Koch and Koch (Child support)

[2023] AATA 4288

Koch and Koch (Child support) [2023] AATA 4288 (26 October 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/AC026021

APPLICANT:  Mr Koch

OTHER PARTIES:  Child Support Registrar

Mrs Koch

TRIBUNAL:Member J Bakas

DECISION DATE:  26 October 2023

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – whether the adjusted taxable incomes for past period for the liable parent should be changed – conditions for changing the income is not met - 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 and Mrs Koch are the parents of three children born 2004, 2008 and 2009. Only the children born in 2008 and 2009 are involved in this matter, who are recorded as being in the 100% care of Mrs Koch.

2. The application for review before the Tribunal relates to the date from which Mr Koch’s income tax declaration (ITD) for the 2021/2022 financial year should be applied.

3. On 14 December 2022, Services Australia – Child Support (Child Support) decided to apply Mr Koch’s ITD of $55,327 from 14 December 2022.

4. On 19 December 2022, Mr Koch contacted Child Support as he wanted his ITD to apply to his child support assessment from 1 July 2023. Prior to the decision of 14 December 2022, the provisional income of $77,579 (for the 2021/2022 year) was used in the assessment period for Mr Koch.

5. Mr Koch objected to this decision, and on 26 March 2023, the objections officer decided to disallow the objection.

6. Mr Koch applied to the Tribunal for further review as he was still of the view that it was unfair to apply his ITD of $55,327 only from 14 December 2022 and because his actual income was much less than his provisional income and he struggled to pay for his medication and bills given the high child support payments he was required to make.

7. The Tribunal heard the matter on 27 September 2023 and 26 October 2023 as it became evident at the first hearing that Mrs Koch had not received the hearing papers.

8. Mr Koch attended both hearings in person. Mrs Koch attended both hearings via MS Teams audio. Mrs Koch also had [Ms A] of [named] Community Legal Service with her at the second hearing as a support person. In addition, an interpreter was present at the second hearing to assist Mrs Koch. However, she did not require the interpreter’s assistance.

9. The Tribunal had before it documentation provided by Child Support (the hearing papers). Both parents had a copy of these documents with them at the second hearing. In addition, both parents had provided the Tribunal with documents prior to the hearing and Mr Koch provided further documents at the first hearing. All documents were exchanged between the parties.

ISSUES

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

2. The issue which arises in this case is whether it was correct to apply Mr Koch’s 2021/2022 ITD from 14 December 2022 and not an earlier date.

CONSIDERATION

1. Section 58 of the Act allows Child Support to determine a person’s adjusted taxable income for a child support period where either the person’s taxable income for the last relevant income year has not been assessed under an Income Tax Assessment Act or Child Support is unable to ascertain whether or not the person’s taxable income for that year has been so assessed.

2. In this case, Mr Koch’s taxable income for the 2021/2022 year had not been available when Child Support made the assessment for the period commencing 1 September 2022 (the 2021/2022 tax return had not been lodged) and thus Child Support determined a ‘provisional’ income amount of $77,579 to be used in the administrative assessment pursuant to section 58 of the Act (his taxable income for the 2020/2021 year was $75,393).

3. Section 58A of the Act applies if Child Support subsequently ascertains components of a person’s adjusted taxable income and the amount is different than the amount determined under section 58. It relevantly states:

   58A Subsequently ascertaining components of a parent's adjusted taxable income

   (1)The Registrar must immediately amend an administrative assessment of child support payable by or to a parent in relation to a child support period if:

   (a)  the assessment was made on the basis of a determination under section 58; and

   (b)  either:

   (i)  the Registrar subsequently ascertains the amount of the parent's adjusted taxable income for the last relevant year of income; or

   (ii)the Registrar makes a later determination under section 58; and

   (c)  either:

   (i)  if subparagraph (b)(i) applies--the amount that was subsequently ascertained is different from the amount that was determined under section 58; or

   (ii)  if subparagraph (b)(ii) applies--the later amount that the Registrar determines is different from the earlier amount determined under section 58.

