Compton and Penney (Child support)

[2017] AATA 2860

Compton and Penney (Child support) [2017] AATA 2860 (16 November 2017)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2017/BC012365

APPLICANT:  Ms Compton

OTHER PARTIES:  Mr Penney

Child Support Registrar

TRIBUNAL:  Member P Jensen

DECISION DATE:  16 November 2017

DECISION:

The decision under review is varied so that Mr Penney’s post-separation income of $20,936 is excluded from his 2015-16 adjusted taxable income of $122,378 from 15 May 2017 to 30 September 2017.

Member P Jensen

CATCHWORDS

Child support – Post-separation costs – End date for the exclusion of income – Decision under review varied.

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

1. Ms Compton and Mr Penney are the parents of [Child 1] and [Child 2]. A child support case was registered from 20 October 2015. The Child Support (Assessment) Act 1989 (“the Act”) provides for an administrative assessment of child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes.

2. Section 44 of the Act provides that in certain circumstances the extra income a parent earns following separation (their “post-separation income”) can be excluded from their adjusted taxable income for child support purposes.

3. On 15 May 2017, Mr Penney applied to have $20,936 excluded from his adjusted taxable income pursuant to section 44 of the Act. His application was refused. He objected to that decision. An objections officer allowed his objection and decided to exclude $20,936 from his adjusted taxable income from 15 May 2017 until 12 April 2018. Ms Compton sought further review by the Tribunal and I heard the matter on 16 November 2017. I spoke to Ms Compton and Mr Penney by conference phone.

4. Mr Penney’s evidence can be summarised as follows. He has been employed by [Employer 1] since 2012. His 2012-13 adjusted taxable income was $95,175. His 2013‑14 adjusted taxable income was $98,234. His 2014-15 adjusted taxable income was $99,943. Following the parents’ separation on 13 April 2015 he undertook additional work for [Employer 1]. His 2015-16 base salary was $101,442 but his 2015-16 adjusted taxable income was $122,378. The additional $20,936 would not have been earned in the ordinary course of events.

5. Ms Compton’s evidence can be summarised as follows. At the end of 2013, [Employer 1] promised Mr Penney an annual bonus of approximately $23,000 to $26,000. Mr Penney arranged to have the bonus paid to Ms Compton as a salary. The arrangement was made without any consultation with Ms Compton. Ms Compton has never worked for [Employer 1] and, at all relevant times, Mr Penney’s remuneration from [Employer 1] has consisted of the wages that [Employer 1] paid to him and the payments that [Employer 1] paid to her.

6. Mr Penney denied Ms Compton’s account of events. He gave sworn evidence that he did not earn the money that was paid to Ms Compton and he did not arrange for a portion of his remuneration to be paid to Ms Compton.

7. On 17 March 2014, [Employer 1] paid $15,922 into Ms Compton’s bank account. The transaction is described as “[Employer 1] [Ms Compton] July to Mar”. Ms Compton stated that she was the only signatory to her bank account and she was the only person who held a debit card in respect of her bank account, but Mr Penney was abusive and controlling during the course of their relationship. She said she had to do what he told her to do and he treated the money in her bank account as his own.

8. On 24 March 2014, $14,000 was withdrawn from Ms Compton’s bank account. The transaction is described as “Wdl Branch [BSB]”. Ms Compton said the funds were transferred to Mr Penney’s bank account. Mr Penney said the funds were not transferred to his bank account. He said he could not be certain as to why the funds were withdrawn but he suspected they were withdrawn to purchase a [car] that was jointly registered in Ms Compton’s and his names. 

9. On 24 March 2014, [Employer 1] started making weekly payments into Ms Compton’s bank account. The transactions were initially described as “[Employer 1] SALARY” and were later described as “[Employer 1] Wages”. In March 2014 the payments were $419.00 per week and by September 2015 they had risen to $473.50 per week. They appear to have been Ms Compton’s only regular income.

10. According to Ms Compton’s 2013-14 tax return, she was employed by [Employer 1] as an [Occupation 1]. She earned $23,411. She incurred tax-deductible expenses of $280 in respect of her employment. At the hearing she said Mr Penney forced her to sign her 2013-14 tax return.

11. According to Ms Compton’s 2014-15 tax return, she was employed by [Employer 1] as an [Occupation 1]. She earned $26,504. She incurred tax-deductible expenses of $380 in respect of her employment. At the hearing she said Mr Penney forced her to sign her 2014-15 tax return.

