Durant and Jepson (Child support)

[2021] AATA 1270

Durant and Jepson (Child support) [2021] AATA 1270 (24 March 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/MC020537

APPLICANT:  Mr Durant

OTHER PARTIES:  Child Support Registrar

Ms Jepson

TRIBUNAL:Member S Hoffman

DECISION DATE:  24 March 2021

DECISION:

The tribunal sets aside the decision under review and, in substitution, decides that Mr Durant’s income estimate of $59,442 is accepted and applies from 31 August 2020.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income – whether the estimate should have been refused – estimate of income accepted – decision under review set aside and substituted

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 Durant pays child support to Ms Jepson for [Child 1] who is 7 years old.

2. On 31 August 2020 Mr Durant contacted Services Australia - Child Support (the CSA) to lodge an estimate of his income from that date. The CSA decided on 4 September 2020 to accept his income estimate election which was $59,442 from 31 August 2020 (the original decision).

3. On 24 September 2020 Ms Jepson lodged an objection to the original decision. On 22 December 2020, an objections officer decided to refuse to accept Mr Durant’s income estimate.

4. Mr Durant lodged an application for review with this tribunal on 24 December 2020. The matter was heard on 24 March 2021. Mr Durant and Ms Jepson attended the hearing via conference telephone and gave affirmed evidence. The tribunal had before it a bundle of documents provided by the Department (numbered 1 to 99), copies of which were provided to the parties before the hearing. Mr Durant submitted documents numbered A1 to A2, which were sent to Ms Jepson before the hearing.

ISSUE

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act1989 (the Act). 

2. The issue which arises in this case is whether to accept or refuse to accept Mr Durant’s election to estimate his income from 31 August 2020.

CONSIDERATION

1. Section 60 of the Act provides that a parent may elect to estimate his or her adjusted taxable income if certain criteria are met. These include that the estimated annualised income will not be more than 85% of the taxable income figure used to calculate the rate of child support.

2. Subsection 61(3) of the Act sets out that the Registrar (the CSA) must immediately take such action as is necessary to give effect to an estimate of income in relation to a child support assessment.

3. Section 63AA of the Act sets out that the CSA may refuse to accept an income election if it is satisfied that the income estimate is less than the person’s income for the relevant period. Subsection 63AA(4) sets out that in making the decision as to whether to refuse to accept an income election, the CSA may act on the basis of information it has received or obtained about the financial circumstances of the parent; and may, but is not required to, conduct an inquiry into the matter.

4. The tribunal takes the view that sections 61 and 63AA of the Act provide for the decision-maker to accept, or refuse to accept, an estimate of income but not to change the amount of the estimate as elected by the parent.

5. According to CSA’s records, Mr Durant’s taxable income for 2018/19 was $175,132 and for 2019/20 it was $186,336.

6. Mr Durant said that he was a fly-in fly-out (FIFO) worker and his ability to work was affected by the border closures from March 2020 onwards. He said he relied on paid leave for a while and then found other work.

7. Mr Durant submitted a letter dated 7 December 2020 from [Mr A], [a] manager for [Employer 1]. [Mr A] wrote that Mr Durant had been employed by [Employer 1] since 2008 as a FIFO [occupation 1]. His job required him to travel from [interstate] to Perth, then to the [named] region of Western Australia (WA).

8. [Mr A] wrote that COVID-19-related border restrictions imposed by the WA government meant that Mr Durant, who lives [interstate], had not been able to return to WA and had since extinguished his leave entitlements. He had taken leave without pay to retain his employment.

9. The Tribunal understands that this situation may have changed recently as the WA border restrictions have relaxed. However, that is not relevant to this review which is considering the income estimate lodged on 31 August 2020.

10. Ms Jepson did not dispute that Mr Durant was unable to continue work as a FIFO worker for a period from March 2020.

11. When Mr Durant lodged his income estimate on 31 August 2020, he informed the CSA that he had two sources of employment income at the time. He told the tribunal he had some income from [Employer 1] and was also working on a casual basis as a [occupation 2]. According to CSA records, his second employer was [Employer 2].

12. At the time he lodged his income estimate, Mr Durant was being assessed for child support on an adjusted taxable income of $175,132 (his 2018/19 taxable income). He informed the CSA his annualised income from 31 August 2020 was $59,442. As that is clearly less than 85% of the income used in the child support assessment, the 85% test found in section 60 of the Act is met.

13. When Ms Jepson lodged her objection, she told the CSA that she did not believe Mr Durant’s income had dropped to $59,442 and that Mr Durant was being paid by both [Employer 1] and [Employer 2].

14. Mr Durant provided payslips to the CSA from [Employer 2] for September 2020 that showed his annual salary was $62,400 although his weekly gross income was about $1,650 which is equivalent to about $85,800 a year. The tribunal notes the letter from [Employer 1] that refers to Mr Durant using up all his leave pay and that his continuing employment was based on him taken unpaid leave; that is, he was not necessarily being paid by both employers when he was working as a [occupation 2].

15. The tribunal is satisfied that Mr Durant’s income reduced significantly after he was unable to work as a FIFO worker because of border restrictions. He relied on paid leave until that was exhausted and he took a lower-paid job as a [occupation 2].

16. The tribunal is satisfied that Mr Durant’s income estimate of $59,442 is less than 85% of $175,132, which was the income he was being assessed on before he lodged his income estimate.

17. The tribunal is satisfied that Mr Durant lodged his income estimate based on what he reasonably anticipated his income would be from 31 August 2020.

18. The tribunal notes that Mr Durant lodged a revised estimate of $86,661 that was applied from 1 September 2020 (the following day) as he realised he had given the CSA his net pay figure rather than his gross pay. As Mr Durant corrected this error quickly and before the objection decision was made, the tribunal will not exercise its discretion to refuse to accept the income estimate election, as allowed under section 63AA of the Act.

19. The tribunal concludes that Mr Durant’s estimate of income of $59,442 is to be accepted and applied from 31 August 2020.

20. That being the case, the revised estimate of $86,661 that applied from 1 September 2020 before the objection decision was made should automatically be reinstated.

21. The tribunal notes that Ms Jepson considered the application of an income estimate to be unfair and that Mr Durant should be assessed on his previous year’s taxable income.

22. The child support legislation allows for people to lodge income estimates as a person’s income can change during a year for a range of reasons; and generally, it is appropriate for a person to be assessed on their actual income, rather than a higher amount they no longer earn. Both parties were aware of the reconciliation process whereby Mr Durant’s estimate of income will be compared against his taxable income for 2020/21 after the end of the financial year.

DECISION

The tribunal sets aside the decision under review and, in substitution, decides that Mr Durant’s income estimate of $59,442 is accepted and applies from 31 August 2020.