Kersey and Kersey (Child support)

[2022] AATA 4992

Kersey and Kersey (Child support) [2022] AATA 4992 (22 November 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/MC024524

APPLICANT:  Mr Kersey

OTHER PARTIES:  Child Support Registrar

Ms Kersey

TRIBUNAL:Member C Breheny

DECISION DATE:  22 November 2022

DECISION:

The decision under review is 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

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 Kersey and Ms Kersey are the separated parents of [Child 1]. There are older children not subject to this review. The child support case for [Child 1] ended on 2 March 2020. At the time Mr Kersey was the parent liable to pay child support to Ms Kersey.

2. On 24 February 2021 the Australian Taxation Office (ATO) notified Services Australia (Child Support) that Mr Kersey’s 2016/17 taxable income was $134,322, his 2017/18 taxable income was $49,758 and Mr Kersey’s 2018/19 taxable income was $270,076. On that day a decision was made that the administrative assessments for the child support periods from 1 December 2017 to 2 March 2020 should be updated, as child support payments were previously based on “provisional incomes” for Mr Kersey.

3. The following new assessments were made and advised by notice dated 24 February 2021:

   ·For the period 1 December 2017 to 29 May 2018 the annual child support rate was $2,609. The amount was payable by Ms Kersey to Mr Kersey, as Mr Kersey had 100% care of [Child 1].

   ·For the period 30 May 2018 to 31 October 2018 the annual child support rate was $19,654. The amount was payable by Mr Kersey to Ms Kersey, as [Child 1] had returned to Ms Kersey’s care.

   ·For the period 1 November 2018 to 31 December 2019 the annual child support rate was $5,801. The amount was payable by Mr Kersey to Ms Kersey, as Ms Kersey had 100% care of [Child 1].

   ·For the period 1 January 2020 to 2 March 2020 the annual child support rate was $28,171. The amount was payable by Mr Kersey to Ms Kersey, as Ms Kersey had 100% care of [Child 1].

4. On 13 April 2022 the ATO notified Child Support of Mr Kersey’s amended 2018/19 taxable income. On the same day a new assessment notice was issued for the period 1 January 2020 to 2 March 2020. The notice also indicated that Mr Kersey had child support arrears of $19,704.27 and that payments should be made to Child Support.

5. On 10 May 2022 Mr Kersey objected to the decision made on 13 April 2022 arguing that the case was “private collect” and he therefore did not owe arrears to Child Support.

6. On 20 July 2022 a Child Support objections officer disallowed the objection. The objections officer found that the relevant taxable incomes were correctly applied to the child support assessment and that Mr Kersey had outstanding child support arrears.

7. On 25 May 2022 Mr Kersey 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 22 November 2022. Mr Kersey attended the hearing by telephone and gave evidence on affirmation. Ms Kersey could not be contacted at the appointed time and did not participate in the hearing. I had before me the statement and documents provided by Child Support pursuant to subsection 37(1) and section 38AA of the Administrative Appeals Tribunal Act 1975, received on 26 September 2022 and 7 November 2022 respectively (documents numbered 1–133).

ISSUES AND CONSIDERATION

1. The statutory provisions relevant to this application are contained in the Child Support (Assessment) Act 1989 (the Act) and the Child Support (Registration and Collection) Act 1988 (the Collection Act).

2. Section 58 of the Act states that if a parent’s taxable income has not been assessed by the ATO for the last relevant year of income in relation to a child support period, then the parent’s income will be determined by the Child Support Registrar for the purpose of determining the child support liability (commonly known as a “provisional income”).

3. Section 58A of the Act provides for retrospective and prospective amendments to the administrative assessment on the basis of subsequently obtained taxable incomes. Specifically, paragraph 58A(2)(b) provides that if the income amount subsequently obtained is higher than the amount earlier determined, the Registrar must immediately amend the administrative assessment for the child support period on the basis that the parent’s adjusted taxable income for that year of income is, and has always been, the amount that was subsequently ascertained.

4. Mr Kersey did not dispute that his taxable incomes, as assessed by the ATO are correct and that they should be used in the child support assessment. He said that he “never objected to the taxable incomes being used” and said that the objections officer did not actually address his concerns.

