Hanbury and Horler (Child support)

[2023] AATA 3292

Hanbury and Horler (Child support) [2023] AATA 3292 (24 August 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/AC025898

APPLICANT:  Mr Hanbury

OTHER PARTIES:  Child Support Registrar

Ms Horler

TRIBUNAL:Member Y Webb

DECISION DATE:  24 August 2023

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that the estimate of $28,678 (annualised) for the period 13 November 2022 to 30 June 2023 lodged by Ms Horler on 13 November 2022 is to be refused.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income – whether the estimate should be refused – decision under review set aside and substituted

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 the child support assessment regarding two of the children of Mr Hanbury and Ms Horler (“the children”).  The children are now 16 years old and 15 years old.

2. From 4 August 2022 the child support assessment was based on Ms Horler’s adjusted taxable income for the 2021-22 financial year of $63,607.

3. On 13 November 2022 Ms Horler contacted Services Australia – Child Support (Child Support) and lodged an estimate of income for the 2022-23 financial year.  She declared that her income from 13 November 2022 to 30 June 2023 was $1,100 per fortnight.  She stated that her year to date income was $24,323.  Child Support calculated that the periodic amount was $18,071 and that Ms Horler’s annualised estimate for the period 13 November 2022 to 30 June 2023 was $28,678.

4. On 19 December 2022 Child Support accepted Ms Horler’s estimate and decision letters were issued to both parents.

5. On 20 February 2023 Mr Hanbury objected to that decision.  He was granted an extension of time to object.

6. On 30 March 2023 an objections officer disallowed Mr Hanbury’s objection.

7. On 31 March 2023 Mr Hanbury applied for review by the Administrative Appeals Tribunal (“the Tribunal”).

8. Mr Hanbury attended a telephone hearing on 24 August 2023 and gave evidence on affirmation.

9. Ms Horler did not attend the hearing. The Tribunal registry attempted to obtain Ms Horler’s full contact details but she did not respond to the letters sent to her. The Tribunal was satisfied that she had been provided with reasonable notice of the proceedings (by letter) prior to the hearing and in accordance with section 40 of the Administrative Appeals Tribunal Act 1975 the Tribunal decided to proceed with the hearing in Ms Horler’s absence.

10. Child Support provided papers relevant to this matter.  The larger bundle was marked Exhibits C1 to C145 and the smaller bundle was marked Exhibits C146 to C171.

ISSUES

1. The issue to be determined is whether Ms Horler’s estimate of income should be accepted or refused.

CONSIDERATION

1. The legislation relevant to this review is found in the Child Support (Assessment) Act 1989 (“the Assessment Act”) and the Child Support (Registration and Collection) Act 1988.

2. The rate of child support payable by a 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 of children, the level of care provided and the income of each parent. The specific income quantity is called a person’s adjusted taxable income, which is defined in section 43 of the Assessment Act.

3. The statutory scheme provides some flexibility for parents whose circumstances change from one year to the next. Relevantly, in specified circumstances, section 60 of the Assessment Act allows a person to elect that their adjusted taxable income is their current adjusted taxable income rather than the adjusted taxable income from the previous financial year providing that their election is not more than 85% of the adjusted taxable income for the last relevant year of income for the child support period.

4. Subsection 60(4) of the Assessment Act provides a method statement that must be followed where a parent makes a partial year election during an income year. Essentially this involves a calculation of annualising the parent’s estimate for the remainder of the year so that an annual amount is used to determine the parent’s adjusted taxable income for a day in the child support period for the remainder of the income year that the estimate applies.

5. Child Support may refuse to accept the estimate if it is not accurate (section 63AA of the Assessment Act). Otherwise, it must accept the estimate and give effect to it.

6. A person making an estimate for part of a financial year must also advise Child Support of their income and supplementary amounts for the financial year up until the date that the estimate has effect. This is known as their “year to date income amount”. This is the total of the income component amounts for the period from the first day of the year of income to the day before the start day of the election (paragraph 60(3)(b) of the Assessment Act). In this case Ms Horler advised that her “year to date income amount” was $24,323.

7. If Child Support accepts an estimate election, the income estimate amount becomes the 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 Assessment Act).

8. Letters dated 19 December 2019 were issued to Ms Horler and Mr Hanbury advising that Ms Horler’s estimate of income for the 2022-23 financial year had been accepted and that the new assessment would take effect from 13 November 2022.

9. When Child Support decided to accept Ms Horler’s estimate it gave her a notice under section 160 of the Assessment Act which stated, in part, that she was required to notify Child Support within 14 days of “any event or change in circumstances which will affect your estimate of [your] adjusted taxable income” including “any receipt of a lump sum payment which will be included in your taxable income”. There is no evidence that Ms Horler contacted Child Support about any changes to her adjusted taxable income.

