Ratliff and Fitzsimons (Child support)

[2023] AATA 3407

Ratliff and Fitzsimons (Child support) [2023] AATA 3407 (21 August 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/PC025466

APPLICANT:  Mr  Ratliff

OTHER PARTIES:  Child Support Registrar

Miss Fitzsimons

TRIBUNAL:Member S Letch

DECISION DATE:  21 August 2023

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 direction that the child support assessment be reassessed in accordance with paragraphs 7 to 11 of these reasons.

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 met - decisions under review set aside and sent back with directions

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. This matter concerns a decision by the Child Support to not give retrospective effect in the child support assessment to Mr Ratliff’s (lower) adjusted taxable incomes for the 2010/11, 2011/12, 2012/13, 2013/14, 2014/15, 2015/16, 2016/17, 2017/18, 2018/19 and 2019/20 financial years.

2. It is convenient by way of background to set out some extracts from the objections officer’s decision dated 14 December 2022:

   Decision being objected to:

   Mr Ratliff is objecting to our decision, made on 29 September 2022 to refuse the back dating of his ATO incomes for Financial Years: 2010/2011, 2011/2012, 2012/2013, 2013/2014, 2014/2015,
   2015/2016, 2016/2017, 2017/2018, 2018/2019 and 2019/2021

   Mr Ratliff has objected to this decision because he believes that the incomes should be applied from an earlier date as he was unable to lodge at the time due to extensive medical concerns (conditions).

   …

   In order for us to consider backdating an income, we must consider the circumstances of the case
   and the relevant legislation. As above, one of the reasons for backdating incomes is that the
   customer had serious illness or injury (including serious mental illness), and that the customer was
   incarcerated. Therefore, we can consider if these conditions satisfied Section 11.

   Mr Ratliff`s evidence shows that he sustained his injury in 2005. However, a review of our records shows that the 2006/2007, 2007/2008, 2008/2009 and 2009/2010 tax returns were all lodged within time. This suggests that his injury from 2005 did not prevent him from lodging subsequent tax
   returns for at least the next 4 financial years.

   We also consider if Mr Ratliff was aware of the assessments. Our records show that there was contact
   between himself and us on 19 August 2011, where he discussed his assessment letters. There was
   contact dated 2 July 2013 shows that although he was not living at a fixed address, he picked up
   occasional casual work . In the same contact, it was recorded that he stated that he had not
   received any tax returns and that he had lodged his tax returns and got nothing back . There was
   also a recorded contact on 16 July 2014, where he discussed his frozen bank account . From this
   evidence, we are satisfied that Mr Ratliff was aware that there was an assessment of child support, and
   he had presence of mind to contact us to discuss his account.

   Our records further show that Mr Ratliff travelled overseas on 11 October 2014 to 19 October 2014, and again on 16 February 2015 to 25 February 2015. From this evidence, we are satisfied that he had the ability to engage in international travel.

   ATO records further show that for a significant proportion of the tax years 2010/2011 to 2018/2019,
   he was employed as a trade`s assistant for various employers. The income amounts shown on these
   tax returns suggests that this work was for more than a few days at a time. From this evidence, we
   are satisfied that he had the ability to engage in such work activities

   Our records showed that Mr Ratliff was incarcerated in the following dates:
   14 January 2016 to 19 January 2016
   11 February 2016 to 16 February 2016
   22 April 2016 to 29 April 2016
   21 December 2021 to 19 May 2022

   From this evidence, we are satisfied that his time in prison is not such that it would have prevented
   him from lodging tax returns at any other times outside these periods.

   In considering the evidence from the medical practitioner, there is no doubt that Mr Ratliff has had
   significant concerns regarding his health, physical or otherwise. However, it is noted that the
   evidence from his general practitioner on 6 September 2022, whilst highlighting the difficulty Mr Ratliff
   faced, and that it did significantly impact his functional independence and activities of daily living,
   did not state that his condition prevented him from lodging his tax returns on time. Furthermore, the
   evidence from his psychologist showed that he would require support to live a normal life
   however it is not stated that his condition prevented him from lodging his tax returns on time.

