Lasker and Jagerman (Child support)

Lasker and Jagerman (Child support) [2022] AATA 634 (1 February 2022)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2021/PC022578
APPLICANT:  Mr Lasker
OTHER PARTIES:  Child Support Registrar
Ms Jagerman

TRIBUNAL:Senior Member R Ellis
DECISION DATE: 01 February 2022
DECISION:

The decision under review is set aside and the matter is sent back to the Child Support Registrar for reconsideration in accordance with the direction that Mr Lasker’s estimated income in 2016–17 be reconciled against a determined adjusted taxable income amount for that financial year of $149,067.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate reconciliation – incorrect estimate reconciliation – decision set aside and sent back with direction to reconcile estimates of income

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

This review relates to a decision made by the Child Support Agency about the reconciliation of estimates of income used to assess child support.
Mr Lasker and Ms Jagerman are the parents of [Child 1] (born June 2006), [Child 2] (born February 2008), [Child 3] (born October 2011) and [Child 4] (born December 2012). Mr Lasker is the parent liable to pay child support under the assessment.
On 6 September 2016 the Child Support Agency made the decision to accept an income estimate from Mr Lasker of $113,257 (annualised) and applied this amount in the child support assessment from 6 September 2016 to 30 June 2017. At the same time the Child Support Agency recorded a year-to-date income for Mr Lasker of $20,496.
On 15 June 2017 the Child Support Agency made the decision to accept a subsequent income estimate of $0 from Mr Lasker and applied this amount to the assessment from 15 June 2017 to 30 June 2017.
On 12 May 2020 the Child Support Agency wrote to Mr Lasker seeking information related to his income for the period from 6 September 2016 to 30 June 2017.
On 27 May 2020 the Child Support Agency made the decision to reconcile the estimates of income using a provisional adjusted taxable income amount for Mr Lasker for 2016–17 of $155,441. This provisional income was based on his income from employment for the relevant financial year. An assessment notice was issued advising that Mr Lasker owed an additional $8,430.41 in child support to Ms Jagerman for the period from 6 September 2016 to 30 June 2017. As Mr Lasker had under-estimated his income by 10 per cent or more of his actual income the Child Support Agency also imposed a penalty of $845.
On 11 June 2020 information was received by the Child Support Agency from the Australian Taxation Office (ATO) that Mr Lasker had an adjusted taxable income of $148,933 in 2016–17.
On 7 July 2020 Mr Lasker objected to the decision made on 27 May 2020 and on 24 February 2021 the Child Support Agency disallowed the objection (the objection decision).
On 6 September 2021 Mr Lasker applied to the Administrative Appeals Tribunal (the Tribunal) for a review of the objection decision.
The Tribunal conducted a hearing into the application, following the granting of an extension of time, on 18 January 2022. Mr Lasker and Ms Jagerman gave evidence on affirmation by conference telephone. The Child Support Agency provided the Tribunal and the parties with papers relevant to the matter (106 pages).

ISSUES

The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act).
The Child Support Agency makes child support assessments for a child support period using a formula outlined in Part 5 of the Act. The variables in the formula include the adjusted taxable incomes of both parents and ordinarily this is equal to the taxable income and supplementary amounts for the financial year that ended before the start of the child support period. Supplementary amounts include such things as reportable fringe benefits.
Section 60 of the Act allows a parent to elect to use an estimate of their adjusted taxable income to apply from the day of the election to the end of the financial year (the estimate period). The estimate is an annualised amount of their taxable income and supplementary amounts for the estimate period.
A parent can make an income estimate for a whole year of income or for a part year of income. In respect of an estimate for a part year of income, the parent must also give an estimate of income for the remaining period and an estimate of their adjusted taxable income from the start of the financial year to the beginning of the estimate period (year-to-date income). This allows the Child Support Agency to reconcile the estimate when information is available from the ATO for the relevant financial year.
When the Child Support Agency accepts a parent’s estimate election, their income estimate amount becomes their adjusted taxable income amount for the purposes of assessing the annual rate of child support payable in the application period (subsection 61(1A) of the Act).
During a financial year, a parent may revoke an estimate election and make a new one (sections 62 and 62A of the Act).
After the year of income has ended, the Child Support Agency will compare the parent’s estimated income with their actual adjusted taxable income for that year. This is known as an estimate reconciliation. In circumstances where the actual adjusted taxable income is not known 12 months after the end of the year of income for the estimate elections, then the Child Support Agency may determine an income amount to be used for reconciliation purposes (section 64AB of the Act).
The issue which arises in this case is whether or not the Child Support Agency has made the legally correct decision to use a determined adjusted taxable for the purposes of reconciling Mr Lasker’s income estimates.

