Carder and Marks (Child support)
[2024] ARTA 202
•18 November 2024
Carder and Marks (Child support) [2024] ARTA 202 (18 November 2024)
Applicant/s: Ms Carder
Respondent: Child Support Registrar
Other Parties: Mr Marks
Tribunal Number: 2024/SC028376
Tribunal: General Member A Ryding
Place:Sydney
Date:18 November 2024
Decision:The Tribunal sets aside the decision under review and, in substitution, decides that the Registrar ought not to have exercised the discretion in section 75 of the Child Support (Assessment) Act 1989 to amend Mr Marks’s adjusted taxable incomes for the 2011–12 and 2012–13 financial years.
CATCHWORDS
CHILD SUPPORT – income, property and financial resources – administrative error recording earlier incomes – statute of limitations – serious medical conditions – no ongoing child support assessment – financial hardship – 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 pursuant to subsection 16(2AB) of the Child Support (Registration and Collection) Act 1988.
Statement of Reasons
BACKGROUND
From 14 October 2024, the Administrative Appeals Tribunal (AAT) became the Administrative Review Tribunal (the Tribunal). Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (the Transitional Act), applications for review to the AAT that were not finalised before 14 October 2024 are taken to be an application for review to the Tribunal. The Transitional Act gives the Tribunal the authority to continue and finalise any aspect of the review not already completed by the AAT. This decision and statement of reasons is made by the Tribunal.
This is an application for review of two decisions of Services Australia – Child Support (Child Support) to correct the provisional incomes of one party to the application, Mr Marks, for the financial years 2011–12 and 2012–13, following errors made by Child Support. That decision has given rise to a debt payable by the applicant, Ms Carder.
Ms Carder and Mr Marks are the parents of [Child 1] (born [in] September 2000). There is no longer an active child support assessment in place.
On 23 October 2023, Child Support wrote to the parties informing them that it had identified a systems issue which had caused an administrative error in respect of their (by that stage closed) child support assessment (folios 184 and 186).
On 2 November 2023 Child Support raised with Mr Marks that it had used the incorrect incomes for him for past periods. Mr Marks said that he would like the error corrected. On 3 November 2023 Child Support informed Ms Carder of the error (folio 190).
On 10 January 2024, Child Support decided to replace:
Mr Marks’s provisional income for the 2011–12 financial year of $145,071 with his taxable income of $81,538; and
Mr Marks’s provisional income for the 2012–13 financial year of $151,185 with his taxable income of $83,885.
The parties were informed of this by Child Support’s letters dated 10 January 2024 (folios 201 and 203).
This meant a decrease in the amount of child support payable in those financial years by Mr Marks of $11,437.42. However of that amount, only $1,268.90 could be collected by Child Support, as the remainder of the debt arose during a period where the parties had agreed to private collection of child support.
On 6 February 2024, Ms Carder lodged an objection to those decisions (folio 215). On 12 July 2024, Child Support provided its decision on that objection (the Objection Decision) (folio 20). Ms Carder’s objection was disallowed.
On 6 August 2024, Ms Carder applied to the Tribunal for review of the Objection Decision. Ms Carder’s application stated (verbatim):
I am submitting this application for review for the following reasons, and I am mainly hoping for some compassion. I was diagnosed with [cancer] in 2021, I no longer work, and am currently still having treatment every 3 weeks, this whole situation has me stressed and anxious, which I am hoping you can understand.
It relates to an administrative error, which Child Support has admitted was their fault.
The error relates to a 2011/12 and a 2012/13 financial income for my ex-partner, who at the time had not paid Child support for the first 3 years of separation - Child Support are aware of the explanations for this, and it has been noted on their files. We were both given the opportunity to proceed with this new assessment in January this year and my ex-partner has requested to pursue the matter.
Most debts have a statute of limitations that are only 7 years.
I have also applied to Centrelink to see if they were going to also resubmit for the Family Tax Benefit for those same years, and they have advised that as it is an error by Child Support, they will not be recalculating
I submitted an objection to this Child Support assessment and my-ex for the same consideration and it was declined.
On 18 November 2024, the Tribunal conducted a hearing in this matter by MS teams video conference. Ms Carder participated, Mr Marks informed the Tribunal ahead of the hearing that he chose not to participate, and Child Support did not participate and instead relied upon its documents. Before the Tribunal were hearing papers supplied by Child Support, numbered 1 to 264 (the hearing papers). Ms Carder provided evidence on affirmation.
The Tribunal has had careful regard to all of the documents provided to it that appear relevant to the matters in issue, and to the evidence provided by Ms Carder. Reference below is made only to the documents and evidence relevant to this decision.
ISSUES
The assessment by Child Support of the liability to pay, the rate payable and the provision of child support are governed by the Child Support (Assessment) Act 1989 (the Assessment Act) and the Child Support (Registration and Collection) Act 1988 (the Registration and Collection Act). The Assessment Act and the Registration and Collection Act also provide Child Support the power to amend assessments.
