Adlard and Adlard (Child support)

[2024] AATA 780

Adlard and Adlard (Child support) [2024] AATA 780 (26 February 2024)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/MC026995

APPLICANT:  Mr Adlard

OTHER PARTIES:  Child Support Registrar

Mrs Adlard

TRIBUNAL:Member S Letch

DECISION DATE:  26 February 2024

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income - estimate of income correctly refused - 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

1. This matter concerns a decision by Child Support on 27 July 2023 to initially accept, and then upon objection, refuse, Mr Adlard’s estimated 2023/24 adjusted taxable income of $104,928 for the period 27 July 2023 to 30 June 2024.

2. It is convenient by way of background to set out an extract from the objections officer’s decision dated 21 October 2023, which allowed Mrs Adlard’s objection:

   ...

   Mr Adlard and Ms Adlard have had a registered child support assessment for [Child 1] and [Child 2] since 12 October 2020.

   On 27 July 2023, Mr Adlard notified us of a change in his income due to change in his circumstances.

   We made a decision to accept Mr Adlard's 2023/2024 estimate of adjusted taxable income of $104,928 (annualised) for the period 27 July 2023 to 30 June 2024. Letters were issued to both parties advising of this decision and their objection rights.

   On 17 August 2023, Ms Adlard objected to this decision as she believes it is incorrect and stated the following :

   - Mr Adlard has worked for the same employer for a few years now, his first year his income was $109,766 and second year a Taxable Income of $156,808 (2022).

   - She believes it to be unreasonable to accept an income estimate of $104,928 for the 23-24 year without any proof or confirmation given that the estimate is much lower than previous years.

   - It would be fair to assume the pattern of high increased wages over time would continue - not decrease.

   …

   On 28 August 2023, we spoke with Mr Adlard and notified him of Ms Adlard s objection. Mr Adlard provided the following verbal response:

   Her assumptions are incorrect. Basically, she is saying that I have been in this company for three years which is not correct. I changed jobs in 2022 to different employer and have just rejoined back with my current employer in July 2023.

   Secondly, the numbers she has been talking about in her claim include bonuses, which I haven't earnt here so how can she claim that. She is looking at a tax return from two years back. And I have only just recommenced with this employer at the start of July 2023.

   On 19 September 2023, Mr Adlard provided evidence:

   - Copy of payslips showing:

   Pay Period: 01/07/2023 to 31/07/2023

   Payment date :14/07/2023

   Basic salary: $8,800.00

   Pay Period: 01/08/2023 to 31/08/2023

   Payment date :15/08/2023

   Basic salary: $8,800.00

   Other Relevant information

   We issued a request for financial information to Mr Adlard s employer to confirm his income as of the date the estimate was lodged.

   Employer provided us with the following payment details:

   - Copy of payslips showing:

   Pay Period: 01/07/2023 to 31/07/2023

   Payment date :14/07/2023

   Basic salary: $8,800.00

   Car Allowance: $1458.33

   Gross pay: $10,258.33

   Pay Period: 01/08/2023 to 31/08/2023

   Payment date :15/08/2023

   Basic salary: $8,800.00

   Sales commission: $546.48

   Gross Pay: $ 10,804.81

   Pay Period: 01/09/2023 to 31/09/2023

   Payment date :15/09/2023

   Basic salary: $8,800.00

   Car Allowance: $1458.33

   Gross Pay: $ 10,258.33

   REASONS FOR THE DECISION

   An income estimate is an election that a parent can make to have their assessment or notional assessment based on their expected income for a year of income, or for part of a year of income (CSA Act section 60, section 62A).

   An income estimate can be made if:

   - There is no income amount order in force on the start day of the election or in the remainder of the financial year, and

   - In the case of a first election for a year of income - the estimate is 85% or less than the person's adjusted taxable income for the last relevant year of income.

   In this case, Mr Adlard estimated his basic salary as $8,800.00 per month.

   Evidence provided by the employer shows Mr Adlard received commission and allowances in addition to the basic salary.

   After reviewing the evidence provided by the employer, we are satisfied that the estimated adjusted taxable income of $104,928 (annualised) is not an accurate representation of  Mr Adlard’s income and was not correct at the time it was lodged on 27 July 2023.

   Therefore, we have made the decision to refuse to accept Mr Adlard s estimate of adjusted taxable income of $104,928 (annualised) for the period 27 July 2023 to 30 June 2024.

   The objection is allowed.

