Levin and Luxton (Child support)

[2018] AATA 534

Levin and Luxton (Child support) [2018] AATA 534 (30 January 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2017/MC012580

APPLICANT:  Mrs Levin

OTHER PARTIES:  Child Support Registrar

Mr Luxton

TRIBUNAL:Member A Grant

DECISION DATE:  30 January 2018

DECISION:

The decision under review is affirmed.

CATCHWORDS
Child Support – Income estimate  – Date of election – 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. Ms Levin and Mr Luxton are the separated parents of [Child 1] and a child support case is registered in which Ms Levin is assessed to pay child support to Mr Luxton.  This review is about an estimate of income made by Ms Levin which has been applied to the child support assessment from 12 July 2017.  On 14 September 2017 an objections officer of the Department of Human Services (Child Support) (the Department) decided that the decision made on 12 July 2017 to accept and apply Ms Levin’ estimate of $15,600 from that date and not from 1 July 2017 was correct.  Ms Levin requested review of the decision by the Social Services and Child Support Division of the Administrative Appeals Tribunal (the tribunal) on 26 September 2017.

2. The hearing proceeded on 30 January 2018.  Ms Levin attended the hearing and gave evidence by conference telephone.  Mr Luxton had advised the tribunal before the hearing that he was unable to participate in the hearing and had nothing to contribute, hence the tribunal proceeded to hear and determine the matter without his participation.  The Department had provided the relevant papers from its file which have been taken into consideration by the tribunal in this review.

ISSUES

1. The assessment of child support uses various factors to calculate the appropriate rate payable, including the care being provided by the parents, the income of the parents, and the age of the children.  The income used is usually the adjusted taxable income from the last relevant year of income. 

2. According to section 60 of the Child Support (Assessment) Act 1989 (the Act), if a person believes that their actual income is significantly different (usually lower) to the income used in the assessment, then they can make an election to use an estimate of their income instead of the adjusted taxable income which would otherwise apply.  If accepted, then the estimate can be used in the child support calculator instead of the adjusted taxable income from the last relevant year of income.  An election can be made at any point before and during an income year.

3. Estimates are aligned to taxation years.  Hence an estimate will usually operate until the end of the current financial year of income.   In some cases, an estimate may end earlier, for example where the parent revokes the estimate (because they return to work, for example) or if it is revoked or suspended by a departure determination which substitutes another income amount for the same period covered by an estimate election.  

4. Subsection 60(6) of the Act describes the start day for an estimate election:

   (5)  The start day for the election must be:

   (a)  the day on which the parent makes the election; or

   (b)  the first day of a child support period, so long as that day is not before the day referred to in paragraph (a).

5. The issue which arises for determination in this review is whether there is any basis on which Ms Levin’ estimate election for the 2017/2018 financial year of $15,600 can be applied to the assessment from 1 July 2017.

CONSIDERATION

1. The file reflects that Ms Levin lodged an election on 6 December 2016 which was initially accepted and applied to the assessment from that date, reflecting a reduced estimate income of $16,045 used to assess child support.  However, on 31 January 2017, Mr Luxton lodged an application for a change to the child support assessment, seeking a higher level of support than was being assessed based on that estimate.  On 8 May 2017, an officer of the department made a decision that Ms Levin’ income would be set as $103,293 for the period 22 November 2016 to 31 May 2017 (the departure determination.)

2. The file reflects, as would be expected, that the decision to set Ms Levin’ income for that period then superseded the estimate election for the period that the departure determination covered and during which Ms Levin’ income was set in the determination. Once the departure determination affecting Ms Levin’ income ended on 31 May 2017, her former estimate was again ‘revived’ and applied for the remainder of the financial year.  The estimate automatically ended on 30 June 2017, and a letter had been sent to Ms Levin on 1 May 2017 advising her that this would happen and that her 2015/2016 income of $103,293 would apply to the assessment from 1 July 2017.  That letter also stated that “If you expect to earn less than $87,799, you may be able to lodge an estimate for the 2018 financial year.  You can lodge an estimate on CSA online or you can contact us to discuss your options.”

3. The departmental file reflects that Ms Levin had contact with departmental officers as follows:

   ·14 March 2017: Ms Levin informed the Department that she was not working and doesn’t have any income, is supported by her husband and is looking for a new job.  There was a discussion about child support enforcement action.

