Raines and Owston (Child support)

[2020] AATA 1405

Raines and Owston (Child support) [2020] AATA 1405 (10 March 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/AC018251

APPLICANT:  Mr Raines

OTHER PARTIES:  Child Support Registrar

Ms Owston

TRIBUNAL:Member Y Webb

DECISION DATE:  10 March 2020

DECISION:

The decision under review is set aside and the matter is sent back to the Child Support Registrar for reconsideration in accordance with the directions that:

·     Mr Raines’s later estimate of income of $90,000 per annum from 15 October 2019 should not be accepted; and

·     the later estimate of income that Mr Raines lodged on 15 October 2019 be reviewed and re-assessed and, if inaccurate, amended accordingly.

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 remitted to the Child Support Registrar for reconsideration

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 relates to the child support assessment regarding the three children of Mr Raines and Ms Owston (“the children”).  The children are 11, seven and three years old.  The Department of Human Services (“Child Support Agency”) records disclose that the children are in the 86% care of Ms Owston and 14% care of Mr Raines.

2. In the period beginning 11 February 2019 Mr Raines was liable to pay an annual amount of child support of $16,839 based on his 2018 adjusted taxable income of $109,161 and Ms Owston’s 2018 income of nil.

3. On 16 July 2019 Mr Raines contacted the Child Support Agency and advised that he had been unemployed since May 2019 and that he had no income.  He advised that his year to date income was nil.  On 16 July 2019 the Child Support Agency accepted the estimate of $0 for the period 16 July 2019 to 30 June 2020.  That decision is not under review by the Administrative Appeals Tribunal (“the Tribunal”).

4. On 18 October 2019 Mr Raines provided another estimate of income.  It appears that he provided this online.  The Child Support Agency papers state that the estimate start date was 15 October 2019 and the estimate end date was 30 June 2020.  The notes do not include any other details including the amount of the estimate.  The notes state that the estimate was accepted. 

5. The Child Support Agency wrote to Mr Raines by letter dated 18 October 2019 stating that it had recalculated his child support assessment for the period 15 October 2019 to 30 June 2020 using $126,346 “as provided by you”.

6. Mr Raines lodged an objection to that decision on 14 November 2019 but his objection was disallowed on 3 January 2020 on the grounds that it had not received any evidence to show that his amended income estimate of $126,346 was incorrect.

7. On 20 January 2020 Mr Raines requested review by the Tribunal. Ms Owston was scheduled to attend the hearing but she could not be reached on the day and time of the hearing. The Tribunal was satisfied that she had been provided with reasonable notice of the proceedings (by letter and text message prior to the hearing and voice messages at the time of the hearing) and in accordance with section 40 of the Administrative Appeals Tribunal Act 1975 the Tribunal decided to proceed with the hearing in her absence.

8. The Child Support Agency provided a bundle of papers relevant to the review and these were marked Exhibit C1.  Mr Raines provided documents including a written submission and photographs of his employee portal showing some payslips and these were marked Exhibits A1 to A11.

CONSIDERATION

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

2. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Assessment Act. This requires the application of a statutory formula which takes into account factors such as the number of children, the level of care provided and the income of each parent. The specific income quantity is called a person’s adjusted taxable income, which is defined in section 43 of the Assessment Act.

3. The statutory scheme provides some flexibility for parents whose circumstances change from one year to the next. Relevantly, in specified circumstances, section 60 of the Assessment Act allows a person to elect that their adjusted taxable income is their current adjusted taxable income rather than the adjusted taxable income from the previous financial year.

4. Subsection 60(4) of the Assessment Act provides a method statement that must be followed where a parent makes a partial year election during an income year. Essentially this involves a calculation of annualising the parent’s estimate for the remainder of the year so that an annual amount is used to determine the parent’s child support income for a day in the child support period for the remainder of the income year that the estimate applies.

5. Later income estimate elections for a year of income can be made at any time within that year of income and the amount estimated may be higher or lower than the previous estimate (section 62A).  The start date of the election for a later partial year estimate must be either:

   · The day on which the parent makes the election (subsection 62A(2) of the Assessment Act), or

   · If the annualised amount of the later estimate election is more than the amount of the earlier election, the date of the event that occurred to change the parent’s income (subsection 62A(3) of the Assessment Act).

6. In Mr Raines’s case it appears that he contacted the Child Support Agency online.  There is no date provided on the “Estimate Details Notepad” note.  However, the notes of
   18 October 2019 state that the subsequent election was accepted pursuant to section 62A.  By letter dated 18 October 2019 the Child Support Agency wrote to Mr Raines and stated that it had recalculated his child support assessment for the period 15 October 2018 to 30 June 2020 “using $126,346 as provided by you”.  The summary details enclosed showed that for the estimate period of the 2019/2020 financial year, the estimated income in the period 15 October 2019 to 30 June 2020 was $90,000 annualised to $126,346. 

