Michelmore and Adkins (Child support)

[2024] AATA 1900

Michelmore and Adkins (Child support) [2024] AATA 1900 (11 April 2024)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2024/SC027278

APPLICANT:  Mr Michelmore

OTHER PARTIES:  Child Support Registrar

Ms Adkins

TRIBUNAL:Member M King

DECISION DATE:  11 April 2024

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that the estimate of income made by Ms Adkins is to be refused.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income – employer’s final payments received after estimate – 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

BACKGROUND

1. Mr Michelmore and Ms Adkins are the parents of [Child 1] and [Child 2], both born in 2015.

2. The administrative assessment of child support for the period from 1 November 2023 was based upon an adjusted taxable income of $152,521 for Ms Adkins (being her 2022/23 adjusted taxable income).

3. On 6 November 2023, Services Australia – Child Support (Child Support) accepted an annualised estimate of income from Ms Adkins of $0 for the period 6 November 2023 to 30 June 2024. That election was made by Ms Adkins on the basis that her employment had ceased. Ms Adkins was recorded as having a year-to-date adjusted taxable income of $65,561 for the period 1 July 2023 to 5 November 2023.

4. Mr Michelmore objected to that decision and, on 2 January 2024, an objections officer disallowed the objection.

5. On 3 January 2024, Mr Michelmore applied for review by the Tribunal.

6. The application was heard on 22 March 2024. Mr Michelmore and Ms Adkins attended the hearing by conference telephone and gave sworn evidence. The Tribunal deferred making a decision to obtain additional evidence from Child Support.

CONSIDERATION

1. The Tribunal has considered the material provided by Child Support (Exhibit 1, pages 1 to 125), the sworn evidence given by Mr Michelmore and Ms Adkins at the hearing, a copy of a call recording provided by Child Support after the hearing and a copy of a payslip provided by Ms Adkins after the hearing.

2. The relevant legislative provisions are contained in the Child Support (Assessment) Act 1989 (“the Act”). Section 60 of the Act states:

   A parent may, before a year of income starts or during a year of income, elect that the parent’s adjusted taxable income for the year of income is to be the amount that applies under subsection (2) or (3)…

3. A year of income is defined as a taxation year. Relevantly, subsections (3) and (4) provide that, if the election is made after the year of income has started, the person has to estimate their adjusted taxable income from the date of the election until the end of the year of income. That amount is then annualised and used by Child Support in the administrative assessment. The person is also required to estimate their adjusted taxable income for the period from the start of the year of income until the day before the election was lodged.

4. Therefore, to make such an election, a person has to advise Child Support of what their income is likely to be from the date they make the election until the end of the financial year and also advise Child Support of their income from the start of the financial year to the date they make the election.

5. A parent may also only make an election if the annualised estimated income is not more than 85% of the parent’s adjusted taxable income for the last relevant year of income for the child support period.

6. Subsection 60(5) of the Act states that the start date for the election must be the day on which the parent makes the election or a later date which is the start of a child support period. That is, the election cannot take effect from a date earlier than the date on which the election was made.

7. On 6 November 2023, Ms Adkins made such an election. The Tribunal has listened to a copy of the call recording of 6 November 2023 wherein Ms Adkins made her estimate of income.

8. In that recording, Ms Adkins advised she had ceased employment and had no current income. She made a $0 estimate of income from 6 November 2023. She advised her year-to-date adjusted taxable income, based on her last payslip, was $67,561 (which Child Support seems to have misheard as $65,561). She said that amount included her final payment from her employer.

9. Ms Adkins’s adjusted taxable income for 2022/23 (the last relevant year of income) was $152,521 which was the adjusted taxable income being used in the administrative assessment. The Tribunal therefore finds that Ms Adkins’s estimate of income met the requirements of section 60 of the Act.

10. Subsection 63AA(2) of the Act provides that the Child Support may refuse to accept an estimate of income if satisfied that the estimated income until the end of the year of income is likely to be less than the person’s actual income or if the estimated income for the period from the start of the year of income until the election was made is likely to be more than the person’s actual income for that period.

11. At page 94 of Exhibit 1 is a copy of a payslip from Ms Adkins’s employer for the period ending 30 November 2023. The payslip records a year-to-date gross taxable income of $67,561.61. That is the income Ms Adkins advised to Child Support on 6 November 2023.

12. After the hearing, Ms Adkins provided an unredacted copy of the payslip. The payslip records that the payment was made on 15 November 2023. The payment included a severance payment of $25,711.54 and payment of Ms Adkins’s remaining annual leave entitlements.

13. The Tribunal is satisfied that the payment recorded in that payslip is the last payment Ms Adkins received from her employer. Her income after that time was likely to be $0.

14. However, the issue is that the estimate of income lodged by Ms Adkins was for $0 income from 6 November 2023. In fact, she received a payment of $36,598.61 gross ($33,794.61 net) on 15 November 2023. At the time she made the estimate of income with Child Support, Ms Adkins was aware she was to receive that payment from her employer.

15. Therefore, her likely adjusted taxable income for the estimate period (6 November 2023 to 30 June 2024) would have been at least $36,598. The year-to-date income of $65,561 accepted by Child Support (for the period 1 July 2023 to 5 November 2023) was also more than her actual income for that period, which was $30,963 ($67,561 less $36,598).

16. Consequently, the Tribunal finds that the estimate of income lodged by Ms Adkins on 6 November 2023 should be refused pursuant to subsection 63AA(2) of the Act.

17. In making that decision, the Tribunal does not infer that Ms Adkins has done anything untoward. She would have been entitled to make the estimate of income she did after she received the payment from her employer on 15 November 2023. However, she made the estimate of income on 6 November 2023. In considering this matter, the Tribunal cannot change the date the estimate of income was made by Ms Adkins.

18. The effect of this decision will be that the income being used in the assessment for Ms Adkins will return to her 2022/23 adjusted taxable income of $152,521.

19. If Ms Adkins’s current adjusted taxable income is still significantly less than that income, she can make a further estimate of income with Child Support. Such an estimate cannot, however, be backdated.

20. Ms Adkins’s income can also be considered as part of a change of assessment application. The Tribunal notes that Ms Adkins and Mr Michelmore are currently parties to a change of assessment review application which is being considered by this Tribunal, differently constituted. Ms Adkins’s income will be considered in that review.   

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that the estimate of income made by Ms Adkins is to be refused.