Rigby and Batson (Child support)

[2022] AATA 3062

Rigby and Batson (Child support) [2022] AATA 3062 (21 July 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/BC023635

APPLICANT:  Mr Rigby

OTHER PARTIES:  Child Support Registrar

Ms Batson

TRIBUNAL:Senior Member S Trotter

DECISION DATE:  21 July 2022

DECISION:

The decision under review is affirmed.

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 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 Rigby and Ms Batson are the separated parents of two children (born 2009 and 2011) (the children). This review application concerns a decision of the Services Australia – Child Support Agency (CSA) in relation to a child support case registered with the CSA and specifically about whether an income estimate made by Ms Batson on 23 December 2021 should be accepted.

2. Prior to 23 December 2021, the CSA was assessing the child support liability on the basis of an adjusted taxable income of $58,071.18 for Ms Batson when Ms Batson is recorded as advising the CSA that there was a change in her financial circumstances and she lodged an estimate of $0 per annum for the period 23 December 2021 to 30 June 2022.

3. On 17 January 2022, the CSA accepted the annualised income estimate for Ms Batson of $0 and applied it in the child support estimate from 23 December 2021.

4. On 5 April 2022, Mr Rigby lodged an application with the Tribunal seeking independent merits review of the CSA’s decision stating as follows:

   could not be reached so you checked with her employer and that she is on leave without pay. CSA has then disallowed my objection. As I stated in my first objection statement: Ms Batson is paying a mortgage, she has bills to pay, she has children to feed when she has them on her week. I believe Ms Batson has a … source of income in order to pay for the above mentioned outgoings. I do not understand how my previous objection could be disallowed considering Ms Batson is able to pay for everyday living including looking after her mother who also resides at the address.

5. The hearing of the application was held on 19 July 2022. Mr Rigby and Ms Batson both spoke to the Tribunal by conference telephone and gave evidence on affirmation. The Child Support Registrar did not participate in the hearing and did not attend.

6. In considering the application, the Tribunal took into account the oral evidence of Mr Rigby and Ms Batson and the documentary material (marked Exhibit 1, pages 1 to 290) provided by the CSA to the Tribunal and the parties and documents provided by Ms Batson (marked Exhibit B pages 1 to 12), numbered copies of which were exchanged with the parties.

ISSUES

1. The statutory provisions relevant to this review are in the Child Support (Assessment) Act 1989 (the Assessment Act). A child support liability is usually determined using the child support formula in Part 5 of the Assessment Act for periods of 15 months (child support periods). The formula takes into account various factors including each parent’s adjusted taxable income, as defined in section 43 of the Assessment Act.

2. When a parent’s income reduces by 15% or more as assessed against their adjusted taxable income for the last relevant year of income, the parent may make an estimate of future income under section 60 of the Assessment Act.

3. The legislation provides some flexibility for parents whose circumstances change. Section 60 of the Assessment Act allows a person to elect to estimate their adjusted taxable income when a parent’s income reduces by 15% or more as assessed against their adjusted taxable income for the last relevant year of income. The period affected by an estimate is set out in section 60. The period starts on the day the person makes an estimate or the start of a financial year, whichever is the later. The period ends at the end of the financial year. The Registrar may, under section 63AA of the Assessment Act, refuse to accept an election if it is likely that the estimate is not accurate.

4. An estimate of income by its nature may be unlikely to be precise. In essence, what is required is a forecast of likely income for the rest of the tax year, taking into account any allowable deductions. The estimate should take account of what is known, as well as what is reasonably in contemplation as likely. However, when reviewing the efficacy of an income estimate, it is not appropriate to have regard to changes in circumstances that could not reasonably have been anticipated when the estimate was given; a point-in-time approach is required.

5. A party to a child support case has legal obligations to ensure an estimate remains accurate and legislative mechanisms are in place for the estimate to be reconciled and the assessment adjusted if there is a variation between actual adjusted taxable income and the estimate, and there is the potential for a penalty if appropriate.

6. The issues to be determined by the Tribunal are as follows:

(a)Is the annualised estimate for the partial year 23 December 2021 to 30 June 2022 not more than 85% of Ms Batson’s adjusted taxable income for the last relevant year of income? And, if so,

(b)Should the discretion to refuse to accept the estimate be exercised?

CONSIDERATION

1. Only those matters of relevance to the issues before the Tribunal are canvassed in these Reasons. As discussed at hearing, there are other matters which, understandably of importance to the parties, are of no relevance to the issues before the Tribunal.