12. As noted earlier, the parents separated in April 2015. They continued to live in the same house until September 2015. Ms Compton continued to receive weekly payments from [Employer 1] until October 2015. In June 2017 the Department of Human Services – Child Support (“the CSA”) recorded Ms Compton as saying that Mr Penney’s bonuses “went to my account and ended up in his pocket.” At the hearing, Ms Compton confirmed that she had made that statement to the CSA. She provided a copy of her bank account statements for the period from 3 March 2014 to 2 June 2014. In addition to the $14,000 transaction, the other larger payments were to [named retailers], [School 1], and [School 2]. The payments appear to be in respect of purchases for the household as a whole. There is no clear documentary evidence that any of the money that Ms Compton received from [Employer 1] was transferred to Mr Penney’s bank account or that Mr Penney used the funds in Ms Compton’s bank account as his own.

13. Ms Compton also provided a copy of her bank account statements for the period from 13 April 2015 to 18 September 2015; a period during which they were separated but living in the same house. On 26 August 2015, Mr Penney transferred $4,316 into Ms Compton’s bank account and on 3 September 2015 that sum was used to pay the stamp duty owing in respect of Ms Compton’s purchase of a townhouse. Mr Penney stated that the parents reached a property settlement (without the involvement of solicitors or a court) whereby Ms Compton received a car and funds that enabled her to purchase an unencumbered townhouse. Ms Compton confirmed those facts but stated that the division of matrimonial property had been unfair. Mr Penney submitted that Ms Compton’s receipt of a car and funds to purchase an unencumbered townhouse from the matrimonial asset pool was demonstrably inconsistent with her allegations, which he denied, that he had been abusive and controlling during the course of their relationship.

14. In addition to receiving weekly payments from [Employer 1], Ms Compton also received emails from [Employer 1] which attached her payslips. The payslips listed her base salary, PAYG withholdings (which suggests that [Employer 1] had her tax file number) and superannuation guarantee payment (which suggests that [Employer 1] had her superannuation details). On 7 October 2015, [Employer 1] provided Ms Compton with an employment separation certificate which stated that she commenced employment on 1 July 2013 and ceased employment on 2 October 2015. It also stated that she had resigned from her employment. At the hearing, Ms Compton stated that Mr Penney had forced her to sign a document stating that she had resigned from her employment with [Employer 1].

15. Ms Compton stated that she moved into her townhouse in September 2015. She subsequently lodged her 2015-16 tax return in which she stated that she had been employed by [Employer 1] as an [Occupation 2] and had earned $7,189. She also received $10,508 in newstart allowance payments. I asked Ms Compton why she had provided the Australian Taxation Office with information which, on her account of events, was incorrect. She did not suggest that Mr Penney had forced her to sign her 2015-16 tax return. She said she was “caught in a vortex of lies” and did not know how to extricate herself from the situation. She confirmed that, on her account of events, she and Mr Penney have both provided the Australian Taxation Office with incorrect information over a number of years and she has not taken any steps, at any time, to have that information corrected.

16. Some of the evidence that Ms Compton has provided, and in particular the deposit of $15,922 on 17 March 2014, supports her submission that she was not employed by [Employer 1] and she has received some of Mr Penney’s remuneration. However, there is other evidence which suggests that Ms Compton was employed by [Employer 1] and she was remunerated in respect of her employment, and she was not receiving some of Mr Penney’s remuneration. [Employer 1] made regular payments to Ms Compton and the payments were described as “salary” and “wages”. The payments were deposited into her bank account and she was the sole signatory and card holder of the account. [Employer 1] sent emails to Ms Compton with copies of her payslips. Ms Compton stated in her tax returns that she had earned income through her employment with [Employer 1] and, in 2013-14 and 2014-15, she stated that she had incurred tax-deductible expenses in the course of earning that income. She continued to receive regular payments from [Employer 1] after she separated from Mr Penney. When she informed [Employer 1] that she was resigning, [Employer 1] provided her with an employment separation certificate. She claimed that Mr Penney arranged for a portion of his remuneration to be redirected to her without her consent and he subsequently forced her to sign false documents and she was unable to resist his demands because he was so abusive and controlling. On that point, there is some force in Mr Penney’s submission that Ms Compton’s allegations are inconsistent with her receipt of a car and funds from the matrimonial asset pool which enabled her to purchase an unencumbered townhouse. The effect of Ms Compton’s submissions also appears to be that one or more unrelated third parties at [Employer 1] agreed to Mr Penney’s request to provide him and Ms Compton, and in turn the Australian Taxation Office with false information. I also note that, on Ms Compton’s account of events, she provided the Australian Taxation Office with incorrect information, and continued to do so after she physically separated from Mr Penney, and she has not taken any steps, at any time, to correct that information. Finally, I note that Mr Penney gave sworn evidence that he did not arrange for a portion of his remuneration to be paid to Ms Compton. Viewing the evidence as a whole, and mindful of the gravity of the allegations that Ms Compton has levelled against Mr Penney (and others), I accept Mr Penney’s evidence that he did not arrange for a portion of his remuneration to be paid to Ms Compton and the additional income he received during 2016-17 above his base salary was income that he earned after the parents had separated and it was income that he would not have earned in the ordinary course of events.

