Marsden and Marsden (Child support)

[2020] AATA 897

Marsden and Marsden (Child support) [2020] AATA 897 (8 January 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/SC017431

APPLICANT:  Mr Marsden

OTHER PARTIES:  Child Support Registrar

Mrs Marsden

TRIBUNAL:Member M Baulch

DECISION DATE:  8 January 2020

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – whether the adjusted taxable income for the last relevant year could be applied from an earlier date – no provision to backdate – decision under review affirmed

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

BACKGROUND

1. This application for review is about the amount of Mr Marsden’s adjusted taxable income used in the administrative assessment of child support from 1 July 2019.

2. Mr Marsden and Mrs Marsden are the parents of one child who is still under 18 years of age.  Since [February] 2006, Mr Marsden has been assessed as liable by the Department of Human Services – Child Support (the Department) to pay child support to Mrs Marsden, with the Department collecting the liability from Mr Marsden on Mrs Marsden’s behalf.

3. [In] July 2019, the Department made an assessment of child support from 1 August 2019 based upon Mr Marsden’s adjusted taxable income of $112,535 (the decision under review).

4. Mr Marsden objected to that decision, seeking to have his adjusted taxable income of $112,535 applied to the assessment from an earlier date.  [In] September 2019, that objection was disallowed and Mr Marsden has now applied to this tribunal seeking an independent review of the Department’s decision.

5. A hearing into the application for review was held by the tribunal on 8 January 2020.  Mr Marsden and Mrs Marsden both participated in the hearing by conference telephone and both gave evidence under affirmation during the hearing.  A representative of the Child Support Registrar (the Registrar) did not participate in the hearing. 

6. The tribunal had before it relevant documents provided to it by the Department pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, which were labelled folios 1 to 71, copies of which Mr Marsden and Mrs Marsden both confirmed they had received prior to the tribunal hearing.

ISSUES

1. The statutory provisions relevant to this review application are found in the child support law, in particular the Child Support (Assessment) Act 1989 (the Act).

2. The issue which arises in this case is whether or not Mr Marsden’s adjusted taxable income of $112,535 should be applied to the child support assessment from 1 August 2019, rather than an earlier date.

CONSIDERATION

1. Part 5 of the Act provides for an administrative assessment of the child support payable by one separated parent to the other.  It uses a statutory formula which contains variables such as the parents’ adjusted taxable incomes, the ages and number of children and their percentages of care.

2. Section 43 of the Act defines a parent’s adjusted taxable income to be the sum of the following:

   ·      The parent’s taxable income for the last relevant year of income in relation to the child support period;

   ·      The parent’s reportable fringe benefits total for that year of income;

   ·      The parent’s target foreign income for that year of income;

   ·      The parent’s total net investment loss (within the meaning of the Income Tax Assessment Act 1997) for that year of income;

   ·      The total of the tax free pensions or benefits received by that parent in that year of income; and

·      The parent’s reportable superannuation contributions (within the meaning of the Income Tax Assessment Act 1997) for that year of income.

Subsection 5(1) defines the last relevant year of income, in relation to a child support period, to mean the income of the last year of income (or tax year) that ended before the start of the period.

1. The practical effect of these provisions is that, for a child support period, a parent’s adjusted taxable income for the most recently completed tax year for which income information is available will ordinarily be used to calculate the ongoing liability.  Put another way, the legislation requires past income to be used to calculate present and future child support liability.

2. In this case, Mr Marsden’s child support liability for a child support period commencing on 1 September 2018 was initially determined having regard to his last year of relevant income, being his 2017-18 taxable income of $127,243.  Later, an estimate election made by Mr Marsden pursuant to section 60 of the Act was accepted, initially an estimated adjusted taxable income of $106,926, subsequently reconciled to be $114,519.  Estimate elections apply for an income year (or tax year), thus that estimate applied until and including 30 June 2019.

3. On 1 July 2019 Mr Marsden’s child support liability reverted to the assessment based upon his last year of relevant income, being his 2017-18 adjusted taxable income of $127,243.  Although Mr Marsden had the option of making another estimate election on or before 1 July 2019, no such election was made.

4. The assessment based upon an adjusted taxable income of $127,243 continues to apply until the child support period that commenced on 1 September 2018 ends.  Section 7A of the Act provides that a child support period ends on the earliest of the following:

   ·      The time 15 months after the period started; or

   ·      The end of the calendar month during which the Registrar makes an assessment of the annual rate of child support as required by section 34A of the Act.

5. Section 34A of the Act provides that the Registrar must make a new child support assessment when a new tax figure is available for a parent, using that new tax figure.  Subsection 34A(2) of the Act states that the Registrar must make the new assessment as soon as practicable after the tax assessment is made. The new assessment starts on the first day of the next calendar month after the calendar month in which the Registrar makes the assessment.

6. In this matter, the Registrar was notified of a new tax figure by the Australian Taxation Office for Mr Marsden, being his 2018-19 taxable income of $112,535, [in] July 2019. The Registrar then made a new assessment using that new tax figure starting from 1 August 2019.

7. Therefore, the existing child support period ended on 31 July 2019 and a new child support period commenced on 1 August 2019. The assessment of Mr Marsden’s liability for this period is based upon his adjusted taxable income of $112,535.

8. Mr Marsden submitted at hearing that the assessment based upon his adjusted taxable income of $112,535 should commence on 1 July 2019.  He submitted that doing so would be sensible and fair.  He stated that he was not aware that his adjusted taxable income would revert to $127,243 from 1 July 2019 or that he had the option of making an estimate on or before that date. 

9. Unfortunately, the law provides no discretion.  The earlier child support period applies until a new child support period commences.  The new child support period cannot commence any earlier than the first day of the next calendar month after the calendar month in which the Registrar makes the assessment, the making of which is prescribed by when the Australian Taxation Office makes its assessment of Mr Marsden’s taxable income.

10. I therefore found that the earliest date from which Mr Marsden’s adjusted taxable income of $112,535 can be applied to the child support assessment is 1 August 2019 and, for these reasons, decided to affirm the decision under review.

DECISION

The decision under review is affirmed.