Pandey and Vaughan (Child support)

[2022] AATA 1177

Pandey and Vaughan (Child support) [2022] AATA 1177 (31 March 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/BC023176

APPLICANT:  Ms Pandey

OTHER PARTIES:  Child Support Registrar

Mr Vaughan

TRIBUNAL:Member K Dordevic

DECISION DATE:  31 March 2022

1. The decision of the tribunal and the reasons for the decision were delivered orally on 31 March 2022.

2. The following paragraphs are the reasons for the tribunal’s decision.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income - whether the estimate should have been accepted - estimate of income refused – 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

1. Ms Pandey (the mother) and Mr Vaughan (the father) are the parents of two children. Most recently a case was registered with Services Australia – Child Support (the Agency) from December 2015. The children are recorded as being in the mother’s sole care.

2. On 25 October 2021, after receiving notice of the father’s 2021 adjusted taxable income of $91,704 from the Australian Taxation Office, the Agency amended the child support record and determined that from 1 July 2020 to 30 November 2022 the father child support liability must be calculated on the basis of his 2021 adjusted taxable income. Therefore, his child support liability increased from about $3,730 to over $17,000. This adjustment was necessary as the father had lodged an income estimate of $39,107 for the 2021 financial year.

3. On 5 November 2021 the father contacted the Agency and lodged an income estimate of $29,200 for the period 5 November 2021 to 30 June 2022. His application was accepted on that day. The mother objected to that decision on 18 November 2021. Her objection was disallowed on 17 January 2022.

4. The mother lodged this application on 25 January 2022. The tribunal heard the matter on 31 March 2022. The parents appeared by MS Teams audio. The Child Support Registrar elected to not attend the hearing. In reaching its decision, the tribunal took into account documents provided by the Agency (folios 1 to 147) and the additional documents provided by the mother (A1 to A8) and the father (B1 to B9). It is noted that the mother lodged further written submissions on 30 March 2022; these were not taken into evidence given the tardiness of their lodgement.

5. The law relevant to this application is outlined in the Child Support (Assessment) Act 1989 (the Act).

6. In this case the tribunal must decide whether the father’s income estimate should be accepted for the purpose of the child support assessment.

7. Section 60 of the Act permits a parent to elect to estimate their adjusted taxable income for a part year of income and, under certain circumstances, the Agency must accept that estimate for child support assessment purposes. Relevant to subparagraph 60(1)(b)(i) the father’s 2021 adjusted taxable income, as determined under section 43 of the Act, was $91,704. To satisfy paragraph 60(1)(b) the father’s estimate, as determined in accordance with subsection 60(2) of the Act, must be 85% or less of $91,704.

10.  When lodging his income estimate, the father advised that his 2021 income was artificially inflated due to social security payments and crypto currency returns. He advised that he works as a sole trader and his ongoing gross weekly income was $560. On this basis alone, the father’s estimate was accepted. Of particular concern to the tribunal is that, when accepting the income estimate, the Agency accepted that the father’s declarations without requesting corroborating evidence.  In the tribunal’s view, a declaration alone is not sufficient to establish that the father’s income was 85% less than his 2021 adjusted taxable income particularly in circumstances where he had previously lodged an estimate that was significantly less that his adjusted taxable income.

11.  Upon the objection being lodged, the Agency sought corroborating evidence from the father. The Agency was also provided evidence from the father’s bank which indicated that he is the director of [Business 1], which is the trustee for the [Family Trust 1] and that regular deposits were made into the account from [Employer 1]. On 17 December 2021 the father provided payslips from the [Family Trust 1] indicating that he is in receipt of wages of $550 per week from the week beginning 25 October 2021. Prior to this date his year-to-date income was nil.

12.  At hearing the father explained that some time in November 2021, at the advice of his accountant, he formed [Business 1]. He is the sole director of the company, which is trustee for the [Family Trust 1]. The only beneficiary of the trust is his own father. His account created the payslips and “I just transfer the amount that I want” from the business account to his personal account. He had determined that an amount of $550 was appropriate, as he knew that soon his work with his main contractor, [Employer 1], would come to an end. It is noted that in support of this contention he provided a letter from the director of [Employer 1]; he was unable to explain why this was not on company letterhead.

13.  The tribunal put to the father that the payslips he has provided do not correspondence with actual transfers from the trust account to his personal accounts. The tribunal put to him that the arrangement had the flavour of being created for the purposes of his child support. The father was unable to explain the discrepancies, stating “I just wanted the money to last until June or July”. He denied that the payslips were created for the purpose of supporting his income election.

14. The Registrar (or this tribunal in its place) may refuse to accept an income election under section 63AA of the Act. Relevantly, paragraph 63AA(2)(a) of the Act states that the Registrar may refuse an income estimate if it is not satisfied that the partial year income amount for the income election is less than the amount that the Registrar considers is likely to be the parent’s actual adjusted taxable income for the remaining period in relation to the income election. Subsection 63AA(5) of the Act states that if the Registrar refuses the election, it is taken to never having been made.

15.  The father recently established his own company, which is the trustee for the [Family Trust 1], which apparently pays him $550 per week in wages. By way of example, the payslips indicate that the father was paid $500 on 25 October 2021. On 26 October 2021 there was a payment into his personal account from the business account of $1,000. The payslips indicate that he was paid $528 on 1 November 2021; there is no similar deposit into his personal account. However, on 5 November 2021 there is a deposit from the business account to his personal account of $1,100. The tribunal is simply unable to reconcile the payslips with the bank deposits and the father oral testimony. The tribunal formed the view that the payslips were created with the sole view of supporting the father’s estimate application.  The tribunal is of the view that it is highly likely that the father’s partial year income amount for the income election is less than the amount it considers is likely to be the his actual adjusted taxable income for the remaining period. Thus, pursuant to paragraph 63AA(2)(a) of the Act, the father’s income election is refused.

DECISION

The tribunal sets aside the decision under review and, in substitution, decides that Mr Vaughan’s income estimate lodged on 5 November 2021 is refused pursuant to paragraph 63AA(2)(a) of the Child Support (Assessment) Act 1989.