Godfrey and Bamer (Child support)

[2022] AATA 352

Godfrey and Bamer (Child support) [2022] AATA 352 (31 January 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/PC022486

APPLICANT:  Mr Godfrey

OTHER PARTIES:  Child Support Registrar

Ms Bamer

TRIBUNAL:Senior Member R Ellis

DECISION DATE:  31 January 2022

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate reconciliation – whether correctly reconciliation of income estimates – 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. This review relates to a decision made by the Child Support Agency about the reconciliation of estimates of income used to assess child support.

2. Mr Godfrey and Ms Bamer are the parents of [a child] (born September 2006).  There has been a child support assessment in place since 4 December 2006 and Mr Godfrey is the liable parent.

3. On 30 June 2020 the Child Support Agency made the decision to accept an estimate of income from Mr Godfrey of $65,607 (annualised) and applied this amount to the assessment from 1 July 2020 to 30 June 2021.

4. On 17 May 2021 Mr Godfrey elected to lodge a subsequent estimate of income and the Child Support Agency made the decision to apply the amount of $0 (annualised) to the assessment from 17 May 2021 to 30 June 2021.

5. On 31 May 2021 Mr Godfrey elected to lodge a subsequent estimate of income and the Child Support Agency made the decision to apply the amount of $70,027 (annualised) to the assessment from 25 May 2021 to 30 June 2021.

6. On 22 July 2021 the Child Support Agency received advice from the Australian Taxation Office that Mr Godfrey had an adjusted taxable income of $88,447 for 2020-21.

7. On 22 July 2021 the Child Support Agency made the decision to reconcile the estimates of income using the adjusted taxable income amount of $88,447.  An assessment notice was issued to Mr Godfrey advising that he owed an additional $3,410.29 in child support to Ms Bamer for the period from 1 July 2020 to 30 June 2021.  As Mr Godfrey had under-estimated his income by 10 per cent or more of his actual income the Child Support Agency also imposed a penalty of $342.

8. On 4 August 2021 Mr Godfrey objected to this decision and on 7 October 2021 the Child Support Agency disallowed the objection (the objection decision).

9. On 7 October 2021 Mr Godfrey applied to the Administrative Appeals Tribunal (the Tribunal) for a review of the objection decision.

10. The Tribunal conducted a hearing into the application on 21 December 2021.  Mr Godfrey and Ms Bamer gave evidence on affirmation by conference telephone.  The Child Support Agency provided the Tribunal and the parties with papers relevant to the matter (152 pages).

ISSUES

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

2. The Child Support Agency makes child support assessments for a child support period using a formula outlined in Part 5 of the Act.  The variables in the formula include the adjusted taxable incomes of both parents and ordinarily this is equal to the taxable income and supplementary amounts for the financial year that ended before the start of the child support period.  Supplementary amounts include such things as reportable fringe benefits.

3. Section 60 of the Act allows a parent to elect to use an estimate of their adjusted taxable income to apply from the day of the election to the end of the financial year (the estimate period).  The estimate is an annualised amount of their 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.

4. When the Child Support Agency 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 (subsection 61(1A) of the Act).

5. During a financial year, a parent may revoke an estimate election and make a new one (sections 62 and 62A of the Act).

6. After the year of income has ended, the Child Support Agency will compare the parent’s estimated income with their actual income for that year.  This is known as an estimate reconciliation.  If the parent’s actual income is more than their estimated income, the child support assessment will be amended using their actual income (subsection 64A(2) of the Act).

7. The issue which arises in this case is whether or not the Child Support Agency has made the legally correct reconciliation of Mr Godfrey’s income estimates.

CONSIDERATION

1. Mr Godfrey told the Tribunal he lodged three estimates during 2020-21 as his financial circumstances had changed.  Mr Godfrey said he was working for [Employer] when he made his first estimate on 30 June 2020 because he had taken on a new role within the company.  Mr Godfrey said he then left [Employer] and submitted a further estimate on 17 May 2021 because he had no income at that time.  Mr Godfrey said when he was about to start in a new role with a [company] he lodged another estimate on 31 May 2021.

2. Mr Godfrey explained that the Child Support Agency had made an error when recording his final estimate made on 31 May 2021.  Mr Godfrey said he had advised the child support officer he was starting a new job on 2 June 2021 with an annual salary of approximately $162,500 but would also continue receiving parenting payment.  Mr Godfrey said the child support officer had inputted his income as fortnightly rather than weekly.

