Newton and Holder (Child support)

[2023] AATA 3295

Newton and Holder (Child support) [2023] AATA 3295 (31 August 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/AC025954

APPLICANT:  Ms Newton

OTHER PARTIES:  Child Support Registrar

Mr Holder

TRIBUNAL:Member J Leonard

DECISION DATE:  31 August 2023

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income – whether the estimate was likely to be less than parent’s actual income – 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 review concerns the adjusted taxable income used for Mr Holder in a child support assessment from 26 September 2022.

2. Ms Newton and Mr Holder and are the separated parents of one child. Mr Holder is the parent liable to pay child support to Ms Newton. Immediately prior to 26 September 2022 Mr Holder’s child support liability was assessed as being $2,730 per annum on the basis of his 2021–22 adjusted taxable income of $43,122 and Ms Newton’s 2021–22 adjusted taxable income of $26,307.

3. On 26 September 2022, Mr Holder contacted Services Australia – Child Support (Child Support) to lodge an income estimate for the remaining 2022–23 financial year. Mr Holder estimated his income to be $24,507 (annualised).

4. On 26 September 2022, Child Support accepted Mr Holder’s estimate election for the period 26 September 2022 to 30 June 2023 and calculated that Mr Holder’s child support liability decreased to $459 per annum, being the “minimum annual rate” for the child.

5. Ms Newton objected to the decision on 19 January 2023 and applied for an extension of time to object. The application for an extension of time was accepted; however, on 11 April 2023 an objections officer disallowed the objection.  

6. On 17 April 2023 Ms Newton applied to the Social Services and Child Support Division of the Administrative Appeals Tribunal for an independent review of the objection decision. The application was heard on 31 August 2023. Mr Holder attended the hearing by MS Teams audio and gave evidence on affirmation. Ms Newton did not answer her phone at the appointed time.

7. Ms Newton was notified in writing of the date and time of the hearing on 24 July 2023. She was reminded of the hearing by SMS message on 28 August 2023 and 30 August 2023. The Tribunal is satisfied Ms Newton was given reasonable notice of the hearing and so proceeded to hear the matter in her absence as provided for by paragraph 40(1)(b) of the Administrative Appeals Tribunal Act 1975.

8. In addition to oral evidence, the Tribunal had regard to documents provided by Child Support (folios 1 to 142).

ISSUES

1. The issue in this matter is whether Mr Holder’s estimate of income on 26 September 2022 should have been accepted or refused.

CONSIDERATION

1. The statutory provisions relevant to this application are contained in the Child Support (Assessment) Act 1989 (the Act).

2. In general, a person’s child support liability is calculated by using an adjusted taxable income for each of the parents (section 43 of the Act), which is based on the person’s taxable income (plus supplementary amounts, if relevant) for the tax year that started before the child support period.

3. The Act makes provision, however, for a child support assessment to be based on an estimate of current income if there has been a decrease in income of at least 15%. Section 60 of the Act generally provides that where an income estimate is made part-way through a tax year, the applicant is required to provide information about their year-to-date adjusted taxable income and an estimate of likely adjusted taxable income for the remainder of the tax year, on and from the date of the income estimate election.

4. An estimate of income by its nature may be unlikely to be precise. In essence, what is required in this context is a forecast of likely income for the rest of the tax year, taking into account any allowable deductions. The estimate should take account of what is known, as well as what is reasonably in contemplation as likely. However, when reviewing the efficacy of an income estimate, it is not appropriate to have regard to changes in circumstances that could not reasonably have been anticipated when the estimate was given.

5. The effect of an income election is set out in section 61 of the Act. It is used in the assessment for a specified period unless refused under section 63AA of the Act.

6. Subsection 63AA(2) of the Act provides that Child Support may refuse to accept an income election if the income amount estimated is less than the amount that Child Support considers is likely for the remaining period, or the amount estimated for the year-to-date is more than the amount that Child Support considers is likely for that period.

Should the income election be accepted or refused?

1. There were no income orders in place when Mr Holder made his estimate of adjusted taxable income. His estimate of $24,507 was the first estimate election in the 2022–23 financial year and was less than 85% of his 2021–22 taxable income of $43,122. Mr Holder made a valid income estimate election in accordance with the provision contained in section 60 of the Act.

