Fairburne and Oaldham (Child support)

[2022] AATA 3517

Fairburne and Oaldham (Child support) [2022] AATA 3517 (8 August 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/PC023778

APPLICANT:  Mr Fairburne

OTHER PARTIES:  Child Support Registrar

Ms Oaldham

TRIBUNAL:Senior Member S Trotter

DECISION DATE:  8 August 2022

DECISION:

The decision under review is set aside and the matter is sent back to the Child Support Registrar for reconsideration in accordance with Paragraph 23 of these Reasons.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – whether new year to date should be used – income not accurately determined - decision under review set aside and sent back with direction for reconsideration

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.As relevant to this application, Mr Fairburne and Ms Oaldham are the parents of two children (born 20015 and 2016) in relation to whom there has been a child support case registered with what is commonly referred to as the Child Support Agency (the CSA) since 4 December 2020.

2.This review application concerns a single decision of the CSA about Mr Fairburne’s income as utilised in the child support case from 10 December 2020.

3.From 4 to 9 December 2020, Mr Fairburne’s child support assessment was calculated based upon, amongst other things, a provisional adjusted taxable income figure of $104,900 (per annum) and Ms Oaldham’s provisional adjusted taxable income of $17,731 resulting in an annual child support liability of $14,098 payable by Mr Fairburne to Ms Oaldham.

4.On 10 December 2020, the CSA accepted Mr Fairburne’s estimate of adjusted income of $20,961.00 (annualised) for the period 10 December 2020 to 30 June 2021 with Mr Fairburne’s child support liability from 10 December 2020 to 30 June 2021 then reassessed as $0.

5.On 22 February 2022, the CSA reconciled Mr Fairburne’s estimated adjusted taxable income of $20,961 (annualised) for the period 10 December 2020 to 30 June 2021 against his Australian Taxation Office advised adjusted taxable income of $88,946 for the 2020/2021 financial year. Mr Fairburne’s child support liability for the 10 December 2020 to 30 June 2021 period was then reassessed based on an adjusted taxable income of $52,989 (for that period) resulting in child support arrears of $6,787.65.

6.On 18 March 2022, Mr Fairburne objected to that decision on the following basis:

I was unemployed and receiving jobseeker payments at the time of child support commencing so the estimate used at the time was accurate.

The difference in amounts was from a redundancy payment which was not included in my ytd earnings and I have the payslips to provide this.

I would like transcripts from the initial conversations with child support officers as I have in no way mislead them and feel this is unjust.

Also on the last conversation with child support the amount of […] issued as a penalty was going to be removed and this has not been done either.

7.On 22 April 2022, the CSA disallowed the objection.

8.On 29 April 2022, Mr Fairburne lodged an application with the Tribunal seeking an independent review of the CSA’s decision on the following basis:

CSA have taken the applicants last tax return to pay o/due CS and he believes they have assessed his prior income incorrectly

9.The hearing of the application was held on 26 July 2022. Mr Fairburne spoke to the Tribunal by conference telephone and gave evidence on affirmation. Ms Oaldham choose not to participate in the hearing and was removed as a party. The Child Support Registrar did not participate in the hearing and did not attend.

10.In considering the application, the Tribunal took into account the oral evidence of Mr Fairburne and the documentary material provided by the CSA in accordance with subsection 37(1) of the Administrative Appeals Tribunal Act 1975 (marked Exhibit 1) and further documents provided by Mr Fairburne during the hearing (marked Exhibit A).

ISSUES

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

12.A person’s child support liability is determined using a child support formula which takes into account a number of factors including the adjusted taxable incomes of the parents, which is the taxable income from the previous tax year that ended before the start of the child support period (plus any supplementary amounts).

13.Section 60 of the Act allows a person to lodge an income estimate. The period covered by the estimate commences on the day on which the person makes the estimate or the day on which the child support period commences, whichever is the later. The period ends at the end of the financial year.

14.The estimate is an annualised amount of the person’s taxable income and supplementary amounts for the estimate period. A parent can make an income estimate for a whole year of income or for a part year of income.

15.In respect of an estimate for a part year of income, the parent must provide their adjusted taxable income from the start of the financial year to the beginning of the estimate period (their year to date (YTD) income) and an estimate of income for the remaining period. The CSA then reconciles the estimate when information is available from the Australian Taxation Office for the relevant financial year.

16.Pursuant to subsection 61(1A) of the Act, when the CSA accepts a parent’s estimate election, their income estimate amount becomes their adjusted taxable income amount for the purposes of assessing the annual rate of child support payable in the application period.

17.After the end of the relevant financial year, the CSA compares the parent’s estimated income with their actual income for that year. This is known as an estimate reconciliation. Pursuant to subsection 64A(2) of the Act, If the parent’s actual income is more than their estimated income, the child support assessment is amended using their actual income.

18.Section 63AE of the Act provides a discretion for a new YTD income amount to be determined if the CSA becomes aware that the YTD income amount used in an estimate election is incorrect. The new amount then replaces the previously advised YTD income amount.

19.The issue which arises in this case is whether Mr Fairburne’s YTD income amount should be replaced in relation to his 10 December 2020 income estimate.

CONSIDERATION

20.Mr Fairburne told the Tribunal that there was initially some confusion around his YTD earnings for the purposes of the estimate. He told the Tribunal that before the child support case commenced (on 4 December 2020), he was made redundant. At the time of the child support case he was on jobseeker payment and when he was asked about his YTD amount, he told the CSA the amount based on his payslips and did not take into account the redundancy payment he received. He understands now that the redundancy payment is classed as part of his earnings for child support purposes but he wasn’t aware at that at the time. He gave the CSA the figure on his payslip based on the salary he was earning at the time before he was made redundant. The child support case had not even started when he was paid the redundancy payment. If the correct YTD amount had been used it would make a difference to his liability. The redundancy money had already been used by the time the child support case started and his only income was then jobseeker payment.

21.There are a number of payslips of Mr Fairburne in evidence before the Tribunal relating to the relevant period including a payslip for payment date 25 September 2020 showing that Mr Fairburne’s pay for the period 21 September 2020 to 2 October 2020 included as follows:

Taxable         Non Taxable     Gross Pay      Tax Withheld    Deduct          Net Pay

This Pay       $27,062.98      $49,461.00      $76,523.98      $8,660.00       $0                $67,863.98

Y.T.D.     $72,507.55      $49,461.00      $121,968.55    $21,745.00      $3,432.22       $96,791.33

22.Having had regard to the evidence, the Tribunal concludes that the YTD income figure of $36,857 given to the CSA by Mr Fairburne on 10 December 2020 was incorrect. The Tribunal is satisfied that this figure was given in error, with Mr Fairburne not aware that the redundancy payment should also have been included. As a result of the use of an incorrect YTD figure, it follows that the reconciliation is incorrect.

23.Given the circumstances of the matter the Tribunal considers the discretion to determine a new YTD income amount for Mr Fairburne should be exercised pursuant to section 63AE of the Act and a new estimate and reconciliation should be calculated on the basis that Mr Fairburne’s redundancy payment is to be included in the calculation of the 10 December 2020 YTD figure.

DECISION

The decision under review is set aside and the matter is sent back to the Child Support Registrar for reconsideration in accordance with Paragraph 23 of these Reasons.