Clowes and Clowes (Child support)

[2023] AATA 1794

Clowes and Clowes (Child support) [2023] AATA 1794 (24 May 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/PC025535

APPLICANT:  Mr Clowes

OTHER PARTIES:  Child Support Registrar

Ms Clowes

TRIBUNAL:Senior Member K Dordevic

DECISION DATE:  24 May 2023

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income - whether the estimated income is less than the amount likely to be the actual income - estimate of income correctly refused - decision under review affirmed

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

1. Mr Clowes is the parent liable to pay child support to Ms Clowes in respect of [their son]. There has been a child support assessment in place since 22 July 2016 and it has been registered for collection since that date.

2. This application for review concerns the income used for Mr Clowes in the child support assessment.

3. On 6 November 2022 Mr Clowes lodged an income estimate of $67,785 (annualised) for the period 6 November 2022 to 30 June 2023 on the basis that he would receive employment income of $1,300 per week and that he had ceased employment on 4 November 2022 and had commenced a new role on 6 November 2022. He also advised that his gross income for the period 1 July to 5 November 2022 was $113,882.

4. On 21 November 2022 Services Australia – Child Support (Child Support) accepted Mr Clowes’ income estimate.

5. On 22 November 2022 Ms Clowes objected to that decision. On 21 January 2023 an objections officer allowed the objection.

6. On 4 July 2022 Mr Clowes applied to the Social Services and Child Support Division of the Administrative Appeals Tribunal (the Tribunal).

7. In considering the application the Tribunal took into account the oral evidence of Mr Clowes and Ms Clowes provided at hearing by MS Teams audio and the documentary evidence (folios 1 to 227) provided by Child Support and the additional documentary evidence provided by Mr Clowes (folios A1 to A25).  It is noted that Ms Clowes elected not to participate in the hearing after making brief submissions.

ISSUES

1. The statutory provisions relevant to this review are found in the Child Support (Assessment) Act 1989 (the Act).

2. In this case the Tribunal must determine whether Mr Clowes’ income estimate should be accepted for the purpose of the child support assessment.

CONSIDERATION

1. Child Support (acting for the Child Support Registrar) generally determines child support liabilities using a child support formula in Part 5 of the Act. The formula takes into account a range of factors including the adjusted taxable income of each of the parents. The adjusted taxable income for each of the parents is the taxable income from the last tax year that ended before the start of the child support period (plus supplementary amounts such as reportable fringe benefits, if relevant).

2. The statutory scheme provides some flexibility for parents whose circumstances change from one year to the next. Relevantly, in specified circumstances, section 60 of the Act allows a person to elect that their adjusted taxable income is their current adjusted taxable income rather than the applicable adjusted taxable income as determined under the formula. 

3. The Tribunal finds that on 6 November 2022 Mr Clowes lodged a part year income estimate of $44,014.28 for the period 6 November 2022 to 30 June 2023 and that his total adjusted year to date income was $113,882.71.

4. Subsection 60(1) of the Act states that a parent may elect to estimate his or her adjusted taxable income for a year of income:

   (1)  A parent may, before a year of income starts or during a year of income, elect that the parent's adjusted taxable income for the year of income is to be the amount that applies under subsection (2) or (3) if:

   (a)  the parent is to be assessed in respect of the costs of a child of the parent for a day in a child support period; and

(b)  the amount that would apply under that subsection is not more than 85% of:

(i)  the total of the parent's adjusted taxable income determined in accordance with section 43 for the last relevant year of income for the child support period; or

(ii)  an amount that the parent declares is the total of the parent's adjusted taxable income for the last relevant year of income for the child support period, and the Registrar is satisfied that the declared amount is correct.

1. Subsection 60(3) of the Act provides for the lodging of an estimate for part of a year of income. Subsection 60(4) provides the methodology to be employed when determining the estimate for a part of a year of income:

   Estimate for a part of a year of income etc.

   (3)If the parent makes the election under subsection (1) during the year of income but not on the first day of the year of income:

   (a)the parent is to use the method in subsection (4) to work out the amount; and

   (b)the parent is to estimate each income component amount for the parent for the period that:

   (i)started on the first day of the year of income; and

   (ii)ended at the end of the day before the start day for the election.

   (4)For the purposes of paragraph (3)(a), the method is as follows:

   Method statement

   Step 1.Estimate each income component amount for the parent for the period (the remaining period):

   (a)starting on the start day for the election; and

   (b)ending at the end of the last day of the year of income.

   Step 2.Add up those amounts. The result is the partial year income amount.

   Step 3.Divide the partial year income amount by the number of days in the remaining period.

   Step 4.Multiply the quotient by 365.

2. Relevant to Mr Clowes’ application, paragraph 60(2)(a) of the Act states that the income component amounts include the parent’s taxable income.

3. Paragraph 60(1)(b) of the Act is satisfied as Mr Clowes’ income estimate is less than 85% of his adjusted taxable income for the last relevant year of income, being $207,475 for the 2021 financial year.

4. Mr Clowes’ evidence at hearing can be summarised as follows. He believes that the estimate applied by Child Support is “dirty data”. Further, Child Support is backing the “wrong person”, he will not pay money out as it was a “fraudulent figure” and he will not get a refund if he overpays. This is the “matter of principle” for him.

5. The Child Support record indicates that at the time of lodging his income estimate Mr Clowes advised that he would earn $1,300 per week for the period 6 November 2022 to 30 June 2023. At hearing, Mr Clowes stated that he never advised that his weekly income was $1,300 and that he only advised an annual sum ($80,000). Further, he was not to know that the estimate calculations were incorrect; he simply relied on the advice received from the Child Support officer at the time of lodging the estimate.

6. The Tribunal prefers the documentary evidence and is satisfied that, on the basis of Mr Clowes’ reported income of $1,300 per week, the income estimate for the remaining period, when annualised, of $67,785 was determined correctly in accordance with subsection 60(3) of the Act, and so satisfying paragraph 60(1)(b).

7. However, paragraph 63AA(2)(a) of the Act states that the Registrar may refuse an income estimate if satisfied that the partial year income amount for the income election is less than the amount that the Registrar considers is likely to be the parent's actual adjusted taxable income for the remaining period in relation to the income election.

8. Mr Clowes has provided two fortnightly payslips for the periods 7 November to 4 December 2022. These indicate that his annual salary is $80,000 per annum and the payslips indicate that his gross fortnightly earnings are $3,076.92 ($1,538.46 per week). Therefore, it is clear that his income estimate is neither likely or correct. His ongoing employment income exceeded his declared income by over $200 per week. Furthermore, Mr Clowes has not provided evidence regarding whether he was eligible for any lump sum payments upon the termination of his previous employment. 

9. Thus, pursuant to paragraph 63AA(2)(a) of the Act, the Tribunal refuses Mr Clowes’ income estimate dated 6 November 2022 as it is satisfied that the partial year income amount for the income election is less that the amount it considers is likely to be his actual adjusted taxable income for the remaining period.

DECISION

The decision under review is affirmed.