Levick and Whitworth (Child support)

[2021] AATA 2735

Levick and Whitworth (Child support) [2021] AATA 2735 (11 May 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/BC020888

APPLICANT:  Miss Levick

OTHER PARTIES:  Child Support Registrar

Mr Whitworth

TRIBUNAL:Member P Jensen

DECISION DATE:  11 May 2021

DECISION:

The decision under review is set aside and, in substitution, Mr Whitworth’s application to have a portion of his 2019-20 adjusted taxable income excluded for child support purposes is refused.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – whether post separation costs should be excluded from the adjusted taxable income for the last relevant year – additional income was earned in the ordinary course after separation – an amount should not be excluded – decision 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 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

1. Miss Levick and Mr Whitworth are the parents of two children. In November 2018, the parents separated and a child support case was registered with what is commonly called the Child Support Agency or CSA. The Child Support (Assessment) Act 1989 (“the Act”) provides for an administrative assessment of child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes. This case concerns Mr Whitworth’s 2019-20 adjusted taxable income.

2. When the child support case was registered, the administrative assessment was based on Mr Whitworth’s 2017-18 adjusted taxable income of $208,984.

3. In August 2019 the CSA was advised that Mr Whitworth’s 2018-19 adjusted taxable income was $218,372. Ordinarily, the administrative assessment from 1 September 2019 would be based on that adjusted taxable income. However, Mr Whitworth applied to have a portion of that adjusted taxable income excluded for child support purposes. The CSA decided to grant the application and exclude $218,372 - $208,984 = $9,388, and from 1 September 2019, Mr Whitworth continued to be assessed on an adjusted taxable income of $208,984. The CSA’s reasons for making that decision do not appear in the hearing papers. Miss Levick did not object to that decision.

4. In July 2020 the CSA was advised that Mr Whitworth’s 2019-20 adjusted taxable income was $224,792. Ordinarily, the administrative assessment from 1 September 2020 would be based on that adjusted taxable income. However, Mr Whitworth applied to have a portion of that adjusted taxable income excluded for child support purposes. The CSA decided to grant the application and exclude $224,792 - $208,984 = $15,808, and from 1 September 2020, Mr Whitworth continued to be assessed on an adjusted taxable income of $208,984. Miss Levick promptly objected to that decision. An objections officer disallowed her objection. Miss Levick promptly applied to the Tribunal for further review.

5. The Tribunal Registry notified the parents by email on 8 April 2021 that the hearing would be conducted at 10:00 am on Tuesday, 11 May 2021, and that the Tribunal would phone them at that time. On Friday, 7 May 2021, Miss Levick contacted the Registry and stated that she would be unable to attend the hearing at the scheduled time. She was told that she could apply to have the hearing rescheduled, and that such applications must be in writing (e.g. email). She did not promptly make that application. The matter remained listed for hearing on 11 May 2021.

6. At approximately 11:30 pm on 10 May 2021 (and so, effectively, on the morning of the hearing), Miss Levick applied to have the hearing rescheduled. She stated that she had been unable to apply for an adjournment earlier, and she had been unable to take leave from work to attend the hearing. I contacted Mr Whitworth at the scheduled hearing time. I informed him of Miss Levick’s application. Mr Whitworth indicated his preference for proceeding with the hearing. I decided to refuse Miss Levick’s application for an adjournment. The hearing proceeded in her absence. Mr Whitworth gave sworn evidence by conference phone.

7. Mr Whitworth’s application was lodged pursuant to section 44 of the Act, which allows for a portion of a parent’s adjusted taxable income to be excluded for child support purposes if certain requirements are satisfied. It is sufficient to focus on paragraph 44(1)(d) of the Act, which relevantly requires that:

   in the last relevant year of income … the applicant earns, derives or receives income: 

   (i)in accordance with a pattern of earnings, derivation or receipt that is established after the applicant and the other parent first separate; and 

(ii)that is of a kind that it is reasonable to expect would not have been earned, derived or received in the ordinary course of events.

1. Mr Whitworth said he had been employed by [Company 1] for 10 years. He said that two aspects of his 2019-20 adjusted taxable income satisfied the requirements of paragraph 44(1)(d): the additional income he received by cashing in some annual leave, and the additional income he received via a promotion.

2. Mr Whitworth provided payslips for November 2019 and June 2020. At the hearing he confirmed that the payslip for November 2019 showed that he had cashed in one week’s leave during that month. He also confirmed that he had not cashed in any other leave during 2019-20. He obviously continued to accrue leave during 2019-20, and that is reflected in the leave entitlements that appear in his payslip for June 2020.

3. To satisfy paragraph 44(1)(d)(i), a pattern of earnings, derivation or receipt must be established. The one-off cashing in of a week’s leave does not establish a pattern. Paragraph 44(1)(d) is not satisfied in respect of that additional income.

4. In February 2020, Mr Whitworth was promoted to [Position 1]. His base salary increased, and a letter from his employer dated 7 February 2020 relevantly stated:

   Please note that as a result of his increase you will not participate in the annual salary review for 2020.

   Your level, roster and all other respects in regards to your conditions of employment will remain unchanged.

5. Mr Whitworth’s adjusted taxable incomes for the last five years have been as follows:

   2015-16          $160,615
   2016-17          $180,298
   2017-18          $208,984
   2018-19          $218,372

   2019-20          $224,792

6. Mr Whitworth said that he received a promotion during 2016-17, hence the higher 2016-17 adjusted taxable income. He said he was not eligible for a performance bonus during the financial year in which he was promoted, but he was eligible, and he did receive, a performance bonus during 2017-18, hence the higher 2017-18 adjusted taxable income. As noted earlier, he and Miss Levick separated in November 2018.

7. I informed Mr Whitworth that a question arose as to whether it was reasonable to expect that he would not have been promoted in the ordinary course of events. He explained that when he and Miss Levick separated, he could have withdrawn and become isolated, but he had expenses to pay, and so he had worked very hard, and his hard work had led to his promotion. In response to further questions, he agreed that hard work had also led to his promotion during 2016-17.

8. Mr Whitworth’s work history suggests that he is, and at all relevant times has been, a hard worker. His hard work led to a promotion in 2016-17 and a performance bonus in 2017-18. He received another promotion during 2019-20. Given Mr Whitworth’s work history, I am not persuaded that it was reasonable to expect that he would not have been promoted during 2019-20 (with a consequential increase in earnings) in the ordinary course of events. Subparagraph 44(1)(d)(ii) is not satisfied in respect of that additional income. 

9. In summary, paragraph 44(1)(d) was not satisfied in respect of any portion of Mr Whitworth’s 2019-20 adjusted taxable income. The correct decision in those circumstances was to refuse his application to have a portion of that income excluded for child support purposes.

DECISION

The decision under review is set aside and, in substitution, Mr Whitworth’s application to have a portion of his 2019-20 adjusted taxable income excluded for child support purposes is refused.