Lindsay McLeod and Child Support Registrar
[2013] AATA 565
[2013] AATA 565
Division GENERAL ADMINISTRATIVE DIVISION File Number
2013/2703
Re
Lindsay McLeod
APPLICANT
And
Child Support Registrar
RESPONDENT
DECISION
Tribunal Dr P McDermott RFD, Senior Member
Date 12 August 2013 Place Brisbane The Tribunal affirms the decision under review.
.......................[Sgd].................................................
Dr P McDermott RFD, Senior Member
CATCHWORDS
CHILD SUPPORT – Departure prohibition order – Child support debt – Not desirable to revoke order – Not appropriate for the Tribunal to “look behind” a child support assessment – No evidence of relevant ATO assessments – Decision under review affirmed
LEGISLATION
Child Support (Assessment) Act 1989 (Cth) s 43
Child Support (Registration and Collection) Act 1988 (Cth) ss 3, 72D, 72I, 72N, 116
CASES
Commissioner of Taxation (South Australia) v Executor Trustee & Agency Co of S.A. Ltd (1938) 63 CLR 108
Kenyon and Child Support Registrar [2012] AATA 714
Re O’Neill and Child Support Registrar [2010] AATA 545Whittaker v Child Support Registrar (2010) 264 ALR 473
SECONDARY MATERIAL
Parsons RW, Income Taxation in Australia (Law Book Co, 1985 fasc. ed. 2011)
REASONS FOR DECISION
Dr P McDermott RFD, Senior Member
INTRODUCTION
Mr Lindsay McLeod (“the applicant”) has a child support debt which arises from a registered maintenance liability for his three children. On 16 October 2012, a delegate of the Child Support Registrar (“Registrar”) made a Departure Prohibition Order (“DPO”) against the applicant. The DPO was made under s 72D of the Child Support (Registration and Collection) Act 1988 (Cth) (“the Act”). The DPO authorises officers of the Australian Federal Police and the Australian Customs and Border Protection Service to prevent the applicant from leaving Australia.
On 27 May 2013 the solicitor for the applicant wrote to the Child Support Agency to request that the DPO be revoked. The applicant provided an affidavit which was lodged in the Federal Magistrates Court in support of an application for leave for the Registrar to make a new determination of child support payable by the applicant. On 29 May 2013, a delegate of the Registrar made a decision not to revoke the DPO. The applicant now seeks review of that decision by this Tribunal.
BACKGROUND
The applicant has been assessed as having a child support liability of $13,714.87 on the basis that his taxable income for the income year of 2008/2009 was $172,512. The applicant states that the Australian Taxation Office (“ATO”) has subsequently issued an amended assessment for that year for $5,967. On 11 July 2013 the Federal Circuit Court of Australia made an order to grant leave to the Registrar to make a further assessment of child support payable by the applicant in the period 1 November 2009 to 30 September 2010. The court also made an order to stay the collection of child support arrears pending the decision of the Registrar.
The applicant has expertise in the manufacture of hovercraft which are marketed in overseas countries. He stated that from 2001 to 2005 he operated as a sole trader. He also stated that at one time the business was conducted through a trust although he could not name the trustee. He is the controller of, at least, four companies that manufacture hovercraft. The three children of the applicant now have an involvement in these companies. It is fair to say that the evidence that was given by the applicant was vague about the actual shareholdings of the children in each of these companies. The applicant stated that the actual turnover of the companies varies from year to year; in one year the turnover exceeded $1 million. The applicant stated that he worked a 90 hour week for the companies and relied on drawings from the companies. There is no evidence as to what drawings were made during the relevant period. The applicant stated that the various companies operate from a property which is owned by his second wife from whom he is now separated. That property will be sold to a trustee company in which he has a shareholding in order to save duty. That trustee company has not previously had an involvement in the hovercraft business.
ISSUES AND LEGISLATION
A DPO can be revoked under s 72I of the Act. Under s 72I(1) of the Act, the Registrar must revoke a DPO in the following circumstances:
… if:
(a) the person no longer has a child support liability; or
(b) the person has a child support liability, but arrangements satisfactory to the Registrar have been made for the liability to be wholly discharged; or
(c) the person has a child support liability, but the Registrar is satisfied that the liability is completely irrecoverable.
