Leonard and Reynell (Child support)

[2021] AATA 1273

Leonard and Reynell (Child support) [2021] AATA 1273 (11 March 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/BC020289

APPLICANT:  Ms Leonard

OTHER PARTIES:  Child Support Registrar

Mr Reynell

TRIBUNAL:Senior Member R Ellis

DECISION DATE:  11 March 2021

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 Reynell’s estimate of income made on 17 August 2020 was for the amount of $1,500 per fortnight for the estimate period, and did not include any allowable deductions to reduce that amount.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income – whether the estimated income is less than the amount likely to be the actual income – estimate of income correctly accepted but incorrectly calculated – decision under review set aside and sent back with directions

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. This review is about the acceptance of an estimate election used to assess child support in respect of the children [Child 1], [Child 2], [Child 3] and [Child 4].

2. Ms Leonard and Mr Reynell are the parents of [Child 1] (born May 2006), [Child 2] (born February 2008), [Child 3] (born June 2009) and [Child 4] (born June 2015).  There has been a child support assessment in place since 12 June 2018 and Ms Leonard is currently the parent liable to pay child support under the assessment.

3. On 17 August 2020 the Child Support Agency made the decision to accept an income estimate from Mr Reynell of $29,551 (annualised) to be used in the child support assessment from 17 August 2020 to 30 June 2021.

4. On 3 September 2020 Ms Leonard objected to this decision and on 17 November 2020 the Child Support Agency disallowed the objection (the objection decision).

5. On 23 November 2020 Ms Leonard applied to the Administrative Appeals Tribunal (the Tribunal) for a review of the objection decision.

6. The Tribunal conducted a hearing into the application on 25 February 2021.  Ms Leonard and Mr Reynell gave evidence on affirmation by conference telephone.  The Child Support Agency provided the Tribunal and the parties with papers relevant to the matter (167 pages).

7. Following the hearing the Tribunal sought potentially relevant material from the Child Support Agency under subsection 37(2) of the Administrative Appeals Tribunal Act 1975 in relation to the estimate provided by Mr Reynell.  This was received on 26 February 2021 (C1).

ISSUES

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

2. 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.

3. 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.  It must be no more than 85 per cent of the adjusted taxable income that applies when the parent makes the estimate election.

4. The parent making the estimate election must also estimate 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 Australian Taxation Office for the relevant financial year.

5. The Child Support Agency may refuse to accept an estimate election if satisfied the amount estimated for the partial year is less than the amount considered likely to be the actual adjusted taxable income for the partial year (section 63AA of the Act).

6. The issue which arises in this case is whether or not the Child Support Agency made the legally correct decision to accept Mr Reynell’s estimate of income made on 17 August 2020.

CONSIDERATION

1. Ms Leonard told the Tribunal she believed the estimate submitted by Mr Reynell was incorrect.  She said Mr Reynell had a history of not providing the correct information in relation to his income and was actually earning more than his estimate.

2. Ms Leonard referred to two payslips for Mr Reynell in evidence provided by the Child Support Agency.  She said one payslip showed gross earnings of $1,350 while the other showed gross earnings of $1,200.  Ms Leonard pointed out that despite these amounts Mr Reynell’s overall taxable earnings increased by a more significant amount between the two payslips.  Ms Leonard said she was uncertain if the payslips were correct.

3. The Tribunal notes in evidence payslips for Mr Reynell for the pay period 21 September 2020 to 4 October 2020 and for the period 5 October 2020 to 18 October 2020.  Gross taxable earnings in the first payslip equal $1,350 with gross year-to-date earnings of $19,952.72.  Gross taxable earnings in the second payslip equal $1,200 with gross year-to-date earnings of $26,384.32.  The Tribunal calculated the difference in year-to-date income between the two pay periods to be $6,431.60 over the fortnight.

4. Ms Leonard told the Tribunal that Mr Reynell was being paid more than her and yet she was the parent paying child support even though care of the children was shared.  Ms Leonard said she felt this was extremely unfair.

