Boleyn and Vannoy (Child support)

[2022] AATA 2104

Boleyn and Vannoy (Child support) [2022] AATA 2104 (4 May 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/PC022782

APPLICANT:  Mr Boleyn

OTHER PARTIES:  Child Support Registrar

Ms Vannoy

TRIBUNAL:Member J Thomson

DECISION DATE:  4 May 2022

DECISION:

The tribunal sets aside the decision under review and, in substitution, decides that Mr Boleyn’s income estimate of $85,514 for the period 4 April 2021 to 30 June 2021 should be accepted.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income - whether lump sum should be included in amended estimate of income – lump sum should not be included - 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. Mr Boleyn and Ms Vannoy are the parents of [Child 1], born 2011, and [Child 2], born 2014 (the children), both of whom are recorded as being in the 65% care of Ms Vannoy and the 35% care of Mr Boleyn

2. From 1 July 2021 Mr Boleyn’s child support liability was assessed on the basis of his income estimate of $73,000.

3. On 4 February 2021, Mr Boleyn contacted the Agency to notify them that he expected to receive a lump sum payment on 9 February 2021

4. On 5 March 2021, Mr Boleyn notified the Agency of his receipt of a lump sum payment from his employer of $20,000, and an increase in his weekly wages from $1,540 to $1,640. He also advised that his year-to-date income of $64,759. As a consequence the Agency amended the child support record, by amending Mr Boleyn’s income estimate to $113,483 per annum for the period 13 October 2020 to 30 June 2021 (after a correction to the child support record on 12 March 2021) .

5. On 16 March 2021 Mr Boleyn again contacted the Agency to discuss the calculation of his income estimate components. On the same day the Agency made a decision to recalculate his child support assessment and record his income estimates for the period 13 October 2020 to 3 March 2021 at $85,514 per annum and for the period 4 March 2021 to 30 June 2021 at $146,858 per annum.

6. On 14 September 2021, Mr Boleyn lodged his objection to the Agency’s decision of 16 March 2021, approximately 154 days outside the 28-day statutory period for lodging his objection. On 20 September 2021, the Agency granted Mr Boleyn an extension of time in which to object to the Agency’s decision of 16 March 2021.

7. On 18 November 2021, an Agency objections officer disallowed Mr Boleyn’s objection, and on 19 November 2021, Mr Boleyn applied to the tribunal for review of the objections officer’s decision.

8. The tribunal heard the matter on 17 February 2022. Both parents attended the hearing via MS Teams audio and gave affirmed evidence. The tribunal had before it documentation provided by the Agency (Exhibit 1) and Mr Boleyn (Exhibit A). Both parents had copies of these documents with them at the hearing.

9. The tribunal issued an order pursuant to section 39AA(5) of the Administrative Appeals Tribunal Act 1975 on18 February 2022 , seeking submissions from the Agency regarding, relevantly, the manner in which the lump sum redundancy payment of $20,000 referred to above should be taken into account in determining Mr Boleyn’s amended income estimate for the 2020/21 financial year.

10. The Agency’s legal representative, [Mr A] Lawyers, provided written submissions dated 26 April 2022 in compliance with the tribunal’s order of 18 February 2022. These have been admitted into Evidence and marked Exhibit C and circulated to the applicant and Ms Vannoy for consideration and comment.

ISSUES

1. The issue which arises in this case is whether the lump-sum payment of $20,000 made to Mr Boleyn by his employer on 4 March 2021 should be included in his amended income estimate notified to the Agency on 4 March 2021 as income for the purposes of determining his child support liability:

CONSIDERATION

1. In reaching its decision, the tribunal has considered the affirmed evidence given by the parents at the hearing, the documentation provided by the Agency, including its legal representative’s submissions dated 26 April 2022, Exhibit 1, and Mr Boleyn’s documentation, Exhibit A.

2. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act). Section 60(2) of Part 5 of the Act sets out the various components to be taken into account in determining the administrative assessment of child support, one of which is a parent’s “child support income”, calculated by using the parent’s adjusted taxable income (ATI), the principal component of which is the parent’s taxable income.

3. A parent’s taxable income is generally the amount assessed under the Income Tax Assessment Act 1997. However, where an assessment of a person’s taxable income has yet to be made, section 62A of the Act makes provision for a parent to elect to estimate the whole of their ATI for a year of income and to subsequently amend that estimate from time-to-time. Section 62A(2) provides, relevantly, that, subject to subsection (3), the start date for the parent’s new income estimate under subsection (1) must be the day on which the parent makes that election.

4. Subsection (3)(a) provides, relevantly, that if an event affecting the accuracy of an estimate on which the earlier election is based has occurred, and the amount that would be worked out under subsection (1) for an election under that subsection if the start date for that election was the day on which the event occurred is more than the total of the component amounts referred to in subsection 60(2) which applied to the earlier election, the start date of the amended election must be the day on which the event occurred.