7. Mr Raines subsequently contacted the Child Support Agency and objected to the estimate of income figure of $126,346. He stated that he had supplied an estimate of $90,000 but that that was his annual salary.  He said that his monthly salary would be $7,500 and that he would not be starting in his new job until 18 November 2019.   He lodged an objection dated 14 November 2019 stating that he would only be receiving income from employment in the period 18 November 2019 to 30 June 2020.  He stated that when he updated his estimate online it did not allow him to outline the period the income estimate was for.  He stated that his annual salary was $90,000.

8. At the hearing Mr Raines stated that he was unemployed until October 2019 and that he was then employed on an annual salary of $90,000.  He stated that the actual salary which he will earn between October 2019 and June 2020 will not be $90,000 but approximately $55,000.  He contended that he could not afford the current child support payments and that the estimate of income was inaccurate.

9. From the available evidence it seems that Mr Raines informed the Child Support Agency that he was earning $90,000.  Because the details of his notification were not reproduced in the C1 papers it is not clear whether he clarified that this amount was his annual salary and not the partial year income amount.  Within the C1 papers (page 10) was a payslip which it appears was provided when Mr Raines lodged his application to the Tribunal.  While Mr Raines told the Child Support Agency that he commenced work with his new employer in October 2019 and later that it was 18 November 2019, the payslip was for the period
   23 September 2019 to 6 October 2019 and showed a year-to-date gross income of $6,923.08 which means that he must have actually commenced employment with his new employer on 9 September 2019 and the Tribunal so finds.

10. The payslip shows that the base annual salary is $89,999.94 per year.  It also shows that he receives a car allowance of $576.92 per fortnight ($15,000 per year).  Mr Raines told the Tribunal that this is to compensate him for the extensive travel he undertakes as part of his employment.  He stated that he frequently drives in excess of 1,000 kilometres a week and that his costs per year would total at least the $15,000 car allowance which he receives.  The Tribunal is satisfied that the car allowance is not normally taxable income being a reimbursement for expenditure incurred by the employee on work-related travel.  There is no third party evidence regarding the tax status of Mr Raines’s car allowance.  If it is not taxable income it does not form part of his total taxable income.  If it is taxable income Mr Raines can claim his work-related travel expenses as tax deductible expenses.  The Tribunal accepts Mr Raines’s statements that his car expenses are at least equivalent to his car allowance in which case his receipt of a taxable car allowance would not significantly affect his total taxable income.

11. There is no dispute that Mr Raines did not expect to receive any other income component amount in the remaining period.

12. The Tribunal accepts that Mr Raines’s annual salary was $89,999.94 (which he notified as $90,000 and which the Tribunal accepts is correct when rounded) and that his actual partial year income amount was considerably less than this.  Mr Raines stated that it was approximately $55,000 but that was calculated on his employment commencing in either October or November 2019.  The payslip clearly shows that he commenced employment on 9 September 2019 and the Tribunal calculates that his partial year income amount from 9 September 2019 to 30 June 2020 was $72,739 ($90,000/365 = $246.5753 X 295 days = $72,739.725) and annualised = ($72,739.725/295  X  365 =$89,999.995 ($90,000)).

13. Clearly, the estimate of income is inaccurate.  The annualised amount resulting from the later income election was $90,000 not $126,346. 

14. As the annualised amount of the later estimate election was more than the amount of the earlier election (which was $0), the date of the event that occurred to change the parent’s income, that is, 9 September 2019 should have been the start date of the later election (subsection 62A(3) of the Assessment Act) and not 15 October 2019. The earlier election should have been revoked from 8 September 2019 (subparagraph 61(1A(b)(ii)). Hence, the Tribunal finds that the start date of the later estimate election was also inaccurate.

15. However, while a decision maker may refuse to accept an estimate made under subsection 62A(1) if it is an under-estimate (section 63AA), there is no comparable provision in section 63AA in circumstances where a parent has over-estimated their income.

16. Nevertheless, in view of the incorrect start date of the later election the Tribunal finds that the later estimate of income should not have been accepted.

17. Alternatively given the inaccurate information which showed that the later estimate election was inaccurate, the Registrar could amend the estimate pursuant to section 63A of the Act on the basis that an event affecting the accuracy of the estimate has occurred.

DECISION

The decision under review is set aside and the matter is sent back to the Child Support Registrar for reconsideration in accordance with the directions that:

·     Mr Raines’s later estimate of income of $90,000 per annum from 15 October 2019 should not be accepted; and

·     the later estimate of income that Mr Raines lodged on 15 October 2019 be reviewed and re-assessed and, if inaccurate, amended accordingly.