Dioli and Araujo (Child support)

[2021] AATA 2909

Dioli and Araujo (Child support) [2021] AATA 2909 (22 June 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/BC021347

APPLICANT:  Mr Dioli

OTHER PARTIES:  Child Support Registrar

Ms Araujo

TRIBUNAL:Member C Breheny

DECISION DATE:  22 June 2021

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 Dioli and Ms Araujo are the separated parents of [the child].  Mr Dioli is the parent liable to pay child support to Ms Araujo and for some time that had been on the basis that Ms Araujo had 62% and Mr Dioli had 38% care of [the child]. Prior to 3 October 2020 Mr Dioli’s child support liability was $1,783 per annum, based on his 2019/20 taxable income of $65,475 and Ms Araujo’s 2019/20 taxable income of $69,989.

2. On 24 December 2020 a decision was made that Ms Araujo had 89% and Mr Dioli had 11% care of [the child] from 3 October 2020. Thus from 3 October 2020 onwards Mr Dioli’s child support liability increased to $5,330 per annum ($444.17 per month) based on his 2019/20 adjusted taxable income of $65,475 and Ms Araujo’s 2019/20 adjusted taxable income of $69,989.

3. On 13 January 2021, Mr Dioli contacted Services Australia – Child Support (Child Support) to lodge an income estimate for the period 13 January 2021 to 30 June 2021. Mr Dioli estimated his income to be “nil”. Child Support accepted Mr Dioli’s estimate election and calculated that from 13 January 2021 Mr Dioli’s child support liability decreased to $1,467 per annum (or $122.25 per month), being the “fixed annual rate” for one child. 

4. On 6 February 2021 Ms Araujo objected to the decision stating that Mr Dioli owned his own business and would continue to be capable of earning an income. On 3 April 2021 a Child Support objections officer allowed the objection and decided that the income estimate lodged on 13 January 2021 should be refused.

5. On 29 March 2021 Mr Dioli applied to the Social Services and Child Support Division of the Administrative Appeals Tribunal for an independent review of the objection decision. The application was heard on 22 June 2021. Mr Dioli and Ms Araujo attended the hearing by conference telephone and gave evidence on affirmation. A representative of the Child Support Registrar did not attend the hearing. I had before me the statement and documents provided by Child Support pursuant to subsection 37(1) and section 38AA of the Administrative Appeals Tribunal Act 1975, received on 25 May 2021 and 9 June 2021 respectively and numbered 1–122. I also considered additional evidence submitted by Mr Dioli, marked A1–A21.

ISSUES AND CONSIDERATION

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

2. In general, a person’s child support liability is calculated by using an adjusted taxable income, which is based on the person’s taxable income for the previous financial year.  In this case the child support period in question is the period 1 October 2020 to 31 December 2021, which would generally use 2019/2020 taxable incomes (folio 204). Both Mr Dioli and Ms Araujo had lodged their 2019/20 income tax returns and their respective taxable incomes ($65,475 Mr Dioli and $69,989 Ms Araujo) were used in the administrative assessment. Initially Mr Dioli’s child support liability was $1,783 per annum (folio 60), but a change in care percentages from 3 October 2020 increased his child support liability to $5,330 per annum (folio 73), based on the same 2019/20 taxable income amounts.

3. The Act makes provision for a child support assessment to be based on an estimate of current income provided there has been a decrease in income of at least 15%. Section 60 of the Act generally provides that where an income estimate is made part-way through a tax year, the applicant is required to provide information about their year-to-date adjusted taxable income and an estimate of likely adjusted taxable income for the remainder of the tax year, on and from the date of the income estimate election.

4. An estimate of income by its nature may be unlikely to be precise. In essence, what is required in this context is a forecast of likely income for the rest of the tax year, taking into account any allowable deductions. The estimate should take account of what is known, as well as what is reasonably in contemplation as likely. However, when reviewing the efficacy of an income estimate, it is not appropriate to have regard to changes in circumstances that could not reasonably have been anticipated when the estimate was given.

5. Mr Dioli stated that he lost his job on 13 January 2021 and he would not be earning any other income. He also told Child Support that he would not be claiming Centrelink payments, but would be financially supported by his partner (folio 85). He indicated that his year-to-date income from his employer as of 12 January 2021 was $33,280 (folio 85).

6. In lodging her objection Ms Araujo stated that Mr Dioli had contacted her in early January 2021, asking her to accept child support payments at a reduced rate, as part of a private agreement. When she refused, he sent her a text message on 10 January 2021 to the effect that he would be unemployed, if she did not agree to his proposal within 24 hours (folio 146). Ms Araujo provided Facebook pages indicating that Mr Dioli was the director of the company “[Company]” and that the company operated from his home address (folios 169/170). She further provided a Facebook page on which Mr Dioli acknowledged that “[Company]” was his own company (folio 173).

7. In response Mr Dioli provided an unsigned and undated letter from “[Company]” (folio 150) stating that Mr Dioli was no longer employed as of 13 January 2021, as his “performance was well below par due to constant psychological effects from I believe his childrens [sic] ex wife and child support”.