3. Mr Godfrey said he had subsequently provided the Child Support Agency with evidence to confirm he was paid weekly but he believed this had been ignored.  Mr Godfrey said he had been told by a child support officer that, despite any error, he had still been assessed on a lower income for 2020-21 than his actual income for that financial year and so was required to pay the correct amount of child support.  Mr Godfrey said this did not seem fair.

4. The Tribunal notes in evidence from the Child Support Agency a record of the conversation with Mr Godfrey when he submitted his estimate on 31 May 2021.  The record indicates Mr Godfrey advised the child support officer he was starting a new job and his income was $2,683 per fortnight from 2 June 2021.  The annualised income amount of $70,027 was explained to Mr Godfrey and the record notes that he confirmed his understanding of this amount.

5. Mr Godfrey told the Tribunal that when discussing the estimate he advised the child support officer the amount of $2,683 seemed low and felt it may have been a net amount not a gross amount.  Mr Godfrey reiterated he had informed the child support officer that he was paid weekly in his new role.  Mr Godfrey said he did not become aware of the error made by the Child Support Agency until he received his tax return and discovered that an amount had been garnished and paid to Ms Godfrey for child support.

6. Mr Godfrey said he had always been up front when informing the Child Support Agency of his financial circumstances and would have addressed the mistake immediately had he known about it sooner.

7. Ms Godfrey told the Tribunal she had no comment to make in relation to the reconciliation of Mr Godfrey’s income.  She pointed out that if Mr Godfrey was to overestimate his income she would send any additional child support he had paid back to him.

8. Three income estimates were submitted by Mr Godfrey during the period in question.  On each occasion he was advised in writing by the Child Support Agency that his estimate had been accepted and informed of his review rights if he believed the decision to be incorrect.  Section 64A of the Act therefore determines how the reconciliation process will be carried out.  Subsections 64A(3) and 64A(4) provide a formula for reconciling.  This is a complex process, however, in essence the legislation requires each estimate to be annualised and then reconciled with the actual income of the parent (also annualised).  If the parent’s actual adjusted taxable income amount is more than their estimated adjusted taxable income amount, the child support assessment will be amended (subsection 64A(2) of the Act).

9. The Tribunal analysed the calculations undertaken by the Child Support Agency in determining the estimated income for Mr Godfrey for the period from 1 July 2020 to 30 June 2021.  His total estimated adjusted taxable income for this period, based upon his three estimate elections, is $64,615.44 ($57,516.80 for the first period from 1 July 2020 to 16 May 2021, $0 for the second period from 17 May 2021 to 24 May 2021 and $7,098.64 for the third period from 25 May 2021 to 30 June 2021).

10. The Tribunal is satisfied the Child Support Agency has correctly calculated each estimate amount in accordance with the process set out in section 64A of the Act.

11. As Mr Godfrey made his initial estimate election for a full year he was not required to provide his year-to-date income.  The difference between Mr Godfrey’s actual adjusted taxable income for 2020-21 of $88,447 and his estimated adjusted taxable income is $23,831.56 ($88,447 - ($57,516.80 + $0 + $7,098.64) = $23,831.56).

12. The Tribunal is also satisfied that the Child Support Agency has correctly applied the reconciliation process as set out in section 64A of the Act in this case.

13. Mr Godfrey argues that his estimate election made on 31 May 2021 was incorrectly recorded by the Child Support Agency.  While, based on the evidence provided, this appears to be the case, this issue is not before the Tribunal.  The only matter the Tribunal is able to review in this instance is the reconciliation of the estimates made by Mr Godfrey.

14. Even accepting the argument there was an error made in relation to the estimate lodged by Mr Godfrey on 31 May 2021, he has nevertheless underestimated his adjusted taxable income for the 2020-21 financial year.  The Tribunal is bound by the terms of the Act and there is no discretion to change the reconciliation process in such circumstances.

15. The Tribunal is satisfied the decision to reconcile the estimates lodged by Mr Godfrey using an actual adjusted taxable income for him of $88,447 in the 2020-21 financial year is the legally correct decision.

16. The Tribunal notes that if a different estimated adjusted taxable income amount was used, based on a weekly income for Mr Godfrey rather than a fortnightly income, it is possible he would end up with a reduced child support liability under such a scenario.  For the decision to accept the estimate lodged on 31 May 2021 to be reviewed by the Child Support Agency, Mr Godfrey would need to need to submit an objection and seek an extension of time (as the notice of this decision was sent to him in correspondence dated 31 May 2021).

DECISION

The decision under review is affirmed.