Carling and Child Support Registrar (Child support)

[2018] AATA 959

Carling and Child Support Registrar (Child support) [2018] AATA 959 (8 March 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBERS:  2018/BC013249 & 2018/BC013268

APPLICANT:  Mr Carling

OTHER PARTY:  Child Support Registrar

TRIBUNAL:Member P Jensen

DATE OF DECISIONS:                   8 March 2018

DECISIONS:

The Tribunal varies the decisions under review as follows:

• Mr Carling’ application for an extension of time in which to object to the decision dated 28 March 2013 is granted; and

  Mr Carling’ applications for extensions of time in which to object to the decisions dated 23 July 2012 and 21 July 2013 are refused.

CATCHWORDS

Child support – Particulars of the administrative assessment - Adjusted taxable income applied for past period - Refusal to grant extension of time to object - Incorrect determination of adjusted taxable income - Potential merit - Decision under review set aside and substituted that extension of time be granted

Child support – Particulars of the administrative assessment - Adjusted taxable incomes applied for past periods - Refusal to grant extension of time to object - Poor prospects of success - 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 DECISIONS

1. Mr Carling and Ms Carling are the parents of [Child 1] and [Child 2]. A child support case was registered in 2005. At all relevant times, Mr Carling has been the parent who has been required to pay child support in respect of the children.

2. On 23 July 2012 the Department of Humans Services - Child Support (“the CSA”) wrote to Mr Carling and informed him that it had decided to calculate his rate of child support payable from 1 September 2012 on the basis of his provisional 2011-12 income of $68,059. It transpired that he was assessed on that provisional income from 1 September 2012 to 27 March 2013.

3. On 28 March 2013, Mr Carling informed the CSA that his 2011-12 income was $21,298. On the same day the CSA decided to calculate his rate of child support payable from 28 March 2012 on the basis of that income. It transpired that he was assessed on that provisional income from 28 March 2013 to 31 August 2013.

4. On 21 July 2013 the CSA wrote to Mr Carling and informed him that it had decided to calculate his rate of child support payable from 1 September 2013 on the basis of his provisional 2012-13 income of $72,505. It transpired that he was assessed on that provisional income from 1 September 2013 to 31 August 2014.

5. On or about 5 September 2017, Mr Carling lodged his tax returns for 2010-11 to 2016-17. The Australian Taxation Office informed the CSA of Mr Carling’ adjusted taxable incomes for those years. Relevantly, his adjusted taxable incomes for 2011-12 and 2012-13 were less than his provisional incomes for those years and his adjusted taxable incomes for 2013-14 to 2016‑17 were more than his provisional incomes for those years. (His 2011-12 adjusted taxable income was $21,268 and his 2012-13 adjusted taxable income was $30,320.) The CSA decided to not reassess his rates of child support payable that were based on his 2011-12 and 2012-13 provisional incomes but reassess his rates of child support payable that were based on his 2013-14 to 2016-17 provisional incomes. Mr Carling promptly lodged an objection. He asked to be assessed on his actual incomes at all relevant times.

6. There were a number of ways in which the CSA could have interpreted Mr Carling’ objection. The simplest interpretation may have been that Mr Carling was objecting to the CSA’s recent decisions to retrospectively reassess some, but not all, of his rates of child support payable. However, after talking to Mr Carling, the CSA concluded that Mr Carling was objecting to its original decisions to use provisional incomes for 2011-12 and 2012-13. Having reached that conclusion, the CSA noted that he had not objected to those earlier decisions within 28 days of being notified of the decisions and he therefore had not objected within time: section 81 of the Child Support (Registration and Collection) Act 1988. He applied for extensions of time in which to object. The CSA decided to refuse his extension of time applications. He promptly sought review of those decisions and I heard the matters on 8 March 2018. I spoke to Mr Carling by phone.

7. The CSA concluded that Mr Carling was seeking review of the decisions dated 23 July 2012 and 21 July 2013 but, given the broad nature of his objection as well as other matters that I will discuss shortly, I find that he was also seeking review of the decision dated 28 March 2013.

