Orlebar and Orlebar (Child support)

[2021] AATA 1299

Orlebar and Orlebar (Child support) [2021] AATA 1299 (10 March 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/BC020422

APPLICANT:  Mr Orlebar

OTHER PARTIES:  Child Support Registrar

Mrs Orlebar

TRIBUNAL:Member S Brakespeare

DECISION DATE:  10 March 2021

DECISION:

The tribunal sets aside the decision under review and, in substitution, decides that Mr Orlebar’s income estimate of $0 is to be accepted and applied to the administrative assessment from the application day of 3 September 2020.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income – whether the estimate should have been refused – estimate of income accepted – 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. On 3 September 2020 an Orlebar of the Child Support Agency accepted Mr Orlebar’s estimate of nil income and applied it to the administrative assessment for the period 3 September 2020 to 30 June 2021 (the original decision). Ms Orlebar lodged an objection to the decision on 28 September 2020.

2. On 4 December 2020 an objections Orlebar allowed the objection and decided to refuse to accept Mr Orlebar’s estimate of income (the objection decision). Mr Orlebar lodged an application for review of the objection decision with the tribunal.

3. A hearing was held on 10 March 2021. Mr Orlebar and Ms Orlebar gave evidence on affirmation to the tribunal via conference telephone. The Child Support Agency provided the tribunal and the parties with a bundle of papers relevant to the review.

4. Relevant aspects of the evidence and material before the tribunal will be referred to in the tribunal’s consideration of the issues which it has to decide.

ISSUE

1. The legislation relevant to this review is contained in the Child Support (Assessment) Act 1989 (the Act)

2. The issue which arises in this case is whether Mr Orlebar’s income estimate should be accepted.

CONSIDERATION

1. A person may make an estimate of income for a financial year, or part of a year, if the provisions in section 60 of the Act are met.

2. If a person has not made an estimate for the year of income and wishes to estimate their income during the financial year, after the first day of the financial year, they can make an income estimate for part of the year (subsection 60(3)). If the person has already made an income estimate election for the year of income and wishes to make another estimate due to a change in their circumstances they must make a later income estimate (section 62A).

3. In providing an estimate for part of the year the person must inform the Child Support Agency of their estimated income for each income component amount for the remaining period (paragraph 60(3)(a)). The remaining period is from the start date of the income estimate election to the end of the year of income (subsection 60(4)). The total of the person’s income component amounts for the remaining period is their partial year income amount (subsection 60(4)). They must also inform Child Support Agency of their year to date income, that is, the total of the income component amounts they have received from the beginning of the year of income to the day before the start day of the income estimate election (paragraph 60(3)(b)).

4. In order to calculate the amount to be used in the assessment, the partial year income amount must be divided by the number of days in the remaining period, to identify a daily income amount. That daily income amount is then multiplied by 365 to identify the annualised income, which is the amount the parent is required to provide as their income estimate election (paragraph 60(3)(a) and subsection 60(4)).

5. The start date of the election for a part year estimate must be either the day on which the person makes the election (paragraph 60(5)(a)); or the first day of a child support period, so long as that day is not before the day the parent makes the election (paragraph 60(5)(b)).

6. The Child Support Agency may refuse to accept an income estimate for part of a year of income if the parent’s partial year income amount is less than what the Child Support Agency considers is likely to be the parent’s actual adjusted taxable income for the remaining period in relation to the income election (subsection 63AA(2)).

7. Unless the income estimate is refused, the Child Support Agency must apply the estimate to the administrative assessment for a period beginning on the day the election is made and ending on the last day of the income year, or, if the estimate is subsequently revoked and replaced by another estimate, on the start day for the later election (section 61).

8. Mr Orlebar told the tribunal that when he made his income estimate he was ceasing employment and did not have another position to go to. He provided an employment separation certificate to the Child Support Agency which states that he ceased working on 17 September 2020. It was his intention to apply for Centrelink benefits at some stage however he was not sure when he would do that and what his entitlement would be. He knew that he was required to advise the Child Support Agency if he recommenced employment or if he was granted a Centrelink benefit. Mr Orlebar acknowledged that at the time he made the nil estimate he was expecting to receive a payment in lieu of annul leave. He did not include that amount in the estimate as he did not know how much it would be. He was paid $915.

9. Mr Orlebar said that he has incurred an $11,000 debt because the Child Support Agency continued to assess him on an income of $110,000 despite him not working. The Child Support Agency did not initially give him the opportunity to lodge another estimate after the objection officer’s decision was made; he kept being referred to the AAT whenever he attempted to dispute the assessment. He said that he has recently started work and the Child Support Agency has now accepted an income estimate from him.

10. Mrs Orlebar told the tribunal that she accepts the decision of the Child Support Agency.

11. The tribunal finds that:

    ·Mr Orlebar was being assessed on his 2019/2020 adjusted taxable income of $109,877.00 from 1 August 2020,

    ·Mr Orlebar lodged an estimate of $0 with the Child Support Agency on 3 September 2020;

    ·Mr Orlebar ceased employment on 17 September 2020; and

    ·Mr Orlebar received a termination payment of $915 on 23 September 2020.

12. The tribunal accepts that Mr Orlebar’s income estimate was not accurate. He was still working when he lodged the estimate and was also entitled to a small leave payment on termination. However, the tribunal takes the view that whilst the income estimate was inaccurate, the amount of income he was likely to receive after 3 September 2020 was not significant (at most two weeks salary plus $915 in leave entitlements).

13. The Act contains provisions for reconciling estimates and includes penalties for underestimating income in particular circumstances.

14. The tribunal notes that subsection 63AA(2) is a discretionary provision. The effect of refusing to accept the estimate is that Mr Orlebar continued to be assessed on an income of $109,877.00. This is a harsh outcome, given that Mr Orlebar had ceased working within 14 days of the estimate being made and his income after the employment ceased consisted of the payment in lieu of leave, and later, income support payments.

15. The tribunal is of the view that whilst Mr Orlebar’s estimate was not accurate, the inaccuracy was not such that it would have resulted in his liability being significantly less than what it should have been when calculated over the application period. It is appropriate that if there is a discrepancy that it be dealt with via the reconciliation process. The tribunal therefore decides not to exercise the discretion in subsection 63AA(2) to refuse to accept the income estimate.

16. The tribunal sets aside the decision under review and, in substitution, decides that Mr Orlebar’s income estimate of $0 is to be accepted and applied to the administrative assessment from the application day of 3 September 2020

DECISION

The tribunal sets aside the decision under review and, in substitution, decides that Mr Orlebar’s income estimate of $0 is to be accepted and applied to the administrative assessment from the application day of 3 September 2020.