   Mr Ratliff`s tax returns from 2006/2007 to 2009/2010 tax years were lodged on time and suggests that
   his condition did not prevent him from lodging his tax returns for the first five years following the
   start of his injury. Evidence from our records also show that he was aware of the assessment, as
   several records show that he discussed the matter with us. Mr Ratliff, despite his mental health and
   physical injuries, was also able to engage in international travel. Further, although the evidence
   from his medical practitioners show that he had many difficulties regarding his condition, they did

   not state that these conditions prevented him from lodging his tax returns on time.

   From the evidence provided, we are not satisfied that Mr Ratliff`s condition met the conditions of
   Section 11.

   Therefore, we make a decision to refuse the back dating of his ATO incomes for financial years
   2010/2011, 2011/2012, 2012/2013, 2013/2014, 2014/2015, 2015/2016, 2016/2017, 2017/2018,
   2018/2019 and 2019/2021.

   The objection is disallowed

1. Mr Ratliff and Miss Fitzsimons participated in the Tribunal’s hearing by conference telephone. Mr Ratliff was assisted by Ms [A] (who holds an enduring power of attorney over Mr Ratliff’s affairs: see folio 33 of the hearing papers).

2. The case for Mr Ratliff is well summarised in the written submission compiled by [Ms A] (folios 31 and 32):

   The Child Support Agency letter (14 December 2022) disallowing the objection to refuse to
   back date Mr Ratliff’s ATO incomes [redacted] contains three factual errors and a few mistaken assumptions. Since these were used as part of the arguments for disallowing the objection I am asking that this decision be reviewed.

   Firstly, towards the bottom of page 4 under ‘Other relevant facts’ it is stated that Mr Ratliff had
   an employer except for the 2014/2015, 2015/2016 and 2018/2019 tax years. This is
   incorrect. Mr Ratliff was not employed and unable to work in 2015, 2016, 2017, 2019, 2020,
   2021, 2022. When he did work Mr Ratliff only ever managed to hold a job for a few months at a
   time.

   Secondly, also on page 4 it states that on 12 Sept 2022 and 20 Sept 2022 the CSA received
   correspondence from Mr Ratliff whereas this correspondence came from myself as Mr Ratliff’s
   authorised representative. On 25 October 2022 the objection was lodged by myself on
   Mr Ratliff’s behalf as Mr Ratliff is incapable of understanding this process and lodging the objection.

   Thirdly, mention was made of an enduring power of attorney not having been signed by
   Mr Ratliff. This had, in fact, been correctly signed. However, to allay any concerns of the CSA
   Mr Ratliff and f submitted a second enduring power of attorney with the optional bottom
   section signed as well.

   The mistaken assumptions: On page 6 under ‘Details of Objection decision’ it is noted that
   the 2006/2007, 2007 /2008, 2008/2009 and 2009/2010 tax returns were all lodged on time.
   The CSA assumed that Mr Ratliff lodged these when, in fact, his then partner and mother of his
   daughter, Miss Fitzsimons, lodged these tax returns on Mr Ratliff’s behalf as he was incapable of
   doing so. His brain injury from 2005 prevented him from lodging these tax returns.
   Next, it states that there were three phone calls in 2011, 2013 and 2014 from Mr Ratliff to the
   CSA showing that he was aware of a child support assessment. Mr Ratliff was aware of the
   assessment but was unable to respond to the letters as he did not understand how to
   engage with the complexities of the CSA beyond a phone call. In 2014 he was supported to

   make that phone call by his then current girlfriend, [redacted].

   Re the brief international travel in 2014 and 2015: the CSA assumed that Mr Ratliff organised this travel himself whereas [redacted] booked, paid for and organised all the arrangements for the 2014 trip to see his family. A family friend, [redacted], did the same for Mr Ratliff in 2015. Mr Ratliff did not have the ability to engage in international travel on his own. He required, and still requires, very substantial support to travel anywhere due to his brain injury.

   As already noted, Mr Ratliff could work physically for a few months at a time but mentally, he was and still is incapable of processing any paperwork associated with a job. An administrative officer at his work completed any such paperwork for Mr Ratliff when he did get a job.

   The last two paragraphs on page 6 note that the medical letters did not specifically state that Mr Ratliff was unable to lodge his tax returns on time. Both medical assessments clearly state that Mr Ratliff’s brain injury had, and continues to have, significant impact on his “functional independence and activities of daily living and his issues in regards to his memory and learning difficulties impact his understand(ing) and management in regards to his finances.” These difficulties with finances include lodging tax returns on time.

