Boulding and Wrinch (Child support)

Boulding and Wrinch (Child support) [2021] AATA 5036 (10 November 2021)

DIVISION:Social Services & Child Support Division
REVIEW NUMBERS: 2021/MC022090
APPLICANT: Mr Boulding

OTHER PARTIES: Ms Wrinch

Child Support Registrar

TRIBUNAL: Member S Cullimore

DECISION DATE: 10 November 2021

DECISION:

The Tribunal sets aside the decision under review and substitutes a new decision that Mr Boulding’s adjusted taxable incomes for the 2007/08 and 2008/09 financial years be retrospectively amended to $12,000.

This means that new child support assessments should now be made for the period 13 October 2008 to 12 April 2011, and any arrears of child support which he owes be adjusted accordingly.

This means that his application for review is partly successful.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – whether the adjusted taxable incomes for past periods for the liable parent should be changed – discretion to assess based on Male Total Average Weekly Earnings – conditions for changing the incomes to lower amounts are met – liable parent’s imprisonment and health issues prevented lodgement of 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 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

The following background information is taken from the records of Services Australia – Child Support (“the CSA”) and is not in dispute, and the Tribunal finds each matter as fact.
Mr Boulding and Ms Wrinch are the parents of one child, now aged 17.
The child support case started on 20 January 2005 and has been Registrar Collect since that date.
On 13 April 2021 Mr Boulding applied (in essence) to have his child support liability for the period 13 October 2008 to 12 April 2011 retrospectively reduced.[1]
[1] C185 and see below.
On 27 April 2021 a delegate refused that application.[2]
[2] C217.
On 26 May 2021 Mr Boulding objected to that decision.[3]
[3] C220.
On 22 July 2021 an objections officer disallowed his objection.
On 13 August 2021 Mr Boulding sought further review by this Tribunal of the objection decision.

DOCUMENTARY EVIDENCE AND HEARING

The Tribunal had before it the original bundle of documents provided by the CSA (406 pages).
Mr Boulding was represented by [Ms A] from Victorian Legal Aid.
[Ms A] attended the hearing on his behalf on 10 November 2021 via teleconference and made verbal submissions.
The Tribunal has also today given a decision in another, but unrelated matter, concerning Mr Boulding. This is review 2021/MC022083.
The Tribunal received in evidence from [Ms A] unredacted copies of Mr Boulding’s Prison Record, and of two medical reports from, and medical notes of, his general practitioner, [Dr B]. (The two CSA files contained heavily redacted versions of these documents).
Ms Wrinch chose not to take part in these proceedings.

ISSUE

The principal issue to be decided by the Tribunal can be summed up as follows:
· Should the adjusted taxable incomes of Mr Boulding in 2007/08 and 2008/09 now be retrospectively determined as lower amounts than those which are now fixed?

CONSIDERATION

The relevant child support law

Child support is in most cases based upon a “formula” which looks at a number of factors, including the “adjusted taxable incomes” of the parents for a previous tax year. Assessment of child support in this way is called “administrative assessment”.
The major component in most cases of “adjusted taxable income” is the person’s “taxable income” as assessed by the Commissioner of Taxation.[4]
[4] See section 43 of the Assessment Act.
Where a person does not lodge a tax return for a particular year, the Registrar may determine that that person has an adjusted taxable income of a certain amount. This is called a “deemed income” or “provisional income”.
If the Registrar has a recent, previous tax return for the person, the figure for the relevant year can be worked out by adding an “indexation factor” to that (last known) previous taxable income.
If the Registrar has no previous tax returns for the prior two financial years for the person, the figure for the relevant year can be worked out based upon the so-called “MTAWE” figure (“Male Total Average Weekly Earnings”).
The MTAWE figure is a statistical average of weekly earnings, nationally, and is itself subject to annual indexation.
For 2020/21 this figure is $78,957.
If information later comes to light of the actual taxable income of the person, for the tax year or years for which a “deemed” income has been applied, then, in some circumstances, the deemed income can be replaced, retrospectively, with the actual taxable income.
That is the issue here.
The relevant law is contained in section 58 onwards of the Child Support (Assessment) Act 1988 (“the Act”) and in Regulation 11 of the Child Support (Assessment) Regulations 2018.
Given the complexity of this matter, the relevant provisions of the Act and Regulations are set out below (my emphasis added):
58Determination by the Registrar of a parent’s adjusted taxable income
(1)This section applies if a parent is to be assessed in respect of the costs of a child in relation to a child support period and either of the following apply:
(a)the parent’s taxable income for the last relevant year of income in relation to the period has not been assessed under an Income Tax Assessment Act;
(b)the Registrar is unable to ascertain whether or not the parent’s taxable income for that year has been so assessed.
…..
Parent’s taxable income assessed for the previous year of income
(3)If:
(a)the parent’s taxable income for a year of income has been assessed under an Income Tax Assessment Act; and
(b)that year (the previous year) is the year of income before the last relevant year of income;
the Registrar may determine that the parent’s adjusted taxable income for the last relevant year of income is the amount worked out by multiplying the parent’s adjusted taxable income for the previous year by the ATI indexation factor.
Parent’s taxable income assessed for an earlier year of income
(4)If:
(a)the parent’s taxable income for the previous year has not been assessed under an Income Tax Assessment Act; but
(b)the parent’s taxable income for an earlier year of income has been so assessed;
the Registrar may determine that the parent’s adjusted taxable income for the last relevant year of income is the greater of the following amounts:
(c)the amount worked out by multiplying the parent’s adjusted taxable income for the earlier year of income (or, if the parent’s taxable income has been so assessed for more than one earlier year of income, the most recent of those years) by the ATI indexation factor;
(d)the amount that is equal to two‑thirds of the annualised MTAWE figure for the relevant June quarter in relation to the child support period.
Other circumstances
(5)If:
(a)subsections (2), (3) and (4) do not apply in relation to the parent; or
(b)the Registrar decides not to make a determination in relation to the parent under one of those subsections;
the Registrar may determine that the parent’s adjusted taxable income for the last relevant year of income is an amount that is at least two‑thirds of the annualised MTAWE figure for the relevant June quarter in relation to the child support period.

