Harmon and Kovachev (Child support)

[2021] AATA 4245

Harmon and Kovachev (Child support) [2021] AATA 4245 (25 August 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/SC021629

APPLICANT:  Mr Harmon

OTHER PARTIES:  Child Support Registrar

Ms Kovachev

TRIBUNAL:Member S Letch

DECISION DATE:  25 August 2021

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – whether the adjusted taxable income for past period should be changed – conditions for changing the incomes to lower amounts are not met – 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 Harmon has been assessed by the Child Support Agency (CSA) as liable to pay child support to Ms Kovachev.

2. On 2 June 2020, the CSA decided to vary Mr Harmon’s annual rate of child support from $414 per annum to $1,407 per annum for the period 14 March 2016 to 30 September 2016. This was because the CSA was notified by the Australian Taxation Office (ATO) on 30 May 2020 that Mr Harmon had lodged a tax return for the 2014/15 tax year which assessed his adjusted taxable income as $35,909.00. As this was higher than the sum declared by Mr Harmon at the relevant time, the CSA was required to retrospectively apply the higher income to the assessment.

3. Mr Harmon asked the Tribunal to the determine the matter “on the papers”. Ms Kovachev advised the Tribunal prior to the hearing that she did not want any part in Mr Harmon’s application.

4. It is convenient to set out an extract from the objections officer’s decision dated 30 April 2021 by way of background:

   …

   On 6 January 2016, [Mr Harmon] provided an income tax declaration for the 2014/15 financial year of $17,109.00.

   On 14 March 2016, a new child support period commenced using the 2014/15 financial year income. [Mr Harmon]’s income tax declaration for the 2014/15 financial year of $17,109/00 was applied to the assessment. [Mr Harmon]’s child support liability was assessed as $414.00 per annum, this is the minimum annual rate of child support.

   On 30 May 2020, the Australian Taxation Office (ATO) notified us that [Mr Harmon] lodged a tax return for the 2014/2015 financial year. The ATO reported [Mr Harmon]’s adjusted taxable income…to be $24,000. We used this income…[Mr Harmon]’s child support assessment remained as $414.00…

   On 2 June 2020, we received further information from the …(ATO)…reporting [Mr Harmon]’s 2014/15 adjusted taxable income to be $35,909.00. We used this income to recalculate the amount of child support…child support liability was updated to $1,407.00 per annum…for the period 14 March 2016 to 30 September 2016.

   …

   We have made the decision to vary the annual rate of child support from $414 per annum to $1407 per annum for the period 14 March 2016 to 30 September 2016.

   The objection is disallowed.

5. In the Tribunal’s assessment, section 58A of the Child Support (Assessment) Act 1989 provides a complete answer to Mr Harmon’s application. It provides the following:

   Subsequently ascertaining components of a parent's adjusted taxable income

   (1)  The Registrar must immediately amend an administrative assessment of child support payable by or to a parent in relation to a child support period if:

   (a)  the assessment was made on the basis of a determination under section 58; and

   (b)  either:

   (i)  the Registrar subsequently ascertains the amount of the parent's adjusted taxable income for the last relevant year of income; or

   (ii)  the Registrar makes a later determination under section 58; and

   (c)  either:

   (i)  if subparagraph (b)(i) applies--the amount that was subsequently ascertained is different from the amount that was determined under section 58; or

   (ii)  if subparagraph (b)(ii) applies--the later amount that the Registrar determines is different from the earlier amount determined under section 58.

   Retrospective determinations

   (2)  If:

   (a) at the time the Registrar is to amend the administrative assessment under this section, the parent could lodge his or her tax return by the date required under Part IV of the Income Tax Assessment Act 1936 (taking into account any deferral under section 388-55 in Schedule 1 to the Taxation Administration Act 1953 ); or

   (b)  paragraph (a) of this subsection does not apply and:

   (i)  the amount subsequently ascertained, as mentioned in subparagraph (1)(b)(i), is higher than the amount that was determined under section 58; or

   (ii)  the later amount that the Registrar determines, as mentioned in subparagraph (1)(b)(ii), is higher than the earlier amount determined under section 58; or

   (c)  neither paragraph (a) nor (b) applies, but circumstances prescribed by the regulations for the purposes of this section apply in relation to the parent;

   then the Registrar must immediately amend the administrative assessment for the child support period on the basis that the parent's adjusted taxable income for that year of income is, and has always been, the amount that was subsequently ascertained or later determined (as the case requires).

