Royce and Hong (Child support)

[2020] AATA 3676

Royce and Hong (Child support) [2020] AATA 3676 (2 July 2020)

DIVISION:  Social Services and Child Support Division

REVIEW NUMBER:  2020/MC019148

APPLICANT:  Miss Royce

OTHER PARTIES:  Child Support Registrar

Mr Hong

TRIBUNAL:Member J Longo

DECISION DATE:                           2 July 2020

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income – reconciliation of estimate – 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 review concerns the reconciliation of Mr Hong’s estimated income for the 2018/2019 financial year.

2. Mr Hong and Miss Royce are the parents of [Child 1]. There has been a child support assessment in place made by the Department of Human Services – Child Support (the Department) for the children since 2014.

3. On 10 September 2019 a decision was made to reconcile the estimated income against his actual taxable income of $114,594. Miss Royce objected to that decision on 22 November 2019. On 15 April 2020 the Department disallowed Miss Royce’s objection.

4. On 29 May 2020, Miss Royce lodged an application to the Administrative Appeals Tribunal (the tribunal) for a review of the decision. The hearing took place on 2 July 2020. Miss Royce and Mr Hong participated in the hearing by conference telephone and gave sworn evidence. In making its decision, the tribunal took into consideration the documents (numbered 1 to 213) provided by the Department which were also sent to Miss Royce and Mr Hong. Miss Royce provided additional information to the tribunal (numbered A1 to A7), which has been also sent to Mr Hong.

ISSUES

1. The issues in this matter are whether or not Mr Hong’s estimate of income have been reconciled correctly.

CONSIDERATION

1. The legislation relevant to this review is contained in the Child Support (Assessment) Act 1989 (the Assessment Act). Usually child support liabilities are determined using a child support formula in Part 5 of the Assessment Act for periods of 15 months (child support periods). The formulas take into account a range of factors including the adjusted taxable incomes of each of the parents.

2. The adjusted taxable income for each of the parents (section 43 of the Assessment Act) is the taxable income from the last tax year that ended before the start of the child support period (plus supplementary amounts, if relevant). Prior to lodging an estimate on 23 October 2018, the child support assessment for the child support period was based on Mr Hong’s 2017/18 adjusted taxable income of $118,911. The tribunal accepts that Mr Hong provided an estimate for the period from 23 October 2018 to 30 June 2019.

3. The legislation provides some flexibility for parents whose circumstances have changed. Section 60 of the Assessment Act allows a person to lodge an income estimate. The period affected by an estimate is set out in section 60. The period starts on the day the person made an estimate or the start of the tax year, whichever is the later, and ends at the end of the tax year. The effect of an income election is set out in section 61 of the Assessment Act. It is used in the assessment for a specified period unless refused under section 63AA of the Assessment Act. When lodging an estimate for part of a tax year a person is required to provide the Department with a figure for their income in the year to date.

4. The Department must reconcile estimates after the end of the relevant financial year when it receives advice from the Australian Taxation Office of the parent’s taxable income for the relevant year. The Assessment Act provides different methods for reconciling estimates depending on whether a parent made one or more estimates for the whole or part of a tax year. In this case Mr Hong made several estimates of income from 23 October 2018. He stated that he told the Department that he would earn income of $0 for the remainder of the financial year and provided a year to date income of $76,488. Mr Hong provided additional estimates of his income on 13 November 2018, 4 January 2019, 5 April 2019 and 28 June 2019.

10.Section 64A of the Assessment Act provides a formula for reconciling multiple income elections for the remaining part of a tax year. That section applies to the estimates made by Mr Hong on 23 October 2018, 13 November 2018, 4 January 2019, 5 April 2019 and 28 June 2019. Mr Hong’s adjusted taxable income for 2018/19 was $114,594. The Department records show a year to date amount of $82,502 for his estimate of income. As his total estimated income for the period 23 October 2018 to 30 June 2019 was $36,695.64, his income was less than the year to date income and estimate ($82,502 + $36,695.64 = $119,197.64).

11.Miss Royce has objected and sought review of the objection because she did not agree with the estimates provided to the Department by Mr Hong, as she stated there was no evidence to support these figures. Miss Royce questioned that the estimates had not been appropriately checked and did not agree with the resulting child support liability.

12.The question of whether the multiple estimates provided by Mr Hong during the period between 23 October 2018 and 30 June 2019 should have been accepted by the Registrar is not the decision under review before the tribunal. While these decisions are decisions to which a person may object to the Department and also seek a review regarding these estimates with the tribunal, the Department has not considered objection decisions for these estimates. Therefore, the tribunal does not have the jurisdiction to review these decisions. As the estimates provided by Mr Hong on 23 October 2018, 13 November 2018, 4 January 2019, 5 April 2019 and 28 June 2019 were accepted by the Department, the tribunal cannot reconsider whether these estimates were correct.

13.The tribunal has examined the reconciliation calculations made by the Department, based on the year to date income provided to the Department and the multiple estimates made by Mr Hong and his 2018/2019 taxable income and confirms that the reconciliation has been undertaken correctly. As Mr Hong’s year to date income and estimated income is higher than his taxable income, there are no arrears of child support payable from this reconciliation.

DECISION

The decision under review is affirmed.