The applicant does not rely upon any of the circumstances that are mentioned in Paras (a), (b) or (c) in s 72I(1) of the Act. I am satisfied that none of those circumstances exist. Paragraph (a) can have no relevance as there is evidence, in the form of a certificate under s 116(2) of the Act, that the applicant has a child support liability.[1] Paragraph (b) cannot apply to this case as there is no evidence that arrangements satisfactory to the Registrar have been made for the discharge of the whole of the liability. Indeed, it is apparent that the applicant has continually informed the Child Support Agency that he has no intention to discharge the liability. In giving evidence the applicant confirmed that he informed the Child Support Agency that he would rather spend $20,000 in legal fees than pay the child support debt.[2] Paragraph (c) is not relevant as I cannot be satisfied that the liability is completely irrecoverable. There have been repayments when the applicant was receiving assistance from Centrelink. This year an instalment of $6,000 was made from one of the companies that are controlled by the applicant.[3]
[1] Exhibit A, T-Document 29, p. 154.
[2] Exhibit A, T-Document 19, p. 125.
[3] Exhibit A, T-Document 9, p. 56.
The applicant relies upon the exercise of a discretion under s 72I(3) of the Act. Under this subsection the Registrar:
may also, at the Registrar’s discretion, revoke or vary a departure prohibition order in respect of a person if the Registrar considers it desirable to do so.
The applicant has recognised that the Policy Guide provides guidance in interpreting this discretion, namely that it should be exercised in a way that supports the objects of the Act.[4] Which are:
(1) … to ensure:
(a) that children receive from their parents the financial support that the parents are liable to provide; and
(b) that periodic amounts payable by parents towards the maintenance of their children are paid on a regular and timely basis; and
(c) that Australia is in a position to give effect to its obligations under international agreements or arrangements relating to maintenance obligations arising from family relationship, parentage or marriage.
(2) It is the intention of the Parliament that this Act shall be construed and administered, to the greatest extent consistent with the attainment of its objects, to limit interferences with the privacy of persons.[5]
The exercise of the discretion in this case would not advance any of the objects in s 3(1) of the Act. Quite apart from this policy consideration there are no circumstances that would, in my view, make it desirable to revoke the DPO. After reviewing the evidence before me I do not consider that it would be desirable to revoke the DPO under s 72I(3) of the Act.
[4] Exhibit A, T-Document 4, p. 32.
[5] s 3 of the Act.
CONSIDERATIONS
The applicant has to travel overseas a number of times in the coming months for business purposes. The applicant has in the past been provided with departure authorisation certificates to enable him to travel overseas upon him giving a security deposit. The applicant has raised concerns about the workability of obtaining a departure authorisation certificate at short notice. The applicant contends that it is “imperative” that he be allowed to travel overseas without having to seek the approval of the Child Support Agency. However, the respondent contends that on three occasions a decision whether to grant a departure authorisation certificate has been made within three days of the application. The applicant points to the requirement of s 72N(2) of the Act which provides that the day specified in the certificate must be a day that is after the day on which the certificate is issued, but not more than 7 days after that day. I do not consider that this requirement would present any practical difficulties and that the Registrar would continue to provide a departure authorisation certificate to the applicant at short notice upon him providing adequate security.
The applicant submits that if the amended assessment for the income year 2008/2009 (which assessed the applicant’s income to be $5967) is applied by the Registrar then the applicant will have no outstanding child support liability. However, the scheme of the Act is that once an assessment is made it stands until any amendment by the Registrar. In the context of this application it is inappropriate for me to “look behind” any child support assessments which have been made, as was emphasised by Senior Member Bean (as she then was) in Re O’Neill and Child Support Registrar.[6] Until the Registrar makes a decision to amend the assessment that assessment stands. During the hearing I was advised that it may take the Registrar up to three months to make an assessment. This is understandable in view of the complex business structures that are in use. It would be inappropriate for me to anticipate the exercise of any discretion by the Registrar. There is no evidence before me as to what relevant ATO assessments have been made which would be considered by the Registrar. There is, for instance, no material before me as to whether there are any reportable fringe benefits relating to the relevant year.[7]
[6] [2010] AATA 545 at [18].
