Letlow and Child Support Registrar (Child support)

[2022] AATA 1556

Letlow and Child Support Registrar (Child support) [2022] AATA 1556 (14 March 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBERS:  2021/SC022732, 2021/SC022994 and 2021/SC022995

APPLICANT:  Mr Letlow

OTHER PARTY:  Child Support Registrar 

TRIBUNAL:Member P Jensen

DATE OF DECISIONS:                   14 March 2022

DECISIONS:

The decisions under review are set aside and, in substitution, Mr Letlow’s applications for extensions of time in which to object to decisions made on 11 August 2021 to apply a 2018-19 provisional adjusted taxable income of $228,826.00, a 2019-20 provisional adjusted taxable income of $234,613.02 and a 2020-21 provisional adjusted taxable income of $241,290.81 are granted.

CATCHWORDS

CHILD SUPPORT – refusal to grant an extension of time to object – minor delay in lodging the objection late – some prospects of objection succeeding and therefore there is arguable merit – no prejudice to the other parent - the extension of time should have been granted - decisions under 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 DECISIONS

1. Mr Letlow and Ms Letlow are the parents of [Child 1] who was born [in] September 2003. A child support case was registered in 2006 with what is commonly called the Child Support Agency or CSA. This case concerns decisions to amend Mr Letlow’s 2018-19, 2019-20 and 2020-21 provisional adjusted taxable incomes.

2. The Child Support (Assessment) Act 1989 (“the Assessment Act”) provides for an administrative assessment of child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care for the child. From 25 January 2018 to 30 September 2018, the administrative assessment was based, in part, on Mr Letlow’s 2016-17 adjusted taxable income of $22,416.

3. The Assessment Act creates what are called “child support periods”: section 7A of the Assessment Act. A new child support period started on 1 October 2018. If the Australian Taxation Office (“the ATO”) had assessed Mr Letlow’s adjusted taxable income for the financial year prior to the financial year in which the child support period started, which the Act calls “the last relevant year of income”, the administrative assessment from 1 October 2018 would have been based on that adjusted taxable income. However, Mr Letlow had not lodged his 2017‑18 tax return and so the CSA decided to use a provisional adjusted taxable income which was calculated from his 2016-17 adjusted taxable income: subsection 58(3) of the Assessment Act. The CSA calculated a 2017-18 provisional adjusted taxable income of $22,932, and it applied that income to the administrative assessment, subject to a possible reassessment once Mr Letlow’s 2017-18 adjusted taxable income became known.

4. Another child support period commenced on 1 January 2020. Mr Letlow had still not lodged his 2017-18 tax return, notwithstanding his legal obligation to do so. The administrative assessment from 1 January 2020 was based on a 2018-19 provisional adjusted taxable income for Mr Letlow of $51,151.

5. Another child support period commenced on 1 April 2021. Mr Letlow had still not lodged his 2017-18 tax return. The administrative assessment from 1 April 2021 was based on a 2019‑20 provisional adjusted taxable income for Mr Letlow of $52,638.

6. Another child support period was due to commence on 1 September 2021 and if matters had proceeded as they had in the past, the administrative assessment from 1 September 2021 would have been based on a 2020-21 provisional adjusted taxable income for Mr Letlow of $52,638.

7. On 11 August 2021 the ATO informed the CSA that it had assessed Mr Letlow’s 2017-18 adjusted taxable income to be $222,593. The CSA decided to reassess the rate of child support payable during the period from 1 October 2018 to 31 December 2019 on the basis of that adjusted taxable income: section 58A of the Assessment Act. Neither parent objected to that decision.

1. On 11 August 2021 the CSA also made the following three decisions:

   ·    A decision to apply a 2018-19 provisional adjusted taxable income for Mr Letlow of $228,826.00 during the child support period from 1 January 2020 to 31 March 2021.

   ·    A decision to apply a 2019-20 provisional adjusted taxable income for Mr Letlow of $234,613.02 during the child support period from 1 April 2021 to 31 August 2021.

   ·    A decision to apply a 2020-21 provisional adjusted taxable income for Mr Letlow of $241.290.81 during the child support period from 1 September 2021 to 7 September 2021.

2. Mr Letlow was notified of those decisions via a letter dated 11 August 2021. The letter is presumed to have been posted on the fifth business day after it was produced, namely 18 August 2021: section 163 of the Evidence Act 1995. Mr Letlow is presumed to have received the letter on the seventh business day after it was posted, namely 27 August 2021: section 160 of the Evidence Act 1995. The letter also informed him that he could object to those decisions and if he wished to do so, “you can object in writing within 28 days from the date you receive this letter.” That information reflected the requirements of section 81 of the Child Support (Registration and Collection) Act 1988 (“the Registration Act”). To object within time, Mr Letlow needed to object by 24 September 2021.

3. The child support case ended on [date] September 2021; [Child 1] turned 18 the following day.

4. On 14 October 2021, Mr Letlow objected to the decisions made on 11 August 2021 to use the provisional incomes listed above. He also applied for extensions of time in which to object pursuant to section 82 of the Registration Act. The CSA decided to refuse his extension of time applications. He applied to the Tribunal for further review. I heard the matters on 14 March 2022. Mr Letlow gave sworn evidence by conference phone. He was represented by a friend, [Mr A].