   Dr [redacted] assessment also clearly notes on page 2 point C that Mr Ratliff requires “assistance, supervision and/or cueing for money management (administration and timely payments of tax, rent etc)”. Both medical assessments clearly indicate that Mr Ratliff’s medical condition prevented him from lodging his tax returns on time.

3. [Ms A] told the Tribunal that it was not intended that Miss Fitzsimons be left with an overpayment of child support; rather, that Mr Ratliff’s actual historical incomes be correctly reflected and that there be a “clean slate” going forward.

4. Miss Fitzsimons does not strongly disagree with Mr Ratliff’s actual incomes being applied to the historical child support assessment. However, she is concerned about the prospect of having a debt. I indicated during the hearing that I did not know whether a retrospective application of Mr Ratliff’s reduced adjusted taxable incomes would result in an overpayment; that would be a matter for Child Support to calculate in the event I accepted Mr Ratliff’s submissions. [Ms A] indicated that preliminary discussions had been had with Child Support; it had been indicated that Mr Ratliff did not wish to pursue any possible overpayment, and that Miss Fitzsimons could be relieved from repaying a debt (if one exists). [Ms A] reiterated during the hearing that she and Mr Ratliff would not seek recovery of any overpayment in the event the present application was successful.

5. Turning to the decision under review, section 58A of the Child Support (Assessment) Act 1989 provides the following:

CHILD SUPPORT (ASSESSMENT) ACT 1989 - SECT 58A

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;

then the Registrar must immediately amend the administrative assessment for the child support period on the basis that the parent‘s adjusted taxable income for that year of income is, and has always been, the amount that was subsequently ascertained or later determined (as the case requires).

Prospective determinations

(3) If subsection (2) does not apply, then the Registrar must immediately amend the administrative assessment for the child support period on the basis that for each later day in the period the parent‘s adjusted taxable income for that year of income is the amount that was subsequently ascertained or later determined (as the case requires).

(3A)  If, after an administrative assessment of child support is amended under subsection (2) or (3) because of subparagraph (1)(b)(i), the assessment (the tax assessment ) of a parent‘s taxable income is amended (whether or not because of an objection, appeal or review), the Registrar may further amend the administrative assessment to take account of the amendment to the tax assessment.

Amended tax assessments--retrospective determinations

(3B)  An amendment of the administrative assessment under subsection (3A) must be on the basis that the parent‘s adjusted taxable income for that year of income is, and has always been, the amount worked out as a result of the amended tax assessment if:

(a)  the parent‘s adjusted taxable income worked out as a result of the amended tax assessment is higher than the amount determined under section 58; or

(b)  the parent lodged his or her income tax return for that year of income with the Commissioner of Taxation on or before the day by which the parent was required to lodge the income tax return for that year (taking into account any deferral under section 388-55 in Schedule 1 to the Taxation Administration Act 1953) and:

(i)  the parent applied for the amendment of the tax assessment on or before the day by which the parent was required to lodge his or her income tax return for that year; or

(ii)  the parent applied for the amendment of the tax assessment before the end of 28 days after the parent was given the tax assessment (including an amended tax assessment) by the Commissioner of Taxation; or

(iii)  the parent applied for the amendment of the tax assessment before the end of 28 days after the parent becomes aware that the tax assessment is not correct if the parent did not apply for the amendment on or before a day referred to in subparagraph (i) or (ii) because of circumstances beyond the knowledge or control of the parent; or

(iv)  the parent did not apply for the amendment of the tax assessment on or before any of the days referred to in subparagraph (i), (ii) or (iii), but the Registrar is satisfied that special circumstances exist.

(3C)  An amendment of the administrative assessment under subsection (3A) must be in accordance with subsection (3E) if:

(a)  subsection (3B) does not apply; and

(b)  the parent‘s adjusted taxable income (the later income ) worked out as a result of the amended tax assessment is:

(i)  higher than the earlier ascertainment of the parent‘s taxable income; but

(ii)  lower than the amount determined under section 58.