   Retrospective determinations

   (2)If:

   (a) at the time the Registrar is to amend the administrative assessment under this section, the parent could lodge his or her tax return by the date required under Part IV of the Income Tax Assessment Act 1936 (taking into account any deferral under section 388‑55 in Schedule 1 to the Taxation Administration Act 1953); or

   (b)  paragraph (a) of this subsection does not apply and:

   (i)  the amount subsequently ascertained, as mentioned in subparagraph (1)(b)(i), is higher than the amount that was determined under section 58; or

   (ii)  the later amount that the Registrar determines, as mentioned in subparagraph (1)(b)(ii), is higher than the earlier amount determined under section 58; or

   (c)  neither paragraph (a) nor (b) applies, but circumstances prescribed by the regulations for the purposes of this section apply in relation to the parent;

   then 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 or later determined (as the case requires).

4. When Child Support became aware that Mr Koch’s 2021/2022 taxable income was $55,327, they applied this to the child support assessment from 14 December 2022 which was the date the ITD was made.

5. Mr Koch’s evidence and submissions included that:

   16.1.  He does not understand why Child Support always fix him with a very high provisional income.

   16.2.  The delay in lodging his tax return was caused by a number of factors including that it took him time to recover from the relationship breakdown and subsequent property settlement and that he tried to get help to submit his tax but was not able to.

   16.3.  He was trying to submit his tax return on his own and it was difficult and he tried calling Services Australia and the Australian Taxation Office (ATO) and had to wait for hours on the phone. He feels as though he is being punished for no reason.

   16.4.  He did not wish to incur the costs of a tax agent.

   16.5.  He is now trying to lodge his 2022/2023 tax return and is having difficulties again. He has gone to the ATO to try to understand what the issue is but no one could help him.

17.  He also provided an ATO form to show his income in the 2020/2021 year was only $49,795. However, I note that the hearing papers at page 18 refer to Mr Koch being in receipt of fringe benefits of about $17,000.

1. In any event,iIn accordance with section 58A of the Act, retrospective determinations can only be made if either paragraph 58A(2)(a), paragraph 58A(2)(b) or paragraph 58A(2)(c) applies. The time for lodging the income tax returns has passed and therefore paragraph 58A(2)(a) does not apply. The taxable income subsequently ascertained by Child Support is not higher than income determined under section 58 of the Act and therefore paragraph 58A(2)(b) does not apply.

2. The Regulations referred to in paragraph 58A(2)(c) are the Child Support (Assessment) Regulations 2018 (the Regulations). Section 11 of the Regulations relevantly provides:

   11Adjusted taxable income—prescribed circumstances

   (1)For the purposes of section 58A of the Act, the following circumstances are prescribed in relation to a parent who was unable to provide information about the parent’s adjusted taxable income to the Registrar at the time the relevant administrative assessment was made:

   (a)  one or more of the following applied in relation to the parent at that time:

   (i)the parent did not know that an application for the assessment had been made and  accepted;

   (ii)the parent had a serious illness or injury;

   (iii)the parent was under detention or imprisonment;

   (iv)the parent resided in a remote location which made it difficult to contact the Registrar;

   (v)a natural disaster prevented the parent from being able to contact the Registrar;

   (vi)there was some other exceptional circumstance that prevented the parent from providing the information;

   (b)  the Registrar confirms that the parent was unable to provide the information at that time because of a circumstance mentioned in paragraph (a);

   (c)  the parent later provides the information to the Registrar as soon as is practicable in the circumstances.

3. Based on the evidence before me, I find that none of the prescribed circumstances apply to Mr Koch in relation to his 2021/2022 ITD.

4. Accordingly, I find that paragraph 58A(2)(c) of the Act is not satisfied.

5. On this basis, I find that a retrospective determination cannot be made in respect of the assessments for the child support period from 1 September 2022 to 14 December 2022. As such, I find it was correct for the objections officer to disallow the objection after finding that it was correct to apply the ITD of $55,327 from 14 December 2022.

DECISION

The decision under review is affirmed.