[7] Child Support (Assessment) Act 1989 (Cth) s 43.
10. The original income tax return of the applicant for the income year 2008/2009 is not in evidence; this return would have been signed upon lodgement as correct by the applicant. Even though the applicant would have signed this return he now contends that this return was incorrect because the companies had prior to this income year amended their accounting methods from a cash receipts to an accruals method of accounting. However, I asked the applicant how the change of tax accounting methods of the companies could have any relevance to his taxation position. I did not receive any submissions in relation to this issue. At the hearing I stated that normally the applicant would be assessed on a cash basis. In Carden’s case,[8] Dixon J observed in dicta that the cash basis of accounting is appropriate to assess the proceeds of “professional skill and personal work”.[9] The tax records of the applicant are not in evidence.
[8] Commissioner of Taxation (South Australia) v Executor Trustee & Agency Co of S.A. Ltd (1938) 63 CLR 108.
[9] R.W Parsons, Income Taxation in Australia (Law Book Co, 1985 fasc. ed. 2011) p. 615, [11.26].
11. The applicant maintains that over the years he has made expenditure on the children that should have been considered by the Child Support Agency. However, the records of the Child Support Agency disclose that the applicant has been credited with such expenditure within the relevant period covered by the court order.[10]
[10] Exhibit A, T-Document 30, p. 159.
12. I have considered s 72D(1) of the Act which enables the Registrar to make a DPO. The power to make a DPO is certainly “an extraordinary power”.[11] After reviewing the material before me I consider that the delegate of the Registrar was justified in making a DPO. This decision was taken to enforce payment of child support and was not lightly taken.
[11] Kenyon and Child Support Registrar [2012] AATA 714 at [12] per Hack DP.
13. Prior to the DPO being made, the Child Support Agency made a comprehensive submission for the consideration of the delegate which fully outlined the circumstances of the applicant.[12] This submission outlined how the applicant had not made any voluntary payments and had on a number of occasions informed the Child Support Agency that he had no intention to pay any child support. The submission also outlined that he had regularly travelled overseas for business purposes with 82 movements as of the date of the submission. At that time he had not lodged his income tax returns for the 2010/2011 and 2011/2012 income years.[13] The delegate also recognised that the applicant had made a claim concerning the income he derived in the 2008/2009 income year and had a number of years to resolve his claim.[14] The Registrar had no authority to amend the assessment which was more than 18 months old without having the leave of the court. There was certainly material upon which the delegate could be “satisfied that the person has persistently and without reasonable grounds failed to pay” his child support debts.[15]
[12] Exhibit A, T-Document 6.
[13] Exhibit A, T-Document 6. p. 49.
[14] Exhibit A, T-Document 7.
[15] s 72D(1)(c) of the Act
14. The Child Support Agency has acted reasonably in affording procedural fairness to the applicant before the DPO was made. The applicant was advised that unless he contacted the Child Support Agency by 3 October 2012 the Agency could recommend the making of a DPO.[16] The applicant declined the opportunity to make a submission that a DPO should not be made. The Act does not impose a requirement upon the Registrar to afford procedural fairness before making a DPO. The Federal Court of Australia has held that Pt VA of the Act establishes a regime which is inconsistent with the existence of a duty to afford procedural fairness.[17] However, the fact that procedural fairness was accorded to the applicant is evidence of the Child Support Agency acting reasonably in this matter.
[16] Exhibit A, T-Document 6, p. 44.
[17] Whittaker v Child Support Registrar (2010) 264 ALR 473 at 518 [249] per Lindgren J.
DECISION
15. I affirm the decision under review.
I certify that the preceding 15 (fifteen) paragraphs are a true copy of the reasons for the decision herein of Dr P McDermott RFD, Senior Member
.......................[Sgd]..........................................
Associate
Dated 12 August 2013
Date of hearing 17 July 2013 Counsel for the Applicant M. Black
Solicitor for the Applicant
For the Respondent
John P. Bussa
Christopher Bishop, Departmental Advocate
0