(3D)  An amendment of the administrative assessment under subsection (3A) must be in accordance with subsection (3E) if:

(a)  subsection (3B) does not apply; and

(b)  the parent‘s adjusted taxable income (the later income ) worked out as a result of the amended tax assessment is lower than both the earlier ascertainment of the parent‘s taxable income and the amount determined under section 58; and

(c)  any of the following applies:

(i)  the parent applied for the amendment of the tax assessment before the end of 28 days after the parent was given the tax assessment (including an amended tax assessment) by the Commissioner of Taxation;

(ii)  the parent applied for the amendment of the tax assessment before the end of 28 days after the parent becomes aware that the tax assessment is not correct if the parent did not apply for the amendment on or before a day referred to in subparagraph (i) because of circumstances beyond the knowledge or control of the parent;

(iii)  the parent did not apply for the amendment of the tax assessment on or before either of the days referred to in subparagraph (i) or (ii), but the Registrar is satisfied that special circumstances exist.

(3E)  If subsection (3C) or (3D) applies, the amendment of the administrative assessment under subsection (3A) must be on the basis of the later income from the day the earlier ascertainment of the parent‘s adjusted taxable income took effect.

Amended tax assessments--prospective determinations

(3F)  If none of subsections (3B), (3C) nor (3D) applies, an amendment of the administrative assessment under subsection (3A) for a child support period must be on the basis that for each later day in the period the parent‘s adjusted taxable income for that year of income is the amount worked out as a result of the amended tax assessment.

No taxation assessment required

(4)  This section applies whether or not the Commissioner of Taxation has made an assessment under an Income Tax Assessment Act of the parent‘s taxable income for that year of income.

1. The starting position is that Mr Ratliff’s lower actual adjusted taxable incomes cannot be given retrospective effect. There are obvious policy reasons for this; it would potentially be grossly unfair to the other party to revisit the assessment upon which they were entitled to rely.

2. Regulation 11 of the Child Support (Assessment) Regulations 2018 (“Regulation 11”) provides the following:

   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.

   (2) For the purposes of section 58A of the Act, the following circumstances are prescribed in relation to a parent who resided overseas during the last relevant year of income for the child support period for which the Registrar made the relevant administrative assessment:

   (a)  the parent was not required to lodge a tax return under the Tax Act;

   (b)  the parent provides the information about the parent’s adjusted taxable income to the Registrar within a reasonable time in the circumstances.

1. I am comfortably satisfied that Mr Ratliff suffered a serious brain injury in 2005 which severely impacts his capacity to manage his daily life, including and in particular his financial affairs. He is the subject of an enduring power of attorney because he is not able to manage his arrangements without significant assistance. His tax returns up to the 2009/10 financial year were lodged on time only as a result of the assistance of Miss Fitzsimons. I accept his international travel was arranged with assistance; I consider Child Support has given too much weight to those arrangements. Similarly, I do not consider the recorded telephone contacts demonstrate Mr Ratliff had capacity to understand and manage his child support obligations. I accept that Mr Ratliff has been able to briefly hold down employment; however, that has only ever been able to be for short periods and he has been unable to sustain employment as a consequence of his brain injury. The serious impact of his injury is supported by medical evidence. I am satisfied Mr Ratliff was unable to provide information in a timely way due to his serious impairment, and that the information was provided to the Registrar as soon as practicable (and after a time Mr Ratliff was able to secure [Ms A]’s assistance to manage his affairs).

2. I am therefore satisfied that, for the purposes of Regulation 11, Mr Ratliff satisfies the prescribed circumstances for the purposes of section 58A of the Act for his adjusted taxable incomes for the 2010/11, 2011/12, 2012/13, 2013/14, 2014/15, 2015/16, 2016/17, 2017/18, 2018/19 and 2019/20 financial years to be given retrospective effect. Child Support will be required to recalculate Mr Ratliff’s child support liability accordingly.

3. I note that to extent it is possible, I encourage Child Support to give effect to the ultimate outcomes sought by both parents in this case. Both parents are clearly genuinely committed to prioritising [child]’s interests going forward.

4. As I have a reached a different conclusion to the objections officer, the decision under review will be set aside.

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 direction that the child support assessment be reassessed in accordance with paragraphs 7 to 11 of these reasons.