Bingham and Swinney (Child support)

[2020] AATA 1033

Bingham and Swinney (Child support) [2020] AATA 1033 (6 March 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/PC018134 & 2019/PC018136

APPLICANT:  Miss Bingham

OTHER PARTIES:  Child Support Registrar

Mr Swinney

TRIBUNAL:Member S Brakespeare

DECISION DATE:  06 March 2020

DECISIONS:

The decisions under review are affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – whether the adjusted taxable income for the last relevant year was correctly applied – whether an income estimate was correctly reconciled - decisions under review affirmed

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. On 23 September 2019 officers of the Child Support Agency made the following decisions (the original decisions):

   ·     To calculate the child support assessment for the period 1 October 2019 to 31 December 2020 using Mr Swinney’s 2018/19 adjusted taxable income of $51,417.

   ·     To use Mr Swinney’s 2018/19 adjusted taxable income of $51,417 to reconcile his income estimates for the 2018/19 income year.

2. Miss Bingham objected to both decisions. The objections were disallowed on 3 December 2019 (the objection decisions). Miss Bingham lodged an application for review of both objection decisions with the tribunal on 30 December 2019.

3. A hearing was held on 6 March 2020. Miss Bingham and Mr Swinney both gave evidence on affirmation to the tribunal via conference telephone. The Child Support Agency provided the tribunal and the parties with bundles of papers relevant to both reviews (202 pages and 199 pages respectively).

4. Relevant aspects of the evidence and material before the tribunal will be referred to in the tribunal’s consideration of the issues which it has to decide.

ISSUES

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

   ·      Whether Mr Swinney’s 2018/19 adjusted taxable income of $51,417 should be used in the administrative assessment for the child support period 1 October 2019 to 31 December 2020; and

   ·      Whether Mr Swinney’s 2018/19 adjusted taxable income of $51,417 should be used to reconcile his income estimates for the 2018/19 income year.

CONSIDERATION

Issue 1 – Should Mr Swinney’s adjusted taxable income for 2018/2019 be used in the administrative assessment from 1 October 2019?

1. Section 43 of the Act provides that a person’s adjusted taxable income for a day in a child support period is their adjusted taxable income for the last relevant year of income in relation to the child support period. Section 5 of the Act defines the last relevant year of income in relation to a child support period as the last year of income that ended before the start of the period.

2. Subsection 34A(2) of the Act provides that as soon as practicable after the tax assessment is made, the Child Support Agency must assess the annual rate of child support payable for the child for days in a child support period starting on the first day of the next calendar month (after the calendar month in which Child Support Agency makes the assessment).

3. On 22 September 2019, after the Child Support Agency received notice from the Australian Taxation Office that Mr Swinney’s adjusted taxable income for 2018/19 was $51,417, an administrative assessment was made in respect of the child support period commencing from the first day of the next calendar month, being 1 October 2019 and ending on 31 December 2020.

4. Miss Bingham told the tribunal that she did not agree with the adjusted taxable income of $51,417 being used in the administrative assessment. She said that when Mr Swinney commenced work with [Employer 1] in December 2018, his annual salary was $105,000. In her view, that amount should be used in the administrative assessment for the period he was working.

5. Mr Swinney said that he stopped working for [Employer 1] in September 2019. His income for the year is likely to be in line with the amount of $51,417 being used in the administrative assessment.

6. The tribunal finds that in accordance with section 43 and subsection 34A(2) of the Act, Mr Swinney’s adjusted taxable income of $51,417 must be used in the administrative assessment for the child support period commencing 1 October 2019.

7. For a different income amount to be used for Mr Swinney, Miss Bingham would need to make an application for a change of assessment under Part 6A of the Act which relates to departure determinations. Any such application may not necessarily be successful.

Issue 2 – Should the adjusted taxable income of $51,417 be used to reconcile Mr Swinney’s estimates for the 2017/18 year?

1. Section 64A of the Act sets out how to reconcile a parent’s adjusted taxable income in instances where there has been more than one income election for the year. If the difference between the parent’s actual adjusted taxable income and the parent’s applicable year to date income amount (if any) for the year of income is more than the parent’s estimated ATI amount for the year of income, then the parent’s adjusted taxable income for a day that occurs in the application period for each income election is the amount that is worked out using the method statement in subsection 64A(4). The parent’s estimated ATI amount is worked out using the method statement in subsection 64A(3).

2. Miss Bingham contends that the amount used for reconciliation from 10 December 2018 through to 30 June 2019 should be an annualised income of $105,000, as this is what Mr Swinney was earning when he worked for [Employer 1].

3. Mr Swinney agreed that he worked for [Employer 1] for a nine-month period and during that time, his salary was in the vicinity of $105,000. However, he contended that over the 2018/19 income year, his income was $51,417 and this is the amount that should be used in reconciling his estimates.

4. The tribunal finds that Mr Swinney made an income election for the 2018/19 year of $0. He subsequently made an income election of $31,958.89 ($57,463 annualised) for the remaining period 10 December 2018 to 30 June 2019.

5. In accordance with the method statement in subsection (3), Mr Swinney’s estimated ATI amount for the year of income is $31,958.89. This is less than his actual adjusted taxable income of $51,417 and therefore his adjusted taxable income for each day in each election period is calculated in accordance with the method statement in subsection (4).

6. The method statement in subsection (4) requires that the difference between the actual adjusted taxable income and the estimated adjusted taxable income be calculated to arrive at an underestimated amount. The underestimated amount in this case is $19,458.11. This amount is then divided by 365 to arrive at an additional daily amount. The additional daily amount is added to the estimated daily amount for each estimate period to arrive at the underestimated rate for each period. The underestimated amounts, together with the estimated amounts for each estimate period, are then annualised.

7. The tribunal finds that the reconciled adjusted taxable incomes, calculated in accordance with the method statement, are as follows:

   ·$19,454.50 for the period 1 July 2018 to 9 December 2018; and

   ·$76,924.01 for the period 10 December 2018 to 30 June 2019.

8. The legislation does not allow for reconciliation to occur using any other method or amount.

DECISIONS

The decisions under review are affirmed.