Kiager and Kiager (Child support)

Kiager and Kiager (Child support) [2024] AATA 2905 (10 June 2024)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2024/SC027699
APPLICANT:  Mr Kiager
OTHER PARTIES:  Child Support Registrar
Ms Kiager

TRIBUNAL:Member D Tucker
DECISION DATE: 10 June 2024
DECISION:

The Tribunal sets aside the decisions under review and, in substitution, decides that Mr Kiager’s election to estimate his income at $1,000 per fortnight is to be accepted and that his annualised ATI for child support purposes is $26,071 for the period from 18 October 2023 until the date of his subsequent income estimate on 25 March 2024.

(This means the application was successful).

CATCHWORDS
CHILD SUPPORT – particulars of the administrative assessment – adjusted taxable income – income estimate – new casual job – application for review set aside and substituted

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

Mr Kiager (the father) and Ms Kiager (the mother) are the parents of [Child 1], born [in] April 2008 and [Child 2], born [in] May 2011.
Since 27 October 2022 a child support assessment has been registered with Services Australia – Child Support (Child Support).
Prior to the decision under review, the assessment was based on the father’s 2022–23 adjusted taxable income (ATI) of $106,912, and the mother’s provisional ATI for 2022–23 of $50,085, with the father liable to pay the mother.
On 18 October 2023, the father elected to lodge an estimate of his adjusted taxable income (ATI) of $26,071 (annualised) for the period 18 October 2023 to 30 June 2024 because he had lost his full-time job, but had recently acquired a casual job. His estimate of his earnings, which Child Support accepted, was an average of $1,000 per fortnight.
On 20 December 2023, the mother objected to Child Support’s decision. After granting the mother an extension of time to object, on 15 March 2024 Child Support allowed the mother’s objection. Consequently, the father’s liability was reassessed based on his 2022–23 ATI of $106,912, thereby creating arrears from the date of his income estimate on 18 October 2023.
On 25 March 2024, the father lodged an application with this Tribunal. He and the mother gave affirmed evidence via a telephone hearing on 24 May 2024. The Tribunal considered the parents’ oral evidence, and documents provided by Child Support.

LEGISLATION AND ISSUES’s

The relevant provisions are within the Child Support (Assessment) Act 1989. Unless otherwise stated, all references to legislation in these Reasons are to this Act.
Child Support generally determines child support liabilities using a formula in Part 5 which considers factors including the ATI of each parent from the previous tax year. ATI is defined in section 43 and includes a parent’s taxable income.
The legislation provides some flexibility for parents whose circumstances change. Section 60 allows a parent to elect to estimate their ATI when their income reduces by at least 15% as assessed against their ATI for the last relevant year of income. The period affected by an estimate starts on the day of the parent’s estimate, or the start of a financial year, whichever is the later and ends at the close of the financial year.
According to section 63AA, if the Registrar considers it likely that a parent’s income estimate is less than their actual ATI will be for the relevant period, they may refuse to accept it. If the Registrar does so, the estimate is taken to never having been made. Otherwise, the Registrar must accept the parent’s estimate and use it to assess the annual rate of child support payable in the relevant period (section 63).
Parents are obliged to ensure their estimate remains accurate and legislative mechanisms reconcile any difference between it and the parent’s actual ATI.
The issue to be determined by the Tribunal is whether the discretion to refuse to accept the father’s income estimate should be exercised?

