Howse and Howse (Child support)

[2021] AATA 1690

Howse and Howse (Child support) [2021] AATA 1690 (17 March 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBERS:  2020/BC020505

2020/BC020542

APPLICANT:  Mr Howse

OTHER PARTIES:  Child Support Registrar

Ms Howse

TRIBUNAL:Member J D'Arcy

DECISION DATE:  17 March 2021

DECISIONS:

The decisions under review are affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – whether the adjusted taxable income of the liable parent was correctly applied – decision under review affirmed

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

BACKGROUND

1. Mr Howse has requested the Administrative Appeals Tribunal (the tribunal) to review the decisions of Services Australia – Child Support (Child Support) to use Ms Howse’s adjusted taxable income for the period 1 August 2020 to 31 October 2021; and to accept her income estimates.

2. Mr Howse and Ms Howse are the parents of three children. They share the care of the children. A registered child support assessment has been in place since 26 June 2019. Child support is collected by Child Support.

3. 2020-BC020542: On 13 July 2020 Child Support used Ms Howse’s 2019/2020 adjusted taxable income of $67,305 in the assessment for the period 1 August 2020 to 31 October 2021. Mr Howse objected and sought that the adjusted taxable income of $67,305 be used to calculate the assessment when Ms Howse was actually earning that income.

4. Mr Howse’s objection was disallowed because child support assessments use the last relevant year of income for the child support period to which the assessment applies. The last relevant year of income is the last year of income that ended before the start of the period. A new child support period commenced on 1 August 2020 when the Australian Taxation Office advised Child Support of Ms Howse’s 2019/2020 adjusted taxable income. Prior to 1 August 2020 Child Support had been using her 2018/2019 adjusted taxable income of $38,809.

5. 2020-BC020505: For the period 1 August 2020 to 31 October 2021 the assessment was based on Ms Howse’s 2019/2020 adjusted taxable income of $67,305.

6. On 7 August 2020 Ms Howse advised that her circumstances had changed because she was only receiving the JobKeeper payment of $1,500 per fortnight. She provided an income estimate of $39,107. On the same date Child Support accepted her estimate. Mr Howse objected to the use of the estimate.

7. On 9 October 2020 Ms Howse updated her estimate because she had returned to receiving her full-time salary of $2,019 per fortnight from 20 September 2020. Her estimate was updated to reflect an annual income of $52,638 to be used in a child support assessment from 20 September 2020.

8. Mr Howse’s objection to the use of the income estimate was disallowed.

9. On 24 December 2020 Mr Howse lodged applications against the above two decisions to this tribunal.

10. On 17 March 2021 the tribunal conducted a telephone hearing with Mr Howse and Ms Howse.

11. Child Support provided the tribunal and the parties with the subsection 37(1) of the Administrative Appeals Tribunal Act 1975 statement and documents (223 pages each for both matters).

ISSUES

1. The issues to be decided in these applications are whether the Child Support Registrar’s decisions to use Ms Howse’s 2019/2020 adjusted taxable income from 1 August 2020, and to accept Ms Howse’s estimates, were correct.

CONSIDERATION

1. 2020-BC020542: Section 43 of the Child Support (Assessment) Act 1989 (the Assessment Act) directs the Registrar to make child support assessments using the last relevant year of income for the child support period to which the assessment applies. Section 5 of the Assessment Act defines the last relevant year of income for a child support period as the last year of income that ended before the start of the period.

2. In the hearing, Mr Howse had no submission to make concerning the use of Ms Howse’s 2019/2020 adjusted taxable income for the child support period commencing 1 August 2020. It was open to him to apply for a change of assessment of child support under Reason 8A if there were special circumstances that made the assessment unfair.

3. The tribunal found that the Registrar had acted in accordance with section 43 of the Assessment Act to use Ms Howse’s 2019/2020 adjusted taxable income of $67,305 in the assessment for the period 1 August 2020 to 31 October 2021.

4. 2020-BC020505: A person’s child support liability is determined using a child support formula which takes into account a number of factors including the adjusted taxable incomes of the parents, which is the taxable income from the previous tax year that ended before the start of the child support period (plus any supplementary amounts).

5. Section 60 of the Assessment Act allows a person to lodge an income estimate. The period covered by the estimate commences on the day on which the person makes the estimate or the day on which the child support period commences, whichever is the later. The period ends at the end of the financial year.

6. Section 62 of the Assessment Act allows a parent to revoke and replace the income estimate.

7. The Child Support Guide (at section 2.5.1) clearly explains the situations in which an estimate can be made:

   An income estimate can be made if:

   ·     there is no income amount order in force on the start day of the election or in the remainder of the financial year (CSA Act section 60(6),section 63(2A)), and

   ·     in the case of a first election for a year of income - if the estimate is 85% or less than the person's adjusted taxable income for the last relevant year of income (2.4.4) (CSA Act 60(1)(b)). The adjusted taxable income is based on the parent's taxable income and must be:

   • as advised by the ATO, or
   • where the parent is a resident of a reciprocating jurisdiction, as advised by the relevant overseas authority (CSA Act section 58C, section 162A), or
   • a declaration by the parent of their adjusted taxable income (2.4.4) which the Registrar is satisfied is correct (CSA Act section 60(1)(b)(ii)).

   A later income estimate election for a year of income can be made:

   · at any time within that year of income, and the amount estimated may be higher or lower than the previous estimate (CSA Act section 62A),

8. Subsection 63AA(1) of the Assessment Act allows the Child Support Registrar to refuse the estimate if the Registrar is satisfied that the estimated amount is less than the amount that is likely to be the person’s adjusted taxable income for the year of income to which the income estimate relates. Paragraph 63AA(4)(b) provides that in making that decision the Registrar may, but is not required to, conduct an inquiry into the matter.

9. In reviewing a decision by the Registrar about an estimate election, the tribunal will decide if the estimate election should have been accepted or refused at the date of acceptance or refusal. The legislation does not allow the tribunal to substitute a new estimate.

10. On 7 August 2020 Ms Howse advised Child Support that she was only receiving the JobKeeper payment of $1,500 per fortnight and provided an income estimate of $39,107. Ms Howse was able to retain her employment during the COVID-19 pandemic but, like many employees at the height of the pandemic, Ms Howse’s income was reduced to the JobKeeper payments set at $1,500 per fortnight. She provided payslips in support of the estimate.

11. On 9 October 2020 Ms Howse again updated her estimate when her income increased. Her annual income of $52,638 was less than the adjusted taxable income for the 2020 financial year because payment of parenting payment for her youngest child had ceased.

12. There was no income amount order in force at the time that Ms Howse lodged her estimates; her income had reduced by 15%; and her adjusted taxable income was based on her Notice of Assessment provided by the Australian Taxation Office.

13. Ms Howse met all of the legislative requirements for lodging an income estimate; and there is no material available to the tribunal to indicate that the Registrar should have refused the estimates at that time.

14. The tribunal was satisfied that all of the requirements of the Assessment Act had been met and concluded that the decision to accept the estimates was correct.

DECISIONS

The tribunal affirms the decisions under review.