8. Mr Dioli also provided two pages from a Suncorp Bank account in his name for the period 13 January 2021 to 17 February 2021 (folios 157/158). The bank account statement shows direct credits from another bank (Bank of Queensland) totalling $1,400, plus a deposit of $650 marked “Child Support” and a deposit of $150 marked “rent” in the period of one month.

9. Mr Dioli agreed that he was the director of the company “[Company]” but submitted that the company was owned by another person ([Mr A]). Mr Dioli agreed that [Mr A] was his good friend.

10. Mr Dioli said that he (Mr Dioli) wrote the letter, stating that he was no longer employed. He “basically fired himself”, but he did so on [Mr A]’s behalf. Mr Dioli said that [Mr A] was “tired of being harassed by Child Support to deduct payments from Mr Dioli’s wages”. [Mr A] therefore told Mr Dioli that he needed to leave.

11. Mr Dioli also submitted that the transfers into his bank account came from his partner. There are several monthly payments being deducted from that account[1], which total approximately $456 per month. His partner was transferring the money to cover the regular monthly deductions.

    [1] I note there appear to be three regular payments per month in the amounts of $71.94, $87.57 and $296.67

12. Mr Dioli further provided a copy of an ASIC report (folio A21) indicating that he ceased being the director of “[Company]” as of 6 April 2021. His brother ([Mr B]) was now the company director and [Mr A] was the shareholder.

13. Mr Dioli also said that he did not receive a “termination payment” and that he did not have an employment contract with “[Company]”.

14. Departmental records indicate that Mr Dioli apparently only provided one “pay slip” from “[Company]” to indicate that his “income per pay” had been $33,280 (folio 92). It was recorded as a “one off” payment (folio 202). Mr Dioli stated, however, that he was being paid on a regular weekly basis.

15. As stated above the income estimate is for the remainder of the tax year (in this case to 30 June 2021) and according to Mr Dioli’s income estimate his total taxable income for 2019/20 would therefore be $33,280 (year-to-date income $33,280 + $0).

16. Section 63AA of the Act, provides a discretion to refuse to accept an income estimate election. Paragraph 63AA(2)(a) enlivens the potential exercise of discretion to refuse if Mr Dioli’s estimate of income for the period 13 January 2021 to 30 June 2021 was likely to be too low.

17. I note that in making an estimate, the person is attempting to forecast future income, so absolute precision cannot necessarily be expected. The provisions in the Act for the amendment of estimates by the Registrar if circumstances change, and for estimate reconciliation after the end of the tax year once the actual income is ascertained, suggest that an overzealous approach in scrutinising an income estimate is not warranted. Consistent with this, it is also relevant to note that the power to refuse to accept an estimate is discretionary, not mandatory, even if the Registrar is satisfied that the estimate is too low.

18. On the other hand, if the Registrar were to take a lax approach, that may well encourage people to underestimate their income to avoid paying child support (in the short term at least). A balance must be struck, and I consider that it is appropriate to ascertain whether the estimate was reasonable when it was given. If it was, the appropriate course of action is not to reject the estimate in the course of an objection or a tribunal review, but for the Registrar to amend the estimate if that is warranted.

19. Mr Dioli stated that he has not and would not be earning any more income from “[Company]” and that the evidence he provided supported his contentions.

20. I am not satisfied that the evidence Mr Dioli provided is credible. He agreed that he wrote the letter advising that his employment was terminated on 13 January 2021 himself. The ASIC report he provided, however, indicates that he remained a company director until 5 April 2021 and thus he would have continued to have had all the rights and obligations as a company director under the law. There is no evidence that [Mr A] (or any other person) asked Mr Dioli to resign or terminated his employment.

21. I note departmental records indicate that Mr Dioli’s child support liability was up to date as of 24 September 2020 with regular payments being made. There is no evidence that Child Support approached “[Company]” with a request to deduct child support from Mr Dioli’s salary or that [Mr A] was “harassed by Child Support” in any way, as claimed by Mr Dioli.

22. The bank statements show further deposits into Mr Dioli’s account, but there is no evidence to indicate who made these deposits or whether this account is indeed the bank account into which Mr Dioli’s wages would generally be paid. It does not show any past wages being deposited. It is thus possible that Mr Dioli operates another bank account.

23. I also note that the ASIC report indicates that the company continues to operate from Mr Dioli’s residential address. It appears unusual that Mr Dioli should allow an unrelated entity (e.g. a company that he was not associated with) to operate from his premises without any form of recompense, such as rent.

24. Given the concerns about the evidence provided, I am not satisfied that Mr Dioli would not be drawing additional money from “[Company]” after 13 January 2021. I accept that there is an argument that Mr Dioli was no longer a company director from 6 April 2021 and that he would therefore be no longer entitled to any salary from the company from that date. As noted above, however, I must assess Mr Dioli’s circumstances as of the day he lodged his income estimate (13 January 2021). I thus consider Mr Dioli’s income estimate election of $0 for the period 13 January 2021 to 30 June 2021 was likely to be too low.

25. I am therefore satisfied that the most appropriate course here is to refuse Mr Dioli’s income estimate election and affirm the decision under review.   

DECISION

The decision under review is affirmed.