10. After the end of the income year Child Support is required to undertake a reconciliation calculation which compares the parent’s estimated income with their actual income. If the actual income is higher than the estimated income, their assessment must be amended to use the actual income (sections 64 and 64A of the Assessment Act).

11. In this case Ms Horler contacted Child Support on 13 November 2022. She stated that her estimated income was $1,100 per fortnight for the period 13 November 2022 to 30 June 2023.  Annualised this was an amount of $28,678.

12. The relevant issue for the Tribunal is whether the estimate lodged on 13 November 2022 should be accepted or rejected?

13. The Tribunal is satisfied and finds that in relation to the estimate made on 13 November 2022:

    a)   This was the first election in the financial year.

    b)   The election met the 85% requirement (the estimate of $28,678 was not more than 85% of the adjusted taxable income for the last relevant year of income).

    c)   The election was not made on the first day of the financial year 2022–23 and Ms Horler estimated her year-to-date income amount.

14. The remaining question is whether or not the estimate is to be accepted or refused. In this case, subsection 60(3) of the Act is relevant as this is an estimate made during the financial year but not on the first day of the year. This means that subsection 63AA(2) has application in terms of the reasons for which the Registrar can refuse to accept the estimate:

    ·      Income election is for an amount less than the amount that is likely to be the person’s actual adjusted taxable income for the estimate period; or

    ·      Year-to-date amount is more than the amount that is likely to be the total of the actual income component amounts for the parent in the year-to-date period.

15. On 13 November 2022 Ms Horler lodged an estimate of $28,678 (annualised) for the period 13 November 2022 to 30 June 2023.  At that time Ms Horler advised that she was employed and was earning $1,100 per fortnight.  She stated that each fortnight’s earnings could be slightly less or more depending on work availability.

16. The estimate was accepted.  Mr Hanbury objected on the basis that the income submitted by Ms Horler was not a true reflection of her actual income at the time when the estimate was made.  He did not believe that Ms Horler’s income had reduced to a significantly lower amount.

17. At the time that Ms Horler stated that her annualised estimate of income was $28,678, she did not provide any evidence supporting her statement that this was her actual income in the period 13 November 2022 to 30 June 2023.

18. Child Support contacted Ms Horler’s employer.  The employer provided payslips for the period 8 November 2021 to 12 March 2023.  In that entire period there was only one fortnight where Ms Horler’s gross pay was at or below her stated estimate of $1,100 income per fortnight and that was in the fortnight 4 July 2022 to 17 July 2022.  Leading up to the date of Ms Horler’s estimate period, her fortnightly gross earnings were:

Period	Fortnightly gross earnings
26/9/2022 to 9/10/2022	$1,226.04
10/10/2022 to 23/10/2022	$1,226.32
24/10/2022 to 6/11/2022	$1,320.12

1. In the estimate period of 13 November 2022 to 30 June 2023 Ms Horler’s fortnightly gross earnings (from November 2022 to March 2023) were:

Period	Fortnightly gross earnings
7/11/2022 to 20/11/2022	$1,477.90
21/11/2022 to 4/12/2022	$1,534.35
5/12/2022 to 18/12/2022	$1,646.68
19/12/2022 to 1/1/2023	$1,669.26
2/1/2023 to 15/1/2023	$1.605.28
16/1/2023 to 29/1/2023	$1,709.50
30/1/2023 to 12/02/2023	$1,527.11
13/2/2023 to 26/02/2023	$1,621.20
27/2/2023 to 12/3/2023	$1,744.24

1. The Tribunal is mindful that its assessment of whether Ms Horler’s estimate should be accepted or not is the time that she made the election on 13 November 2022.  However, the fortnight’s income at that time was $1,477.90 (as detailed in bold above) which is significantly higher than her estimate of $1,100 per fortnight.  The other details above of her fortnightly income are included to query how Ms Horler could have ascertained that an accurate estimate of her income was $1,100 per fortnight.  The records of her income demonstrate that neither leading up to 13 November 2022 nor in the months after that date that her income was ever $1,100 per fortnight or approximately close to it.

2. The Tribunal finds that the estimate provided by Ms Horler on 13 November 2022 was significantly inaccurate and is to be refused as the income election of $28,678 (annualised) in the period 13 November 2022 to 30 June 2023 is less than the amount that is likely to be Ms Horler’s actual adjusted taxable income for the estimate period.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that the estimate of $28,678 (annualised) for the period 13 November 2022 to 30 June 2023 lodged by Ms Horler on 13 November 2022 is to be refused.