Carrington and Carrington (Child support)

[2018] AATA 953

Carrington and Carrington (Child support) [2018] AATA 953 (28 February 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2017/MC012926

APPLICANT:  Mr Carrington

OTHER PARTIES:  Child Support Registrar

Ms Carrington

TRIBUNAL:Member M Baulch

DECISION DATE:  28 February 2018

DECISION:

The decision under review is affirmed.

CATCHWORDS

Child support – Particulars of the administrative assessment – Adjusted taxable income – Conditions to retrospectively apply actual income to the assessment not met – Decision 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. This application for review is about the child support assessments that have applied in respect of [their three children].

2. The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of the child support payable by one separated parent to the other.  It uses a statutory formula which contains variables such as the parents’ adjusted taxable incomes, the number and ages of children and the percentages of care. 

3. Mr Carrington and Ms Carrington are the parents of [their three children].  Since 16 January 2009 the Department of Human Services – Child Support (the Department) has made child support assessments under which Mr Carrington was liable to pay child support to Ms Carrington and the Department has most recently collected that liability on Ms Carrington’s behalf since 31 May 2013.

4. Mr Carrington’s liability to pay child support ended on 11 March 2015, however there are outstanding amounts of child support owed by Mr Carrington that the Department is seeking to collect on behalf of Ms Carrington.  On 20 May 2017 the Department wrote to Mr Carrington advising that he owed overdue child support and late payment penalties of $12,148.03.

5. Since 16 April 2010 the assessments of child support have been determined having regard to provisional adjusted taxable income amounts determined by the Child Support Registrar (the Registrar) as Mr Carrington had not lodged an income tax return with the Australian Taxation Office (the ATO) since the 2007-08 tax year.

6. On 27 June 2017 Mr Carrington lodged his income tax returns with the ATO for the 2008-09, 2009-10, 2010-11, 2011-12, 2012-13 and 2013-14, 2014-15 and 2015-16 tax years and assessments of his taxable income were made. 

7. On 14 July 2017 the Department reassessed Mr Carrington’s outstanding liability on the basis of his taxable income for the 2008-09, 2009-10, 2010-11, 2011-12, 2012-13 and 2013-14 tax years.  This reduced the outstanding amount of child support owed to Ms Carrington to $888.50.

8. Ms Carrington objected to that decision and, on 11 November 2017, that objection was allowed.  The objections officer decided none of the circumstances under which Mr Carrington’s taxable incomes could be applied retrospectively to his child support liability were satisfied (the decision under review).  Mr Carrington has now applied to this tribunal for an independent review of the Department’s decision.

9. A hearing into the application for review was held by the tribunal on 28 February 2018.  Mr Carrington attended the hearing in person and Ms Carrington participated by telephone, and both gave evidence during the hearing.  A representative of the Registrar did not participate in the hearing.

10. The tribunal had before it relevant documents provided to it by the Department pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 which were labelled folios 1 to 440, copies of which both parties confirmed they had received prior to the tribunal hearing.

ISSUES

1. The statutory provisions relevant to this review are found within the child support law, in particular the Act and the Child Support (Assessment) Regulations 1989 (the Regulations).

2. The issue which arises in this case is whether or not Mr Carrington’s taxable incomes for the 2008-09, 2009-10, 2010-11, 2011-12, 2012-13 and 2013-14 tax years can be retrospectively applied to the child support assessment.

CONSIDERATION

1. Part 5 of the Act provides that the Registrar must make an administrative assessment of child support in accordance with the statutory formula set out in that Part.  The statutory formula requires that there be a determination as to each parent’s adjusted taxable income.  Section 43 of the Act defines a parent’s adjusted taxable income to be the sum of the following:

   ·       The parent's taxable income for the last relevant year of income in relation to the child support period;

   ·       The parent's reportable fringe benefits total for that year of income;

   ·       The parent's target foreign income for that year of income;

   ·       The parent's total net investment loss (within the meaning of the Income Tax Assessment Act 1997 ) for that year of income;

   ·       The total of the tax-free pensions or benefits received by that parent in that year of income; and

·       The parent's reportable superannuation contributions (within the meaning of the Income Tax Assessment Act 1997) for that year of income.

For the purposes of determining a parent’s adjusted taxable income, their taxable income is the amount determined by the ATO (see section 56 of the Act).

1. Where a parent’s taxable income for a particular year has not been assessed by the ATO, for example, when a parent has not lodged an income tax return, section 58 of the Act allows the Registrar to make their own determination of that parent’s adjusted taxable income for that year and provides various methods for doing so.  In certain circumstances, subsection 58(5) of the Act allows the Registrar to determined that a parent’s adjusted taxable income for a particular year “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”.  The MTAWE figure is determined by having regard to the Average Weekly Earnings – Trend – Males – All Employees Total Earnings published by the Australian Bureau of Statistics (see section 5A of the Act).

