Ainsworth and Mynatt (Child support)

[2019] AATA 5944

Ainsworth and Mynatt (Child support) [2019] AATA 5944 (22 November 2019)

DIVISION:  Social Services & Child Support Division

REVIEW NUMBER:  2019/SC017147

APPLICANT:  Ms Ainsworth

OTHER PARTIES:  Child Support Registrar

Mr Mynatt

TRIBUNAL:  Member A Ducrou

DECISION DATE:  22 November 2019

DECISION:

The tribunal sets aside the decision under review and, in substitution, decides that the income election made by Mr Mynatt on 3 May 2019 is refused.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income – estimated income amount less than the parent’s likely taxable income – decision under review set aside and substituted

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 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

1. Ms Ainsworth and Mr Mynatt are the separated parents of two children aged four and two (the children) in respect of whom there is a child support assessment. This review is about the income particulars to be recorded and applied in the child support assessment. Specifically, this review concerns whether an estimate of income that Mr Mynatt provided on 3 May 2019 for the period from 3 May 2019 to 30 June 2019 should be accepted and recorded as a particular of the child support assessment.

2. A child support case for the children was registered with the Department of Human Services – Child Support (the Department). From 17 December 2018 Mr Mynatt was the parent liable to pay child support to Ms Ainsworth. From 31 December 2018 the Department used an adjusted taxable income for Mr Mynatt of $148,058 in the administrative assessment. The adjusted taxable income reflected the provisional income applied for Mr Mynatt as he had not lodged his tax return for the 2017/2018 financial year with the Australian Taxation Office (the ATO).

3. The Department’s records show that Mr Mynatt contacted the Department on 3 May 2019 about his income. In summary, Mr Mynatt advised the Department that his income for the 2017/2018 financial year was $148,058. In that financial year he had worked in a higher position and was doing a lot of overtime, weekend work and after-hours shifts. Since then he had been demoted. Mr Mynatt provided details of his income for the 2018/2019 income year (corresponding with the 2018/2019 financial year). He advised that he had not been able to work since an accident on 18 February 2019. His last pay was on 2 May 2019 and he had used up all of his long service leave and annual leave. Based on the information that Mr Mynatt provided his estimated income for the period from 3 May 2019 to 30 June 2019 was calculated as $0. This equated to an annualised income of $0 per annum for that period.

4. On 3 May 2019 a delegate of the Child Support Registrar (the Registrar) decided to accept Mr Mynatt’s estimate of income for the period from 3 May 2019 to 30 June 2019. The particulars of the administrative assessment of child support for the children were amended and an adjusted taxable income of $0 was used for Mr Mynatt in the administrative assessment from 3 May 2019 to 30 June 2019. This resulted in a reduction in the annual rate of child support that Mr Mynatt was liable to pay to Ms Ainsworth for that period.

5. On 6 May 2019 Ms Ainsworth lodged an objection to the decision made on 3 May 2019.

6. On 15 July 2019 an objections officer of the Department decided to disallow the objection. The objections officer decided to affirm the decision to accept the estimate of income provided by Mr Mynatt for the period from 3 May 2019 to 30 June 2019. An adjusted taxable income of $0 continued to be used for Mr Mynatt in the administrative assessment of child support from 3 May 2019 to 30 June 2019.

7. On 13 August 2019 Ms Ainsworth made an application electronically to the Social Services and Child Support Division of the Administrative Appeals Tribunal (the tribunal) for review.

8. The tribunal conducted a hearing on 22 November 2019. The Registrar did not attend the hearing. Ms Ainsworth participated at the hearing by conference telephone. She gave oral evidence on affirmation and made oral submissions. The tribunal made several attempts to contact Mr Mynatt on the contact telephone number he provided at the scheduled hearing time. Mr Mynatt did not answer the calls. AAT Registry records show that Mr Mynatt was notified by letter dated 14 November 2019 of the hearing and that on 21 November 2019 he was sent an SMS message reminding him of the hearing. Mr Mynatt did not contact the tribunal to advise that he would not be able to participate at the hearing. He did not request that the hearing be rescheduled. Having regard to section 29 of the Child Support Directions made under section 18B of the Administrative Appeals Tribunal Act 1975, the tribunal proceeded to hear and decide the application for review in the absence of Mr Mynatt without his oral evidence and submissions. The tribunal had before it documents that the Registrar provided (numbered 1 to 295). Copies of the documents were provided to the parties. The tribunal made its decision on 22 November 2019.

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Assessment Act).

2. The issue which arises in this case is:

   ·      Should the income election made by Mr Mynatt on 3 May 2019 for the period from 3 May 2019 to 30 June 2019 have been accepted?

CONSIDERATION

Issue – Should the income election made by Mr Mynatt on 3 May 2019 for the period from 3 May 2019 to 30 June 2019 have been accepted?

1. The legislation establishes a system for the assessment of the rate of child support payable in a particular child support case. In the majority of cases a statutory formula is applied. As part of the statutory formula the child support income for each parent is determined. Under section 41 of the Assessment Act a parent’s child support income is their adjusted taxable income less the self-support amount. Subsection 43(1) of the Assessment Act sets out how a parent’s adjusted taxable income is calculated. The adjusted taxable income comprises the total of the parent’s taxable income for the last relevant year of income and other specified components.

2. Under subsection 60(1) of the Assessment Act a parent is permitted to elect that their adjusted taxable income for child support purposes for the year of income is to be an amount that they estimate. Subsection 60(3) applies if a parent makes the election during the year of income but not on the first day of the year of income. It requires the parent to work out two income amounts. The first is the parent’s year-to-date income for the period from the start of the financial year until the end of the day before the start day for the election. The second is the parent’s estimate of each component of their income for the period starting on the start day for the election and ending at the end of the last day of the year of income. That income amount is referred to as the partial year income amount. If the parent subsequently decides that their recorded year-to-date income is incorrect they can elect another amount to replace the year-to-date income amount for the year of income (section 63AC of the Assessment Act).

