Garrett and Child Support Registrar (Child support)

[2023] AATA 1181

Garrett and Child Support Registrar (Child support) [2023] AATA 1181 (11 April 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/SC025116

APPLICANT:  Mr Garrett

OTHER PARTY:  Child Support Registrar

TRIBUNAL:Member P Jensen

DECISION DATE:  11 April 2023

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – refusal to grant an extension of time to object - no satisfactory explanation for the delay - weighing all factors the extension of time was 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 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 Garrett and [Ms A] are the parents of [Child 1]. A child support case was registered with the Child Support Agency (the CSA) in 2004. The Child Support (Assessment) Act 1989 (the Assessment Act) provides for an administrative assessment of child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care for the child. From 1 September 2021 the administrative assessment was based on Mr Garrett’s 2020–21 adjusted taxable income of $47,582, [Ms A]’s 2020–21 adjusted taxable income of $71,589 and her 100% care for [Child 1]. Mr Garrett was assessed to pay $4,815 per annum in child support.

2. The Assessment Act also provides for a departure from the administrative assessment in certain circumstances. On 7 November 2021, Mr Garrett lodged a departure application. On 26 November 2021, Mr Garrett stated that his adjusted taxable income from 1 July 2021 to 25 November 2021 had been nil and he estimated that his adjusted taxable income for the period from 26 November 2021 to 30 June 2022 would be $9,034 (which would equate to $15,195 per annum during those 217 days). On 31 January 2022 the CSA decided to grant Mr Garrett’s departure application and vary his adjusted taxable income to $58,300 per annum from 26 November 2021 until the end of the child support case. Mr Garrett had a right to object to the departure decision. To do so within time, he needed to do so within 28 days of being served with a notice of the departure decision: section 81 of the Child Support (Registration and Collection) Act 1988 (the Registration Act). Mr Garrett was notified of the departure decision via a letter dated 31 January 2022. The child support case ended on 22 April 2022 (when [Child 1] turned 18). Mr Garrett objected to the departure decision on 5 October 2022. He was out of time by approximately seven months. He applied for an extension of time in which to object pursuant to section 82 of the Registration Act. The CSA promptly refused his application. He promptly applied to the Tribunal for review of that decision. I heard the matter on 11 April 2023. Mr Garrett gave evidence via MS Teams. He was accompanied by his wife and CSA representative, Mrs Garrett.

3. The principles to be applied when deciding an extension of time application were summarised in Phillips v Australian Girls’ Choir and Another [2001] FMCA 109:

   1.There is no onus of proof upon an applicant for extension of time though an application has to be made. Special circumstances need not be shown, but the court will not grant the application unless positively satisfied it is proper to do so. The "prescribed period" of 28 days is not to be ignored …

   2.It is a prima facie rule that the proceedings commenced outside the prescribed period will not be entertained … It is not a pre-condition for success in an application for extension of time that an acceptable explanation for delay must be given. It is to be expected that such an explanation will normally be given as a relevant matter to be considered, even though there is no rule that such an explanation is an essential pre-condition …

   3.…It is relevant to consider whether the applicant has rested on his rights and whether the respondent was entitled to regard the claim as being finalised. …

   4.Any prejudice to the respondent … is a material factor [which goes] against the grant of an extension.

   5.The mere absence of prejudice is not enough to justify the grant of an extension. …

   6.The merits of the substantial application are properly to be taken into account in considering whether an extension of time should be granted. …

   7.Considerations of fairness as between the applicant and other persons otherwise in a like position are relevant to the manner of exercise of the court's discretion …

4. If a parent lodges their tax returns promptly, the administrative assessment will be based on the parent’s adjusted taxable income for the last relevant year of income as assessed by the Australian Taxation Office (the ATO). If not, the CSA will use a provisional adjusted taxable income, subject to a possible reassessment once the ATO has determined the parent’s adjusted taxable income for the relevant year. There are restrictions on when the CSA can reassess an administrative assessment because the person’s adjusted taxable income was less than their provisional adjusted taxable income: section 58A of the Assessment Act.

5. On 14 October 2020 the CSA sent a letter to Mr Garrett reminding him that it had been assessing his child support payable on provisional adjusted taxable incomes for 2014–15, 2015–16, 2016–17, 2017–18, 2018–19 and 2019–20, and informing him that it had recently been advised of his adjusted taxable incomes for 2014–15, 2018–19 and 2019–20 (all of which were higher than the corresponding provisional adjusted taxable incomes). The CSA issued new administrative assessments which brought Mr Garrett’s child support arrears to $39,578.

6. On 7 November 2021, Mr Garrett lodged a departure application. He sought a departure decision with effect from 1 July 2011.

7. Mr Garrett is a self-employed [Occupation 1]. On 2 December 2021 the CSA contacted him and noted that according to a sample of his business activity statements, his annualised revenue would be approximately $71,000. The CSA noted:

   If I was to consider ATO benchmarks for expenses than [sic] this would mean that his income would be higher than currently used in the assessment. This has the potential to be a contrary decision meaning he could end up with an income determination higher, and a higher assessment rate. I reminded [Mr Garrett] of the option to withdraw his application.

8. Mr Garrett elected to continue with his departure application. The CSA subsequently asked Mr Garrett to provide a sample of his bank statements. He refused to do so. At the Tribunal hearing, Mrs Garrett stated that she had provided Mr Garrett’s bank account statements to the CSA. I took Mrs Garrett to the [Bank 1] account statements that the CSA had obtained directly from the [Bank 1] following Mr Garrett’s refusal to provide his bank account statements. Mrs Garrett then stated that Mr Garrett had accounts with other financial institutions and the CSA should have obtained statements for those accounts too. In response to further questions, Mrs Garrett eventually conceded that Mr Garrett had not disclosed the details of those other accounts to the CSA; he had only disclosed that he had an [specified] account, an [specified] account and a [specified] account (with unspecified financial institutions).

