Ekstrand and Hartle (Child support)

[2020] AATA 1389

Ekstrand and Hartle (Child support) [2020] AATA 1389 (27 March 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/BC018374

APPLICANT:  Mr Ekstrand

OTHER PARTIES:  Ms Hartle

Child Support Registrar

TRIBUNAL:Member P Jensen

DECISION DATE:  27 March 2020

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income – whether the estimate was likely to be less than parent’s actual income – 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

1. Mr Ekstrand and Ms Hartle are the parents of [Child 1] and [Child 2]. A child support case was registered in 2014 with what is now called Services Australia, but which is still commonly referred to as the CSA. 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. The Act also allows a parent to provide an estimate of their income and, if accepted, the administrative assessment is based on that estimate of income, subject to a possible reassessment once the parent’s adjusted taxable income for the relevant financial year becomes known.

2. From 1 September 2019 the administrative assessment was based on Mr Ekstrand’s 2018-19 adjusted taxable income of $124,750. On 7 September 2019, he completed an online form in which he stated that he had earned $10,421 and incurred tax-deductible expenses of $652 during the period from 1 July 2019 to 6 September 2019, and he expected to earn $55,343, rounded to the nearest dollar, and incur tax-deductible expenses of $2,858, rounded to the nearest dollar, during the 298 days from 7 September 2019 to 30 June 2020. ($55,343 - $2,858) / 298 x 365 = $64,287 per annum, after taking into account rounding errors. On 17 September 2019 the CSA decided to accept Mr Ekstrand’s estimate of income. Ms Hartle objected to that decision. An objections officer allowed her objection and refused Mr Ekstrand’s estimate of income. Mr Ekstrand applied to the Tribunal for further review. Ms Hartle contacted the Tribunal Registry prior to the hearing and informed it that she did not wish to participate in the hearing. I heard the matter on 27 March 2020. Mr Ekstrand gave sworn evidence by conference phone.

3. Mr Ekstrand’s estimate was provided pursuant to subsection 60(1) of the Act. Subsection 60(2) of the Act refers to the income component amounts, which are the components of a person’s adjusted taxable income, such as their taxable income, reportable fringe benefits and net investment losses. Subsections 60(3) to (5) of the Act state:

   Estimate for a part of a year of income etc. 

   (3)If the parent makes the election under subsection (1) during the year of income but not on the first day of the year of income: 

   (a)the parent is to use the method in subsection (4) to work out the amount; and 

   (b)the parent is to estimate each income component amount for the parent for the period that: 

   (i)started on the first day of the year of income; and 

(ii)ended at the end of the day before the start day for the election. 

(4)For the purposes of paragraph (3)(a), the method is as follows:

Method statement 

Step 1.   Estimate each income component amount for the parent for the period (the remaining period): 

(a)starting on the start day for the election; and 

(b)ending at the end of the last day of the year of income. 

Step 2.   Add up those amounts. The result is the partial year income amount. 

Step 3.   Divide the partial year income amount by the number of days in the remaining period. 

Step 4.   Multiply the quotient by 365. 

(5)The start day for the election must be: 

(a)the day on which the parent makes the election; or 

(b)the first day of a child support period, so long as that day is not before the day referred to in paragraph (a).

1. Paragraph 60(3)(a) of the Act required Mr Ekstrand to estimate his adjusted taxable income from 7 September 2019 to 30 June 2020. Paragraph 60(3)(b) of the Act required Mr Ekstrand to state his adjusted taxable income from 1 July 2019 to 6 September 2019.

2. Section 63AA of the Act allows a decision-maker to refuse a parent’s estimate of income if, in effect, they under-estimate their adjusted taxable income for the remainder of the financial year or they over-state their financial year-to-date adjusted taxable income.

3. At the hearing, Mr Ekstrand stated that he had not earned any income during the period from 1 July 2019 to 6 September 2019. I noted that he had stated in his online form that he had earned $10,421 and incurred tax-deductible expenses of $652. He said he had provided that information by mistake. I noted that Mr Ekstrand spoke to the CSA on 17 September 2019 and, according to its file note, the CSA referred to his stated year-to-date adjusted taxable income and then:

   Explained importance of accurate YTD in reconciliation process, and customer confirmed their understanding.

4. At the hearing, Mr Ekstrand confirmed the accuracy of that file note. He reiterated that he should have advised the CSA that his year-to-date adjusted taxable income had been $0, and the information he provided — that his year-to-date adjusted taxable income had been $10,421 - $652 = $9,769 — was incorrect.

5. As the CSA noted, it is important that a parent provides an accurate year-to-date adjusted taxable income when lodging an estimate of income. If they over-state their year-to-date adjusted taxable income, the reconciliation process may not account for all of their income in respect of the financial year in question. For those reasons, it was appropriate to refuse Mr Ekstrand’s estimate of income pursuant to section 63AA of the Act.

6. It is also worth noting some brief observations about Mr Ekstrand’s estimate of income. He stated in his online form that he was earning $2,600 per fortnight, and expected to do so from 7 September 2019 to 30 June 2020. He provided the additional information: “new employer, less rostered days on”.

7. Mr Ekstrand said he was offered casual employment in August 2019. He commenced that employment on 9 September 2019. It transpired that his employment was terminated on 19 December 2019. He received three weeks of pay every four weeks. His weekly earnings, and four-weekly annualised earnings, can be summarised as follows:

   Week ending                Earnings           Four-weekly

   annualised earnings

   15/09/19                $3,025.20           

   22/09/29                $3,528.00

   29/09/19                $2,768.40

   06/10/19  $0.00           $121,513/yr

   13/10/19                $2,551.68

   20/10/19                $3,528.00

   27/10/19                $2,848.80

   03/11/19  $0.00           $116,389/yr

   10/11/19                $2,646.72

   17/11/19                $3,528.00

   24/11/19                $2,814.60

   01/12/19  $0.00           $117,182/yr

   08/12/19                $2,480.64

   15/12/19                $3,528.00

   22/12/19                $2,673.00

   $0.00           $113,179/yr

8. Mr Ekstrand did not provide any documentary evidence in support of his estimate of income of $2,600 gross per fortnight, or $67,785 gross per annum. At the hearing he said he had provided the estimate on the basis that he would cease employment in March 2020 when his child was born. If that were in fact the case, one would have expected Mr Ekstrand to have referred to it in the “additional information” he provided with his estimate, or during his subsequent conversation with the CSA following Ms Hartle’s objection to the original decision: see page 99 of the hearing papers.

9. On balance, I find that Mr Ekstrand under-estimated his adjusted taxable income for the remainder of the financial year, and for that reason as well, it was appropriate to refuse his estimate of income.

DECISION

The decision under review is affirmed.