Eatman and Glavin (Child support)

[2021] AATA 5028

Eatman and Glavin (Child support) [2021] AATA 5028 (9 November 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/BC022206

APPLICANT:  Mr  Eatman

OTHER PARTIES:  Child Support Registrar

Ms Glavin

TRIBUNAL:Member S De Bono

DECISION DATE:  9 November 2021

DECISION:

The decision under review is affirmed. (This means the application for review is unsuccessful.)

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income – whether the estimated income is less than likely 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 Eatman and Ms Glavin are the separated parents of [Child 1] and [Child 2]. Ms Glavin has 100% care of [Child 1] and 67% care for [Child 2] and Mr Eatman has 0% care of [Child 1] and 33% care of [Child 2]. On 1 July 2021 Mr Eatman lodged an income estimation with Services Australia (Child Support) for the 2022 financial year and he estimated his income to be $14,000 for the period 1 July 2021 to 30 June 2022. This was accepted by Child Support on 2 July 2021.

2. On 5 July 2021 Ms Glavin objected to this decision on the basis that she thought Mr Eatman’ income for the 2022 financial year would be higher than the income estimation of $14,000. On 1 September 2021 an objections officer allowed Ms Glavin’s objection and made the decision not to accept Mr Eatman’s new income estimation for the 2022 financial year.

3. On 3 September 2021 Mr Eatman applied to the Administrative Appeals Tribunal (the tribunal) for an independent review of the objections officer’s decision. The tribunal had before it a bundle of documents (91 pages – referred to as the hearing papers) which had been sent to both parties prior to the hearing. Mr Eatman also provided additional information (A1–A5). Relevant aspects of the material and evidence before the tribunal will be referred to in the tribunal’s consideration of the issues to be decided.

LAW AND CONSIDERATION

1. The law relevant to this review is found in the Child Support (Assessment) Act 1989 (the Assessment Act). The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Assessment Act. This requires the application of a statutory formula which takes into account factors such as the number and age of children, the level of care provided and the child support income amount of each parent.

2. Section 60 of the Assessment Act provides a parent may elect to estimate their taxable income for a year of income. Subsection 60(1) provides a parent may estimate for either a whole income year or part of an income year. Mr Eatman elected to estimate his income for the whole of the income year in accordance with subsection 60(2) which states:

   Estimate for a whole year of income

   (2)  If the parent makes the election under subsection (1) before the year of income starts or on the first day of the year of income, the amount is the total of the following amounts (the income component amounts) as estimated by the parent:

   (a)  the parent’s taxable income for the year, disregarding any assessable FHSS released amount (within the meaning of the Income Tax Assessment Act 1997) that may be included in the parent’s assessable income for the year;

   (b)  the parent’s reportable fringe benefits total for the year;

   (c)  the parent’s target foreign income for the for the year;

   (d)  the parent’s total net investment loss (within the meaning of the Income Tax Assessment Act 1997) for the year;

   (e)  the total of the tax free pensions or benefits received by the parent in the year;

   (f)  the parent’s reportable superannuation contributions (within the meaning of the Income Tax Assessment Act 1997) for the year.

3. Section 62A of the Assessment Act provides that if a parent has revoked an earlier income election they must elect a new adjusted taxable income worked out using the same method as that set out in section 60, starting on the start day for the new election.

4. Section 63AA of the Assessment Act provides the Registrar may refuse to accept an income election if the partial year income amount given by the person is less than the amount the person’s actual adjusted taxable income is likely to be for the remaining period.

5. Income for child support purposes is estimated on the basis of the likely income for the whole financial year. The financial year in this instance was from 1 July 2021 to 30 June 2022 (the 2022 financial year).

6. The task of the tribunal is to review a single decision of the Agency – that decision is of the objections officer made on 1 September 2021 not to accept Mr Eatman’s income estimation of $14,000 for the period 1 July 2021 to 30 June 2022.

Issue 1 – Is the decision of the objections officer to reject Mr Eatman’s income estimation of $14,000 correct?

1. Mr Eatman received his last pay from [Company 1] on 1 July 2021 (gross $14,523.60). He said he lodged a new income estimate on the basis that he was no longer employed by [Company 1] and he was not sure what his income would be for the 2022 financial year. Mr Eatman said he knew his income would be less than his income in the 2021 financial year because he had earnt just under $160,000 in that financial year. Mr Eatman thought he was estimating for a shorter period rather than the whole financial year and he said he provided updates to Child Support when he earnt an income after his initial income estimation on 1 July 2021. He also said he was not sure if his income would be higher than $14,000 for the financial year because he was not sure if he would be able to obtain work. He has now decided to start his own business.

2. Mr Eatman’s main concern was that 85% of his previous income of $159,316 for the 2021 financial year was used once his updated income estimation of $14,000 was refused by the objections officer and this meant he incurred a debt of about $4,000. Mr Eatman said he has been told this amount will never be refunded even when his income is reconciled for the 2021/2022 financial year and turns out to be less than $135,418 that Child Support have used to calculate his child support liability from 1 July 2021. Mr Eatman received this information during a conversation with an officer of Child Support and this information is correct.

3. Ms Glavin said that she objected to this decision as it was her view that Mr Eatman had been working for [Company 1] once he resigned and she thought the income estimation would be too low for the whole of the 2022 financial year, especially given he has ongoing financial commitments that he would have to meet.

4. Mr Eatman updated his income estimation on 1 September 2021 to $35,000 and he said he has continued to update his income estimation in “real time” since then which he said is based on his actual income earnt during these periods.

5. The hearing papers before the tribunal indicate the officer told Mr Eatman that his income estimation was going to be applied for the whole financial year (that is, for the whole of the 2022 financial year) and that Mr Eatman understood this.[1]

   [1] Page 20 of the hearing papers.

6. The objections officer refused Mr Eatman’s income estimation because information obtained from his employer showed he had already earnt $13,979.28 for the period of 1 July 2021 to 29 July 2021 and was due to commence his roster swing on 25 August 2021, making the decision that Mr Eatman’s income estimation would be too low given this information from his employer.[2]

   [2] Page 57 of the hearing papers.

7. The tribunal notes that this information was provided on 3 August 2021,[3] after the date Mr Eatman resigned. The separation certificate provided by Mr Eatman shows his last day of casual employment with [Company 1] was on 16 July 2019.

   [3] Page 57 of the haring papers.

8. The tribunal also accepts the objections officer’s decision to refuse Mr Eatman’s income estimation of $14,000 for the 2022 financial year but for a different reason. Mr Eatman said he has had some income since his initial income estimation and is updating his actual income on a monthly basis with Child Support. He said he has had a month where he earnt $3,500 and another month when he had no income and has informed Child Support his income for that period was $0. He said his income estimation has changed on the basis of this updated information.

9. Given that Mr Eatman said he has had further income since his income estimation of $14,000 and that income estimation at that time applied for the whole financial year the tribunal is satisfied that the decision of the objections officer to refuse this income estimation of $14,000 for the 2022 financial year has been correctly refused in accordance with section 63AA of the Act.

DECISION

The decision under review is affirmed. (This means the application for review is unsuccessful.)