   …

3. Mr Adlard told the Tribunal that his wage is made up of base salary, and a component of commissions. There is no guarantee he will receive commissions. He was advised by Child Support that he could nominate his base salary, and then “update” throughout the year when he received commissions. That was his intention; however, the “objection has overridden” that. His income in the previous year is about $60,000 more than his current income, so he considers it unfair to use the higher income. He was happy to “pay the difference” if income was higher after the end of the year.

4. Mrs Adlard told the Tribunal Mr Adlard also receives a car allowance in addition to commissions. Mr Adlard has not submitted his 2022/23 income tax return. Mr Adlard said he plans to lodge his return by the end of March 2024.

5. Mr Adlard said Child Support was aware of the car allowance and “factored that in”. He said that allowance will form part of his taxable income; however, he uses his own car for work purposes.

6. Mr Adlard told the Tribunal that his general issue with the assessment is that he is being asked to pay child support on a much higher figure from the past, which he regards as unfair.

Application of the law

1. The pivotal provision in this application is section 63AA of the Child Support (Assessment) Act 1989:

   63AA  Registrar may refuse to accept an income election

   (1)  If:

   (a)  a parent makes an income election to which subsection 60(2) applies; and

   (b)  the Registrar is satisfied that the amount worked out under that subsection is less than the amount that the Registrar considers is likely to be the parent’s actual adjusted taxable income for the year of income to which the income election relates;

   the Registrar may refuse to accept the income election.

   (2)  The Registrar may refuse to accept a parent’s income election to which subsection 60(3) applies if the Registrar is satisfied that:

   (a)  the partial year income amount for the income election is less than the amount that the Registrar considers is likely to be the parent’s actual adjusted taxable income for the remaining period in relation to the income election; or

   (b)  the total of the income component amounts estimated by the parent under paragraph 60(3)(b) for the period referred to in that paragraph is more than the amount that the Registrar considers is likely to be the total of the actual income component amounts for the parent for that period.

   (3)  If:

   (a)  a parent makes an election under subsection 62A(1); and

   (b)  the Registrar is satisfied that the partial year income amount for the income election is less than the amount that the Registrar considers is likely to be the parent’s actual adjusted taxable income for the remaining period in relation to the income election;

   the Registrar may refuse to accept the income election.

   (4)  In making the decision as to whether to refuse to accept the income election, the Registrar:

   (a)  may act on the basis of information that the Registrar has received or obtained as to the financial circumstances of the parent; and

   (b)  may, but is not required to, conduct an inquiry into the matter.

   (5)  Except for the purposes of Parts VII, VIIA and VIII of the Registration and Collection Act (dealing with objections and appeals), if the Registrar refuses to accept the income election, the election is taken never to have been made.

2. In short, the Registrar may refuse to accept an income election if the estimated amount is less than the amount that the Registrar considers is likely to be the parent’s actual adjusted taxable income for the year of income to which the income election relates.

3. I do not take Mr Adlard to be seriously suggesting that his income was not likely to be higher than his estimated income given that, on the balance of probabilities, he was likely at some stage during the financial year to receive commissions. That is indeed what appears to have transpired. Mr Adlard also conceded that his car allowance will form part of his adjusted taxable income.

4. Accordingly, I think it clear enough that the Registrar was right to exercise the discretion in section 63AA to refuse Mr Adlard’s estimate election. As this is the same conclusion as the objections officer, the decision under review will be affirmed.

5. I understand Mr Adlard will consider this outcome unsatisfactory. The child support scheme, under the rolling formula arrangements, is generally based upon applying the most recently completed tax year’s income. This is intended; however, if income reduces, that reduced income will feed into the assessment in the next year. However, the estimate regime allows an election of sufficiently reduced income to take effect earlier in the assessment; understandably, there is an objective test as to the likelihood of accuracy. Without such a test, the regime would be susceptible to manipulation. Here, I think it clear Mr Adlard’s actual adjusted taxable income was always likely to be higher than his nominated estimate.

6. I note that Mr Adlard is at liberty at any time to make a “change of assessment” application if he considers the child support assessment unfair. I also note that Mr Adlard says Child Support specifically advised him to only estimate his “base salary”. He is now deprived of the opportunity to make a different estimate election that perhaps may have been higher, accounting for a reasonable estimate of commission income, for example. If Mr Adlard considers he has suffered financial detriment as a result of maladministration, he is at liberty to approach Child Support and seek a compensation payment.[1] I am very careful to observe that this Tribunal has no role or jurisdiction over that scheme.

   [1] The Compensation for Detriment caused by Defective Administration (CDDA) Scheme.

DECISION

The decision under review is affirmed.