Ivers and Orpen (Child support)

[2021] AATA 1984

Ivers and Orpen (Child support) [2021] AATA 1984 (8 April 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/SC020668

APPLICANT:  Mr Ivers

OTHER PARTIES:  Child Support Registrar

Ms Orpen

TRIBUNAL:Member J Leonard

DECISION DATE:  08 April 2021

DECISION:

The decision under review is set aside and a decision substituted that the estimate of income of “nil” lodged by Mr Ivers for the period 14 October 2020 to 30 June 2021 should be accepted.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income – whether the estimate was lower than the likely adjusted taxable income – whether discretion to refuse estimate should be accepted – 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

BACKGROUND

1. Mr Ivers and Ms Orpen are the separated parents of two children. Mr Ivers is the parent liable to pay child support to Ms Orpen. For the period 23 August 2020 to 17 June 2021 Mr Ivers’s child support liability was assessed as being $1,258 per annum on the basis of his 2019/2020 adjusted taxable income of $30,820 and Ms Orpen’s 2019/20 adjusted taxable income of $40,457.

2. On 14 October 2020, Mr Ivers contacted Services Australia (Child Support) to lodge an income estimate for the remaining 2020/21 financial year. Mr Ivers estimated his income to be “nil”.

3. On 14 October 2020 Child Support accepted Mr Ivers’s estimate election for the period 14 October 2020 to 30 June 2021 and calculated that Mr Ivers’s child support liability decreased to $443 per annum, being the “minimum annual rate” for the children.

4. Ms Orpen objected to the decision on 4 November 2020 on the basis that Mr Ivers’s  income was not nil as he was paying rent of $300 per week and Child Support was still collecting payment through a third party.

5. On 26 November 2020 Mr Ivers advised Child Support he was receiving $636 per fortnight from Centrelink. On 26 November 2020  Mr Ivers’s updated his estimate to $16,581 per annum for the period 21 October 2020 to 30 June 2021.

6. After obtaining details of income from Mr Ivers’s former employer and Centrelink, an objections officer allowed the objection on 31 December 2020 and decided that the income estimate lodged on 14 October 2020 should be refused.

7. On 5 January 2021 Mr Ivers applied to the Social Services and Child Support Division of the Administrative Appeals Tribunal for an independent review of the objection decision. The application was heard on 8 April 2021. Mr Ivers and Ms Orpen attended the hearing by conference telephone and gave evidence on affirmation. Child Support provided documents relevant to the review which were numbered 1–161.

ISSUES AND CONSIDERATION

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

2. In general, a person’s child support liability is calculated by using an adjusted taxable income, which is based on the person’s taxable income for the previous financial year. 

3. The Act makes provision, however, for a child support assessment to be based on an estimate of current income if there has been a decrease in income of at least 15%. Section 60 of the Act generally provides that where an income estimate is made part-way through a tax year, the applicant is required to provide information about their year-to-date adjusted taxable income and an estimate of likely adjusted taxable income for the remainder of the tax year, on and from the date of the income estimate election.

4. An estimate of income by its nature may be unlikely to be precise. In essence, what is required in this context is a forecast of likely income for the rest of the tax year, taking into account any allowable deductions. The estimate should take account of what is known, as well as what is reasonably in contemplation as likely. However, when reviewing the efficacy of an income estimate, it is not appropriate to have regard to changes in circumstances that could not reasonably have been anticipated when the estimate was given.

5. Mr Ivers told the Tribunal that he rang Child Support because he had exhausted his leave entitlements from his employer and he was no longer working due to health issues. Mr Ivers denies telling Child Support that the reason for the reduction in his income was because he had lost his licence.

6. Mr Ivers told the Tribunal that he informed Child Support that he was getting jobseeker payment and was told to ring back and advise how much he was receiving. He denies advising of an estimate of $0. Mr Ivers told the Tribunal that he rang back within a fortnight. Mr Ivers could not recollect when jobseeker payment commenced, but he stated he had exhausted all of his leave entitlements earlier in the year due to ill health and that he may have been on and off payment.  It is clear that Child Support was aware that Mr Ivers was receiving a Centrelink payment because a file note dated 27 October 2020 records a discussion with Mr Ivers about Centrelink deductions to pay child support.

7. The papers record that Mr Ivers contacted Child Support to provide a subsequent estimate of income. This estimate was applied to the assessment from 21 October 2020; however, it is recorded that the contact was on 26 November 2020. The records show that Mr Ivers estimated his income would be $11,493.42 in the period 21 October 2020 to 30 June 2021. Mr Ivers told the Tribunal this amount was calculated by the Child Support officer who stated not to include the amount of the  COVID-19 supplement as it could be stopped at any time.