   ·1 May 2017: Ms Levin informed that she had been unsuccessful at [a particular job application] and is still applying for positions and also provided additional information about the redundancy payment from [her former employer].  She was advised by the officer that this would be taken into account as a financial resource.  

   ·8 May 2017: decision made on change of assessment application and letter sent about that decision.  Also sent at that time were a number of assessment notices reflecting changes to the assessment (in accordance with the departure determination as well as other factors) over the period from 22 November 2016 to 31 January 2018.  Those notices reflect that from 1 July 2017 to 31 January 2018, an annual rate of $15,418 is payable by Ms Levin to Mr Luxton based, amongst other things, on Ms Levin’ 2016 taxable income of $103,293.

   ·18 May 2017: a discussion about debt negotiation and agreement for Ms Levin to pay increased maintenance pursuant to the departure determination outcome.

   ·12 July 2017:  Ms Levin discusses an estimate of income for the current financial year and an annualised income of $15,600 estimate accepted.  An application for the fixed annual rate not to apply was also discussed in this contact. A letter was sent to Ms Levin on that day advising her that the estimate of income would be applied to the assessment from 12 July 2017.

4. During the hearing, Ms Levin gave evidence that she believed that she had told the Department that she wanted her income to continue at the estimated level on a number of occasions over the period from November 2016 to May 2017.  She had discussed her lower income on multiple occasions with departmental officers and was under the impression that her estimate would continue into the next financial year because she had told them that she was still not working and her only income source was her rental income.  As far as she understood it, the departure determination would only apply for the period it covered, and the estimate would then operate again and continue.

5. The tribunal considered that the proximity of the ‘end of estimate’ letter (1 May 2017) with the decision statement on the change of assessment (8 May 2017) has no doubt contributed to some confusion on Ms Levin’ part (and quite reasonably so) about the actual effect of the departure determination on her previous estimate and the need to lodge a new estimate for the following income year. 

6. Ms Levin confirmed that she received a redundancy package in November 2016.  The departure determination decision reflects that the redundancy covered her ‘usual’ salary until 31 May 2017.  Ms Levin confirmed that she has not worked since finishing with [her former employer]. 

7. The tribunal discussed with Ms Levin the conversations she had with the departmental officers over late 2016 and early 2017.  It was clear that they were discussions related to the change of assessment process after an application was lodged by Mr Luxton in January 2017, and the possible outcomes of that process being considered.  The tribunal accepts, as part of those discussions, that Ms Levin repeatedly discussed her lack of employment and her reduced income.  This is because such matters are highly relevant to a departure determination consideration. 

8. The tribunal has examined the records of discussions on the file as noted above and is satisfied that they were about her income and redundancy over the previous year and her ongoing financial situation, but were not records which reflect Ms Levin expressing an intention to or estimating her income for the financial year from 1 July 2017 onwards. The tribunal finds that there is no record capable of being interpreted as a formal estimate election for the financial year commencing 1 July 2017 on the file in the period prior to 1 July 2017.  The tribunal finds that Ms Levin has not made an estimate election covering the period from 1 July 2017 to 30 June 2018 prior to 30 June 2017.

9. Ms Levin does not suggest that she made an income election in the period 1 July 2017 to 11 July 2017.   She was overseas in the first week or so of July 2017. She contacted the Department on 12 July 2017, made an estimate of her income and it has since been accepted and applied to the assessment.

10. After considering Ms Levin’ evidence and the information on the departmental file, the tribunal finds that there was no income election made by Ms Levin relating to the financial year 1 July 2017 to 30 June 2018 before 12 July 2017.  This is so even though she may have misunderstood what was expected of her and what would occur from 1 July 2017. The tribunal considers that discussing her expected income over the coming period as part of the change of assessment process is not the same as and cannot be taken to be an estimate election.

11. The tribunal has found that Ms Levin first made an income election for the 2017/2018 financial year on 12 July 2017. There is no discretion for a decision maker to ‘backdate’ an income election under section 60 of the Act. According to subsection 60(6) of the Act, the election made by Ms Levin on 12 July 2017 can be applied (and has been correctly applied) from the date of her election. This means that the decision under review is correct and will be affirmed.

DECISION

The decision under review is affirmed.