Plubell and Tovani (Child support)

[2024] AATA 2022

Plubell and Tovani (Child support) [2024] AATA 2022 (8 May 2024)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2024/AC027373

APPLICANT:  Mr Plubell

OTHER PARTIES:  Child Support Registrar

Ms Tovani

TRIBUNAL:Member J Bakas

DECISION DATE:  8 May 2024

DECISION:

The decision under review is affirmed.

CATCHWORDS 

CHILD SUPPORT – whether or not estimate of income has been reconciled correctly – adjusted taxable income – decision under review affirmed 

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. This review concerns the reconciliation of Mr Plubell’s estimated income for the 2022/23 financial year.

2. Mr Plubell and Ms Tovani are the parents of [Child 1] and [Child 2]. There has been a child support assessment in place made by Services Australia – Child Support (Child Support) since 19 August 2020.

3. On 1 August 2023, a decision was made to reconcile the estimated income of $31,004.47 against Mr Plubell’s actual adjusted taxable income of $31,557. Mr Plubell objected to that decision on 22 August 2023. On 21 December 2023 Child Support disallowed Mr Plubell’s objection.

4. On 18 January 2024, Mr Plubell lodged an application to the Administrative Appeals Tribunal (the Tribunal) for a review of the decision. The hearing took place on 23 April 2024. Mr Plubell participated in the hearing in person and Ms Tovani participated in the hearing by MS Teams audio telephone. In making its decision, the Tribunal took into consideration the documents (numbered 1 to 338) provided by Child Support, which were also sent to Mr Plubell and Ms Tovani.

ISSUE

1. The issue in this matter is whether or not Mr Plubell’s estimate of income has been reconciled correctly.

CONSIDERATION

1. The legislation relevant to this review is contained in the Child Support (Assessment) Act 1989 (the Assessment Act). Usually child support liabilities are determined using a child support formula in Part 5 of the Assessment Act for periods of 15 months (child support periods). The formulas take into account a range of factors including the adjusted taxable incomes of each of the parents.

2. The adjusted taxable income for each of the parents (section 43 of the Assessment Act) is the taxable income from the last tax year that ended before the start of the child support period (plus supplementary amounts, if relevant). An assessment was in place between the parties since 19 August 2020.

3. On 6 July 2022, Mr Plubell contacted Child Support and elected to lodge an estimate of his 2022/23 income, being $0 for the period 6 July 2022 to 30 June 2023, which was annualised as $0. Mr Plubell also advised Child Support at this time that his income for the five-day year to date period of 1 July 2022 to 5 July 2022 was $0 income.

4. On 7 December 2022, Mr Plubell contacted Child Support and lodged an amended estimate election  of his 2022/23 income. He advised he received a one-off dividend of $1,230 on 29 September 2022, which Child Support annualised to $1,632 for the 275-day period 29 September 2022 to 30 June 2023.

10.On 28 June 2023, Mr Plubell contacted Child Support and lodged a further amended estimate election of his 2022/23 income. He advised he received a capital gain of $31,000 on 30 September 2022, which Child Support annualised to $41,295 for the 274-day period 30 September 2022 to 30 June 2023.

11.The legislation provides some flexibility for parents whose circumstances have changed. Section 60 of the Assessment Act allows a person to lodge an income estimate. The period affected by an estimate is set out in section 60. The period starts on the day the person made an estimate or the start of the tax year, whichever is the later, and ends at the end of the tax year. The effect of an income election is set out in section 61 of the Assessment Act. It is used in the assessment for a specified period unless refused under section 63AA of the Assessment Act. When lodging an estimate for part of a tax year a person is required to provide Child Support with a figure for their income in the year to date.

12.Child Support must reconcile estimates after the end of the relevant financial year when it receives advice from the Australian Taxation Office (ATO) of the parent’s taxable income for the relevant year. The Assessment Act provides different methods for reconciling estimates depending on whether a parent made one or more estimates for the whole or part of a tax year. In this case Mr Plubell made three estimates of income in the 2022/23 year on 6 July 2022, 29 September 2022 and 30 September 2022.

13.Section 64A of the Assessment Act provides a formula for reconciling more than one income election for the remaining part of a tax year. That section applies to the estimates made by Mr Plubell.

14.The Tribunal accepts that Mr Plubell provided these estimates as detailed above and they are not in dispute. It is also not in dispute that Mr Plubell’s adjusted taxable income for 2022/23 was $31,557. As a result of the estimate reconciliation, Mr Plubell’s child support payable increased in the amount of $99.88 for the year.

15.This is based on an estimate of income during the 2022/23 year of $31,004.47

16.Mr Plubell is disputing the method of calculating the estimate of income as he never earned close to $41,295. He believes the process of annualising incomes used in the assessment results in in an incorrect assessment.  He is of the view that the method by which Child Support calculate child support when making an estimate of income has resulted a payable amount of over a $1,000 more for the year. Mr Plubell also raised concerns about the child support payable in the following financial year but as expressed to him at the hearing, this issue is not before the Tribunal.

17.Mr Plubell gave evidence that he had issues with the method of calculation of his estimates of income. He does not believe that the reconciled figure can be greater than his actual income. When $31,557 is applied over a whole year then the payment of child support he would need to pay is $1,000 annually, whereas an estimate of $41,295 increases the child support amount to about $3,500. As such he is concerned the child support payable is some $2,500 higher than it should be.

18.The Tribunal notes that page 296 of the hearing papers summarises the estimates of income and shows the estimate included in the period and the difference upon reconciliation.

19.The Tribunal has examined the reconciliation calculations made by Child Support, based on the year-to-date income provided to Child Support and the estimates made by Mr Plubell on 6 July 2022, 29 September 2022 and 30 September 2022 and his 2022/2023 taxable income and confirms that the reconciliation has been undertaken correctly. As Mr Plubell’s year-to-date income and estimated income is slightly lower than his adjusted taxable income, there are arrears of child support payable from this reconciliation in the amount of $99.88.

20.When an estimate of a parent’s income is applied to the child support assessment, after the end of the year of income, that estimated income is compared with the parent’s actual income for the year. If the actual income is less than or equal to the estimated income, no further action is required. If the parent’s actual income is more than their estimated income, the assessment will be amended using their actual income.

21.The Tribunal has found Mr Plubell’s actual adjusted taxable income for 2022/23 was $31,557 and his estimated income was $31,004.47.

22.The table below shows how the difference between the two amounts are reconciled.

Period Start		Number of Days		Income included in Estimate Period		Pro-Rata Difference*		Income included in Reconciliation
6/07/2022		85		$                 -		+	$130.05		=	$130.05
29/09/2022		1		$4.47		+	$1.53		=	$6.00
30/09/2022		274		$31,000.00		+	$420.95		=	$31,420.95
($552.53)

*$552.53 / 360 days of total estimate period x number of days in individual estimate period.

23.The Tribunal notes that while the $41,295 is the annualised figure, this does not mean it affects Mr Plubell’s payments as an annual figure. The calculations are based on the reconciled premise of: the ATO-issued adjusted taxable income (ATI) ($31,557.00) - year to date income (YTD) ($0) - Estimated Income ($31,004.47) which returned a difference of $552.53 to be applied over the 360-day estimate period (6 July–30 June). The actual amount Mr Plubell pays before and after estimate reconciliation is an increase of only about $99 in child support.

24.For the sake of completion the Tribunal notes that Ms Tovani did not make any particular submissions in relation to this matter at the hearing.

DECISION

The decision under review is affirmed.