Renssalaer and Errington (Child support)

[2021] AATA 1977

Renssalaer and Errington (Child support) [2021] AATA 1977 (23 April 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/BC020316

APPLICANT:  Mr Renssalaer

OTHER PARTIES:  Child Support Registrar

Ms Errington

TRIBUNAL:Member A Schiwy

DECISION DATE:  23 April 2021

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – reconciliation of an estimated income - whether the estimated income was less than the actual income received in the relevant year – 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 matter is about whether an estimate of income reconciliation was correctly calculated. 

2. Mr Renssalaer and Ms Errington are the parents of one child.  A child support case is registered, and Mr Renssalaer is the parent liable to pay child support to Ms Errington. 

3. Mr Renssalaer’s adjusted taxable income in 2016-17 was $56,348.  On 15 June 2017 Mr Renssalaer estimated his income for 2017-18 to be nil.  A Department of Human Services (now Services Australia) (‘Child Support’) officer decided to accept the estimate.

4. On 14 July 2020 Child Support were notified that Mr Renssalaer’s adjusted taxable income for 2017-18 was $201,106.  Child Support undertook an estimate of income reconciliation based on his actual adjusted taxable income and this resulted in an additional child support liability.  A penalty was also applied but has since been waived.

5. On 7 August 2020 Mr Renssalaer objected to the decision and on 24 November 2020 a Child Support objections officer disallowed Mr Renssalaer’s objection.

6. On 25 November 2020 Mr Renssalaer applied to this tribunal for an independent review of the objections officer’s decision.

7. The tribunal conducted a hearing on 23 April 2021 which Mr Renssalaer and Ms Errington attended via teleconference and gave affirmed evidence to the tribunal.

8. The tribunal had before it a bundle of papers provided by Child Support which was made available to the parents prior to the hearing.   

CONSIDERATION

1. The law that applies in the present matter is contained in the Child Support (Assessment) Act 1989 (the Assessment Act). The rate of child support payable by a liable parent is usually based on an administrative assessment that requires the application of a statutory formula which takes into account, among other things, the adjusted taxable income of each parent. The adjusted taxable income is normally the parent’s taxable income.

10.The Assessment Act allows a parent to elect to estimate his or her adjusted taxable income for a year of income and use the estimated income to replace their adjusted taxable income.  The parent can make an estimate prior to the year of income based on their estimate of their income for that year; or they can make an estimate during an income year based on what they estimate they will earn for the rest of the year.  

1. After the end of the income year Child Support is required to undertake a reconciliation calculation; comparing the parent’s estimated income with their actual income. If the difference between the actual adjusted taxable income and the applicable year to date income is higher than the estimate, the assessment must be amended to use the actual income (refer to sections 64 and 64AA of the Assessment Act). If an adjusted taxable income has not been obtained 12 months after the estimate year (in this case 30 June 2019), Child Support may determine an adjusted taxable income and undertake an estimate reconciliation on that basis (refer to sections 64AB, 64AC and 64AE).

12.The Child Support papers show that:

·As at 18 May 2020 Mr Renssalaer had not lodged a tax return for 2017-18 and they were considering making a determination about his adjusted taxable income.

·Child Support wrote to Mr Renssalaer and on 26 May 2020 he advised that he had withdrawn some superannuation during 2017-18. 

·After obtaining information about the superannuation withdrawal Child Support determined Mr Renssalaer’s adjusted taxable income to be $201,106.  On 21 September 2020 Child Support received notification that his actual adjusted taxable income was $201,106.

·Mr Renssalaer told Child Support that he had been advised that the superannuation was not taxable and as his income was under the tax threshold he did not need to lodge a tax return.  He advised that the superannuation had been used to pay out the mortgage.

·Mr Renssalaer said he was advised by the Australian Taxation Office that $195,000 of his superannuation was not taxable.

·When he withdrew the superannuation, he stated he was retiring; he did not apply for the payment on the grounds of ill health.

13.Mr Renssalaer provided the following information when he objected to the income reconciliation:

·He ceased working in June 2017 as he became seriously ill and was unable to continue working.

·He withdrew funds from his superannuation fund (he was over the preservation age) to assist with medical costs and to contribute to his costs of living.

·He was advised prior to making the withdrawal of superannuation that the amount would not be taxable.  Because he had no other income he therefore thought he would not need to lodge an income tax return for 2017-18.

·He could have applied for the superannuation under invalidity grounds, but did not as he was over the preservation age.

·He has always made the required child support payments, even when he was ill and not working. 

·If he had known how the withdrawal of superannuation would impact his child support assessment he would have left it for another six months (when the assessment had ended).

·He doesn’t have a relationship with the mother or child.

·He is still not working or earning an income and has been supported by his wife.

14.Mr Renssalaer provided a letter from his doctor confirming his illness and a letter from his accountant stating that the superannuation lump sum withdrawal would be the only item included in his tax return for 2017-18.

15.Mr Renssalaer’s evidence was not disputed, and the tribunal accepts that he did not update his estimate when he withdrew his superannuation as he was of the belief that it would not form part of his income. 

16.There is no discretion in the Assessment Act to allow for the superannuation payment to be disregarded when completing the income estimate reconciliation or to allow for a lower assessment in the circumstances; therefore, the tribunal decided to affirm the decision under review.

17.The tribunal noted that had Mr Renssalaer been advised correctly he could have amended his estimate when he made the withdrawal and applied for a change of assessment to have his child support liability reduced.   There is an 18-month time limit for backdating a departure determination and that time has now passed (Mr Renssalaer would need to apply to the court to allow for further backdating).

DECISION

The decision under review is affirmed.