Norris and Norris (Child support)

[2021] AATA 1281

Norris and Norris (Child support) [2021] AATA 1281 (1 April 2021)

DIVISION:  Social Services & Child Support Division

REVIEW NUMBER:  2021/BC020588 & 2021/BC020617

APPLICANT:  Mr Norris

OTHER PARTIES:  Mrs Norris

Child Support Registrar

TRIBUNAL:  Ms Hamilton-Noy, Member

DECISION DATE:  1 April 2021

DECISION:

The Tribunal affirms the decisions under review.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – whether the adjusted taxable income of the liable parent was correctly applied – 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 relates to decisions by Services Australia – Child Support (Child Support) relating to the use of Mr Norris’ adjusted taxable incomes for the 2018/2019 and 2019/2020 financial years.

2. Mr Norris and Mrs Norris are the separated parents of [Child 1] and [Child 2].  A child support case has been registered since 16 August 2014.

3. On 17 September 2020, an employee of Child Support made a decision to replace Mr Norris’ 2018/2019 provisional income with a 2018/2019 adjusted taxable income for the child support period commencing on 1 January 2020.  Mr Norris lodged an objection to this decision on 25 September 2020.

4. On 15 October 2020, an employee of Child Support made a decision to use Mr Norris’ 2019/2020 adjusted taxable income for the child support period commencing on 1 November 2020.  Mr Norris lodged an objection to this decision on 27 October 2020.

5. On 5 January 2021, an objections officer of Child Support considered the objection lodged on 25 September 2020 and affirmed the decision under review.

6. On 7 January 2021, an objections officer of Child Support considered the objection lodged on 27 October 2020 and affirmed the decision under review.

7. On 7 January 2021 and 14 January 2021, Mr Norris made applications to the Administrative Appeals Tribunal for an independent review of Child Support’s decisions.  The Tribunal hearing was held on 25 March 2021, on which date both parties spoke to the Tribunal by conference telephone and gave evidence on affirmation.   At the hearing the Tribunal had before it documents provided by Child Support, copies of which were provided to the parties prior to the hearing (two sets of documents), documents provided by Mr Norris (A1 to A21) and documents provided by Mrs Norris (B1 to B20). The parties confirmed receipt of the documents with the Tribunal.  The Tribunal deferred to consider the law and made a decision on all of the information before it on 1 April 2021.

CONSIDERATION

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Assessment Act) and the Child Support (Registration and Collection) Act 1988.  The legal issues for the Tribunal are whether it was correct to replace Mr Norris’ 2018/2019 provisional income with his adjusted taxable income for the child support period commencing on 1 January 2020 and whether it was correct to use Mr Norris’ adjusted taxable income of $85,042 for the child support period commencing on 1 November 2020.

2. The Assessment Act sets out the statutory formula for the calculation of child support. Application of the administrative assessment of child support requires Child Support to consider each parent’s income in calculating child support payable during a child support period. Division 2 of Part 5 of the Assessment Act sets out the formulas used for calculating annual rates of child support payable using the income of both parents. Division 3 of Part 5 of the Assessment Act sets out how to calculate a parent’s income for child support purposes.

3. Subsection 41(1) of the Assessment Act states that if a parent is to be assessed in respect of the costs of a child in a child support case and does not have a relevant dependent child, the parent’s child support income for the child for a day in a child support period is the amount worked out using the formula: the parent’s adjusted taxable income for the child for the day minus the parent’s self-support amount for the day.

   2018/2019 Financial Year

4. Where a parent has not lodged their income tax return for a relevant year of income, Child Support will use a provisional income for the parent under section 58 of the Assessment Act. The Tribunal accepts that Child Support used a provisional 2018/2019 income for Mr Norris prior to him lodging his income tax returns for this financial year. Under this provision, the Registrar determined Mr Norris’s provisional income for the 2018/2019 financial year to be $80,033.

5. Subsection 56(1) of the Assessment Act states that, for the purposes of assessing a parent in respect of the costs of a child in relation to a child support period, if the parent’s taxable income has been assessed under an Income Tax Assessment Act for the last relevant year of income in relation to the child support period, the parent’s taxable income for that year is the amount as so assessed.