CONSIDERATION

Mr Lasker told the Tribunal he was employed by [Employer 1] in [Town 1] at the time he lodged his estimates and the nature of the work meant his roster was erratic. Mr Lasker said he recalled lodging his first estimate following a roster change and then his second estimate after he became unemployed. Mr Lasker said he had tried to keep his estimates as accurate as possible but his income varied considerably.
Mr Lasker explained his primary concern was not the accuracy of his estimates but the use of a provisional adjusted taxable income by the Child Support Agency to reconcile his estimated income. Mr Lasker said the income amount of $155,441 for 2016–17 applied by the Child Support Agency was incorrect and he had not earned that amount. Mr Lasker added that his actual adjusted taxable income for 2016–17 was $148,933 and he felt it was unfair for the Child Support Agency not to use this figure. Mr Lasker said although the difference between the two incomes was not large it would make a significant change in the amount of child support owed for that year.
Mr Lasker told the Tribunal that after receiving correspondence in early 2020 relating to the estimate reconciliation he had immediately contacted the Child Support Agency to discuss the matter. Mr Lasker said he told the child support officer the amount of $155,441 was a gross income and did not include deductions. Mr Lasker said he explained that he was a bankrupt and unable to access the financial information needed to complete his 2016–17 tax return until he was discharged. Mr Lasker said he had asked if a decision to use a provisional adjusted taxable income could be delayed for a few months until his bankruptcy was discharged. He said the child support officer agreed to investigate and get back to him. Mr Lasker pointed out that he did not receive a response.
The Tribunal notes in evidence from the Child Support Agency a record of a conversation between Mr Lasker and a child support officer on 7 February 2020 relating to his estimate reconciliation. During this conversation Mr Lasker explains that he is a bankrupt and could not lodge his 2016–17 tax return as the trustee was holding the relevant documents. Mr Lasker also explains the amount of $155,441 taken from a group certificate did not include deductions. Mr Lasker requests additional time to provide his income details and the child support officer agrees to inquire further before making a decision on how to proceed. There is no evidence indicating the child support officer responded to this request from Mr Lasker. The Tribunal further notes the next contact from the Child Support Agency is a letter dated 12 May 2020 requesting information about his income. In this letter Mr Lasker is asked to contact the Child Support Agency by 26 May 2020.
Mr Lasker said he contacted the Child Support Agency again on 27 May 2020 to inform them he had just been released from bankruptcy and would be able to access the relevant financial information to complete his tax return. Mr Lasker said the reconciliation had already been undertaken but he was advised to lodge his tax return which he did as soon as he could.
Ms Jagerman told the Tribunal she had no comment to make in relation to Mr Lasker’s income and was comfortable with the Tribunal making a decision based on the information available.
The Child Support Agency can determine a parent’s adjusted taxable income for the purposes of reconciliation if a parent has made an income election and their actual adjusted taxable income is not known 12 months after the end of the relevant year of income. The Act states an income amount can be determined that is considered “appropriate” for that year (section 64AB of the Act). If such a determination is made the parent can object to the particulars, or details, of the assessment to which the determination relates (section 64AB(3) of the Act).
The Tribunal is satisfied section 64AB of the Act applies in this case and that Mr Lasker’s estimate should be reconciled using a determined adjusted taxable income in accordance with the Act.
If the parent’s actual adjusted taxable income becomes known after the reconciliation has been undertaken using a determined adjusted taxable income, the estimate can only be re-reconciled using the actual adjusted taxable income if it is a higher amount than the determined adjusted taxable income (subsection 64A(1) of the Act). Mr Lasker had an actual adjusted taxable income of $148,933 in 2016–17 which is lower than his determined adjusted taxable income of $155,441 in 2016–17. The Act does not allow for his estimated income to be re-reconciled using his actual adjusted taxable income.
The Tribunal is of the view, however, that as a decision has been made under section 64AB of the Act it is open to the Tribunal to review the determined adjusted taxable income amount for 2016–17 used in the reconciliation of Mr Lasker’s estimated income.
Prior to the decision made on 27 May 2020 to reconcile his estimated income using a provisional adjusted taxable income of $155,441, Mr Lasker told the Child Support Agency that this figure was a gross amount and did not include deductions. When doing so Mr Lasker asked the child support officer to delay making a decision until he could provide further information. The child support officer agreed to make inquiries before proceeding. It appears no such inquiries were made before the 27 May 2020 decision.
The Tribunal notes that when submitting his estimate on 6 September 2016 Mr Lasker provided a gross year-to-date income for the period from 1 July 2016 to 5 September 2016 of $21,666 along with allowable deductions of $1,170. Based on this information it would have been reasonable to conclude that Mr Lasker would have deductions against his total gross income for 2016–17 of approximately $6,374 ($1,170 annualised).
In accordance with section 64AB of the Act the Tribunal considers a more appropriate determination of the adjusted taxable income amount for Mr Lasker in 2016–17 would have been $149,067 (gross income of $155,441 less deductions of approximately $6,374).
Following the hearing the Tribunal sought a copy of Mr Lasker’s 2016–17 individual tax return from the Child Support Agency under section 95G of the Child Support (Registration and Collection) Act 1988 (C1–C33). It shows a gross income of $155,441 and total deductions of $6,508. On this basis the Tribunal is satisfied that using a determined adjusted taxable income for Mr Lasker in 2016–17 of $149,067 is a more appropriate income amount.

DECISION

[2022] AATA 634

1 February 2022

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Judicial Review

Procedural Fairness

Remedies

Statutory Construction