Asbridge and Hueffer (Child support)

[2024] AATA 4108

Asbridge and Hueffer (Child support) [2024] AATA 4108 (1 October 2024)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2024/BC028093

APPLICANT:  Mr Asbridge

OTHER PARTIES:  Child Support Registrar

Ms Hueffer

TRIBUNAL:Member C Breheny

DECISION DATE:  01 October 2024

DECISION:

The decision under review is affirmed.

CATCHWORDS 

CHILD SUPPORT – Particulars of the Assessment – an objection to the income estimate – income estimate election of $0 was always likely to be too low – 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 theChild Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

1. Mr Asbridge and Ms Hueffer are the separated parents of three children. Child support liability has been registered for collection since 17 April 2020 and Mr Asbridge is liable to pay child support to Ms Hueffer.

2. For the child support period 1 August 2023 to 31 October 2024, Mr Asbridge’s child support liability was $20,460 per annum, based on his 2022/23 adjusted taxable income of $151,775 and Ms Hueffer’ 2022/23 adjusted taxable income of $99,925.

3. On 16 August 2023 Mr Asbridge contacted Services Australia – Child Support (Child Support) to lodge an income estimate of $0 for the period 16 August 2023 to 30 June 2024. He indicated that his “Year to Date” (YTD) income from 1 July 2023 to 15 August 2023 was $21,885. The estimate was accepted by Child Support on the same day.

4. On 23 August 2023 Ms Hueffer objected to the decision stating that Mr Asbridge was employed and his income for the remaining year would not be $0. Mr Asbridge was advised of the objection by notice dated 22 April 2024 and he provided additional evidence (payslips) on 27 May 2024, indicating that he had resigned from his employment with effect from 17 August 2023. On 1 June 2024 a Child Support objections officer allowed Ms Hueffer’ objection and decided that the initial income estimate lodged on 16 August 2023 should be refused.

5. On 6 June 2024 Mr Asbridge lodged a second income estimate for the 2023/24 financial year, indicating that his YTD income from 1 July 2023 to 5 June 2024 was $59,150 and his income from 6 June 2024 to 30 June 2024 was $0. This income estimate was accepted on 6 June 2024.

6. On 19 June 2024 Mr Asbridge applied to the Social Services and Child Support Division of the Administrative Appeals Tribunal for an independent review of the objection decision. The application was heard on 1 October 2024. Mr Asbridge and Ms Hueffer attended the hearing by telephone and gave evidence on affirmation. I had before me the Statement and Documents provided by Child Support pursuant to subsection 37(1) of the Administrative Appeals Tribunal Act 1975, received on 18 July 2024 and numbered 1–181. I also considered additional evidence provided by Mr Asbridge (marked A1–A5) and Ms Hueffer (marked B1–B2).

ISSUES AND CONSIDERATION

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

The legislative provisions

1. In general, a person’s child support liability is calculated by using an adjusted taxable income, which is based on the person’s taxable income for the previous financial year.  In this case the child support period in question commenced from 1 August 2023 and the assessment was based on Mr Asbridge’s 2022/23 adjusted taxable income of $151,775.

2. Subdivision C of Division 7 of Part 5 of the Act enables a person to elect that an estimate of their adjusted taxable income is used either before the income year commences or during the income year to replace the income amount used in the assessment.

3. A person may make an estimate of income for a whole financial year, or part of a financial year, if the provisions in section 60 of the Act are met. Subsection 60(2) of the Act provides for an income estimate for a whole year of income. It states that the election must be made before the year of income starts or on the first day of the year of income (i.e. before 1 July of a given financial year).

4. If a person has not made an estimate for the whole year of income and wishes to estimate their income during the financial year, i.e. after the first day of the financial year, they can make an income estimate for part of the year (subsection 60(3)). If the person has already made an income estimate election for the year of income and wishes to make another estimate due to a change in their circumstances they must make a later income estimate (section 62A).

5. To make an income estimate the parent must estimate the following amounts: their taxable income for the year, reportable fringe benefits and target foreign income for the year, total net investment losses for the year, tax-free pensions or benefits, and reportable superannuation contributions.

The parties’ submissions

1. In this case there is no dispute that Mr Asbridge made an income election for part of the 2022/23 financial year on 16 August 2023. He indicated that his YTD income was $21,885 and that, from 16 August 2023 he would have no further income. He resigned from his employment as of 17 August 2023.

2. Mr Asbridge stated that the estimate he provided on 16 August 2023 was incorrect. He told the Child Support staff member that he was expecting a “termination payment” from his employer as he had resigned from his job. He was not certain however when this payment would be made and how much he would get paid. He was told that such lump sum payments would be included in his estimate.

3. Mr Asbridge said that he did not hear from Child Support again after his estimate was accepted and he did not contact them to update his initial estimate after he received the last payments from his employer.