CONSIDERATION

The mother explained that she lodged her objection because the payslips the father submitted during family court proceedings indicated an income higher than his estimate. The mother also stated that when the father lodged his income estimate, he was aware he would receive a redundancy payment but failed to mention this to Child Support. By this she inferred the father had been less than transparent with Child Support.
The father denied this, explaining that his employer did not inform him that he was going to be redundant until three days before it occurred, and that he promptly notified Child Support of this, and of his redundancy payment as soon as he received it, as instructed.
The Tribunal notes that Child Support’s file notes of 11 October 2023 corroborate the father’s account[1]:
* Details of the discussion with [Mr Kiager]:
pyr is being made redundant has not been paid out yet
advised once this is done to call and lodge an estimate
he has 2 jobs
advised YTD for both required
due to care levels assessment may reverse, but until we know his income on party
time job which is every second weekend i cant be certain
[1] page 36 of the hearing papers
pyr will call back with this informaiton once the pay out occurs
Child Support’s file notes show that a week later, on 18 October 2023, the father made contact again to make his income estimate[2]:
* Details of discussions about YTD income:
customers YTD is higher due to termination payout that the customer has already
received before today’s call.
* Estimate pended in Cuba. Upon keying, the YTD income was more than 10%
higher than expected for the following reasons:
[2] page 37 of the hearing papers
termination payout
The father’s termination payment was included in his year-to-date income for the purposes of the assessment rather than being a factor in his forward-looking income estimate.
The father explained that shortly before being made redundant he acquired a casual job as a [Occupation 1] at a [workplace]. His income estimate of $1,000 per fortnight referred to this job. Because his earnings were so variable, it was difficult for him to forecast their average with precision or certainty.
On 9 February 2024, during the objection process, the father provided Child Support with six payslips, covering the period 18 September 2023 to 10 December 2023. As the father pointed out, his gross fortnightly earnings varied significantly. One of his payslips showed gross earnings of $645, another showed $1,422, and the rest showed amounts in between.
The average of these payslips was $1,144, more than the $1,000 average estimated by the father on 18 October 2023. However, the father explained that these six payslips were from the busiest season for the venue where he worked as it is used for university end of year functions. During these months he worked extra shifts and therefore the payslips he provided were not indicative of his average income over the whole of the financial year.
The father told the Tribunal that on 11 February 2024[3] he was injured at work. He required surgery and time off work. To calculate his workers compensation payments QBE Insurance estimated the father’s average fortnightly earnings based on the payslips of another long-term employee in a similar position, arriving at a figure of $471.55 per week,[4] or $943.10 per fortnight. Based on this, the father argued that the estimate of $1,000 per fortnight he had provided to Child Support on 18 October 2023. was reasonable.
[3] page 118 of the hearing papers
[4] page 135 of the hearing papers
When Child Support allowed the mother’s objection, the father’s liability was again assessed on his 2022–23 ATI of $106,912. This created arrears of $4,606. This was partly due to Child Support’s decision to grant the mother an extension of time to object, and the delay in its final decision.
On 25 March 2024, the father provided a new income estimate of $1,124 per fortnight. As the father pointed out, this new estimate was also less than 85% of his 2022–23 ATI (section 60(1)(b)).
The father has since found a full-time job of which he promptly notified Child Support. However, shortly after he started, Child Support began garnishing his wages to recover the arrears created by its objection decision. As a result, he found himself under financial stress. The father feels aggrieved at this, pointing out that he had never missed any child support payments in the past and felt that he was treated as recalcitrant when he was not.
The father expressed the belief that while underpayments of child support are reconciled annually, overpayments are not, and therefore any overpayments he has made during the period in question would not be redressed. As the Tribunal explained to the father, this is not correct. If the father’s actual 2023−24 ATI is lower than the ATI reflected in the assessment, Child Support will reconcile the difference (section 64). If a payee in an assessment (the mother in this instance) receives an overpayment, this becomes a debt to the Commonwealth collectible by Child Support (section 69B(1)) and payable in turn to the paying parent (section 69B(3)).
When asked by the Tribunal what she would consider a fair outcome, the mother agreed with the father that it was not fair for him to be assessed on an income of $106,912 per annum during the period in question, as this was well above his actual earnings. She thought it would be fairer if the father was assessed on his reconciled income for 2023–24, which would ultimately occur.
The mother explained that her objection was prompted by the reversal in the parent’s roles, as she became the paying parent after Child Support accepted the father’s income estimate on 18 October 2023. Referring to the father, she stated that, for the period in question, “he should be made to pay something for his children”.
The Tribunal notes that according to the legislated formula, using the father’s estimate of $1,000 per fortnight would have rendered the mother liable to pay him $1,496 per annum. If the father’s income was varied to $1,144 per fortnight for the same period, the mother would still be the paying parent, with a liability of $1,035 per annum. These amounts are calculated using the same formula that rendered the father the paying parent prior to his redundancy.
The mother explained that she was motivated to object to the father’s estimate because she had incurred additional expenses for the children’s care, including orthodontic treatment and school fees. As the Tribunal explained, the appropriate mechanism for accommodating these types of special costs is a change of assessment process, of which the mother was already aware.
The father offered to provide all his payslips from 18 October 2023 to 25 March 2024 (the date of his subsequent income estimate) so the Tribunal could ascertain whether his estimate of 18 October 2023 was borne out by history. However, for reasons set out below, the Tribunal finds this is not necessary.

The Tribunal’s findings and the application of the law

The Tribunal notes that the power to refuse an estimate is discretionary. There are no statutory criteria to consider, other than whether the estimate it is likely to be lower than the parent’s actual ATI for the relevant period. Nor does the Child Support Guide prescribe any additional criteria for accepting or refusing an estimate.
An income estimate is by nature imprecise. It is a forecast of what ATI a parent will have for the rest of the tax year, that takes account of what is known and likely. Even if history proves an estimate to be inaccurate this does not necessarily render it invalid. When reviewing the efficacy of an income estimate, weight should not be given to changes in circumstances that the estimator could not reasonably have anticipated. Rather, a point-in-time approach is required. Therefore, the Tribunal must consider whether the father’s income estimate was likely to reflect his income for the relevant period when he made it.
At the time the father was required to provide his estimate, he had not been employed in his casual job for very long, so the data upon which he had to base his estimate was limited. In the Tribunal’s view, it was reasonable for him to anticipate that his earnings would be higher than average during the busiest season of his workplace. Given the pay packets he had received, his estimate of $1,000 per fortnight was far from unreasonable, as corroborated by QBE’s estimate.
In the absence of any substantial evidence contradicting the father’s estimate, there was no adequate basis for the Registrar to have refused to accept it. Whether the father’s estimate was slightly more or less than his actual ATI for the period in question was not knowable when the father made his estimate.
Parenthetically, the Tribunal notes that even if the father’s average income was $1,144 per fortnight for the whole of the period in question, the difference between his estimate and his actual ATI would be far smaller than the difference between his estimate and his 2022–23 ATI of $106,912.
After considering all the circumstances of the case, the Tribunal is satisfied that the preferable decision is to accept the father’s election to estimate his income at $1,000 per fortnight from 18 October 2023.
The Tribunal notes that after the completion of the 2023–24 financial year, Child Support will reconcile the father’s actual ATI with his estimated income and amend the assessment accordingly.

DECISION

(This means the application was successful).

[2024] AATA 2905

10 June 2024

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Jurisdiction

Statutory Construction

Remedies