5. The principles to be applied when deciding an extension of time application were summarised in Phillips v Australian Girls’ Choir and Another [2001] FMCA 109:

   1.There is no onus of proof upon an applicant for extension of time though an application has to be made. Special circumstances need not be shown, but the court will not grant the application unless positively satisfied it is proper to do so. The "prescribed period" of 28 days is not to be ignored …

   2.It is a prima facie rule that the proceedings commenced outside the prescribed period will not be entertained … It is not a pre-condition for success in an application for extension of time that an acceptable explanation for delay must be given. It is to be expected that such an explanation will normally be given as a relevant matter to be considered, even though there is no rule that such an explanation is an essential pre-condition …

   3.…It is relevant to consider whether the applicant has rested on his rights and whether the respondent was entitled to regard the claim as being finalised. …

   4.Any prejudice to the respondent … is a material factor [which goes] against the grant of an extension.

   5.The mere absence of prejudice is not enough to justify the grant of an extension. …

   6.The merits of the substantial application are properly to be taken into account in considering whether an extension of time should be granted. …

   7.Considerations of fairness as between the applicant and other persons otherwise in a like position are relevant to the manner of exercise of the court's discretion …

6. The CSA’s assessments of the merits of his three objections were substantially the same:

   Merit in the objection

   [Mr Letlow] has objected to our decision made on 11 August 2021 to replace a provisional income [of a particular amount for a particular financial year] with a new provisional income of [a particular amount that was calculated from Mr Letlow’s 2017-18 adjusted taxable income of $222,593].

   [Mr Letlow] has objected on the grounds that My son [Child 1] left school 8.11.19 and directly into a [specified] apprenticeship and has being employed ever since.

   There is no correlation between [Child 1]’s work status and [Mr Letlow]’s income.

   We do not consider there is merit in the objection.

7. Mr Letlow’s very brief handwritten reasons for objecting were effectively two sentences. He referred to [Child 1]’s work status and he stated: “Also as per attached letter from my accountant.” The attached letter dated 27 September 2021 was from [Ms B], chartered accountant of [Firm 1], and it included the following:

   We want to clarify some information in [Mr Letlow’s] assessed income for [2017-18]. We noted that his provisional income for the following years was based on an income of $222,593, however, this amount included a once off payment of $198,166 being a lumpsum payment from his superannuation fund. The lumpsum payment was a partial withdrawal due to health and financial hardship.

   The provisional income for the following years should not include the once off payment. [Mr Letlow’s] assessable income for the tax year ended 30 June 2019 was $35,686 and can be confirmed with tax lodgements made after the date of your letter.

8. The CSA’s records confirm that the ATO has assessed Mr Letlow’s 2018-19 adjusted taxable income to be $35,686.

9. When the CSA was informed that Mr Letlow’s 2017-18 adjusted taxable income was $222,593, it had a discretion to amend his 2018-19, 2019-20 and 2020-21 provisional adjusted taxable incomes accordingly: paragraph 58(4)(c) of the Assessment Act. However, there was no requirement that it do so. To properly exercise the discretion, a decision-maker (and, on objection, an objections officer) would need to consider Mr Letlow’s particular circumstances. However, the hearing papers provided by the CSA suggest that the decisions to vary Mr Letlow’s provisional adjusted taxable incomes on the basis of his 2017‑18 adjusted taxable income of $222,593 were the result of an automated process. When Mr Letlow belatedly objected to those decisions and sought to have the CSA consider his particular circumstances, it ignored the information provided by his accountant which was relevant to the original exercise of the discretion contained in subsection 58(4), and was also relevant to the exercise of the discretion to refuse or grant his applications for extensions of time in which to object. On a preliminary assessment of the available evidence, there appears to be merit in Mr Letlow’s objections.

10. For the sake of completeness, I note that Mr Letlow stated during the hearing that he is a self‑employed [Occupation 1]. He explained that he had been diagnosed with cancer around 2017-18 and had undergone two operations in respect of his illness. He explained that he had also required a pace-maker, and that has been fitted. He is about to turn 62. He explained that with his failing health and the physical nature of his work, his income had decreased, hence the withdrawal of funds from his superannuation account. He was not sure whether he had lodged his 2019-20 tax return. He provided a very rough estimate of his expected 2019-20 and 2020‑21 taxable incomes: maybe around $40,000 each financial year.

11. The CSA concluded that “[a]llowing the objection to proceed will prejudice [Ms Letlow].” However, it is not clear what that prejudice might be. Immediately prior to the CSA’s decisions dated 11 August 2021, Mr Letlow owed child support arrears of $6,651. When the child support case ended on [date] September 2021 he owed child support arrears of $53,087. A large portion of those arrears is referrable to the decision to replace his 2017-18 provisional adjusted taxable income of $22,932 with his 2017-18 adjusted taxable income of $228,826, and that decision is not in dispute. If it transpired that the preferable decisions in relation to the matters that are in dispute were to allow Mr Letlow’s objections, he would not be placed in credit and Ms Letlow would not have to repay an overpayment of child support. The evidence does not support the conclusion that Ms Letlow would be prejudiced if Mr Letlow’s extension of time applications were granted.

12. The CSA concluded that “[g]ranting [Mr Letlow]’s extension of time request for an objection that was lodged 65 days after the original decision was made, without a valid reason for the delay, would raise a question of fairness to other persons in a similar position.” However, the calculation of 65 days includes the CSA’s presumed timeframe for despatching its own correspondence and Australia Post’s presumed timeframe for delivering that correspondence. The more relevant period is Mr Letlow’s delay in objecting. His objections were out of time by 20 days. There was delay, but it was a relatively minor delay.

13. When Mr Letlow lodged his applications for extensions of time in which to object, the preferable course would have been to grant his applications, and that remains the case on review.

DECISION

The decisions under review are set aside and, in substitution, Mr Letlow’s applications for extensions of time in which to object to decisions made on 11 August 2021 to apply a 2018-19 provisional adjusted taxable income of $228,826.00, a 2019-20 provisional adjusted taxable income of $234,613.02 and a 2020-21 provisional adjusted taxable income of $241,290.81 are granted.