Hartnoll and Scruton (Child support)

[2022] AATA 946

Hartnoll and Scruton (Child support) [2022] AATA 946 (25 February 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/BC022923

APPLICANT:  Mr Hartnoll

OTHER PARTIES:  Child Support Registrar

Mrs Scruton

TRIBUNAL:Member P Jensen

DECISION DATE:  25 February 2022

DECISION:

The decision under review is set aside and, in substitution, Mr Hartnoll’s income estimate from 1 September 2021 is accepted.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income – whether the estimate should have been refused – estimate of income accepted – 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

1. Mr Hartnoll and Mrs Scruton are the parents of two children. In 2014 a child support case was registered with what is commonly known as the Child Support Agency or CSA. The Child Support (Assessment) Act 1989 (“the Act”) provides for an administrative assessment of child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes. The Act also allows a parent to provide an income estimate and, if accepted, the administrative assessment is based on that income estimate, subject to a possible reassessment once the parent’s adjusted taxable income has been assessed by the Australian Taxation Office.

2. On 1 September 2021, Mr Hartnoll provided an income estimate, which required him to estimate his adjusted taxable income from 1 July 2021 to 30 August 2021 (“the year-to-date estimate” in respect of “the year-to-date period”) and his adjusted taxable income from 1 September 2021 to 30 June 2022 (“the remainder estimate” in respect of “the remainder period”): section 60 of the Act. However, for convenience, income estimates often focus on the parent’s remainder estimate, and Mr Hartnoll’s was $139,377 per annum from 1 September 2021. The CSA decided to accept Mr Hartnoll’s income estimate. Mrs Scruton promptly objected to that decision. An objections officer allowed her objection and decided to refuse Mr Hartnoll’s income estimate. He promptly applied to the Tribunal for further review. I heard the matter on 22 and 23 February 2022. Mr Hartnoll gave sworn evidence by conference phone. Mrs Scruton provided written submissions but elected to not participate in the hearing. After the hearing, Mr Hartnoll provided further documentation in support of his application and copies were provided to the other parties.

3. The CSA, and in turn the Tribunal, can refuse an income estimate if the year-to-date estimate was an over-estimate or the remainder estimate was an under-estimate: section 63AA of the Act.

4. Mr Hartnoll’s year-to-date estimate was $27,409, which was based on him earning $28,409 and incurring $1,000 in tax deductible expenses during the year-to-date period. However, a payslip shows that as at 27 August 2021, his year-to-date earnings were $35,337. It appears that the discrepancy might be due to two matters. First, Mr Hartnoll appears to have focused on his base rate of earnings rather than his entire earnings, which include overtime. Second, Mr Hartnoll’s first fortnightly pay cycle for 2021-22 ended on 2 July 2021 and totalled $6,927, but most of that income was earned during the period from 19 June 2021 to 31 June 2021.

5. Mr Hartnoll’s year-to-date estimate was inaccurate, but it was an under-estimate, and section 63AA does not grant a discretion to refuse an income estimate on that basis.

6. Mr Hartnoll’s remainder estimate for the 303 days of the remainder period was $115,702, which equates to $139,377 per annum during that period. According to the CSA’s file notes, it was based on Mr Hartnoll earning $5,577 per fortnight and incurring $5,000 in tax deductible expenses in respect of that period.

7. At the hearing, the effect of Mr Hartnoll’s evidence was that he had originally provided more information to the CSA than was reflected in the preceding paragraph, he had been likely to earn more than $5,577 per fortnight but he had also been likely to incur more than $5,000 in tax deductible expenses, and his remainder estimate had been a fair estimate.

8. Mr Hartnoll said he had done an unusually large amount of overtime in the months leading up to when he lodged his income estimate and he had expected to do less overtime during subsequent months. A comparison of two of Mr Hartnoll’s payslips shows that his gross earnings during the 168 days from 28 August 2021 to 11 February 2022 were $102,600 - $35,337 = $67,263. However, during that period he took 145 hours of unpaid leave. Mr Hartnoll’s standard working fortnight consists of 76 hours of work, so his 145 hours of unpaid leave equates to almost four weeks or 28 days. Mr Hartnoll’s average fortnightly earnings when doing paid work was approximately $67,263 / (168 - 28) x 14 = $6,726 per fortnight, and during the 139 days from 12 February 2022 to 30 June 2022 he is likely to earn approximately $6,726 / 14 x 139 = $66,779. In summary, Mr Hartnoll is likely to earn $67,263 + $66,779 = $134,042 gross during the remainder period.

9. Mr Hartnoll’s income estimate was based on him being likely to incur approximately $6,000 in tax deductible expenses during 2021-22. At the hearing, he said he had been likely to incur more tax deductible expenses. He maintained that he had been likely to incur approximately $6,000 in “general” tax deductible expenses, of which approximately $5,000 was referrable to the remainder period. He referred to his tax returns for 2017-18 to 2020‑21 in which his tax deductible expenses were $7,463, $5,857, $16,511 and $5,489 respectively. He stated that he had also been likely to incur additional one-off expenses in respect of a self-funded course that he undertook from 15 November 2021 to 17 December 2021 and from 10 January 2022 to 21 January 2022 (hence the unpaid leave). He stated that he had discussed the course with his manager prior to providing his income estimate, and he subsequently provided an undated letter from [name] who is a [manager] employed by Mr Hartnoll’s employer. The letter commences as follows:

   Mr Hartnoll spoke to me in my office in July 2021 on the potential to register for [a specified] training course to improve his employment options. I agreed it would benefit him if he was qualified but the company was not looking at putting any courses on at the time. Mr Hartnoll said he was happy to fund the course himself to improve his employability.

10. Mr Hartnoll also provided evidence that the course cost him $12,000 and he incurred a further $2,276 in accommodation costs to attend the course. I accept his evidence that his tax deductible expenses during the remainder period were likely to total approximately $5,000 + $12,000 + $2,276 = $19,276.

11. In summary, when Mr Hartnoll lodged his income estimate, his adjusted taxable income during the 303 days of the remainder period was likely to be approximately $134,042 - $19,276 = $114,766, which equates to $138,249 per annum. He provided a remainder estimate of $139,377 per annum; i.e. his remainder estimate was a slight over-estimate. Section 63AA does not grant a discretion to refuse an income estimate on that basis.

12. Mr Hartnoll’s income estimate was required to comply with certain other requirements which were addressed by the objections officer: see page 6 of the hearing papers. There is no dispute that Mr Hartnoll’s income estimate satisfied those requirements.

13. In summary, Mr Hartnoll’s year-to-date estimate was an under-estimate and his remainder estimate was an over-estimate and there was no discretion to refuse his income estimate.

DECISION

The decision under review is set aside and, in substitution, Mr Hartnoll’s income estimate from 1 September 2021 is accepted.