9. The CSA’s reasons for its departure decision included the following:

   It should be noted that the agency cannot make a change of assessment decision that varies an assessment for any day that is more than eighteen months prior to the day upon which a person lodged their application for a change of assessment. … A parent can apply to a Court, having jurisdiction under the [Assessment Act] for leave for a determination or order to be made in respect of a day in a child support period that is more than eighteen months, and less than seven years, earlier than the day on which the application was made.

10. That information had been provided to Mr Garrett on a number of occasions, including three days prior to when he lodged his departure application. It was also in the departure application that he completed and lodged with the CSA. In response to Mr and Mrs Garrett’s questions during the hearing, I repeated that information. Mrs Garrett then incorrectly stated that I had advised Mr Garrett to apply for such an order. To date, Mr Garrett has not applied for such an order.

11. Further, Mr Garrett stated during the hearing that his main reason for lodging his departure application was to have his historical provisional adjusted taxable incomes replaced with his lower actual adjusted taxable incomes. To the extent that Mr Garrett is seeking to use the departure application process to circumvent the ordinary application of section 58A of the Assessment Act, his objection to the departure decision has extremely poor prospects of success.

12. The CSA’s reasons for its departure decision also included the following:

    Analysis of the last six months’ BAS from 1 July 2021 to 31 December 2021 indicates net sales of $47,697 [which equates to approximately $95,300 per annum] … [According to Mr Garrett’s 2020-21 individual tax return, he received revenue of $68,542 and incurred expenses of $61,910, which is 90% of the revenue.] Should I compare this with the ATO Small Business Benchmarks for a [Occupation 1] service business reports [sic] that average total expenses for a turnover between $50,000 and $110,000 would be 32% to 51%. [The CSA decided to apply 55%.] In applying this methodology, I calculate the business expenses as a rounded $52,400 ($95,300 x 55%) to arrive at an expected net business income of $42,900 ($95,300 - $52,400). [Mr Garrett also receives income support payments]. Based on Mr Garrett’s net business income and income support payments, I calculate an approximate income of $58,300 ($42,900 + $15,400) to be a reasonable reflection of his current income and financial resources for child support purposes.

13. The CSA noted Mr Garrett’s unusually high expenses as a proportion of revenue. Mr Garrett refused to fully and frankly disclose his income and financial resources: he refused to provide his bank account statements or even the names of all the financial institutions with which he held accounts. In that context, it is hardly surprising that the CSA resorted to using ATO benchmarks, although I note that it was quite generous to Mr Garrett when doing so. Once a ground for departure is established, decision-makers are required to exercise a broad discretion when making a departure decision. If Mr Garrett’s objection proceeded, a different decision-maker might make a different decision that was more favourable to Mr Garrett, or they might make a different decision that was less favourable to Mr Garrett. In that context, Mr Garrett’s objection has some merit.

14. On 31 January 2022 the CSA sent a copy of its departure decision, its reasons for the departure decision and a covering letter to Mr Garrett. The covering letter stated that Mr Garrett could object to the departure decision and if he wished to do so, he needed to do so within 28 days of receiving the letter. At the hearing, Mr Garrett speculated that he may not have received the letter. On 1 February 2022, Mr Garrett contacted the CSA via his representative. The CSA relevantly noted:

    - rep asked why assess. rate changed overnight, advd rep because of coa decision setting customer’s ([Mr Garrett]) income at $58300

    - rep expressed concern at the decision, advd rep the reason for the decision is spelt out in the letter but, if customer needs further explanation, he can call back after the decision has been rec’d &, if he disagrees w/ the decision, he can object &, if he then disagrees w/ the objection decision, he can appeal to the AAT

    - advd rep decision wasn’t issued online & went out via surface mail, […]

15. Mr Garrett was aware that a decision had been made and details of the decision had been posted to him. I consider it likely that if he had not received that correspondence, he would have contacted the CSA, either directly or via his representative. I find that Mr Garrett received the notice of decision.

16. Mr Garrett did not lodge his objection until 5 October 2022. He stated: “To enable me to get the correct figures of income I needed to wait until the end of the financial year hence why an objection wasn’t applied for in January, now that it’s been done I tried to inform Child Support but they won’t apply the correct figures.” Mr Garrett did not contact the CSA within the 28-day period to discuss the possibility of providing further evidence after the expiration of the 28-day period. Mr Garrett could have provided relevant documentation such as his bank account statements immediately. If Mr Garrett had in fact been waiting for the completion of his 2021-22 tax return, he could have completed it before October 2022. I do not accept his evidence that he believed that he needed to wait until the end of the financial year to obtain further evidence before objecting. Mr Garrett has not provided a satisfactory explanation for his considerable delay in objecting.

17. [Ms A] would be justified in believing the Mr Garrett’s departure application had been finalised: he did not object within the prescribed 28‑day period (which expired in early‑March 2022), he did not object prior to the termination of the child support case (which occurred in mid-April 2022), and he did not object until many months after the child support case had been terminated.

18. Those circumstances as a whole weigh heavily in favour of refusing Mr Garrett’s application for an extension of time in which to object. The CSA made the preferable decision.

DECISION

The decision under review is affirmed.