Manley and Lazenbury (Child support)

[2019] AATA 429

Manley and Lazenbury (Child support) [2019] AATA 429 (7 February 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/AC015635

APPLICANT:  Mrs Manley

OTHER PARTIES:  Child Support Registrar

Mr Lazenbury

TRIBUNAL:Member K Buxton

DECISION DATE:  7 February 2019

CATCHWORDS

CHILD SUPPORT – dismissal of application for review - particulars of the administrative assessment – estimate reconciliation - no reasonable prospect of success - application for review dismissed

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

DISMISSAL OF APPLICATION FOR REVIEW:

1. In this matter, Mrs Manley seeks review of a decision of an objections officer of the Child Support Agency (CSA), dated 24 November 2018, in which her objection to the decision of the CSA to reconcile an estimate of income against her adjusted taxable income for the period 7 May 2018 to 30 June 2018 was disallowed. I convened a directions hearing on 31 January 2019 and discussed the application with Mrs Manley and Mr Lazenbury. I also provided the parties with a further week to provide any additional submissions in relation to the application and, in particular, as to why it ought not be dismissed on the basis that the application had no reasonable prospects of success.

2. The information provided by the CSA indicated that, when Mrs Manley lodged her income estimate on 7 May 2018, she had included her net rather than her gross income in her year-to-date estimate of income. The difference between her net and gross income was about $6,528. Mrs Manley confirmed during the hearing that her year-to-date income had been underestimated. She stated, and the tribunal accepts, that the understating of her income, and use of net rather than gross figures, was not intended to mislead. Nonetheless, not all of the income she had then earned was included in the year-to-date income information provided to the CSA on that date.

3. The relevant provisions are contained in Part 5, Divisions 7 and 7A of the Child Support (Assessment) Act 1989 (“the Act”). Section 60 of the Act provides for a parent to estimate income for a year of income, or for part of a year of income, by informing the CSA of the election to make such an estimate. Section 61 of the Act then allows that estimate to be used in the calculation of the annual rate of child support. Under section 64 of the Act a reconciliation can be made by the CSA if the parent’s actual adjusted taxable income for the year of income is more than the estimated amount. An amended assessment is then issued for the period of the income estimate to reflect actual income earned.

4. The CSA reconciled Mrs Manley’s 2017/18 adjusted taxable income of $32,782 against and her estimated income of $0 for the period 7 May 2018 to 30 June 2018, and her declared year-to-date income of $26,254 prior to 7 May 2018, and decided to annualise the shortfall of $6,528 and apply it to the period for which she had lodged the income estimate of $0, being from 7 May 2018 to 30 June 2018. This is the approach required to be adopted by the CSA under sections 60 to 64 of the Act.

5. Mrs Manley provided further written submissions to the tribunal after the hearing. The tribunal has considered those written submissions and, in particular, the following passage:

   “Under section 64(2) of the Act, the CSA has correctly noted that my actual adjusted taxable income for the year is higher than the amount that I advised. However, the CSA has applied the difference to the wrong period.

   When I telephoned the CSA on 8 May 2018, I clearly stated that I became unemployed on 31 March 2018 and was (and still am) unemployed and that I do not receive unemployment benefits due to my husband’s income. I clearly advised that the earnings that I was advising were for the period 1 July 2017 to 31 March 2018. I also advise that during this conversation, I do not recall the CSA officer clarifying that the income amount I was advising was my taxable and not taxed, income. As I read my income details to the SCA officer over the ‘phone from my final payslip that contained all of the required information, I request that the AAT retrieve the recording of this conversation.

   After I lodged my 2017-18 Income Tax Return, the CSA determined that I had a $6,528 “income discrepancy”, incorrectly concluded that I must have earnt the extra income after 31 March 2018 and increased the amount of Child Support that I was required to pay. - 2 -

   However, section 64(4), of the Act says:

   (4) For the purposes of subsection (3), the amount is worked out by:

   (a) dividing the amount worked out under paragraph (3)(b) by the number of days in the remaining period to which the income election related; and

   (b) multiplying the quotient by 365.

   The CSA has assessed the “remaining period” as being from 31 March 2018 to 30 June 2018. However, the earnings that I advised specifically related to the period 1 July 2017 to 31 March 2018. This is supported by the attached (Appendix A) ATO PAYG Payment Summary that clearly states that my earnings were for the period 1 July 2017 to 31 March 2018. Furthermore, it also clearly shows that I ceased employment on 31 March 2018.

   Despite this, the CSA incorrectly assessed my income discrepancy as being due to earnings after 31 March 2018 and determined that I was liable for additional Child Support amounts of $404.97 (that has already been taken via my 2017/18 Income Tax Refund) and a further $194.71 that is payable directly to Mr Lazenbury.

   I have been unfairly disadvantaged by this decision.”

6. The tribunal does not accept the correctness of this submission as it is at odds with the requirements of the Act. The CSA has not incorrectly assessed the “remaining period” as between 31 March 2018 and 30 June 2018 for the purpose of the income reconciliation, nor did the CSA incorrectly conclude that Mrs Manley “must have earnt the extra income after 31 March 2018”. Rather, the CSA, upon learning that the year-to-date income information provided by Mrs Manley at the time the estimate was lodged was inaccurate and understated, undertook a reconciliation process under the Act that included adding the extent of the understated income to the period for which Mrs Manley lodged an estimate that she would be earning nil income, being from 7 May 2018 to 30 June 2018. The reconciliation process required exactly that, even though the understated income was earned earlier in the year, because the period 7 May 2018 to 30 June 2018 is the “period” referred to in subsection 64(4)(a) of the Act “to which the income election related”. Any perceived disadvantage to Mrs Manley flowed from her understated year-to-date income, rather than the process undertaken by the CSA in accordance with the legislation.

7. It follows that the tribunal would be required to make the same decision on review as that made by the objections officer. As Mrs Manley does not have any real prospect of obtaining a more favourable decision on review it is therefore appropriate to dismiss his application under subsection 42B(1) of the Administrative Appeals Tribunal Act 1975 on the basis of no reasonable prospect of success. I determine accordingly.

8. For completeness, the tribunal notes that Mrs Manley also disagreed with a number of other decisions made by the CSA in relation to the child support case. However, the tribunal can consider only the substance of the objection decision in this context. Mrs Manley may pursue her objection and review rights in relation to any other decisions of the CSA with which she disagrees.