4. Mr Asbridge further noted that he was not advised that Ms Hueffer had lodged an objection to the income estimate until about eight months later (in April 2024). It was only then that he realised that there was an issue with his income estimate. He provided payslips and evidence of his resignation in May 2024 (folios 86–91), which indicate that he received his termination payment on 31 August 2023 and that his final YTD salary was $59,149.

5. Mr Asbridge lodged a second income estimate for the period 6 June 2024 to 30 June 2024 of $0 on 6 June 2024 (folios 103–104 and 115–119) using a revised YTD taxable income of $59,150 for the period 1 July 2023 to 5 June 2024.

6. In the hearing Mr Asbridge said that his likely taxable income for 2023/24 was going to be about $50,000–$60,000. He had not been in paid employment since he resigned from his previous job in mid-August 2023 and was living off savings and his wife’s income. He noted that it was unfair that his child support liability should be assessed on his previous (2022/23) taxable income when his actual taxable income was much less. He also noted that he had not been advised of Ms Hueffer’ objection for many months. Had he been made aware of the issue it could have been resolved much earlier.

7. Ms Hueffer submitted that Mr Asbridge had still been working after August 2023, but was probably receiving cash or in-kind payments (folio B1). She contended that Mr Asbridge left his employment to avoid paying child support and noted that she may consider lodging a “change of assessment” application with Child Support.

Conclusion

1. I have considered the evidence before me. Section 63AA of the Act provides a discretion to refuse to accept an income estimate election. Paragraph 63AA(3)(a) enlivens the potential exercise of discretion to refuse if Mr Asbridge’s estimate of income for the part of the 2023/24 financial year was likely to be lower than his actual adjusted taxable income for that period.

2. I note that in making an estimate, the person is attempting to forecast future income, so absolute precision cannot necessarily be expected. The provisions in the Act for the amendment of estimates by the Registrar if circumstances change, and for estimate reconciliation after the end of the tax year once the actual income is ascertained, suggest that an overzealous approach in scrutinising an income estimate is not warranted. Consistent with this, it is also relevant to note that the power to refuse to accept an estimate is discretionary, not mandatory, even if the Registrar is satisfied that the estimate is too low.

3. On the other hand, if the Registrar were to take a lax approach, that may well encourage people to underestimate their income to avoid paying child support (in the short term at least). A balance must be struck, and I consider that it is appropriate to ascertain whether the estimate was reasonable when it was given. If it was, the appropriate course of action is not to reject the estimate in the course of an objection or a tribunal review, but for the Registrar to amend the estimate if that is warranted.

4. In this case the objections officer decided that the income estimate lodged on 16 August 2023 ($0) should be refused, because (although it was properly made) it was always going to be too low, as the evidence submitted by Mr Asbridge in May 2024 indicated that he had not included all of his income amounts in the estimate. He received a further payment of $7,329.12 on 17 August 2023 and a payment of $29,935.44 on 31 August 2023. These amounts resulted in an actual adjusted taxable income of $59,149.67. Thus, Mr Asbridge’s income estimate of $0 was likely to be lower than his actual taxable income for the period 16 August 2023 to 30 June 2024.

5. Mr Asbridge said that he told the Child Support staff member that he was expecting additional (termination) payments from his employer after 16 August 2023. He just did not know when he would receive the payments.

6. The corresponding file note (folios 12–13) indicates that Mr Asbridge advised he was “living off savings” and he “expected his income to change throughout the financial year”. Mr Asbridge also said that he “expected to get a new job at lower pay in two weeks” and he was asked whether he wanted to proceed with the estimate. The file note further indicates that Mr Asbridge “expected a lump sum payment from his employer” and he was reminded that this would be included in the income estimate. He was also reminded of his obligation to amend the estimate when there was a change to his income.

7. Mr Asbridge agreed that he did not contact Child Support until May 2024 and did not amend his estimate until 6 June 2024. He said that he had not been aware of any issues with his estimate. Child Support should have contacted him much earlier (i.e. shortly after Ms Hueffer lodged her objection on 23 August 2023) and the matter could have been resolved at that time.

8. I have considered the material before me. Based on Mr Asbridge’s own evidence he could have reasonably foreseen that he would have received additional payments from his employer. Payslips indicate that he was paid fortnightly in arrears and that on 16 August 2023 he had not yet received his salary for the period 30 July 2023 to 12 August 2023 ($7,329.12), which was paid on 17 August 2023.

9. Even if he was not aware of the amount of his termination payment he could have expected to earn (at least) $7,329.12 in the period 16 August 2023 to 30 June 2024. I thus consider that Mr Asbridge’s income estimate election of $0 for that period was always likely to be too low and that he would have been aware of that fact. I note that he was advised of his obligation to amend his income estimate if there were any changes, but he did not do so.

10. I am therefore satisfied that the most appropriate course here is to refuse Mr Asbridge’s income estimate election made on 16 August 2023 and affirm the decision under review.   

11. In making my decision I am cognisant that the departure determination process set out in Part 6A of the Act is available where a person considers that the administrative assessment provisions of a person’s income should not be applied due to the special circumstances of the case.

DECISION

The decision under review is affirmed.