Perkins and Perkins (Child support)

[2020] AATA 5132

Perkins and Perkins (Child support) [2020] AATA 5132 (10 September 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/MC019619

APPLICANT:  Mr Perkins

OTHER PARTIES:  Child Support Registrar

Mrs Perkins

TRIBUNAL:Member J Longo

DECISION DATE:  10 September 2020

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that the fixed annual rate should not apply to the assessment of Mr Perkins’ child support for the child support period commencing from 11 February 2020.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – whether a fixed annual rate of child support should not apply – income does not exceed the allowable limit – it is unjust and inequitable for the liable parent to pay the fixed annual rate – the application for fixed annual rate not to  apply should be 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 removed 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 Perkins and Mrs Perkins are the parents of [Child 1] and [Child 2]. Mr Perkins is assessed as the parent liable to pay child support to Mrs Perkins.

2.On 30 December 2019 Mr Perkins lodged an estimate of income of $13,773.71 (annualised $27,322) for the period 30 December 2019 to 30 June 2020. Services Australia – Child Support (the Department) determined that Mr Perkins should be assessed to pay the fixed annual rate from 30 December 2019 as his income was less than $19,981.

3.On 11 February 2020 Mr Perkins applied for the fixed annual rate not to apply to his assessment and the application was accepted. On 16 March 2020 Mrs Perkins lodged an objection to the decision.  On 1 July 2020, an objections officer of the Department made a decision to allow Mrs Perkins’ objection and refused to accept Mr Perkins’ application for the fixed annual rate not to apply.

4.On 6 August 2020, Mr Perkins lodged an application to the Administrative Appeals Tribunal (the tribunal) for a review of the decision. The hearing took place on 10 September 2020. Mr Perkins spoke to the tribunal via conference telephone and gave sworn evidence. Mrs Perkins decided not to participate in the hearing. In making its decision, the tribunal took into consideration the documents provided by the Department (239 pages) which were provided to both parties. Mr Perkins provided additional information (A1 to A5) which was exchanged between the parties.

ISSUES

5.     The legislation relevant to this review is the Child Support (Assessment) Act 1989 (the Assessment Act). The relevant law is contained in Division 8 of Part 5 of the Assessment Act. Subdivision B deals with annual rates of child support for low-income parents and minimum annual rates of child support.

6.     The issues which arise in this case are:

·     Whether Mr Perkins’s child support should be based on the fixed annual rate;

·     Whether the fixed annual rate should not apply.

CONSIDERATION

The law relating to fixed annual rates of child support for low-income earners

7.The Department of Social Services Child Support Guide states at 2.5.3:

It is intended to address the situation where parents minimise their taxable income in a way that does not fairly represent the true income, or real capacity to pay child support, and thereby reduces or avoids the contribution they should make towards meeting the costs of their children.

8.The triggers for assessment of an annual rate for low income parents are contained in section 65A of the Assessment Act, which are as follows:

·     The parent did not receive an income support payment during the last relevant year of income (“income support payment” is defined in section 66 of the Assessment Act);

·     The parent has elected an adjusted taxable income estimate for the remainder of a child support period which is less than the pension PP (single) maximum basic amount;

·     The parent does not have at least shared care of the child during the relevant care period.

9.The “last relevant year of income” is defined in section 5 of the Assessment Act, “in relation to a child support period means the last year of income that ended before the start of the period”.

Applicability of section 65A in this case

10.Based on the evidence of Mr Perkins, Mrs Perkins and the available documentary evidence, the Tribunal has found that Mr Perkins was not in receipt of income support payments and that he has less than shared care of [Child 1] and [Child 2].

The law allowing an application for the fixed annual rate not to apply

11.The legislation provides for a person to make application for the fixed annual rate not to apply. The relevant provision of the Assessment Act is section 65B which states:

(1)If the Registrar makes an assessment of an annual rate of child support payable by a parent for a day in a child support period under section 65A:

(a)    the parent may apply to the Registrar for the section not to apply;

(b)   the parent is taken to have applied to the Registrar for the section not to apply if, immediately before the end of the previous child support period, the section did not apply because of a determination under this section.

12.Subsections (2) and (3) of that provision set out information about what is required in making an application for section 65A not to apply. Those provisions are quite specific in placing the onus on the person making the application to provide evidence to demonstrate certain matters, and also indicates what will not be sufficient evidence for that purpose:

(2)The parent making the application must provide evidence to the Registrar concerning the parent’s income (within the meaning of subsection 66A(4)) to demonstrate that his or her current income is:

(a)    less than the pension PP (single) maximum basic amount; and

(b)   that it would be unjust and inequitable to expect him or her to pay the amount assessed under this section.

(3)An assessment issued by the Commissioner of Taxation for the last relevant year of income shall not be sufficient evidence of the income of the parent for the purposes of this section.

13.These provisions raise the concepts of “current income”, “pension PP (single) maximum basic amount” and “unjust and inequitable”. “Pension PP (single) maximum basic amount” is defined in section 5 of the Assessment Act.

What is the relevant amount of the pension parenting payment (single) maximum basic amount?

14.  The relevant amount of that payment at the commencement of the child support period is $19,981 per annum or approximately $384.25 per week.