…
58ASubsequently ascertaining components of a parent’s adjusted taxable income
(1)The Registrar must immediately amend an administrative assessment of child support payable by or to a parent in relation to a child support period if:
(a)the assessment was made on the basis of a determination under section 58; and
(b)either:
(i)the Registrar subsequently ascertains the amount of the parent’s adjusted taxable income for the last relevant year of income; or
(ii)….and
(c)either:
(i)if subparagraph (b)(i) applies—the amount that was subsequently ascertained is different from the amount that was determined under section 58; or
….

Retrospective determinations
(2)If:
(a)at the time the Registrar is to amend the administrative assessment under this section, the parent could lodge his or her tax return by the date required under Part IV of the Income Tax Assessment Act 1936 (taking into account any deferral under section 388‑55 in Schedule 1 to the Taxation Administration Act 1953); or
(b)paragraph (a) of this subsection does not apply and:
(i)the amount subsequently ascertained, as mentioned in subparagraph (1)(b)(i), is higher than the amount that was determined under section 58; or
(ii)the later amount that the Registrar determines, as mentioned in subparagraph (1)(b)(ii), is higher than the earlier amount determined under section 58; or
(c)neither paragraph (a) nor (b) applies, but circumstances prescribed by the regulations for the purposes of this section apply in relation to the parent;

then the Registrar must immediately amend the administrative assessment for the child support period on the basis that the parent’s adjusted taxable income for that year of income is, and has always been, the amount that was subsequently ascertained or later determined (as the case requires).

Regulation 11 relevantly states:
11Adjusted taxable income—prescribed circumstances
(1)For the purposes of section 58A of the Act, the following circumstances are prescribed in relation to a parent who was unable to provide information about the parent’s adjusted taxable income to the Registrar at the time the relevant administrative assessment was made:
(a)one or more of the following applied in relation to the parent at that time:
(i)the parent did not know that an application for the assessment had been made and accepted;
(ii)the parent had a serious illness or injury;
(iii)the parent was under detention or imprisonment;
(iv)the parent resided in a remote location which made it difficult to contact the Registrar;
(v)a natural disaster prevented the parent from being able to contact the Registrar;
(vi)there was some other exceptional circumstance that prevented the parent from providing the information;
(b)the Registrar confirms that the parent was unable to provide the information at that time because of a circumstance mentioned in paragraph (a);
(c)the parent later provides the information to the Registrar as soon as is practicable in the circumstances.