17. Section 44 of the Act states, relevantly:

    (1)A parent (the applicant) of a child may apply to the Registrar to amend an administrative assessment of child support payable by or to the parent for the child for part of a child support period if: 

    (a)the applicant and the other parent of the child lived together on a genuine domestic basis for at least 6 months; and 

    (b)the separation, following that 6-month period, of the applicant from the other parent occurred: 

    (i)within the last 3 years; and 

    (ii)before the application for administrative assessment of child support for the child was made under section 25 or 25A; and 

    (c)at the time of the application under this section, the applicant and the other parent remain separated; and 

    (d)in the last relevant year of income, or in the application period for an income election (if such an election has been made by the parent), the applicant earns, derives or receives income: 

    (i)in accordance with a pattern of earnings, derivation or receipt that is established after the applicant and the other parent first separate; and 

(ii)that is of a kind that it is reasonable to expect would not have been earned, derived or received in the ordinary course of events. 

(2)If the applicant makes an application under this section, the Registrar may determine that the applicant's adjusted taxable income for the child for a day in the child support period is a specified amount that excludes the income referred to in paragraph (1)(d). 

(3)However, the Registrar may make a determination under subsection (2) only if the determination: 

(a)reduces the applicant's adjusted taxable income for the child for a day in the child support period by 30% or less; and 

(b)applies in respect of a day in the child support period, being a day that is less than 3 years after the last separation referred to in paragraph (1)(b).

1. There is no dispute that Mr Penney and Ms Compton lived together on a genuine domestic basis for at least six months. Paragraph 44(1)(a) is satisfied.

2. There is no dispute that when Mr Penney lodged his section 44 application the parents had separated within the last three years and they had separated before the child support case was registered. Paragraph 44(1)(b) is satisfied.

3. There is no dispute that when Mr Penney lodged his section 44 application the parents remained separated. Paragraph 44(1)(c) is satisfied.

4. When Mr Penney lodged his section 44 application the last relevant year of income was 2015‑16. I accept Mr Penney’s evidence that during 2015-16 he earned additional income that he would not have earned in the ordinary course of events. Paragraph 44(1)(d) is satisfied. I agree that the additional income was $20,936. Reducing Mr Penney’s 2015-16 adjusted taxable income of $122,378 by $20,936 involves a reduction of less than 30%.

5. Mr Penney lodged his section 44 application on 15 May 2017. The child support period during which he lodged his application commenced on 20 January 2017 and ended on 30 September 2017: page 137 of the hearing papers. The objections officer concluded that it was appropriate to exclude Mr Penney’s post-separation income from 15 May 2017. Mr Penney did not take issue with that conclusion and I respectfully agreed with that conclusion. So far as the decision under review is concerned, Mr Penney’s post-separation income could be excluded until 30 September 2017 and it is appropriate to exclude his post-separation income until that date: subsection 44(3). That date is less than three years after the parents separated. The decision under review will be varied accordingly.

6. I note that on 27 October 2017 the CSA made a new decision to exclude Mr Penney’s post‑separation income from 1 October 2017 to 12 April 2018: pages 163 to 170 of the hearing papers. I am not reviewing that decision.

DECISION

The decision under review is varied so that Mr Penney’s post-separation income of $20,936 is excluded from his 2015-16 adjusted taxable income of $122,378 from 15 May 2017 to 30 September 2017.