The issue for consideration in this application is whether Child Support was correct to exercise its discretion to amend Mr Marks’s estimated income for the 2011–12 and 2012–13 financial years?
CONSIDERATION
The background to this matter
From the hearing papers and Ms Carder’s evidence, the Tribunal understands the following to be the history of this matter.
There had been a child support assessment in place for [Child 1] since 25 September 2000, with (in the periods relevant to this matter) Mr Marks as the paying party.
For the 2011–12 financial year, Child Support used a provisional income for Mr Marks of $43,243. For the 2012–13 financial year Child Support used a provisional income for Mr Marks of $44,758. Child Support used these figures rather than Mr Marks’s actual taxable income because Mr Marks had not lodged his taxation returns. Mr Marks was apparently working overseas, in [Country 1].
It appears that on 24 September 2014, Child Support received Mr Marks’s taxable income for the 2011–12 and 2012–13 financial years from the Australian Taxation Office (the ATO) (taken from the Objection Decision). It appears that his actual taxable income was $81,538 for the 2011–12 financial year and $83,885 for the 2012–13 financial year.
However, instead of using these figures, Child Support replaced the existing provisional incomes with a provisional income of $145,071 for the 2011–12 financial year and a provisional income of $151,185 for the 2012–13 financial year. It is unclear why this was done, but Child Support has conceded that this was an administrative error.
On 1 December 2014 Mr Marks contacted Child Support. The note of the call (at folio 105) records as follows:
[Mr Marks] wanted to know if his income could be amended for 12/3 when he had not lodged his tax return and was assessed on provisional income of over $150,000. I advised that he is aware that he needs to lodge his tax return for CS purposes and ATO purposes. I advised that he could have provided an ITD and estimate. I explained that he can apply for COA. I explained COA. [Mr Marks] advised that he does not want to speak to COAT.
It is unclear how Mr Marks stating that he had yet to file a tax return fits with Child Support apparently receiving income figures from the ATO on 24 September 2014.
There is no evidence in the hearing papers of this issue being raised again by Mr Marks, nor of him applying for a change of assessment (which is what “COA” refers to).
On 23 October 2023, Child Support’s letters to the parties stated that “a system issue caused an administrative error where an incorrect provisional income has been used in a past child support assessment for you or the other parent”. The reason for the error that was given in the calls by Child Support to the parties on 2 and 3 November 2023 was:
Explained that when a customer lodged more than 1 years tax returns at once our system would create a provisional income for the next 3 consecutive years and we have identified him as being impacted by this and we acknowledge we had used the incorrect incomes for him for past periods.
The Tribunal has been unable to determine from the hearing papers precisely why these system or administrative errors came about. Nor is the Tribunal able to determine how or why Child Support became aware of the errors. It appears from the hearing papers that at some point in late 2023, it became aware and it contacted the parties, first by letter on 23 October 2023 and then by phone calls in early November.
When Child Support called the parties, Mr Marks said that he wished Child Support to collect any overpayment. Ms Carder raised a number of serious issues with her health, which are discussed below.
Child Support then realised that only some of the debt that would be created by correcting the errors arose during a period where Child Support collected the child support assessment from Mr Marks and that the rest of the time the parties had a private collection arrangement. Mr Marks told Child Support in a call on 8 January 224 that he was not aware of the child support case whilst it was private collect and did not pay it (folio 193). Ms Carder told the Tribunal during the hearing that, during the period when the child support assessment was private collect, Mr Marks did not pay it.
Child Support then determined to correct the error and raise a debt for that part of the overpayment of child support that occurred after Child Support began to collect the child support assessment again, which effectively was 8 July 2014 to 23 September 2014, totalling $1,268.90.
The ability to correct errors
Subsection 75(1) of the Assessment Act provides:
The Registrar may, at any time, amend any administrative assessment by making such alterations and additions as the Registrar considers necessary to give effect to this Act or the Registration and Collection Act.
Section 75 goes on to provide that the section has effect even where child support has been paid under the child support assessment or the applicable child support period has ended.
The use of the word “may” indicates that the power to amend a child support assessment is a discretionary one. The Child Support Guide states (in topic 6.9):
When deciding whether to correct (or not) an error, the Registrar will consider the objects of the Acts and the legislative requirements of the decision affected by the error. The Registrar can also consider circumstances including, but not limited to, the wishes of the affected parents, the integrity of the child support scheme, and the impact on each parent of correcting or not correcting the error.
Error correction decisions are made in the context of the particular circumstances of each case. The circumstances in one case may mean it is appropriate to correct an error in that case, but it may not be appropriate to correct a similar error in another case.
The Registrar may be more likely to decide to correct an error where:
·it is an obvious error of fact, and can be fixed simply
·it impacts the current assessment or liability
·both parents want the error corrected
·one parent wants the error corrected and the other parent does not want it corrected
·the Registrar caused the error or substantially contributed to it
·one parent wants the error corrected and the other parent cannot be contacted.