DISCUSSION OF EVIDENCE, CONCLUSIONS AND REASONING

The Tribunal has carefully considered the relevant facts, the sequence of events, the health and other circumstances of Mr Boulding, the history of his dealings with the CSA, the wording of the above provisions, and the detailed and helpful submissions put to it by [Ms A] from VLA.
The Tribunal finds each of these additional matters as facts:
·     Mr Boulding has been incarcerated from time to time since 2003;
·     He was incarcerated from [September] ` to [January] 2009, and then from [June] 2015 to [August] 2015, and has been incarcerated continuously since [July] 2017;
·     He has numerous, significant health problems, including anxiety disorder, schizo - affective disorder, the effects of drug use, and serious dental problems;
·     Ms Wrinch has had 100% care of the child concerned at all relevant times;
·     Mr Boulding had no income from an employer in 2007/08 or 2008/09;
·     He was either receiving prison allowances or income support payments;
·     He was assessed to pay child support based upon a MTAWE - based income of $36,504pa for 2007/08 and then $39,236pa for 2008/09;
·     These deemed incomes produced a child support liability of just over $3,000pa;
·     In the period before 12 October 2008 and in the period from 13 April 2011 to 12 April 2021 his (final) child support liability was assessed at either nil or the Minimum Annual Rate (MAR);[5]
·     Those (final) assessments were based upon deemed incomes of under the “self - support amount” (for example, for the period 13 April 2011 to 12 July 2012 his deemed income was fixed at $16,354);[6]
·     He had erratic recorded contacts with the CSA concerning his child support liability;
·     These occurred on 7 October 2013, 17 August 2017, 24 June 2020, and 13 April 2021 (via his lawyers, VLA);
·     On 7 October 2013 he was asked to provide his 2007/08 and 2008/09 income tax returns;
·     It was not until 17 August 2017 that he confirmed his 2007/08 income as consisting only of prisoner’s allowances;
·     On 24 June 2020 he advised that he had had nil income for 2018/19;
·     As at 31 August 2021 he owed $2,090.79 in arrears of child support.[7]
[5] For some child support periods, a higher provisional income was originally fixed and then revised downwards: see for example at C48.
[6] C31.
[7] C406.
The Tribunal is satisfied that the combined effect of subsection 58A(2) of the Act and Regulation 11 of the Child Support (Assessment) Regulations 2018 is in this case that the Tribunal should now retrospectively change Mr Boulding’s adjusted taxable incomes for 2007/08 and 2008/09, to amounts much lower than the MTAWE – based figures, which will produce for him significantly lower child support liabilities.
The Tribunal has reached this conclusion for reasons as follows.
Firstly, while the Tribunal is satisfied that subsection 58(5) of the Act did apply at the time the assessments in contention were made, that is, the assessments based upon deemed incomes of $36,504 and $39,236, in the Tribunal’s view that provision contains a discretion as to whether to apply the two thirds of the MTAWE figure, or to apply some other figure, not linked to the MTAWE figure.
This is because subsection 58(5) of the Act says that the Registrar “may determine” that the two thirds of the MTAWE figure applies – it does not say that if subsection 58(5) applies, then the Registrar “must determine” that the two thirds of the MTAWE figure applies.
There is a crucial difference here between “must” and “may”. Only in very limited circumstances does the word “may”, in the context of conferring an administrative discretion, mean “must”. None of those circumstances apply here.
That is, at the time the decision makers made those original assessments that two thirds of the MTAWE should apply for 2007/08 and then 2008/09, they could have chosen not to apply the two thirds of the MTAWE figure to Mr Boulding’s circumstances, but to apply another (lower) figure.
This indeed was what was done before 12 October 2008, and then consistently in the period from 13 April 2011 to 12 April 2021, when much lower deemed incomes (including nil) for Mr Boulding were fixed.
Secondly, the Tribunal is satisfied that subsection 58A(1) applies in the circumstances, in that the Registrar has now, after the provision of a great deal of further information regarding the circumstances of Mr Boulding, “subsequently ascertained” that Mr Boulding’s taxable incomes for 2007/08 and 2008/09 were “different to” the deemed incomes which are in contention, and the Tribunal is satisfied that “circumstances prescribed” by Regulation 11 applied and continue to apply in relation to Mr Boulding (see paragraph 58A(2)(c) of the Act).
This means that the Registrar now “must” (not “may”) retrospectively amend the assessments in contention.
Regulation 11 applies because all of the requirements of that regulation are met, namely that at the relevant times, Mr Boulding was unable to provide the relevant information either because he was “not aware of” the application for an assessment, which was the subject of the decision dated 4 September 2008; and/or because he has suffered from numerous serious illnesses, both physical and mental, as set out in the very detailed report and notes of his doctor; and/or because he has been imprisoned from time to time, and he has been and continues to be unable to communicate effectively with the outside world.
Finally, the Tribunal is satisfied that Mr Boulding “later provided the information to the Registrar as soon as is practicable in the circumstances” because, given the nature and severity of his various medical conditions, and his imprisonment, the Tribunal has concluded that, in his particular, and unusual medical and personal circumstances, he did act as soon as was practicable, for him.[8]
[8] See Taffert v Taffert [2020] AATA 1024
That leaves the issue of what to retrospectively fix his adjusted taxable incomes for 2007/08 and 2008/09 at.
Given that for the period 1 July 2007 to 30 June 2009, Mr Boulding was incarcerated for the period [September] 2008 to [January] 2009, only, and was receiving income support payments for the remainder of the period, the Tribunal now retrospectively determines his adjusted taxable income as $12,000 for each of the 2007/08 and 2008/09 financial years.[9]
[9] This is based on an assumed rate of newstart allowance of about $450pf at that time.
The exact amount is academic, as long as these amounts were under the self-support amounts for those years, which were $18,252 and $18,808.
Further, on the basis that he was receiving income support payments, the new assessments should, in the Tribunal’s view, be the MAR for those years, namely $339pa and $356pa.
His child support “account” should now be adjusted accordingly.

DECISION

This means that new child support assessments should now be made for the period 13 October 2008 to 12 April 2011, and any arrears of child support which he owes be adjusted accordingly.

This means that his application for review is partly successful.

[2021] AATA 5036

10 November 2021

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Judicial Review

Statutory Construction

Remedies

Jurisdiction