Ranford and Kendle (Child support)

[2023] AATA 425

Ranford and Kendle (Child support) [2023] AATA 425 (14 February 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/MC024863

APPLICANT:  Mr Ranford

OTHER PARTIES:  Child Support Registrar

Ms Kendle

TRIBUNAL:Member C Breheny

DECISION DATE:  14 February 2023

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – whether the adjusted taxable incomes for past periods for the liable parent should be changed – conditions for changing the incomes to lower amounts are not met - decisions under review affirmed

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. Mr Ranford and Ms [Kendle] are the separated parents of [Child 1] and [Child 2]. For the period 1 September 2019 to 22 March 2020 (the date the child support case ended) child support liability was based on Mr Ranford’s 2018/19 provisional income of $50,076 and Mr Ranford was the parent liable to pay child support to Ms Kendle.

2. On 21 July 2022 Mr Ranford contacted Services Australia (Child Support) to make an Income Tax Declaration for 2018/19 stating that he had an income of $3,334 in that financial year. On 21 July 2022 a decision was made to apply the reduced income amount retrospectively from 1 September 2019, because Mr Ranford had been incarcerated for a period of time in the 2018/19 financial year and would not have been able to notify Child Support of his income amount. This resulted in an overpayment of $2,664.90 for Ms Kendle.

3. On 2 August 2022 Ms Kendle objected to the decision of 21 July 2022 stating that she advised Child Support in 2017 that Mr Ranford was in gaol. On 1 October 2022 a Child Support objections officer disallowed the objection.

4. On 18 October 2022 Mr Ranford applied to the Social Services and Child Support Division of the Administrative Appeals Tribunal for an independent review of the objection decision. The application was heard on 14 February 2023. Mr Ranford attended the hearing by telephone and gave evidence on affirmation. Ms Kendle elected not to participate in the hearing and did not attend. I had before me the statement and documents provided by Child Support pursuant to subsection 37(1) of the Administrative Appeals Tribunal Act 1975, received on 18 November 2022 (documents numbered 1–106). I also considered additional information provided by Mr Ranford (marked A1–A3).

ISSUES AND CONSIDERATION

1. The statutory provisions relevant to this application are contained in the Child Support (Assessment) Act 1989 (the Act).

2. Section 58 of the Act allows Child Support to determine a person’s adjusted taxable income for a child support period where either the person’s taxable income for the last relevant income year has not been assessed under an Income Tax Assessment Act or Child Support is unable to ascertain whether or not the person’s taxable income for that year has been so assessed.

3. In this case Mr Ranford’s taxable income for 2018/19 had not been available when Child Support made the assessment for the period commencing 1 September 2019 (the 2018/19 tax return had not been lodged) and thus Child Support determined a “provisional” income amount of $50,076 (being at least 2/3 of the annualised MTAWE[1]) to be used in the administrative assessment pursuant to section 58 of the Act. That determination was made on 20 July 2019 (folio 95).

   [1] Male Total Average Weekly Earnings

4. Section 58A of the Act applies if Child Support subsequently ascertains components of a person’s adjusted taxable income and the amount is different than the amount determined under section 58. It relevantly states:

   Subsequently ascertaining components of a parent's adjusted taxable income

   (1)  The Registrar must immediately amend an administrative assessment of child support payable by or to a parent in relation to a child support period if:

   (a)  the assessment was made on the basis of a determination under section 58; and

   (b)  either:

   (i)  the Registrar subsequently ascertains the amount of the parent's adjusted taxable           income for the last relevant year of income; or

   (ii)  the Registrar makes a later determination under section 58; and

   (c)  either:

   (i)  if subparagraph (b)(i) applies--the amount that was subsequently ascertained is different from the amount that was determined under section 58; or

   (ii)  if subparagraph (b)(ii) applies--the later amount that the Registrar determines is different from the earlier amount determined under section 58.

   Retrospective determinations

   2)  If:

   (a) at the time the Registrar is to amend the administrative assessment under this section, the parent could lodge his or her tax return by the date required under Part IV of the Income Tax Assessment Act 1936 (taking into account any deferral under section 388-55 in Schedule 1 to the Taxation Administration Act 1953 ); or

   (b)  paragraph (a) of this subsection does not apply and:

   (i)  the amount subsequently ascertained, as mentioned in subparagraph (1)(b)(i), is higher than the amount that was determined under section 58; or

   (ii)  the later amount that the Registrar determines, as mentioned in subparagraph (1)(b)(ii), is higher than the earlier amount determined under section 58; or

   (c)  neither paragraph (a) nor (b) applies, but circumstances prescribed by the regulations for the purposes of this section apply in relation to the parent; …

5. Mr Ranford notified Child Support on 21 July 2022 (folio 42) that his 2018/19 taxable income was $3,334. He said that he had been released from gaol on 23 March 2019. He did not work for the remainder of the financial year and only received Centrelink payments.

