Bankes and Harker (Child support)

[2021] AATA 1267

Bankes and Harker (Child support) [2021] AATA 1267 (22 March 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/HC020485

APPLICANT:  Mr Bankes

OTHER PARTIES:  Child Support Registrar

Ms Harker

TRIBUNAL:Member M Baulch

DECISION DATE:  22 March 2021

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate reconciliation – no error in calculation – 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 Mr Bankes’ liability to pay child support to Ms Harker.

2. The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of the child support payable by one parent to the other. It uses a statutory formula which contains variables such as the parents’ adjusted taxable incomes, the number and ages of their children and their percentages of care. 

3. Mr Bankes and Ms Harker are the separated parents of [the child]. Since 4 February 2003, Mr Bankes has been assessed as liable to pay child support to Ms Harker by Services Australia (previously known as the Department of Human Services) – Child Support (Child Support).

4. On 9 May 2019, Mr Bankes made an estimate of his adjusted taxable income to be used in the child support assessment.  On 15 October 2019, Mr Bankes amended the amount of that estimate.

5. On 11 July 2020, Child Support reconciled Mr Bankes’ actual adjusted taxable income with the amounts he had estimated on 9 May 2019 and 15 October 2019.  As part of that reconciliation, it was determined that Mr Bankes was required to pay an additional $570.40 in child support to Ms Harker for the period 1 July 2019 to 30 June 2020 (the decision under review).

6. Mr Bankes objected to that decision and, on 4 December 2020, that objection was disallowed. Mr Bankes has now applied to this tribunal for an independent review of Child Support’s decision.

7. A hearing into the application for review was held by the tribunal on 22 March 2021. Mr Bankes discussed the application for review with the tribunal by telephone and gave evidence under affirmation during the hearing. A representative of the Child Support Registrar (the Registrar) did not participate in the hearing. Ms Harker did not answer her telephone when contacted by tribunal staff for the purposes of setting up a telephone conference for the hearing. Pursuant to paragraph 40(1)(b) of the Administrative Appeals Tribunal Act 1975 (the AAT Act), the tribunal proceeded with the hearing in Ms Harker’s absence.

8. The tribunal had before it relevant documents provided to it by Child Support pursuant to section 37 of the AAT Act (154 pages), copies of which were sent to both parties by Child Support prior to the tribunal hearing.

ISSUES

1. The statutory provisions relevant to this review application are found in the Act.

2. The issue which arises in this case is whether or not Child Support has correctly reconciled Mr Bankes’ estimates of his adjusted taxable income that applied for the 2019–20 income year.

CONSIDERATION

1. Child Support makes child support assessments using a formula outlined in Part 5 of the Act.  The elements of this formula include, amongst other things, the adjusted taxable income of each parent.

2. The adjusted taxable income for each parent is defined in section 43 of the Act and includes primarily the taxable income from the year of income in relation to the child support period.  The term year of income is defined in subsection 5(1) of the Act and generally means a financial year.

3. Section 60 of the Act allows a parent to elect to estimate his or her adjusted taxable income for a year of income and use the estimated income to replace their adjusted taxable income.  The parent can make an estimate prior to the year of income based on their estimate of their income for that year; or they can make an estimate during an income year based on what they estimate they will earn for the rest of the year.

4. Section 62 of the Act permits a parent to revoke an earlier estimate election, however when this occurs, they must make a new estimate of their adjusted taxable income pursuant to section 62A of the Act.

5. After the end of the income year, Child Support is required to undertake a reconciliation calculation; comparing the parent’s estimated income with their actual income.  If the actual income is higher than the estimate, their assessment must be amended to use the actual income (section 64 and 64A of the Act).

6. On 9 May 2019, Mr Bankes made an election to have an estimate of his adjusted taxable income of $14,823 applied to the child support assessment from 1 July 2019.  On 15 October 2019, Mr Bankes amended the amount of his estimate.  He estimated that his adjusted taxable income would be $23,426.40 for the 2019–20 income year, so Child Support applied an annualised amount of $26,863 as Mr Bankes’ adjusted taxable income in the child support assessment for the period 11 October 2019 to 30 June 2020.

7. On 11 July 2020, the Australian Taxation Office (the ATO) assessed Mr Bankes’ taxable income, and Child Support determined that Mr Bankes’ actual adjusted taxable income for the 2019-20 income year was $27,413.  As Mr Bankes’ actual adjusted taxable income was greater than the amounts estimated, a reconciliation of his estimates is required.

8. Mr Bankes is unhappy that the amount of $27,413 used as his actual adjusted taxable income includes a gross amount of $10,000 taken from superannuation, in regard to which Mr Bankes asserts that he has already paid taxation and child support.  Ultimately, Child Support takes, as Mr Bankes’ taxable income, the amount that was determined by the ATO (see section 56 of the Act).  If Mr Bankes is unhappy with how the amount withdrawn from superannuation has been assessed by the ATO, he should follow that issue up with the ATO.

9. Child Support has calculated that when Mr Bankes’ actual adjusted taxable income of $27,413 is applied to the child support assessment for the period 1 July 2019 to 30 June 2020, that Mr Bankes is required to pay an additional $570.40 in child support to Ms Harker.  I have examined those calculations and did not identify any errors.

10. Mr Bankes asserts that the additional amount of child support is too high, as his actual adjusted taxable income of $27,413 is not much higher than the annualised amount of $26,863 that was applied to the child support assessment from 11 October 2019.  However, I noted that there is a significant discrepancy between Mr Bankes’ estimated and actual adjusted taxable income for the period 1 July 2019 to 10 October 2019.

11. I concluded that Child Support has correctly reconciled Mr Bankes’ estimated adjusted taxable income and, for these reasons, I therefore affirmed the decision under review.

DECISION

The decision under review is affirmed.