Abella and Abella (Child support)

[2020] AATA 5821

Abella and Abella (Child support) [2020] AATA 5821 (16 November 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/HC019715

APPLICANT:  Mr Abella

OTHER PARTIES:  Child Support Registrar

Ms Abella

TRIBUNAL:Member M Baulch

DECISION DATE:  16 November 2020

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – whether the adjusted taxable income of the liable parent was correctly applied – whether the liable parent elected to estimate their income – decision under review affirmed

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been omitted from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

1. This application for review is about the amount of Mr Abella’s adjusted taxable income used in the administrative assessment of child support for the period 15 September 2017 to 31 August 2018.

2. Mr Abella and Ms Abella are the separated parents of two children.  Since 15 September 2017, Mr Abella has been assessed as liable by the Department of Human Services (now known as Services Australia) – Child Support (Child Support) to pay child support to Ms Abella, with Child Support collecting the liability from Mr Abella on Ms Abella’s behalf since 1 September 2018.

3. From 15 September 2017 the child support assessment was based upon a provisional income for Mr Abella of $180,000.  On 15 April 2020, Child Support received information from the Australian Taxation Office (ATO) that Mr Abella’s taxable income for the 2016-17 income year was $195,331.  This amount was applied to the assessment of Mr Abella’s child support liability for the period 15 September 2017 to 31 August 2018 (the decision under review).  Mr Abella objected to that decision and, on 18 August 2020, that objection was disallowed.  Mr Abella has now applied to this tribunal seeking an independent review of Child Support’s decision.

4. A hearing into the application for review was held by the tribunal on 16 November 2020. Mr Abella and Ms Abella both participated in the hearing by conference telephone and both gave evidence under affirmation during the hearing. A representative of the Child Support Registrar (the Registrar) did not participate in the hearing. The tribunal had before it relevant documents provided to it by Child Support pursuant to sections 37 and 38AA of the Administrative Appeals Tribunal Act 1975, which were labelled folios 1 to 306, copies of which Mr Abella and Ms Abella both confirmed they had received prior to the tribunal hearing.

ISSUES

1. The statutory provisions relevant to this review application are found in the child support law, in particular the Child Support (Assessment) Act 1989 (the Act).

2. The issue which arises in this case is whether or not Mr Abella’s adjusted taxable income of $195,331 should be applied to the child support assessment from 15 September 2017.

CONSIDERATION

1. Part 5 of the Act provides for an administrative assessment of the child support payable by one separated parent to the other.  It uses a statutory formula which contains variables such as the parents’ adjusted taxable income, the ages and number of children and their percentages of care.

2. Section 43 of the Act defines a parent’s adjusted taxable income to be the sum of several amounts, including the parent’s taxable income for the last relevant year of income in relation to the child support period.  Subsection 5(1) defines the last relevant year of income, in relation to a child support period, to mean the income of the last year of income that ended before the start of the child support period.  Subsection 5(1) of the Act further provides that a year of income is that which is defined in taxation legislation; essentially a period that starts on 1 July and ends on 30 June the following year. 

3. The practical effect of these provisions is that, for a child support period, a parent’s adjusted taxable income for the most recently completed income year will ordinarily be used to calculate the ongoing liability.  Put another way, the legislation requires past income to be used to calculate present and future child support liability.

4. In this case, Mr Abella’s child support liability for a child support period commencing on 15 September 2017 is to be determined having regard to his last year of relevant income, being his income for the 2016-17 income year. 

5. Where a parent’s taxable income for a particular year has not been assessed by the ATO, for example, when a parent has not lodged an income tax return, section 58 of the Act allows the Registrar to make their own determination of that parent’s adjusted taxable income for that year and provides various methods for doing so.  When such a determination is made, the parent’s adjusted taxable income is referred to as being “provisional” by Child Support.

6. Until recently, Mr Abella had not lodged an income tax return for the 2016-17 income year.  Therefore, his adjusted taxable income used to determine his child support liability from 15 September 2017 was a provisional amount of $180,000, determined by Child Support having regard to information supplied by Mr Abella on 19 September 2017 (at folio 13).  Child Support records this amount as being Mr Abella’s income for the 2016-17 income year.

7. Mr Abella’s evidence at hearing was that when he was contacted on 19 September 2017, he understood that he was not providing information about his 2016-17 income; but was estimating his income for the 2017-18 year.  His submission, therefore, was that his 2017-18 taxable income of $162,199 should be applied to replace his estimated 2017-18 income to determine his child support liability for the period 15 September 2017 to 31 August 2018.

8. I was not persuaded by Mr Abella’s evidence that he made an estimate election on 19 September 2017 for the purposes of section 60 of the Act.  This is because:

   ·      The file note of the interaction refers to “Financial year of income: 2016/2017” and makes no reference to the 2017-18 income year;

   ·      The file note records Mr Abella being advised about the process of making an estimate, and does not record the information provided by Mr Abella on that date as being an estimate election;

   ·      Information usually sought when a person makes an estimate election was not recorded, such as the person’s year-to-date earnings or information about the previous year’s income; and

   ·      Had Mr Abella made an estimate election of $180,000 and noting his evidence that, had he been asked, he would have advised his 2016-17 income as being likely to be $200,000, an estimate of $180,000 for 2017-18 would have been rejected because it is more than 85% of the previous year’s income.

9. I consequently found that Mr Abella did not make an estimate election on 19 September 2017 and a provisional income of $180,000 for the 2016-17 income year, determined by Child Support having regard to information provided by Mr Abella, was correctly applied to the child support assessment from 15 September 2017.  On 15 April 2020, Child Support received information from the ATO that Mr Abella’s 2016-17 taxable income was $195,331. 

10. As Mr Abella’s actual income was greater than the provisional income of $180,000 that had previously applied in the assessment, section 58A of the Act requires Mr Abella’s actual income of $195,331 be applied to the assessment in place of the provisional amount of $180,000 for the period 15 September 2017 to 31 August 2018.

11. I therefore found that Mr Abella’s adjusted taxable income of $195,331 is to be applied to the child support assessment for the period 15 September 2017 to 31 August 2018 and, for these reasons, I decided to affirm the decision under review.

DECISION

The decision under review is affirmed.