15. The Tribunal notes that for the purposes of section 65B of the Assessment Act the issue raised is the “current income” and it is not clear whether the parenting payment rate is assessed as at the time of the application. The Tribunal considered that the rate of parenting payment as at the time of the application by Mr Perkins should be applied, which in this case is the rate for the year 2019, being $19,981.

What is the law regarding “current income”?

16. The term “current income” is not defined. However, the provision makes clear that the parent’s income is as defined in subsection 66A(4) of the Assessment Act. That provision provides that “income”, in relation to a person, means:

(a)any money earned, derived or received by the parent for his or her own use or benefit, other than money earned, derived or received in a manner, or from a source, prescribed by the regulations for the purposes of this paragraph; or

(b)a periodical payment by way of a gift or allowance, other than a payment of a kind prescribed by the regulations for the purposes of this paragraph.

17.  The prescribed payments referred to in regulation 7D of the Child Support (Assessment) Regulations 2018 are not relevant to this case. They relate to certain payments received in prison and certain support pension payments. Essentially, the legislation requires the Tribunal to consider ordinary concepts of income as opposed to financial resources, which may be available to the person.

Has Mr Perkins demonstrated that his current income is less than the amount of $19,981?

18.  The Tribunal accepts that on the evidence available in this case Mr Perkins’s taxable income for 2018/2019 was $84,570. Mr Perkins stated that while he had worked full-time previously, he was unable to maintain this employment on a full-time basis. He stated that he was diagnosed with stage IV [cancer] in October 2019 and started three different types of chemotherapy treatment in November 2019. He was on compassionate leave through his employer and tried to return to work in January 2020 on a part-time basis, working about 12 hours per week. As his condition was not improving and he found that his energy levels were very depleted, he reduced his hours in February 2020 to eight hours per week. He did not apply for jobseeker until later as he was still working. When COVID-19 restrictions started, he was stood down due to being high risk. He applied for jobseeker in March 2020 but was not paid until May 2020 due to his wife still working. He received jobseeker until July 2020 when he transferred to jobkeeper as his employer became qualified for this payment.

19.  The Tribunal took into consideration Mr Perkins’ circumstances and particularly the written information and oral evidence provided at the hearing. Mrs Perkins stated that Mr Perkins stated to the Department that she did not accept that Mr Perkins’ income had reduced based on his lifestyle. She stated that Mr Perkins and his current wife had purchased a brand new car, which they had owned for a year, worth $73,000 and still owned a $600,000 home. Mrs Perkins also stated that Mr Perkins had been on holiday over the past four months and that he received $63,000 in charity.

20.  Mr Perkins stated that his travel was prior to February 2020 and involved short weekend trips using friends’ properties and not luxury holidays. Mr Perkins also provided evidence that the vehicle purchased, in his wife’s name, was purchased in 2018 for $42,990 and was manufactured in 2015 when purchased. Mr Perkins also provided evidence from his employer which confirmed that he was working eight hours per week ($349.89 per week income) from 3 February 2020. Mr Perkins stated that only $25,000–$30,000 was raised in the charity event for his medical expenses. The money was given to a family member to control.

21. Paragraph 65B(2)(a) of the Assessment Act provides that a determination that the fixed annual rate is not to apply may only be made if the applicant can demonstrate that his or her current income is less than the pension PP (single) maximum basic amount. Mr Perkins’ evidence at the hearing was that the amount of his only income is from being an employee on reduced hours due to his medical condition.

22.  The Tribunal is satisfied that Mr Perkins’ income was less than $19,981 per annum, being the relevant amount of the pension parenting payment (single) maximum basic amount. It is therefore the view of the Tribunal that Mr Perkins has, at the date of his application, demonstrated his income was reasonably likely to be less than $19,981.

23.  The Tribunal notes that the Department has determined that his income was more than $19,981 based on the bank statements which showed deposits of wages into both his joint account and business account of $48,329.23 for the period 1 August 2018 to 13 May 2019. The Department also notes that Mr Perkins was paid wages of $14,114.92 from 21 December 2018 to 29 March 2019. Mr Perkins has stated that some of the deposits were transfers for the payment of funeral services and should not be taken into account.

24. Paragraph 65B(2)(b) of the Assessment Act provides that a determination that the fixed annual rate is not to apply also requires that it would be unjust and inequitable to expect the applicant to pay the assessed amount.

Would it be unjust and inequitable for Mr Perkins to pay the assessed amount?

25.  The Tribunal has considered Mr Perkins’ oral evidence and the information provided to the Department and the Tribunal by Mr Perkins shows that he does not have an income above $19,981 per annum and no interest in his wife’s business.

26.  The Tribunal has also considered the Department evidence that Mrs Perkins provides the majority of the care for the children (the Department has based the care percentage at 100% for Mrs Perkins and 0% for Mr Perkins).

27. Based on all of the above matters and in having regard to the objects of the Assessment Act as previously identified, the Tribunal concludes that it is unjust or inequitable that Mr Perkins pays the fixed annual rate for the children in the present circumstances. As the requirements of subsection 65B(2) of the Assessment Act are satisfied, the Tribunal determines that the application that the fixed annual rate not apply to Mr Perkins’ child support assessment for [Child 1] and [Child 2] should be granted from 11 February 2020.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that the fixed annual rate should not apply to the assessment of Mr Perkins’s child support for the child support period commencing from 11 February 2020.