The Registrar may be less likely to decide to correct an error where:
·neither parent wants the error to be corrected
·there will be no material change to an assessment or financial impact as a result of the correcting the error
·only one of the affected parents is contactable and they do not want the error corrected
·there is no utility to correcting the error, or it would be inappropriate to correct – such as when the error is the subject of merits or judicial review proceedings (whether internal or external to Services Australia).
The Child Support Guide is issued by the Australian Government and designed to assist decision-makers administering social policy law. It is persuasive but has no legislative force. However, the Tribunal should take into account government policy as long as it is not inconsistent with the provisions and objects of the relevant legislation.[1]
Should that discretion be exercised?
[1] Re Drake and Minister for Immigration and Ethnic Affairs (no 2) [1979] AATA 179.
It is clear that Child Support made errors in determining Mr Marks’s taxable income for the 2011–12 financial year to be $145,071 and not $81,538, and to be $151,185 and not $83,885 for the 2012–13 financial year. Child Support has admitted those errors were made.
It is also clear that is open to the Child Support Registrar to correct those errors under section 75 of the Assessment Act. The issue for consideration is whether Child Support ought to have exercised that discretion. The Tribunal has taken into account the following matters:
It is over 10 years since the period in question. The child the subject of the assessment is now 24 so it is reasonable to assume that the child support assessment came to an end in 2018. There is therefore no ongoing child support assessment in place between the parties.
The Tribunal acknowledges that Mr Marks did not participate in the hearing and so the Tribunal was unable to obtain his position on matters. However, the hearing papers support that Mr Marks was aware of the error in January 2014. It was open to him to either seek review of Child Support's decision to set his provisional income at the levels it did in the relevant years or to lodge an application for a change of assessment. From the hearing papers at least, Mr Marks did neither. The Tribunal also notes Mr Marks’s concession that, whilst the child support case was private collect, he did not pay any child support (stating that he was not aware of the existence of the child support case).
There is no evidence before the Tribunal that Mr Marks would suffer any financial hardship were Ms Carder not to pay the amount of the debt, $1,268.90 (again acknowledging that Mr Marks did not participate in the hearing). Ms Carder told the Tribunal that [Child 1] is in intermittent contact with her father, and Ms Carder understands that he is working.
Ms Carder gave evidence to the Tribunal, supported by documents in the hearing papers, regarding her [cancer]. Ms Carder is on a three-weekly treatment regimen. It appears unlikely that she will be able to work again in the short to medium term, if at all.
Ms Carder's financial position has changed significantly since the financial years in question. Due to her diagnosis, she no longer works and whilst Ms Carder receives income protection insurance, it is around two-thirds of the amount she earned by way of salary. Her husband works but they have a mortgage, credit card debts and car loans, as well as Ms Carder's medical bills. Ms Carder said that having to pay the amount of the debt would cause her financial hardship.
Ms Carder received, during the relevant period, family tax benefit from Centrelink. Ms Carder told the Tribunal that she had spoken with Centrelink in or about July 2024, after a number of unsuccessful attempts to get through to it on the phone. She was informed that Centrelink was not going to do anything about the possible impact of this correction by Child Support on her entitlement to family tax benefit, with the reason given being that it was due to a Child Support error. Ms Carder told the Tribunal that she asked Centrelink to put this in writing but has not heard from it.
The Tribunal accepts Ms Carder’s evidence. The Tribunal is conscious that it is preferable for the Child Support Register to be accurate as regards child support assessments. However, the Tribunal is also cognisant of the issues present in this particular case, in particular the period of time that has passed since the child support assessments in question, the impact on Ms Carder of changing the assessments in the manner contemplated by Child Support and the lack, noting again the limitations on the evidence from Mr Marks, of any suggestion that it would cause Mr Marks hardship not to receive back the overpayment. In all the circumstances, the Tribunal considers the discretion in section 75 of the Assessment Act ought not to be exercised and that the relevant child support assessments should remain unamended, and finds accordingly.
35. A consequence of this decision is that Mr Marks has overpaid child support in the amount of $1,268.90 and will now not be entitled to recover that amount from Ms Carder. The overpayment is a result of what Child Support concedes is an administrative error on its part. Whilst this is entirely a matter for Mr Marks, it is open to persons who have suffered a loss as a consequence of Child Support’s actions to seek compensation from Child Support via the “claiming compensation from us” page on the Services Australia website.[2] If Child Support determines that it is not liable to pay compensation, the person may be able to claim via the Scheme for Compensation for Detriment caused by Defective Administration (the CDDA Scheme). The CDDA Scheme provides a mechanism for government agencies to compensate persons who have experienced detriment as a result of defective actions or inaction, in cases where it has been established that there is no legal liability to pay compensation. Again, this claim is made via the Services Australia webpage.
[2] Claiming compensation from us - Accessing our services - Services Australia
DECISION
The Tribunal sets aside the decision under review and, in substitution, decides that the Registrar ought not to have exercised the discretion in section 75 of the Child Support (Assessment) Act 1989 to amend Mr Marks’s adjusted taxable incomes for the 2011–12 and 2012–13 financial years.
| Date of hearing: | Monday, 18 November 2024 |
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