8. Mr Carling stated that he could not recall whether he received the notices dated 23 July 2012, 28 March 2013 and 21 July 2013 which advised him of the decisions that were made on those respective dates. In the absence of any further evidence on point, I find that he received those notices in the ordinary course of the post. He lodged his objections on 3 October 2017. His objections were lodged out of time.

9. The principles to be applied when deciding an extension of time application were summarised in Phillips v Australian Girls’ Choir and Another [2001] FMCA 109:

   1.There is no onus of proof upon an applicant for extension of time though an application has to be made. Special circumstances need not be shown, but the court will not grant the application unless positively satisfied it is proper to do so. The "prescribed period" of 28 days is not to be ignored …

   2.It is a prima facie rule that the proceedings commenced outside the prescribed period will not be entertained … It is not a pre-condition for success in an application for extension of time that an acceptable explanation for delay must be given. It is to be expected that such an explanation will normally be given as a relevant matter to be considered, even though there is no rule that such an explanation is an essential pre-condition …

   3.…It is relevant to consider whether the applicant has rested on his rights and whether the respondent was entitled to regard the claim as being finalised. …

   4.Any prejudice to the respondent … is a material factor [which goes] against the grant of an extension.

   5.The mere absence of prejudice is not enough to justify the grant of an extension. …

   6.The merits of the substantial application are properly to be taken into account in considering whether an extension of time should be granted. …

   7.Considerations of fairness as between the applicant and other persons otherwise in a like position are relevant to the manner of exercise of the court's discretion …

10. Ordinarily, a parent’s rate of child support payable is calculated pursuant to a formula which is based, in part, on the parent’s adjusted taxable income for the preceding financial year. Mr Carling did not lodge his tax returns for many years. The CSA therefore calculated his rates of child support payable from 1 September 2012 and from 1 September 2013 on the basis of provisional incomes that were determined pursuant to subsection 58(4) of the Child Support (Assessment) Act 1989. That subsection states:

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.

1. Mr Carling promptly lodged his 2009-10 tax return and his 2009-10 adjusted taxable income was $63,994. The provisional 2011-12 income of $68,059 and the provisional 2012‑13 income of $72,505 were worked out by multiplying Mr Carling’ 2009-10 adjusted taxable income by the relevant ATI indexation factors. On that preliminary investigation, the decisions to calculate Mr Carling’ rates of child support payable from 1 September 2012 and 1 September 2013 on the basis of those provisional incomes appear correct according to law. Mr Carling’ objections to those decisions have poor prospects of success.

2. The decision that was made on 28 March 2013 is a little more complicated. Subsection 58(2) states:

   If:

   (a)the Registrar or the Commissioner of Taxation has information (whether oral or written) or a document in his or her possession; and 

   (b)either: 

   (i)an amount is specified in that information or document as the parent's adjusted taxable income for the last relevant year of income; or 

   (ii)that information or document allows the amount of the parent's adjusted taxable income for the last relevant year of income to be worked out; and 

   (c)the Registrar is satisfied that the specified amount, or the amount so worked out, is a reasonable approximation of the parent's adjusted taxable income for that year; 

   the Registrar may determine that the specified amount, or the amount so worked out, is the parent's adjusted taxable income for that year.

1. On 28 March 2013, Mr Carling informed the CSA that his 2011-12 adjusted taxable income was $21,298. The CSA was satisfied of the accuracy of that information and it determined that his provisional 2011-12 income was $21,298. Section 58A provided for the implementation of that decision. The section relevantly states:

   Subsequently 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)the Registrar makes a later determination under section 58; 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 

   (ii)if subparagraph (b)(ii) applies--the later amount that the Registrar determines is different from the earlier amount determined under section 58. 

   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). 

Prospective determinations 

(3)If subsection (2) does not apply, then the Registrar must immediately amend the administrative assessment for the child support period on the basis that for each later day in the period the parent's adjusted taxable income for that year of income is the amount that was subsequently ascertained or later determined (as the case requires).

