Dietrich and Dietrich (Child support)

[2022] AATA 945

Dietrich and Dietrich (Child support) [2022] AATA 945 (24 February 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/PC022845

APPLICANT:  Mr Dietrich

OTHER PARTIES:  Ms Dietrich

Registrar Child Support Agency

TRIBUNAL:  Member S Cullimore

DECISION DATE:  24 February 2022

DECISION:

The decision under review is affirmed.

This means that the application for review is unsuccessful.

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 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. The following information is taken from the records of the Child Support Agency (“the CSA”) and the Tribunal finds each of these undisputed matters as fact.

2. Mr Dietrich and Ms Dietrich are the parents of two children who are now aged 6 and 1.

3. The case was registered on 6 January 2017 and has been Registrar Collect since 29 April 2021.

4. On 26 August 2021 a delegate of the CSA accepted an income election (estimate of income) of $60,122 from Mr Dietrich for the period 26 August 2021 to 30 June 2022.

5. On 8 September 2021 Ms Dietrich lodged a written objection to that decision.

6. On 5 November 2021 an objections officer allowed the objection and decided to refuse to accept the estimate.

7. This caused the child support liability of Mr Dietrich to increase, retrospectively, to $16,654 pa from 16 July 2021. It has been $17,032 pa from 1 September 2021.[1]

   [1] C113; C26 and C29. Based on the estimate of $60,122, it was only $5,532 pa (see C52).

8. On 30 November 2021 Mr Dietrich sought a further review by this Tribunal.

9. As at that date he was $3,407.17 in arrears.[2]

   [2] C121.

DOCUMENTARY EVIDENCE AND HEARING

1. The Tribunal had before it the original bundle of documents provided by the CSA. The bundle is referred to in this decision as documents C1 to C122.

2. Mr Dietrich provided the ATO Employment Declaration, A1.

3. Ms Dietrich provided further documents, B1 to B4 (these were in fact already on the CSA file).

4. The parents attended the hearing on 24 February 2022 by MS Teams audio hearing and each gave evidence and made verbal submissions.

ISSUE

1. The only issue which arises in this matter is whether the estimate of $60,122 made by Mr Dietrich on 26 August 2021 for the period 26 August 2021 to 30 June 2022 should be accepted or refused.

CONSIDERATION

The relevant child support law

1. The law relevant to this review is contained in the Child Support (Assessment) Act 1989 (“the Assessment Act”).

2. The Assessment Act sets up a scheme for assessing child support liabilities under what are called “administrative assessments”.

3. Usually, the CSA determines child support liabilities using a child support formula for periods of up to 15 months (called “child support periods”). The “formula” takes into account a range of factors including the most recent “adjusted taxable income” of each parent.

4. Under section 43 of the Assessment Act the adjusted taxable income for each parent is their taxable income from the last financial year that ended before the start of the child support period, plus any additional payments such as net investment losses.

5. The statutory scheme provides some flexibility for parents whose circumstances genuinely change from one year to the next.

6. Relevantly, section 60 of the Assessment Act allows a person to elect that their adjusted taxable income is their current adjusted taxable income (i.e. in the current financial year) rather than the adjusted taxable income from the previous (and concluded) financial year.

7. Section 60 of the Assessment Act onwards sets out methods for calculating an estimate and what requirements need to be met for an estimate to be accepted.

8. In essence, where the estimate is for a part year, as here, the method used is to calculate (i) year to date income for the parent; and (ii) the annualised amount of estimated adjusted taxable income for the estimate period – i.e. the period from when the election is made to the end of that financial year. 

9. In respect of an estimate that applies for a part of a financial year, there is a discretion given by subsection 63AA(2) of the Assessment Act for the Registrar to refuse to accept the estimate on two grounds:

   ·if the Registrar is satisfied that the “annualised” amount worked out for the period from when the estimate is made to the end of that financial year is less than the amount that the Registrar “considers is likely” to be the parent’s actual adjusted taxable income for that period (here 26 August 2021 to 30 June 2022); or

   ·if the actual year to date income is more than the year to date income declared by the parent.

10. The Tribunal also noted the Child Support Guide on this topic at para 2.5.1.

11. If an estimate is refused then the parent’s last relevant adjusted taxable income, or provisional income if they are late lodging tax returns, “replaces” the refused estimate, as if the estimate had never been made.

12. The Registrar must reconcile all estimates after the end of the relevant financial year, when it receives advice from the Australian Taxation Office of the parent’s taxable income for the relevant tax year.

13. This reconciliation process could lead to a reduction or increase in the child support liability.

14. A parent can apply for a “change of assessment” under Part 6A of the Assessment Act if they believe that the amount of child support produced by an “administrative assessment” is unfairly low or unfairly high because of the income, property and financial resources of themselves and the other parent.

DISCUSSION OF EVIDENCE, CONCLUSIONS AND REASONING

1. In 2019/20 the adjusted taxable income of Mr Dietrich had been $126,549. In 2018/19 it had been $94,112.

2. He has not yet lodged his 2020/21 tax return. His evidence was that the income for that year would be “similar” to 2019/20.

3. Mr Dietrich’s evidence was that he was a part owner of a [business] called “[Business 1]” and then sold his interest in that business to become an employee.

4. This arrangement commenced in about late August 2021.

5. For the first four weeks of this arrangement, his actual cash income was $1,248 per week gross, which is $64,896 pa, and there were negotiations over whether he should additionally be supplied with a motor vehicle.

6. Those negotiations however came to no resolution and from week ending 24 September 2021 his gross income increased to $1,706 per week, which is $88,712 pa (see the payslips at C9).

7. An ATO Employment Declaration in relation to Mr Dietrich (A1) makes no reference to any income amount.

8. The only issue before the Tribunal is whether the estimate should be accepted or refused, not whether in fact he has income, property or financial resources which makes the assessment based on that estimate “unfair”.

9. In the event, Mr Dietrich conceded that the $60,122 estimate was too low, certainly from week ending 24 September 2021 onwards.

10. In the view of the Tribunal, the objection decision was correct. It did appear “likely” that Mr Dietrich’s actual income for the estimate period would be higher than his estimate. In fact, the difference was likely to be significant.

11. The decision to refuse the estimate was therefore legally correct, in the circumstances.

12. He may now lodge a new estimate, and/or apply for a change of assessment.

DECISION

The decision under review is affirmed.

This means that the application for review is unsuccessful.