2. The Tribunal then considered whether the income estimate election should be refused. Subsection 63AA(2) enlivens the potential exercise of a discretion to refuse Mr Holder’s estimate of income in respect of the period 1 July 2022 to 25 September 2022 if it is more than is considered likely, or the estimate for the period 26 September 2022 to 30 June 2023 was likely to be too low. When a person makes an election, the estimate is to include the parent’s taxable income and other income component amounts such as the parent’s reportable superannuation contributions.

3. Mr Holder told the Tribunal that he was employed at [Employer] and worked [in a part of the premises]. Sometimes he [did Job task 1] and at other times he [did Job task 2]. He rang Child Support in September 2022 because he had reduced his hours of employment to 20 hours per week in order to qualify for Legal Aid so that he could defend charges laid against him by Ms Newton. In speaking to Child Support he stated that he anticipated his future income would be $470 per week gross. He advised he was also receiving jobseeker payment. 

4. Payroll details provided by his employer show that Mr Holder’s gross earnings varied in the period 1 July 2022 to 4 September 2022, and that he salary sacrificed $40 per week to his superannuation fund from 7 August 2022 to 4 September 2022. From 5 September 2022 he was working 20 hours per week and he salary sacrificed an amount of $130 per week.

5. The Tribunal has calculated that in the period 1 July 2022 to 25 September 2022 Mr Holder’s gross earnings from employment was $11,029.42. In addition, his reportable superannuation contributions totalled $590 in the same period. Child Support ascertained that Mr Holder’s income support payments in the period 1 July 2022 to 25 September 2022 totalled $2,994.76.

6. Mr Holder’s income election of $13,675 for the period 1 July 2022 to 25 September 2022 was lower than his likely adjusted taxable income of $14,614 for the period 1 July 2022 to 25 September 2022. There is no basis to refuse to accept the income election under paragraph 63AA(2)(b) of the Act.

7. The Tribunal then considered the income election for the period 26 September 2022 to 30 June 2023.

8. In her objection Ms Newton stated she was objecting to Mr Holder’s income estimate “because he said he works more than 40 hours at [Employer]”.

9. When he made his income election Mr Holder estimated that he would earn $470 gross per week for the period 26 September 2022 to 30 June 2023. This is $18,665.71[1] in the period 26 September 2022 to 30 June 2023 and was annualised to $24,507.[2]

   [1] $470 / 7 days x 278 days in the remaining period = $18,665.71.

   [2] $18,665.71 / 278 x 365 days in the year = $24,507.

10. The payslips provided by the employer show that from September 2022 Mr Holder mostly worked 20 hours a week. His gross earnings and reportable superannuation contributions totalled $478.40 per week. Child Support ascertained that Mr Holder did not receive income support payments from Centrelink between 30 August 2022 and 19 October 2022. 

11. There was some variation to Mr Holder’s gross wage due to penalty rates, overtime or public holiday loading. Payslips indicate that after 18 December 2022 Mr Holder ceased salary sacrificing superannuation and his gross wage, though variable, was generally higher than his estimate of $470 per week. There are provisions in the Act for estimate reconciliation after the end of the tax year once the actual income is ascertained.

12. The Tribunal accepts Mr Holder’s evidence that he made a genuine attempt in September 2022 to estimate his income for the balance of the financial year. In making an estimate, particularly in respect of the remaining period in the financial year, the person is attempting to forecast future income, so absolute precision cannot necessarily be expected.

13. The Tribunal notes that Mr Holder made a subsequent income election on 15 May 2023 in respect of the 2022–23 financial year.[3]The decision to accept that estimate is not the subject of this review.

    [3] Page 103

14. It seems to the Tribunal that Ms Newton was concerned that Mr Holder was working more hours than advised by his employer. Mr Holder stated that Ms Newton was not in a position to know how many hours he worked and all of his earnings were “on the books”. Mr Holder’s employer complied fully with the request for information from Child Support and the Tribunal has no reason to conclude that he received income in excess of the amounts provided for in the payslips.

15. If Ms Newton is of the view that there are special circumstances such that the administrative assessment of child support results in an unjust and inequitable level of financial support for the child because of Mr Holder’s income, earning capacity or financial resources, there are other administrative remedies that she can pursue.

DECISION

The decision under review is affirmed.