5. Mr Reynell told the Tribunal he submitted his estimate of income after being stood down following an incident at the [work site] where he was working.  Mr Reynell explained that there was a fire at the [work site] and much of the workforce had ended up on the jobkeeper payment.  He said his estimate of $1,500 per fortnight was based on that payment.  Mr Reynell added that he had not worked again since being stood down by his employer.

6. Mr Reynell said by the time he had submitted his payslips to the Child Support Agency the jobkeeper payment rate had declined which explained his lower income in the payslips compared to his estimate.  Mr Reynell said he was uncertain why his year-to-date income had increased significantly between the two pay periods but it may have been because he was paid out a large amount of his holiday pay.  Mr Reynell said at the time he made his estimate of income he felt it was accurate.

7. An income estimate can be made if, in the case of a first election for a year of income, the estimate is 85 per cent or less than the parent’s adjusted taxable income for the last relevant year of income (paragraph 60(1)(b) of the Act).  A parent may not make an income estimate if an income amount order is in force in relation to the parent and any part of the period to which the election would apply if made (subsection 60(6) of the Assessment Act).

8. Mr Reynell made his estimate of income of $1,500 per fortnight on 17 August 2020.  Although his payslips for the pay periods ending 4 October 2020 and 18 October 2020 show a fortnightly pay in line with his estimate, the year-to-date amounts also indicate a higher income than that showing on the payslips.  The Tribunal has calculated the difference in the year-to-date income to be approximately $6,432 over the 14 days between pay periods which is higher than his estimated income of $1,500 per fortnight.  Mr Reynell has explained this is possibly due to the cashing in of outstanding holiday pay.

9. It is unlikely Mr Reynell was aware when he made his estimate election on 17 August 2020 that he would receive a payout of holiday pay around 18 October 2020.  The Tribunal notes that when the jobkeeper payment scheme commenced on 30 March 2020 a rate of $1,500 per fortnight for employees was available to eligible businesses.  The Tribunal is, therefore, satisfied that when making his estimate election Mr Reynell genuinely believed his income would be $1,500 per fortnight.  The Tribunal is also satisfied that, when making his estimate, Mr Reynell also provided his year-to-date income amount.

10. Based on his estimate of $1,500 per fortnight, the Tribunal calculated the gross income for Mr Reynell in the year-to-date period to be $34,071.42 ($1,500 divided by 14 days times 318 days remaining in the period).  On an annualised basis the estimate provided by Mr Reynell would equal approximately $39,107 ($34,071.42 divided by 318 days remaining in the period times 365 days in a year).  The Tribunal notes in evidence, however, that the Child Support Agency has subtracted allowable deductions of $8,325 before arriving at an estimate taxable income of $25,746.42 for Mr Reynell.  This is equal to an annualised income of $29,551 which is the figure used by the Child Support Agency in the assessment.

11. Mr Reynell told the Tribunal at hearing that he was unaware how the Child Support Agency had arrived at the figure of $8,325 for allowable deductions.  Mr Reynell said he had not provided this amount to the Child Support Agency but the deductions could be related to his work tools, clothing and work-related motor vehicle use.

12. Following the hearing the Tribunal sought additional information from the Child Support Agency in relation to the information used to calculate the annualised income used in the child support assessment for Mr Reynell.  The Child Support Agency advised that all information in relation to the estimate made by Mr Reynell, including the amount for allowable deductions, was set out in the relevant papers.

13. While Mr Reynell may well have allowable deductions to claim against his gross income, the Tribunal could find no basis for the amount used in the calculations by the Child Support Agency.  Mr Reynell has told the Tribunal that he did not provide the amount of $8,325.

14. The Tribunal is of the view, based on the evidence provided, that the annualised income used by the Child Support Agency in the assessment for Mr Reynell should be recalculated.

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 Reynell’s estimate of income made on 17 August 2020 was for the amount of $1,500 per fortnight for the estimate period, and did not include any allowable deductions to reduce that amount.