1. From 1 September 2012, Mr Carling’ rate of child support payable was based on the CSA’s determination of his 2011-12 provisional income of $68,059 which was made pursuant to section 58. Paragraph 58A(1)(a) was satisfied.

2. On 28 March 2013 the CSA determined that Mr Carling’ 2011-12 provisional income was $21,298. That determination was also made pursuant to section 58. Paragraph 58A(1)(b) was satisfied.

3. The two provisional incomes were different. Paragraph 58A(1)(c) was satisfied.

4. The CSA was therefore required to immediately amend Mr Carling’ rate of child support payable: subsection 58A(1).

5. As at 28 March 2013, Mr Carling could still lodge his 2011-12 tax return within time. Paragraph 58A(2)(a) was satisfied. The CSA was therefore required to retrospectively amend Mr Carling’ administratively assessed rates of child support payable from 1 September 2012 on the basis that his provisional 2011-12 income was $21,298. That did not occur. On that preliminary investigation, Mr Carling’ objection to the decision dated 28 March 2013 has good prospects of success. (It is important to note that in considering Mr Carling’ applications for extensions of time in which to object, I am required to make a preliminary investigation into the merits of Mr Carling’ objections but I am not undertaking a complete or final investigation into those matters and my preliminary investigations do not bind the CSA.)

6. As an aside, subsections 58A(2) and (3) also explain the CSA’s more recent decisions following Mr Carling’ belated lodgement of a number of tax returns.

7. It is also necessary to consider Mr Carling’ delay in lodging his objections. He stated that the CSA repeatedly told him that when he lodged his tax returns, all of his rates of child support payable would be reassessed. He did not provide any evidence in support of that submission. The CSA noted on 27 August 2014 that it had informed him that if it transpired that his actual income was less than his provisional income, he would continue to be assessed on his provisional income. I do not accept his evidence on that issue.

8. Mr Carling stated that he had been unable to lodge his tax returns sooner because he had suffered from drug and alcohol addiction. In support of that submission he provided a note which confirmed that he commenced a rehabilitation program on 9 October 2009 and successfully completed the program on 13 October 2009. He also stated that he had lacked the funds to attend to the lodgement of his tax returns. However, his 2009-10 adjusted taxable income was $63,994. His 2010-11 adjusted taxable income was $64,841. When the CSA contacted him in 2014, and again in 2016, he was in paid employment. His 2016-17 adjusted taxable income was $52,350. That evidence suggests that there were at least periods during which he retained the capacity to undertake paid employment (and he consequently retained the capacity to lodge his tax returns) and that he had an income from which he could pay a tax agent to lodge his tax returns on his behalf if he was unable to attend to the task himself. I do not accept his evidence on those issues.

9. Mr Carling has not provided a satisfactory explanation for his delay in lodging his objections.

10. Mr Carling currently owes child support arrears of $14,871. If Mr Carling’ application for an extension of time were granted in respect of the decision dated 28 March 2013, and if an objections officer decided to allow his objection, the reduction in his overall child support liability would be less than his current child support arrears. He would not be placed in credit.

11. Notwithstanding Mr Carling’ inordinate delay in lodging his tax returns and his consequently inordinate delay in lodging objections to the CSA’s earlier decisions, it appears that he was over-assessed for child support purposes from 1 September 2012, both in the legal sense that it appears that the law was not properly applied and in the practical sense that he was being assessed on a provisional income of $68,059 per annum, and he was consequently required to pay $12,070 per annum in child support, when his actual income at the time was only $30,320 per annum. In the unusual circumstances of this particular case, the interests of justice favour granting Mr Carling’ application for an extension of time in which to object to the decision dated 28 March 2013, notwithstanding his delay in objecting. His objections to the decisions dated 23 July 2012 and 21 July 2013 have poor prospects of success and the interest of justice favour the refusal of his applications for extensions of time in which to object to those decisions.

DECISIONS

The Tribunal varies the decisions under review as follows:

• Mr Carling’ application for an extension of time in which to object to the decision dated 28 March 2013 is granted; and

• Mr Carling’ applications for extensions of time in which to object to the decisions dated 23 July 2012 and 21 July 2013 are refused.