Hulbert and Hulbert (Child support)

[2022] AATA 4008

Hulbert and Hulbert (Child support) [2022] AATA 4008 (26 October 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/BC024448 and 2022/BC024453

APPLICANT:  Mrs Hulbert

OTHER PARTIES:  Child Support Registrar

Mr Hulbert

TRIBUNAL:Member A Schiwy

DECISION DATE:  26 October 2022

DECISION:

The decisions under review are affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income – whether the estimate should have been accepted – estimate of income correctly accepted – decisions 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. This matter is about whether estimates of income applications made by Mr Hulbert should have been accepted.

2. Mrs Hulbert and Mr Hulbert are the parents of two children.  A child support case has been registered since 2018 and Mr Hulbert is the parent liable to pay child support to Mrs Hulbert.

3. The assessment for the child support period of 1 February 2022 to 30 April 2023 used Mr Hulbert’s adjusted taxable income for 2020–21 which was $159,638.  On 7 June 2022 Mr Hulbert estimated his annual income for the period 7 June 2022 to 30 June 2022 (Estimate 1) and 1 July 2022 to 30 June 2023 (Estimate 2) to be $50,448.  On 7 June 2022 Services Australia (“Child Support”) accepted the two estimates and new assessments were issued.

4. On 8 June 2022 Mrs Hulbert objected to the estimate decisions and on 9 August 2022 her objections were disallowed by a Child Support objections officer.

5. On 12 August 2022 Mrs Hulbert applied to this tribunal for an independent review of the objections officer’s decisions (2022/BC024448 – Estimate 1; 2022/BC024453 – Estimate 2).

6. On around 23 September 2022 Child Support received notification of Mr Hulbert’s adjusted taxable income for 2021–22, which was $111,171 (later amended to $119,811).  An income reconciliation was undertaken.

7. The tribunal conducted a hearing on 26 October 2022 which Mrs Hulbert and Mr Hulbert attended via teleconference and gave affirmed evidence to the tribunal.

8. The tribunal had before it a bundle of papers provided by Child Support.  A copy of the papers was made available to the parents prior to the hearing.

ISSUES

1. The law that applies in the present matter is contained in the Child Support (Assessment) Act 1989 (the Assessment Act).  The rate of child support payable by a liable parent is usually based on an administrative assessment that requires the application of a statutory formula which takes into account, among other things, the adjusted taxable income of each parent. The adjusted taxable income is normally the parent’s taxable income.

10.The Assessment Act allows a parent to elect to estimate his or her adjusted taxable income for a year of income and use the estimated income to replace their adjusted taxable income.  The parent can make an estimate prior to the year of income based on their estimate of their income for that year; or they can make an estimate during an income year based on what they estimate they will earn for the rest of the year.  The estimated income must be no more than 85% of the adjusted taxable income that would have applied. 

11.The Registrar may refuse to accept an income election if satisfied that the amount estimated is less than the amount the Registrar considers is likely to be the actual adjusted taxable income.  When making this decision, the Registrar can act on the basis of information obtained about the financial circumstances of the parent and may conduct an inquiry into their financial circumstances (section 63AA).

12.The issue in this case is whether Child Support should have accepted Mr Hulbert’s estimate of income.

CONSIDERATION

13.It is not disputed that Mr Hulbert, who used to be [with a specified employer], became seriously ill in around 2019 and was unable to work for a period of time.

14.The Child Support papers include a file note made on 7 June 2022 of the conversation between Mr Hulbert and a Child Support officer.  The file note states that Mr Hulbert advised that he is only receiving income from [Agency 1].  He advised that he was previously in receipt of income from an insurance company however this was only in place for two to three years.  He said he received an annual payment of $1,935 per fortnight and his year-to-date income was $47,131 (made up of [Agency 1] income only). 

15.Mrs Hulbert submitted in her objection that:

·Mr Hulbert has previously submitted a tax declaration for $51,000 and his actual taxable income was $159,638.

·The worst of his illness was over in the 2019–20 financial year.

·Mr Hulbert was a director of a company and he books all jobs for the business, and oversees the work and administrative tasks. Other people have told her that he is working.  The company pays for various private expenses.

·He has spent significant amounts, including for a house renovation and the purchase of two new vehicles.  His lifestyle indicates he is earning more than just the [Agency 1] pension.

16.When Mrs Hulbert lodged her objection, Mr Hulbert provided a letter from [Agency 1] dated 17 June 2022 stating that Mr Hulbert received fortnightly payments of $1,963.86 and had been in receipt of the payment since 22 July 2019.  He also provided bank statements for the period 4 November 2021 to 15 June 2022 which showed no other source of income.

17.Mr Hulbert stated the following at the hearing:

·When asked why his 2021–22 taxable income was significantly higher than his estimate Mr Hulbert stated that he received backpay as his health condition was far more serious than originally assessed.  He believes he was aware of the payment at the time he made the estimate, but he could not recall with clarity.

·When he made his estimates, he thought he only had to state his current income.

·He had been trying for some time to get his tax returns prepared and chased up his accountant on several occasions.  He has since appointed a new accountant.

·He runs a business [providing services].  When he became ill, he folded up the business, but about nine months to a year later some of his former employees approached him and asked him to recommence the business.  He agreed, and one of the employees took on the foreman’s role.

·His new accountant recently prepared accounts for the business and assessed that it had made a loss for the last two financial years so he is discontinuing the business.  He has a couple of outstanding contracts to complete.  He said he draws no income from the business.

18.It would appear from the evidence that some time prior to June 2022 Mr Hulbert received a backpayment from his insurer (or [Agency 1]) and this is why his taxable income is significantly higher than the current [Agency 1] pension.  It is clear from the Child Support file note, and Mr Hulbert’s evidence, that he did not tell Child Support about the backpayment he received.  However Mr Hulbert explained that he thought that he only needed to tell Child Support about his current income.  Whilst this is correct it is also necessary to provide year‑to‑date income, and it is likely that his year-to-date income as of 6 June 2022 was much higher than Mr Hulbert stated.  By understating his year-to-date income Mr Hulbert’s assessed income for the income reconciliation was much higher than what he received.  (The tribunal noted that it was open to Mr Hulbert to apply for an adjustment to the year-to-date income.)

19.The tribunal then considered whether, at the time of his application, Mr Hulbert’s estimated income was likely to be higher than his actual adjusted taxable income.  Whether or not his business is highly profitable and pays benefits to Mr Hulbert is in dispute; however it appears that even if this is so, Mr Hulbert’s adjusted taxable income does not reflect any income or benefits from the company.  It is open for Mrs Hulbert to apply for a departure determination on the basis of his income and financial resources and she has apparently made such an application in March 2022.

20.The tribunal was satisfied that it was reasonable for Child Support to accept the estimates made for the periods 7 June 2022 to 30 June 2022 and 1 July 2022 to 30 June 2023 of income in June 2022.  Mr Hulbert’s adjusted taxable income from 7 June 2022 is more than likely only going to be made up of the [Agency 1] pension.  If a departure determination is made to increase is income, his child support liability will be reassessed.

DECISION

The decisions under review are affirmed.