6. Mr Ranford told me that he and his accountant notified Child Support in 2019 that he had no income (apart from Centrelink payments) and was not required to lodge income tax returns. He said that his accountant wrote a letter verifying this advice.

7. The letter from Mr Ranford’s accountant is dated 28 November 2022 (folio A3). It states that Mr Ranford and the accountant contacted Child Support “on 6 May 2021…to discuss outstanding [child support] arrears”. They were told these amounted to $7,915.51. They were also told that the arrears could not be amended because “the no tax return necessary advice to the ATO was not lodged on time”.

8. The corresponding file note in the Child Support records (folio 29) indicates that Mr Ranford was told that a “non-lodgement advice” can only be backdated if it is deemed to be lodged on time by the ATO.

9. Mr Ranford agreed that he had not lodged tax returns for a number of years. His accountant was helping him to lodge the outstanding tax returns. Mr Ranford provided a letter from his accountant to Child Support on 2 May 2022 (folio 32). The letter is addressed to the ATO and dated 19 August 2019. It indicates that tax returns for 2003 and 2004 had been lodged, that no tax returns were necessary for 2005, 2006, 2010 and 2011 and for the years from 2019 onwards. The accountant notes that the “non-lodgement advice” could not be uploaded to the ATO portal. An undated listing of income tax assessments from the ATO (folios 33–34) was also submitted to Child Support on 2 May 2022. The listing indicates that the 2018/19 tax return was finalised and “no return was necessary”.

10. Based on the evidence before me I find that Child Support became aware that Mr Ranford was not required to lodge an income tax return for 2018/19 on or about 2 May 2022. This indicates that his taxable income for that year was likely to be lower than the provisional income amount determined by Child Support and used in the administrative assessment.

11. In accordance with section 58A of the Act, retrospective determinations can only be made if either paragraph 58A(2)(a), paragraph 58A(2)(b) or paragraph 58A(2)(c) applies. The time for lodging the income tax returns has passed and therefore paragraph 58A(2)(a) does not apply. The taxable income subsequently ascertained by Child Support is not higher than income determined under section 58 of the Act and therefore paragraph 58A(2)(b) does not apply.

12. The Regulations referred to in paragraph 58A(2)(c) are the Child Support (Assessment) Regulations 2018 (the Regulations). Section 11 of the Regulations relevantly provides:

    11  Adjusted taxable income—prescribed circumstances

    (1)  For the purposes of section 58A of the Act, the following circumstances are prescribed in relation to a parent who was unable to provide information about the parent’s adjusted taxable income to the Registrar at the time the relevant administrative assessment was made:

    (a)  one or more of the following applied in relation to the parent at that time:

    (i)  the parent did not know that an application for the assessment had been made and  accepted;

    (ii)  the parent had a serious illness or injury;

    (iii)  the parent was under detention or imprisonment;

    (iv)  the parent resided in a remote location which made it difficult to contact the       Registrar;

    (v)  a natural disaster prevented the parent from being able to contact the Registrar;

    (vi)  there was some other exceptional circumstance that prevented the parent from providing the information;

    (b)  the Registrar confirms that the parent was unable to provide the information at that time because of a circumstance mentioned in paragraph (a);

    (c)  the parent later provides the information to the Registrar as soon as is practicable in the circumstances.

13. I note the initial decision to apply the lower income amount retrospectively was made on the basis that Mr Ranford was incarcerated at the time the assessment was made on 20 July 2019. Mr Ranford confirmed that he was in gaol from 8 February 2017 and released on 28 March 2019. I note this is well before the end of the 2018/19 financial year and I find that Mr Ranford was not imprisoned at the time that the assessment was made and the 2018/19 income tax return would have needed to be lodged.

14. I further note that his accountant was dealing with the ATO (at least) from August 2019 onwards and that Mr Ranford was able to notify Child Support of his 2016/17 taxable income on 16 April 2018, whilst still incarcerated (folio 25). Thus there appears to be no reason why Mr Ranford should not have been able to notify Child Support of his 2018/19 income amount earlier.

15. I am therefore not satisfied that Mr Ranford was unable to provide the relevant information at the time the child support assessment was made due to any of the circumstances listed and I find that paragraph 58A(2)(c) of the Act is not satisfied.

16. On this basis I find that a retrospective determination cannot be made in respect of the assessments for the child support period from 1 September 2019 to 22 March 2020.

17. This is the same conclusion as reached by the objections officer and I affirm the decision under review.

DECISION

The decision under review is affirmed.