3. Section 63AA of the Assessment Act sets out when the Registrar may refuse to accept an income election. Relevantly, under subsection 63AA(2) an application for a partial year estimate election may be refused if the Registrar is satisfied that the partial year income amount is likely to be less than the parent’s actual adjusted taxable income for the remaining period in relation to the income election. The power conferred by the legislation to refuse to accept an income election is discretionary. Subsection 63AA(4) provides that in making a decision to refuse an income election, the Registrar may use information that the Registrar has obtained and may, but is not required to, conduct an enquiry into the matter. The Department's online policy guide, the Child Support Guide (“the Guide”) at section 2.5.1 makes it clear that all circumstances are to be considered and that further information either from the parent or a third party (for example an employer ) may be obtained. Section 2.5.1 of the Guide states that a parent will be given the opportunity to show that the estimate is correct before refusing to accept an estimate.

4. In this review the tribunal is the decision-maker. In determining whether to exercise the discretion to refuse to accept an income election, the tribunal’s attention is directed to an assessment of what is likely to happen on objectively knowable facts when the original decision to accept the income election was made rather than to make a retrospective assessment of a parent’s actual income. If an event occurs after a decision is made to accept an income election it does not follow that the exercise of the discretion to refuse to accept the estimate is necessarily warranted in circumstances where the event was unanticipated and did not render the estimate unrealistic when the original decision was made. Based on the Department’s records the tribunal finds that on 3 May 2019 Mr Mynatt lodged an estimate of his income for the period from 3 May 2019 to 30 June 2019. Based on the information that Mr Mynatt provided his estimated income for that period was recorded as $0.

5. The information that Mr Mynatt provided to the Department on 3 May 2019 is set out in paragraph 3 above. Departmental records show that the officer who Mr Mynatt spoke to attempted to contact his employer but was not able to do so. Ms Ainsworth maintained that the Department had not made proper enquiries with Mr Mynatt’s employer or with his bank and that because of this accurate information about his income was not before the original decision-maker. Ms Ainsworth contended that in addition to income Mr Mynatt continued to receive from his employer he was also receiving income from a workers’ compensation or third-party injury claim he made in respect of his injuries from the accident.

6. Following the lodgement of her objection Ms Ainsworth provided the Department with a copy of a payslip for Mr Mynatt for the pay period ending on 6 January 2019. She also provided the Department with a copy of a letter dated 22 May 2019 from [an Insurance Company]. The information in the documents was consistent with the information that Mr Mynatt had provided to the Department when he estimated and was considered by the objections officer in their decision. The objections officer received statements for an account held by Mr Mynatt with [a bank]. Departmental records show that Mr Mynatt’s employer advised the Department on 24 June 2019 that Mr Mynatt was employed and that he was entitled to receive income on 3 May 2019. He received gross wages of $3,218 on 12 May 2019 for the pay period from 29 April 2019 to 12 May 2019. On 1 July 2019 Ms Ainsworth provided the Department with a Federal Circuit Court of Australia financial statement lodged by Mr Mynatt. Mr Mynatt listed total salary or wages income before tax of $750 on average per week. The objections officer noted that this indicated that Mr Mynatt may have been earning an income in June 2019 but found that there was no confirmation of when the income commenced, or that it was known of, as at 3 May 2019.

7. Ms Ainsworth provided the Department with a copy of a letter dated 23 August 2019 from Mr Mynatt’s lawyers. Copies of Mr Mynatt’s most recent payslips were enclosed with the letter. The tribunal finds that Mr Mynatt received gross wages of $1,185.90 for leave for the pay period that ended on 7 July 2019 and that he received gross wages of $3,299.36 for the pay period that ended on 21 July 2019. Bank statements that were provided to the Department subsequently showed that the following amounts were deposited to Mr Mynatt’s bank account from his employer as salary:

Date	Payment
02/05/2019	$130.95
15/05/2019	$2,310.19
29/05/2019	$2,328.58
12/06/2019	$2,328.57
26/06/2019	$614.11
10/07/2019	$593.31
24/07/2019	$666.59

1. Ms Ainsworth told the tribunal that she had received a letter from Mr Mynatt’s lawyers on the day of the hearing which set out details of compensation payments that he had been receiving since 2 May 2019. Ms Ainsworth suggested that because of the circumstances of Mr Mynatt’s accident he may have been receiving the payments from a different section of the insurance company than the section that had provided the letter to the Department initially.

2. Based on the available evidence the tribunal was satisfied that the payments that Mr Mynatt received from his employer were required to be included in his taxable income for the 2019/2020 financial year. The tribunal noted that the payments were made by the same employer who employed Mr Mynatt when he provided the income estimate and who continued to employ him. In the tribunal’s view the evidence was consistent with the partial year income amount of $0 for the income election that Mr Mynatt made on 3 May 2019 being likely to be significantly less than the actual amount of Mr Mynatt’s adjusted taxable income for the remaining period from 3 May 2019 to 30 June 2019. The tribunal considered that it was likely on an objective basis that Mr Mynatt would have been aware of this when he made the estimate. Therefore the tribunal may refuse the estimate in accordance with subsection 63AA(3) of the Assessment Act. The tribunal was satisfied based on the available evidence that in the circumstances it was appropriate to refuse to accept the income election made by Mr Mynatt on 3 May 2019. In accordance with subsection 63AA(5) of the Assessment Act the election is taken never to have been made.

DECISION

The tribunal sets aside the decision under review and, in substitution, decides that the income election made by Mr Mynatt on 3 May 2019 is refused.