   Prospective determinations

   (3)  If subsection (2) does not apply, then the Registrar must immediately amend the administrative assessment for the child support period on the basis that for each later day in the period the parent's adjusted taxable income for that year of income is the amount that was subsequently ascertained or later determined (as the case requires).

   (3A)  If, after an administrative assessment of child support is amended under subsection (2) or (3) because of subparagraph (1)(b)(i), the assessment (the tax assessment ) of a parent's taxable income is amended (whether or not because of an objection, appeal or review), the Registrar may further amend the administrative assessment to take account of the amendment to the tax assessment.

   Amended tax assessments--retrospective determinations

   (3B)  An amendment of the administrative assessment under subsection (3A) must be on the basis that the parent's adjusted taxable income for that year of income is, and has always been, the amount worked out as a result of the amended tax assessment if:

   (a)  the parent's adjusted taxable income worked out as a result of the amended tax assessment is higher than the amount determined under section 58; or

   (b) the parent lodged his or her income tax return for that year of income with the Commissioner of Taxation on or before the day by which the parent was required to lodge the income tax return for that year (taking into account any deferral under section 388-55 in Schedule 1 to the Taxation Administration Act 1953 ) and:

   (i)  the parent applied for the amendment of the tax assessment on or before the day by which the parent was required to lodge his or her income tax return for that year; or

   (ii)  the parent applied for the amendment of the tax assessment before the end of 28 days after the parent was given the tax assessment (including an amended tax assessment) by the Commissioner of Taxation; or

   (iii)  the parent applied for the amendment of the tax assessment before the end of 28 days after the parent becomes aware that the tax assessment is not correct if the parent did not apply for the amendment on or before a day referred to in subparagraph (i) or (ii) because of circumstances beyond the knowledge or control of the parent; or

   (iv)  the parent did not apply for the amendment of the tax assessment on or before any of the days referred to in subparagraph (i), (ii) or (iii), but the Registrar is satisfied that special circumstances exist.

   (3C)  An amendment of the administrative assessment under subsection (3A) must be in accordance with subsection (3E) if:

   (a)  subsection (3B) does not apply; and

   (b)  the parent's adjusted taxable income (the later income ) worked out as a result of the amended tax assessment is:

   (i)  higher than the earlier ascertainment of the parent's taxable income; but

   (ii)  lower than the amount determined under section 58.

   (3D)  An amendment of the administrative assessment under subsection (3A) must be in accordance with subsection (3E) if:

   (a)  subsection (3B) does not apply; and

   (b)  the parent's adjusted taxable income (the later income ) worked out as a result of the amended tax assessment is lower than both the earlier ascertainment of the parent's taxable income and the amount determined under section 58; and

   (c)  any of the following applies:

   (i)  the parent applied for the amendment of the tax assessment before the end of 28 days after the parent was given the tax assessment (including an amended tax assessment) by the Commissioner of Taxation;

   (ii)  the parent applied for the amendment of the tax assessment before the end of 28 days after the parent becomes aware that the tax assessment is not correct if the parent did not apply for the amendment on or before a day referred to in subparagraph (i) because of circumstances beyond the knowledge or control of the parent;

   (iii)  the parent did not apply for the amendment of the tax assessment on or before either of the days referred to in subparagraph (i) or (ii), but the Registrar is satisfied that special circumstances exist.

   (3E)  If subsection (3C) or (3D) applies, the amendment of the administrative assessment under subsection (3A) must be on the basis of the later income from the day the earlier ascertainment of the parent's adjusted taxable income took effect.

   Amended tax assessments--prospective determinations

   (3F)  If none of subsections (3B), (3C) nor (3D) applies, an amendment of the administrative assessment under subsection (3A) for a child support period must be on the basis that for each later day in the period the parent's adjusted taxable income for that year of income is the amount worked out as a result of the amended tax assessment.

   No taxation assessment required

   (4) This section applies whether or not the Commissioner of Taxation has made an assessment under an Income Tax Assessment Act of the parent's taxable income for that year of income.

6. Simply put, the CSA was required to make a retrospective determination as Mr Harmon’s adjusted taxable income was higher than the original assessment and the amended determination on 30 May 2020 (based on a figure of $24,000). There is no roving discretion to apply a different amount; in the event Mr Harmon considered the child support assessment during the disputed period unfair, he could apply to the CSA for a “change of assessment” (which would require leave of a Court to take effect in the assessment prior to a period of 18 months before a departure application was made, up to a maximum period of 7 years).

7. As the Tribunal has reached the same conclusion as the objections officer, the decision under review will be affirmed.

DECISION

The decision under review is affirmed.