services provided in a nursing home that is the person's principal home; or

(iii)  if the person is residing in a nursing home that is the person's principal home for accommodation in the nursing home; or

(iv)  for lodging in premises that are the person's principle home; or

(v)  for the use of a site for:

(A) a caravan or other vehicle; or

(B) a structure;

occupied by the person as the person's principal home; or

(vi)  for the right to moor a vessel that is occupied by the person as the person's principal home; and

(b)either:

(i)  the amounts are payable every 3 months or more frequently; or

(ii)  the amounts are payable at regular intervals (greater than 3 months) and the Commission is satisfied that the amounts should be treated as rent for the purposes of this Act.

(3)  Subparagraphs (2)(a)(ii) to (vi) (inclusive) do not limit the generality of subparagraph (2)(a)(i)."

5.  Point 41-C1 of the VEA states in part:  Rent assistance is an amount that may be added to the maximum basic rate to help cover the cost of rent.

Point 41-C4 states:  The rate of rent assistance depends on:

(a)  the annual rent paid or payable by the person; and

(b)  whether or not the person or the person's partner is receiving a disability pension; and

(d)  whether or not the person has a partner with a rent increased pension.

6.  The point at issue in the case outlined at paragraph 3 above, is what is meant by point 41-C4(a) "annual rent paid or payable".  The only definition of this term contained in the legislation relates to the two-thirds board and lodging rule and is not helpful in this instance.

7.  DSS legislation contains exactly the same definitions as the VEA.

GENERAL ORDERS SERVICE PENSION (GOSP)

8.  The GOSP contains a very extensive section on Rent Assistance.  In part it states:

To receive rent assistance, a pensioner must be paying rent (other than Government rent) for accommodation in Australia, and the amount paid must exceed a certain threshold.  The amount of rent assistance payable depends on the amount of rent paid and the person's family circumstances.  The rate payable may be reduced if the person receives Disability Pension (DP).

ELIGIBILITY CRITERIA

A pensioner is eligible to receive a rate of rent assistance if:

.they pay rent, or are liable to pay rent (other than Government rent);

.they pay a minimum amount of rent known as the rent threshold;

.they reside in Australia;

.they are not an ineligible property owner; and

.they do not receive incentive allowance from DSS.

LEGAL INTERPRETATION

9.  A legal opinion was sought on the meaning of the term "rent paid or payable".  That advice reads, in part, as follows:

That the expression "paid or payable" means at the very least liable to be paid.

Eligibility for rent assistance clearly contemplates giving rent assistance on the basis of a liability to pay rent.

If the expression "rent paid or payable" is used consistently in the rate calculator according to the first definition (ie rent "paid or payable" means only rent paid), this leads to undesirable consequences.  If this expression means only annual rent paid then there will either be no rent assistance paid because there is no total annual rent paid (ie the rent for the year is not yet paid) or rent assistance will have to be calculated on the annual rent paid last year, or some sort of retrospective adjustment based on rent already paid.  This consequence is undesirable because it does not accord with current practice and rent assistance would always be calculated using non-current rental figures.  Rent assistance is assistance with the current rental obligations and not some retrospective compensation for rent paid over a certain limit.

It is undesirable to give the same expression different meanings in the same rent calculator depending on what it is being used for.  This approach is not consistent with normal statutory interpretation.

I do not think that it is open to a Branch to calculate rent assistance on a lesser amount of rent payable than the maximum legal liability owing.  To be able to do so would give the Commission a discretion which the VEA does not confer.

10.  A further question was put to Legal Services: can rent assistance be reassessed and arrears paid, if a higher amount of rent assistance becomes payable retrospectively.  The response to this is:

I can find no legislative support in the VEA for a retrospective adjustment of rent assistance on the basis of a higher "payable" figure.

RESOLUTION OF SPECIFIC CASE

11.  Following receipt of the legal advice, a memorandum was sent to the Branch Office concerned to deal with the case outlined at paragraph 3 above.  The Branch was asked to:

a)  recalculate the rate of rent assistance based on the rent-payable sum of $154 per fortnight and make the new rate payable from the date of the increased rent liability or the day of the advice of the change in circumstances, whichever is the later.  (NB  This does not constitute a retrospective adjustment.  It is a reassessment based on known facts which were not correctly applied at the time of the original assessment); and

b)  Place obligations on the veteran and the landlord to advise within 21 days of any change in rental circumstances, including resolution of the court case.

12.  The veteran was also excluded from the November 1993 rent verification exercise.

CALCULATION OF RENT ASSISTANCE

13.  In all future cases, where an application for rent assistance contains evidence that the amount of rent payable is actually higher than the amount of rent paid, rent assistance is to be calculated on the higher amount.  Care will need to be exercised in the investigation of all such cases to ensure that the circumstances are such that the higher rate of rent assistance is payable.  Details of the reason why rent is being paid at a level lower than the payable amount will need to be obtained and verification of the details with the landlord will be necessary.

14.  If all of the facts are provided to the Department and the delegate determines that the rent assistance is payable at the higher amount, a clear obligation must be placed on the veteran and the landlord.  The veteran and landlord must be required to advise the Department within 21 days in the event that the rent payable is reduced.  In these circumstances if advice is received within the notification period, there is no overpayment of pension.  Rent assistance would be reduced from the current reduction date.  A failure to notify of a reduction in rent would result in the reduction of rent assistance from the day of the reduction in the rent payable.

GOSP AMENDMENT

15.  The information in the current GOSP is not in accordance with the legal interpretation of the VEA and will be amended.

RENT VERIFICATION EXERCISES

16.  The existing rent verification form does not accommodate cases of this type and therefore they cannot be reviewed as part of the annual rent verification exercise.  Given that the incidence of this type of case will probably be rare it isn't practical or desirable to change the whole rent verification process to accommodate them.  Handling of these cases needs to be a manual process and it will be the responsibility of each Branch Office to ensure that they are managed appropriately.

NATIONAL PROGRAM DIRECTOR

BENEFITS