8. It is not clear from the file note why the start date of the subsequent election is 21 October 2020. Either Mr Ivers made the subsequent election on 21 October 2020, around the time that he claims, or Child Support determined that there was a change from 21 October 2020 which affected the accuracy of the previous election, presumably on the basis of information provided by Mr Ivers. (Either subsection 62A(2) or (3) of the Act applies.)

9. Evidence obtained by Child Support  following the lodgement of Ms Orpen’s objection shows that Mr Ivers had been in receipt of jobseeker payments since 8 July 2020. Payslips from his employer shows that he was last paid a wage amounting to $1,032.50 gross on 16 October 2020 covering the period 9 October 2020 to 15 October 2020. Mr Ivers denied receiving income from any source other than jobseeker payment until he commenced employment recently. He provided an updated estimate of his income in April 2021 after being medically approved to return to work.

10. Evidence provided by Centrelink shows that Mr Ivers was receiving jobseeker payment of  $1,115.70 per fortnight until it reduced to $815.70 per fortnight from 14 October 2020. This change is in line with the reduction in the amount of COVID-19 supplement from 25 September 2020. The government also announced the supplement would reduce further to $150 per fortnight from 1 January 2021 to 31 March 2021.

Conclusion

1. According to Mr Ivers’s income estimate provided on 14 October 2020 his total taxable income for 2020/21 would be his year to date income of $9,104 (for the period 1 July 2020 to 13 October 2020) + $0 from 14 October 2020.

2. Section 63AA of the Act provides a discretion to refuse to accept an income estimate election. Subsection 63AA(2) enlivens the potential exercise of discretion to refuse if Mr Ivers’s estimate of income in respect of the period 1 July 2020 to 13 October 2020 is more than is considered likely, or the estimate for the period 14 October 2020 to 30 June 2021 was likely to be too low.

3. Taking into consideration the evidence of the income Mr Ivers received from employment and jobseeker payment in the period 1 July 2020 to 13 October 2020 the Tribunal is of the view that the estimate of $9,104 is likely to be less than his actual adjusted taxable income for this period.

4. The Tribunal notes that in making an estimate, particularly in respect of the remaining period in the financial year, the person is attempting to forecast future income, so absolute precision cannot necessarily be expected. The provisions in the Act for the amendment of estimates by the Registrar if circumstances change, and for estimate reconciliation after the end of the tax year once the actual income is ascertained, suggest that an overzealous approach in scrutinising an income estimate is not warranted. Consistent with this, it is also relevant to note that the power to refuse to accept an estimate is discretionary, not mandatory, even if the Registrar is satisfied that the estimate is too low.

5. On the other hand, if the Registrar were to take a lax approach, that may well encourage people to underestimate their income to avoid paying child support (in the short term at least).

6. Mr Ivers did not dispute that when he made his estimate of $0 on 14 October 2020, he was still to receive a final payment of $1,082.50 gross from his employer. This was paid on 16 October 2020. He did not provide a satisfactory explanation as to why he did not advise Child Support that he was receiving jobseeker payment.

7. When Mr Ivers made his estimate, he was receiving jobseeker payment at the rate of $815.70 per fortnight. The reduction in the COVID-19 supplement from $250 to $150 per fortnight from 1 January 2021 had been announced, as had the intention to cease the COVID-19 supplement from 31 March 2021. The future reduction in the rate of jobseeker payment was reasonably foreseeable as at 14 October 2020.

8. The Tribunal calculates that a more reasonable estimate of income from jobseeker payment in the period 14 October 2020 to 30 June 2021 would be in the vicinity of $12,550.[1] Mr Ivers also received a final gross payment of $1,082.50 on 16 October 2020. The Tribunal calculates that a reasonable estimate of Mr Ivers’s partial year  income for the remainder of the financial year would amount to approximately $13,630. When annualised,[2]  the amount of $19,134 would be under the self-support amount ($25,575) and produce a minimum annual rate of child support the same as a $0 income.

   [1] (7 x $815.70) + (6 x $665.70) + (5 x $570) = $12,550

   [2] $13,630/260 days (estimate period 14 October 2020 to 30 June 2021) x 365 = $19,134

9. Ms Orpen was of the view that Mr Ivers deliberately provided an underestimation of his income in an attempt to avoid paying the correct amount of child support.

10. Despite finding that the estimate of $0 was too low, a more accurate estimate of Mr Ivers’s adjusted taxable income for the remining period would achieve the same result. Given the circumstances in this particular case the Tribunal does not find that the discretion to refuse to accept the estimate made by Mr Ivers on 14 October 2020 should be exercised.

11. The Tribunal has reached a different conclusion to that of the objections officer and therefore set aside the decision.

DECISION

The decision under review is set aside and a decision substituted that the estimate of income of “nil” lodged by Mr Ivers for the period 14 October 2020 to 30 June 2021 should be accepted.