5. Mr Kersey submitted that his issue is about the collection of child support. He has had 100% care of [Child 1] from May 2011 and at the time Ms Kersey was assessed as having to pay child support to him. He said that the “case was privately collected” but he never received any money from Ms Kersey. He also never received any letters from Child Support during that period, so he was unsure about how much money Ms Kersey ought to have paid to him. On 24 July 2018 he received a notice indicating that Ms Kersey had 100% care of [Child 1] from 30 May 2018 and that he was now liable to pay child support to Ms Kersey (folio 17).

6. Mr Kersey said that he understood that child support was “privately collected”. He pointed out that the notice dated 24 February 2021 indicates “Your case was privately collected during the periods that have changed. This means you and [Ms Kersey] are responsible for managing any amounts owing or overpaid for those period” (folio 65).

7. Mr Kersey said that he thought that he therefore did not have to make any payments to Child Support, or (at the very least) Child Support ought to be deducting the amounts owed by Ms Kersey for the period that [Child 1] was in his care from his outstanding arrears.

8. Section 25 of the Act sets out when a parent may apply for an administrative assessment of child support, including among other things that they are a resident of Australia on the day the application is made. In this case there is no dispute that Ms Kersey first applied for an administrative assessment of child support from 8 June 2005 (folio 110).

9. Section 24A of the Collection Act provides that where the Child Support Registrar makes a child support assessment under which a “registrable maintenance liability arises” (i.e. child support is payable), the liability must be immediately registered in the Child Support Register. This is unless “the payee elected not to have the liability enforced under the Act” (subsection 24A(2) refers). In this case it appears that Ms Kersey initially elected not to have the child support liability enforced (i.e. collected by Child Support) until 3 July 2006. This means the case was “private collect” until 3 July 2006.

10. Subsection 25(1) of the Collection Act provides that a payee may apply for the registration of a registrable maintenance liability that was previously not registered because of an election made by the payee under subsection 24A(2) of the Act to not enforce the liability. It appears that Ms Kersey applied for registration of a “registrable maintenance liability” from 4 July 2006 (folio 125) and Child Support accepted her application on 25 July 2006, as indicated by the objections officer (folio 52). This means that any child support payments owing to Ms Kersey from 4 July 2006 had to be collected by Child Support. Ms Kersey (as payee) never made another election in this regard.

11. Documents further show that on 18 March 2008 Mr Kersey became the “payee” (because he had care of [Child 1]) and Ms Kersey was obliged to pay child support to him.

12. The Child Support Guide (the Guide) explains in this regard (at chapter 5.1.2):

    There are certain circumstances (e.g. a change in care or income) which create a role reversal. A role reversal results in the payee becoming the new payer, and the payer becoming the new payee. A liability that arises as a result of a role reversal creates a new registrable maintenance liability which the Registrar must record on the register (CSRC Act section 24A(1)) for collection. The new payee (or the payee and payer jointly) can elect for the Registrar to end collection of the liability (CSRC Act section 38A).

13. Child Support records indicate that Mr Kersey elected not to have the liability enforced under the Act from 19 March 2008 (folio 129). In accordance with subsection 24A(2) of the Collection Act Mr Kersey was able to make such an election in relation to any child support payments owed to him. There is no evidence that Mr Kersey changed his election and thus child support liability owed by Ms Kersey to Mr Kersey was “privately collected”.

14. The consequence of such an election is that there is no “enforceable maintenance liability” and that means Child Support has no power to collect any outstanding child support arrears from Ms Kersey either directly or by “offsetting” part of the arrears owed by Mr Kersey.

15. For completeness I will note that (as indicated in the Guide) Mr Kersey and Ms Kersey could have jointly elected in 2008 (or at any time), not to have child support liability enforced in accordance with section 38A of the Collection Act. If such a “joint election” had been made Mr Kersey would have been correct in his argument that he “did not owe any arrears to Child Support”. There is however no evidence of a “joint election to end collection” pursuant to section 38A.

16. I appreciate Mr Kersey’s concerns and I acknowledge that the wording in the notice dated 24 February 2021 may have led to some confusion, as the private collection arrangements only applied to a particular child support period (from 1 December 2017 to 29 May 2018). This is clarified in the assessments included in the notice (folio 67).

17. Based on these deliberations I have therefore affirmed the decision under review.

DECISION

The decision under review is affirmed.