2. Until recently, Mr Carrington had not lodged an income tax return since the 2007-08 tax year.  Therefore, his adjusted taxable income used to determine his child support liability since 16 April 2010 was the two-thirds MTAWE figure determined pursuant to subsection 58(5) of the Act.  The amounts that have applied to Mr Carrington in this case are set out in the table below.

3. On 27 June 2017 Mr Carrington lodged his income tax returns with the ATO for the 2008-09, 2009-10, 2010-11, 2011-12, 2012-13, 2013-14, 2014-15 and 2015-16 tax years and assessments of his taxable income were made.  Those assessments, so far as they are relevant to this matter, are also set out in the table below:

Tax year	Two-thirds MTAWE	Taxable income
2008-09	$39,236	$5
2009-10	$39,236	$2,867
2010-11	$43,243	$553
2011-12	$44,758	$3
2012-13	$47,046	$12
2013-14	$47,046	$555

Mr Carrington’s taxable incomes are significantly lower than the two-thirds MTAWE figures that have been used to determine his child support liability since 16 April 2010.  Mr Carrington is seeking to have the lower taxable incomes applied to determine his adjusted taxable income for the purposes of the child support assessment.

1. Where a parent had their adjusted taxable income assessed as the two-thirds MTAWE figure pursuant to subsection 58(5) of the Act, and information about a component of their adjusted taxable income (such as their actual taxable income) later becomes available, section 58A(2) of the Act provides a limitation on a retrospective amendment to the assessment of child support having regard to that information.  When that later amount is lower than the amount determined under section 58 of the Act - and this is what has occurred in this case - the lower amount can only be applied to the administrative assessment of child support if the parent was unable to provide information about their adjusted taxable income to the Registrar at the time the particular assessment was made because, at that time, one of the following applied:

   ·       The parent did not know that an application for the assessment had been made and accepted; or

   ·       The parent had a serious illness or injury; or

   ·       The parent was under detention or imprisonment; or

   ·       The parent resided in a remote location which made it difficult to contact the Registrar; or

   ·       A natural disaster prevented the parent from being able to contact the Registrar; or

·       There was some other exceptional circumstance that prevented the parent from providing the information;

(see subregulation 7B(1) of the Regulations).

1. Mr Carrington was aware of the assessment of child support that had been made, and his evidence was that there was no serious illness, injury, detention, imprisonment or natural disaster which prevented him from giving the Registrar information about his adjusted taxable income at the relevant times.  Mr Carrington’s evidence was that he was travelling in a caravan for 12 months at one period of time, but agreed that there were only limited periods of time when he was out of range of 3G mobile telephone services.  I was not persuaded that Mr Carrington had resided at any time in a remote location which made it difficult for him to contact the Registrar.

2. In relation to what circumstances prevented him from giving the Registrar information about his adjusted taxable income, Mr Carrington advised me that he thought that because his income was below the tax-free threshold he did not need to lodge income tax returns.  He did not appreciate, as he now does, that as he was subject to a child support assessment he was required by taxation legislation to lodge an income tax return no matter how low his income.  Mr Carrington’s evidence was that no one told him that he needed to lodge his returns in a timely manner and that the Department told him that he did not need to tell them anything if his circumstances did not change, and they had not.

3. I noted that each time the Department applied a two-thirds MTAWE figure to a child support assessment Mr Carrington was sent a notice outlining that assessment, the first of which was issued on 6 March 2010.  If Mr Carrington had concerns about the adjusted taxable income used in those assessments, he could have always contacted the Department when notified of each assessment.  I was cognisant that there was a period of time during which the Department did not have a current address for Mr Carrington.  However, all child support assessments and letters sent to him since 2009 included the statement to the effect:

   Important

   To ensure that your child support assessment reflects your current situation, you need to tell CSA within 14 days of any changes to your circumstances, such as care arrangements, income, employment status or contact details.  We can only make the changes from the date you let us know.  [my emphasis].

   Ultimately, the obligation to keep the Department appraised of up to date contact details fell on Mr Carrington.

4. It was my view that Mr Carrington had not been sufficiently diligent in attending to his child support matters.  Having regard to the evidence, I was not persuaded that there are other exceptional circumstances which prevented Mr Carrington from providing the Registrar with information about his adjusted taxable income for a particular year in a timelier manner.

5. Subregulation 7B(2) of the Regulations also provides that the lower amount can be applied to replace an adjusted taxable income determined under section 58 of the Act if, the parent lived overseas and was not require to lodge a return, or provided the Registrar with information about their adjusted taxable income in a reasonable time in the circumstances.  I was satisfied that neither of these circumstances apply in Mr Carrington’s case.

6. As none of the circumstances prescribed by regulation 7B of the Regulations apply in Mr Carrington’s case, it is not possible to apply his taxable incomes to the child support assessments instead of the adjusted taxable income determined pursuant to section 58 of the Act using the two-thirds MTAWE figures. 

7. Consequently, and for these reasons, I therefore affirmed the decision under review.

DECISION

The decision under review is affirmed.