Haselhurst and Haley (Child support)

[2022] AATA 2098

Haselhurst and Haley (Child support) [2022] AATA 2098 (17 May 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/MC022662

APPLICANT:  Mr Haselhurst

OTHER PARTIES:  Child Support Registrar

Ms Haley

TRIBUNAL:Member R Anderson

DECISION DATE:  17 May 2022

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income – whether the estimate should have been accepted – estimate of income should be refused – 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. Mr Haselhurst and Ms Haley are the separated parents of [Child 1].  The child support assessment was registered with Services Australia – Child Support (the Agency), on 6 September 2019. The administrative assessment of child support for the period commencing 1 July 2021 reverted to basing Mr Haselhurst’s adjusted taxable income (ATI) on a deemed income for 2019/20 in the amount of $92,790.  Following lodgement of his 2019/20 tax return, Mr Haselhurst’s ATI from 13 August 2021 was $89,366.  The ATI in respect of Ms Haley was $24,747, based on her 2019/20 tax return.

2. On 24 August 2021, Mr Haselhurst lodged an estimate of income with the Agency in respect of the period 24 August 2021 to 30 June 2022 due to changes in his business.  He advised that his year-to-date income was $6,989 and that his estimated income from 24 August 2021 to 30 June 2022 would be $40,252.  His estimate was based on a weekly income of $906.  Based on the income details that Mr Haselhurst provided, the Agency calculated his annualised ATI for the period 24 August 2021 to 30 June 2022 as $47,241.

3. On 26 August 2021, a delegate of the child support registrar (the Registrar) decided to accept Mr Haselhurst’s estimate.  Consequently, the administrative assessment was amended for the period 24 August 2021 to 30 June 2022 so that the ATI used for Mr Haselhurst was based on his estimated income as annualised.

4. On 8 September 2021, Ms Haley objected to the decision to accept Mr Haselhurst’s estimate of income on the basis that he is self-employed and the historical pattern of him underestimating his annual income.  In response, Mr Haselhurst provided copies of his payslips.  The payslip for the week ending 24 August 2021 recorded a weekly gross income of $941 and a year-to-date income of $7,248.  On 22 October 2021 an objections officer decided that Mr Haselhurst’s application for an estimate to apply to the child support assessment from 24 August 2021 to 30 June 2022 should be refused on the basis that it was lower than it was likely to be.

5. On 4 November 2021, Mr Haselhurst lodged an application with this tribunal for an independent review of the objections officer’s decision.

6. The matter was heard on 17 May 2022.  While Mr Haselhurst participated by conference telephone and gave oral evidence to the tribunal on affirmation, Ms Haley chose not to participate.  However, she chose to remain a party to the proceedings. 

7. The tribunal considered information in the documents provided by the Agency in accordance with the Administrative Appeals Tribunal Act 1975 numbered 1 to 197.  At hearing Mr Haselhurst confirmed receipt of those documents.

ISSUE

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

2. The issue which arises in this case is:

   ·      Should the application made by Mr Haselhurst to have an estimate of his ATI apply from 24 August 2021 to 30 June 2022 have been accepted?

CONSIDERATION

1. The Act provides for the administrative assessment to calculate the child support liability based on the income recorded by each parent in their most recently completed tax returns, as lodged with the Australian Taxation Office (ATO).  Subsection 43(1) of the Act sets out how a parent’s ATI for child support purposes is calculated and provides that a parent’s ATI comprises the total of the parent’s taxable income for the last relevant year of income and other specified components: reportable fringe benefits total, target foreign income, total net investment loss, tax-free pensions or benefits, and reportable superannuation contributions.

2. Under subsection 60(1) of the Act a parent is permitted to elect that their ATI for child support purposes is to be the amount estimated by the parent. For the purposes of subsection 60(6) of the Act, the tribunal notes that no income amount order was in place at the time of the election.

3. Where a parent had not previously made an election for the particular financial year, the estimated income must be no more than 85% of the parent’s ATI used in the relevant administrative assessment.  In this case, as the ATI used in the administrative assessment based on the 2019/20 year was $89,366, in order to accept an estimate from Mr Haselhurst, the annualised estimate must be less than or equal to $75,961 (85% of $89,366).

4. If the parent makes the election during the year of income but not on the first day of the financial year of income, under subsection 60(3) of the Act the parent must estimate each income component for the remaining period, starting on the day the parent makes the election and ending on the last day of the year of income. The parent must also estimate each income component for the period from the start of the financial year of income to the day before the start day of the estimate election.

5. Based on Agency records, the tribunal is satisfied that Mr Haselhurst made an election on 24 August 2021 in respect of the remainder of the financial year to 30 June 2022 which was less than 85% of the ATI used for him in the administrative assessment at the time. Therefore, the tribunal finds that Mr Haselhurst made an estimate election under subsection 60(1) of the Act. 

6. Subsection 60(3) of the Act provides that in circumstances where an estimate is lodged for part of the year, the method to be followed in order to calculate the annualised estimate amount is as set out in subsection 60(4) of the Act.

7. The tribunal finds that the Agency calculated Mr Haselhurst’s estimated ATI for the period 24 August 2021 to 30 June 2022 in accordance with the formula set out in subsection 60(4) of the Act and based on a weekly gross income of $906.  Consequently, the gross income from 24 August 2021 to 30 June 2022 was calculated to be $40,252.28 ($906/7 x 311 days). This was then annualised to $47,241 ($40,252.28/311 x 365). However, based on the payslips provided by Mr Haselhurst during the objections process, his gross weekly income had been underestimated.  This observation was not disputed.  Mr Haselhurst told the tribunal that he simply made an error. 

8. The objections officer was satisfied that the ATI estimated by Mr Haselhurst was less than the amount that was likely to be his ATI for the remaining period and therefore refused to accept Mr Haselhurst’s estimated ATI for the period 24 August 2021 to 30 June 2022 in accordance with paragraph 63AA(2)(a) of the Act.

9. As discussed at hearing, the tribunal must stand in the shoes of the original decision-maker and consequently does not have the benefit of hindsight, despite his current payslip recording a year-to-date income that is lower than what Mr Haselhurst had estimated. 

10. In order for the tribunal to be satisfied that Mr Haselhurst’s estimate should be accepted, in accordance with paragraph 63AA(2)(a) of the Act, the tribunal must also be satisfied that the annualised ATI for the estimate period 24 August 2021 to 30 June 2022 is not less than what the tribunal considers is likely to be Mr Haselhurst’s actual ATI for the remaining period.  As noted above, it is common ground that the estimate of Mr Haselhurst was underestimated, albeit unintentionally on his part.

20.Accordingly, the tribunal finds that the estimated ATI of Mr Haselhurst of $47,241 in respect of the period 24 August 2021 to 30 June 2022 must be refused.  As discussed at hearing, following the reconciliation process, it is open to Mr Haselhurst to object to the decision, as it is also open to him to lodge a change of assessment application if he considers use of his ATI based on the reconciled estimate and/or his most recently lodged tax return produces an unfair amount of child support payable by him to Ms Haley in respect of [Child 1].

DECISION

The decision under review is affirmed.