Burgess v Department of Social Services [2026] ARTA 775

Burgess v Department of Social Services [2026] ARTA 775

In this decision of the Administrative Review Tribunal, the age pension recipient (identified in the Tribunal Decision as Mr Burgess) had his age pension rate reduced by Centrelink following activation of a testamentary trust on 20 April 2022 after the death of his wife (identified as Mrs A), and the Tribunal found no reason but to uphold this decision by Centrelink.

Section 1064 of the Social Security Act 1991 (SSA), contains a calculator that affects the lowering of a person’s rate of age pension to be the lower of the outcome of both the income test and the assets test.

It was the assets test that was relevant in this case to cause the lowering of Mr Burgess’ rate of age pension by Centrelink (under Module G1 in section 1064 of the SSA).

Total Attributable Assets Increased

In early September 20[1]5, Mr Burgess and his wife obtained legal advice regarding their respective wills, that they should change the ownership of their jointly held home to tenants in common, which they did, so that the home ownership was changed to be held by Mr Burgess and Mrs A as tenants in common in equal shares.

Under the testamentary trust will of his deceased spouse, the trust fund, to be held for the benefit of Mr Burgess for his life, would consist of, among other things, his wife’s one half tenant in common interest in the home, and any 50% of proceeds of the sale of the home, and any property purchased using those 50% proceeds. Mr Burgess did not contribute to the trust fund assets.

The applicant’s step-daughters (identified in the Tribunal Decision as Ms C and Ms D) were the trustees and executors of the testamentary trust, who were required under the trust deed to consult with Mr Burgess and give effect to his wishes as far as those wishes were consistent with the interests of the trust. The Tribunal stated at paragraph 28:

Attribution of Controlled Private Trust

The Tribunal was to find that unless the trust was a concessional primary production trust (which it was not), then under subsection 1207X(2) of the SSA, if a trust is a controlled private trust in relation to a person who is an attributable stakeholder in relation to the controlled private trust, then that person’s asset (and income) attribution percentage to the trust is 100%, unless the (Centrelink) Secretary determines otherwise.

A controlled private trust in relation to an individual (Mr Burgess) is defined under section 1207V of the SSA to capture persons who pass the source test or the control test. Broadly, the control test captures persons (and their associates, defined under section 1207C to include relatives, defined under section 1207B to include children, which under section 1207A includes adopted, foster or step-children) who can appoint or remove the trustee (e.g. appointor) or who can veto decisions of the trustee (e.g. guardian) and persons who are the trustee(s). And the source test captures persons who transfer property or services to the trust for no or low level consideration (e.g. gift or discount).

The Tribunal found that Mr Burgess’ step-daughters controlled the testamentary trust such that it was a controlled private trust in relation to Mr Burgess’ age pension assets test, being a trust controlled by a group of Mr Burgess’ relatives.

The Tribunal then applied section 1207X(2) of the SSA, that as the controlled private trust was not a concessional primary production trust, then Mr Burgess was a 100% attributable (assets) stakeholder of the trust, unless the Centrelink Secretary were to determine a lower percentage, which the Centrelink Secretary did not do. The entire $349,001 held in the testamentary trust would be attributed to Mr Burgess’ assets test, along with his other non-excluded assets of value.

The Tribunal found that considering the Social Security (Attribution of Assets) Principles 2017 (SSP), the money held in the testamentary trust in this case was not an excluded asset from the assets test against Mr Burgess’ age pension rate.

24 Months to Use Sale Proceeds

On 1 March 2023, the property was sold. Mr Burgess received $323,441.65 into his bank account and the testamentary trust received the other $323,441.65.

On 7 September 2023 the testamentary trust held $349,001. Mr Burgess also owned a campervan valued at $25,000, $500 in household contents and personal effects, and $401,971 held in his bank accounts in large part from his property sale proceeds (which he noted he lived off the interest from those bank accounts). His total asset value calculated by Centrelink was $776,472.

Note the single non-homeowner age pension starts to reduce above $600,000 of assets and cuts off from $1,012,750 of total assets (as at 20 September 2026).

Under section 1118(1) of the SSA, the person’s principal home is disregarded from their assets test calculation.

Under section 1208E of the SSA if Mr Burgess would not have the asset disregarded from his assets test if he instead owned outright the asset held by the testamentary trust (e.g. no intention to use the proceeds to purchase, build, rebuild, repair, or renovate a new principal home), then the value of the asset of the testamentary would be included in Mr Burgess’ assets test.

Under sections 1118(1B) and (2) of the SSA, proceeds of sale of the principal home are given 24 months (which may be extended on application to Centrelink to 36 months) where those sale proceeds are disregarded for calculating the assets test against the former home owner’s age pension.

No Intention to Purchase Evidenced

It was described that the testamentary trust had the purpose of holding the property sale proceeds for use to purchase a replacement home for Mr Burgess. The Tribunal stated at paragraph 39:

However, in this case, Mr Burgess could not evidence any intention to use the sale proceeds held in the trust to purchase a new home. The Tribunal stated at paragraphs 23 and 25:

The Tribunal decision was dated 20 February 2026, and the 24 months since the date of sale of the property expired on 1 March 2025, two years after it was sold, and there was no act by Mr Burgess that would be considered a reasonable attempt to purchase, build, rebuild, repair, or renovate a new principal home under section 4.6.3.90 of the Department of Social Security \- Social Security Guide, in order to have the 24 months extended to 36 months.

Attributable Stakeholder Income and Assets

As Mr Burgess was found to be an attributable stakeholder of a trust, then under section 1207X(2)(d) of the SSA, Mr Burgess’ asset attribution percentage in relation to the testamentary trust was 100% unless Centrelink were to determine otherwise, which here it did not. The entire $349,001 held in the testamentary trust would be attributed to Mr Burgess’ assets test, along with his other non-excluded assets of value.

Assets

As Mr Burgess was the only beneficiary under his spouse’s will “to whom funds in a trust derived from the sale of a property are to be held for life”, the Tribunal would not overturn Centrelink’s decision. Centrelink decided to attribute 100% of the trust’s $349,001 in value to Mr Burgess’ assets test calculation, with his total assets test valuation at $776,472, therefore causing a lowering of his age pension rate.

Income

Mr Burgess had only received reimbursement for works undertaken to prepare the property for its sale and had not received any income from the testamentary trust, nor had he contributed to the trust fund.

As Mr Burgess was not an executor and had no control over the trust, and the trustees stated their intention to not make any distributions to Mr Burgess ‘until a new property is purchased’, the Tribunal found that Mr Burgess’ income attribution percentage for the testamentary trust should be 0%.

Outcome the lower of assets and income test results

Under the calculator in Section 1064 of the SSA, the lower of the outcome of both the income test and the assets test will calculate the result of the lowering of the person’s age pension rate. Therefore it was the assets test result that caused the lowering of Mr Burgess’ age pension rate, which was upheld by the Tribunal.

Takeaway points

In this case Mr Burgess could not avoid both his, and the testamentary trust’s, 50% portion each of the principal home proceeds from becoming attributed to his assets test and therefore reducing his pension. He noted he was living off interest payments from his 50% portion that he held in the bank.

If he was joint owner of the home and owned it outright by right of survivorship and he sold the home he similarly would have had to utilise those proceeds to purchase, build, rebuild, repair, or renovate a new principal home within 24 months, or the outcome for his age pension would be the same, unless another excluded asset exemption could be claimed.