2. Mr Rigby queried at hearing how Ms Batson’s income estimate could be $0 when she continues to pay usual expenses of living, mortgage and bills etc. He said his child support liability then increased and he found it difficult to understand. The Tribunal discussed with Mr Rigby that a person may have access to other monies that is not income. Mr Rigby asked that it be taken into consideration that Ms Batson’s estimate of $0 income being accepted put him under more financial stress. The Tribunal discussed with Mr Rigby that although a possible consequence of an estimate being accepted for one party, the impact financially upon the other parent is not a determinative factor as to whether an estimate is accepted.

3. Ms Batson referred the Tribunal to the documents provided by her to the Tribunal including her email of 22 June 2022 (Exhibit B, pages 1 to 12). Ms Batson’s evidence to the Tribunal was that she ceased employment in June/July 2021 but she continued to receive income which she assumed was some sort of payment for being incapacitated. As she therefore still had income coming in she did not at that stage claim carer payment, in relation to care she provides to her mother who lives with her. However she subsequently was advised by her employer that she had been overpaid by quite a large sum. The Tribunal notes that an email from Ms Batson’s previous employer to her dated 18 January 2022 (page 4 of Exhibit B) refers to an overpayment of $20,893.30.

4. Ms Batson’s evidence was that she then applied for carer payment in late December 2021 or January 2022. At the time of giving the estimate to the CSA she had not yet claimed carer payment. She still owes the whole amount of overpaid salary to her employer and has to pay it back when she returns to work. She has tried to fight it because it was beyond her control and she lost entitlement to carer payment over that period. The overpaid salary she received was used for general living expenses because she assumed at the time it was her entitlement.

5. The Tribunal discussed with Ms Batson her various bank statements contained in Exhibit 1. The Tribunal noted that there was a direct credit to Ms Batson’s account on 17 February 2022 (page 201 of Exhibit 1) of $306.46 described as ‘Wage/salary’. The Tribunal also discussed other amounts shown in Ms Batson’s account statements in January and February 2022 following the making of the estimate specifically $1,013.34 on 6 January 2022, $297.03 on 20 January 2022, $297.03 on 3 February 2022, $387.42 on 8 February 2022 and $306.46 on 17 February 2022. Ms Batson said that it is only possible that these amounts are from her employer. She said she is technically working a certain number of hours but she is taking it as unpaid leave. Her understanding is that she did not have any paid leave left and anything that she has been paid is in error and will need to be paid back so that any wages and salary shown in her bank statement have to repaid.

6. The Tribunal notes that the CSA contacted Ms Batson’s employer on 11 March 2022 (as recorded in the CSA’s records – page 158 of Exhibit 1) and was advised that Ms Batson had been on long-term unpaid leave since June 2021 and would be until March 2022. This was confirmed in email on 22 March 2022 (page 164 of Exhibit 1).

Issue 1 – Is the annualised estimate for the partial year 23 December 2021 to 30 June 2022 not more than 85% of Ms Batson’s adjusted taxable income for the last relevant year of income?

1. The estimate provided by Ms Batson for 23 December 2021 to 30 June 2022 was $0. This is not more than 85% of Ms Batson’s then adjusted taxable income of $58,071.18.

Issue 2 - Should the discretion to refuse to accept the estimate be exercised?

20.The Tribunal notes that the power to refuse an estimate is discretionary under section 63AA of the Act. Section 63AA provides the Registrar with a discretion to refuse an income election in certain circumstances, including when the estimated income is likely to be lower than the parent’s actual adjusted taxable income for the estimate period. If the criteria set out in section 63AA are met, there are not further statutory criteria set out to consider whether to refuse or accept an estimate.

21.The election of an estimate of income relies on the income during the period, not resources that might be available.

1. The Tribunal considered that in all the circumstances of the case, the election was correctly accepted by the CSA as at 23 December 2021. The Tribunal is satisfied that any salary amounts subsequently received by Ms Batson were not anticipated as she had extinguished all paid leave. Whilst the evidence shows that some salary amounts were subsequently paid, the Tribunal is satisfied, including have regard to Ms Batson’s employer’s email of 22 March 2022 that from 6 July 2021 to 31 March 2022 (and subsequently) Ms Batson was on unpaid sick leave. If it transpires that the amounts received as salary after 23 December 2021 are ultimately part of Ms Batson’s taxable income, the divergence from the estimate of $0 is minor, unlikely to impact the child support liability and will be accounted for in any event by the reconciliation process.

23.All legislative requirements for lodging an income estimate were met in relation to Ms Batson as at 23 December 2021 and there is no material available to the Tribunal to indicate that the Registrar should have refused the estimate at that time.

1. Having taken all of these matters into account, the Tribunal is not satisfied that the discretion to refuse to accept the estimate should be exercised.

2. As this is the same decision as that reached by the CSA, it follows that the decision under review is affirmed.

DECISION

The decision under review is affirmed.