5. Mr Boleyn’s evidence at hearing, reflected in the relevant Agency file notes contained in Exhibit 1 and [Mr A]’s written submissions of 26 April 2022, was that on 4 February 2021 he contacted the Agency to notify that he anticipated getting a lump sum payment on 9 February 2021. The Agency diary note of that date at page 115 of Exhibit 1 does not record him identifying whether the payment was a redundancy payment or whether it was taxable or non-taxable.

6. The Agency’s file note at page 116 of its papers, Exhibit 1, records Mr Boleyn’s telephone call to the Agency on 5 March 2021 to lodge an amended income estimate in which he advised the Agency’s officer, [of] his having received a $20,000 lump-sum payout the previous day (4 March 2021), that his weekly wages had increased from $1,540 to $1,640 and that his year-to-date income was $64,759. Again, he did not identify whether the lump-sum payout was a redundancy payment or whether it was taxable or non-taxable.

7. There is no evidence before the tribunal to suggest that Mr Boleyn was aware at the time of his notification of the $20,000 payout to the Agency on 4 March 2021 that the payment would be considered as a non-taxable receipt by the Australian Taxation Office (ATO) in his 2020/21 income tax return, and not included as income in his income tax assessment for that financial year.

8. Nor was there any evidence before the tribunal to suggest that the Agency officers with whom Mr Boleyn spoke on 4 February 2021 and 5 March 2021 sought better particulars as to the source or the nature of the $20,000 lump-sum payout/payment and they appear to have assumed it was some form of taxable income, and treated it as such in the Agency’s determination of his amended income estimate

9. The Agency’s file records for the period 4 March 2021 to 16 March 2021 reflect the Agency was dealing with the correction of an error in its recording of Mr Boleyn’s earlier notification of his anticipated receipt of the $20,000 payout as having been received by him on or about 12 October 2020 when he notified them of his increased weekly salary from $1,540 to $1,640 from his then employer, [Company 1]. He did not actually receive the $20,000 lump-sum payment until 4 March 2021.

10. The Agency’s resolution of this error is reflected in its file note dated 16 March 2021 recorded at page 149 of the Agency’s papers, Exhibit 1 in which, for the first time, it refers to the $20,000 payment as a redundancy payment, and correctly records the amended estimate reflecting the receipt of those funds on 4 March 2021 and the change in the income estimate from 5 March 2020, reflected in the Agency’s decision of 16 March 2021 at page 158 pf Exhibit 1.

11. It is not until 10 September 2021, after the Agency is notified by the ATO of Mr Boleyn’s 2020/21 income tax assessment in the amount of $85,192 that the Agency and Mr Boleyn become aware that the $20,000 redundancy payment notified by Mr Boleyn to the Agency on 4 March 2021 has been considered a non-taxable payment by the ATO and the Agency issued letters to the parents dated 10 September 2021 notifying Mr Boleyn of the reconciliation of his 2020/21 taxable income at $85,192

12. The Agency papers record Mr Boleyn’s objection to its decision of 16 March 2021 dated 13 March 2021 in which he makes reference for the first time to the court ordered lump sum payment of $20,000 he received on 4 March 2021.

13. This payment is identified in the submissions provided by the Agency’s representative, [Mr A], post hearing, dated 26 April 2022, as a payment pursuant to a judgment of [a named Judge] of the Federal Circuit Court on 12 November 2020 in favour of Mr Boleyn in respect of his claim against his former employer, [Company 1], as a payment in lieu of notice of termination and redundancy, which the ATO and the Agency accept was non-taxable (see paragraph 26 of [Mr A]’s submissions at page C279 of Exhibit C).

14. Ms Vannoy’s evidence at the hearing was limited. She acknowledged that the inclusion of the lump sum payment as income in Mr Boleyn’s income estimate and its annualisation over the period 4 April 2021 to 30 June 2021 would have inflated the calculation of Mr Boleyn’s rate of child support over that period. She also asserted her reliance on Mr Boleyn’s income to contribute to the support of the children in the assessment.

15. The submissions provided by [Mr A] on behalf of the Agency referred to above in addition to identifying the correct nature of the lump sum payment and the appropriate treatment of the payment as non-taxable, acknowledged that at the time of Mr Boleyn’s actual election to include the lump sum payment as part of his income election from the date he received the payment on 4 April 2021, it could not have occurred to the Registrar that the redundancy payment was not taxable income as part of Mr Boleyn’s ATI. [Mr A] assert that the Registrar’s decision has since been overtaken by the subsequent revelation that the payment has been assessed by the ATO as non-taxable.

16. The tribunal stands in the original decision maker’s shoes. It also has the benefit of accurate information regarding Mr Boleyn’s income component amounts when determining whether to accept his estimate. Thus, pursuant to subsection 62A(1) of the Act the tribunal disregards the non-taxable income received by Mr Boleyn and determines that Mr Boleyn’s ATI for the period 4 April 2021 to 30 June 2021 should be assessed on an income estimate of $85,514 (based on his declared weekly salary of $1,640), and not including the non-taxable lump sum payment of $20,000.

DECISION

The tribunal sets aside the decision under review and, in substitution, decides that Mr Boleyn’s income estimate of $85,514 for the period 4 April 2021 to 30 June 2021 should be accepted.