6. Subsection 58A(1) of the Assessment Act then requires the Registrar to immediately amend an administrative assessment of child support in relation to a child support period where an assessment had been made under section 58 and the Registrar subsequently ascertains the amount of the parent’s adjusted taxable income for the last relevant year of income. Upon lodgement of his 2018/2019 income tax return, Child Support was required to replace Mr Norris’ 2018/2019 provisional income with his adjusted taxable income under section 58A of the Assessment Act.

7. Where a parent has lodged their income tax return, Child Support will calculate their adjusted taxable income in accordance with subsection 43(1) of the Assessment Act, which states as follows:

   (1)  Subject to this Part, a parent's adjusted taxable incomefor a child for a day in a child support period is the total of the following components:

   (a)  the parent's taxable income for the last relevant year of income in relation to the child support period, disregarding the parent's assessable FHSS released amount (within the meaning of the Income Tax Assessment Act 1997) for that year of income;

   (b)  the parent's reportable fringe benefits total for that year of income;

   (c)  the parent's target foreign income for that year of income;

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

   (e)  the total of the tax free pensions or benefits received by that parent in that year of income;

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

8. Mr Norris’ evidence to the Tribunal was that he and Mrs Norris completed a property settlement in 2014, in which his superannuation was divided and eventually paid out in November 2018.  He disagrees with Child Support’s decisions on the basis that the amount paid to him was taken into account elsewhere and believes it is unfair that the amount be included in his adjusted taxable income for child support purposes.

9. The Tribunal asked Mr Norris during the hearing about his preparation of the income tax returns for the 2018/2019 financial year and he stated that he used a tax agent and was satisfied the information provided to the Australian Taxation Office was correct.  He did not dispute the figures provided by the Australian Taxation Office to Child Support (folio 99).  Mrs Norris did not seek to comment on the Child Support decisions or on Mr Norris’ evidence during the Tribunal hearing.

10. The Tribunal finds from the evidence before it that the Australian Taxation Office has provided to Centrelink information about Mr Norris’ 2018/2019 adjusted taxable income components which, on Mr Norris’ evidence, are correct amounts. There is no evidence before the Tribunal that the components of Mr Norris’ adjusted taxable income were incorrectly calculated in accordance with the requirements in subsection 43(1) of the Assessment Act, set out above. The reportable superannuation amounts are required to be included as a component of Mr Norris’ adjusted taxable income under subsection 43(1) of the Assessment Act.

11. The Tribunal is satisfied that the 2018/2019 financial year is the last relevant year of income for the child support period commencing on 1 January 2020 and that Mr Norris’ adjusted taxable income for the 2018/2019 financial year is $207,557.  Child Support has correctly applied this adjusted taxable income to the child support period commencing on 1 January 2020 and this decision is therefore affirmed.

    2019/2020 Financial Year

12. With respect to the 2019/2020 financial year, Child Support has made a decision to apply Mr Norris’ adjusted taxable income of $85,042 for the child support period commencing on 1 November 2020. Having regard to the evidence of Mr Norris regarding the preparation of his income tax returns, to the figures set out at folio 97 and to subsection 43(1) of the Assessment Act, set out above, the Tribunal is satisfied that Mr Norris’ adjusted taxable income for the 2019/2020 financial year is $85,042.

13. Subsection 56(1) of the Assessment Act provides that, for the purposes of assessing a parent in respect of the costs of a child in relation to a child support period, if the parent’s taxable income has been assessed under an Income Tax Assessment Act for the last relevant year of income in relation to the child support period, the parent’s taxable income for that year is the amount as so assessed.

14. Section 34A of the Assessment Act requires the Registrar to make an assessment using a parent’s adjusted taxable income as soon as practicable after a tax assessment is made. The Tribunal finds that Child Support has also correctly applied this adjusted taxable income to the child support period commencing on 1 November 2020 and this decision is also affirmed.

DECISION

The Tribunal affirms the decisions under review.