Roylance and Roylance (Child support)

[2021] AATA 3857

Roylance and Roylance (Child support) [2021] AATA 3857 (3 September 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/SC022006

APPLICANT:  Mr Roylance

OTHER PARTIES:  Child Support Registrar

Ms Roylance

TRIBUNAL:Member P Jensen

DECISION DATE:  3 September 2021

DECISION:

The decision under review is set aside and, in substitution, Mr Roylance’s estimate of income of $0 from 3 May 2021 is accepted.

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 set aside and substituted

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. Mr Roylance and Ms Roylance are the parents of [Child 1]. A child support case was registered in 2006 with what is commonly called the Child Support Agency or CSA. The Child Support (Assessment) Act 1989 (“the Act”) provides for an administrative assessment of child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes. The Act also allows a parent to provide an estimate of income and, if accepted, the administrative assessment is based on that estimate, subject to a possible reassessment once the parent’s adjusted taxable income has been assessed by the Australian Taxation Office.

2. On 10 August 2020 the CSA decided to accept Mr Roylance’s estimate of income from 10 August 2020 of $45,906 per annum, and on 4 September 2020 it decided to accept Mr Roylance’s estimate of income from 4 September 2020 of $137,520 per annum. Neither parent objected to those decisions.

3. On 3 May 2021 the CSA concluded that Mr Roylance had provided an estimate of income of $3,711 per annum and it decided to accept that estimate. Ms Roylance promptly objected to that decision. An objections officer concluded:[1]

   [W]e are satisfied that the estimate lodged on 3 May 2021 was incorrect as [Mr Roylance] did not finish work until 9 May 2021. Therefore, the estimate for $3,711 will be refused.

   [1]Page 6 of the hearing papers.

4. Mr Roylance promptly applied to the Tribunal for further review. I heard the matter on 3 September 2021. Mr Roylance and Ms Roylance gave sworn evidence by conference phone.

5. Mr Roylance’s estimate dated 3 May 2021 was lodged pursuant to section 62A of the Act. He was required to estimate his adjusted taxable income for the remainder of the financial year, which was then converted to an annualised rate of income. Subsection 63AA(3) of the Act relevantly provides that if the estimate is an underestimate, the CSA “may refuse to accept” the estimate. The CSA has a discretion to refuse an underestimate and that discretion must be exercised reasonably.

6. The CSA’s file note of its conversation with Mr Roylance on 3 May 2021 includes the following: “Estimate of $0 income.”[2] At the hearing, Mr Roylance confirmed that he had provided an estimate of $0. The CSA file note also includes the following:

   Other details
   --------------

   Explained annualised income of $3711 to customer and confirmed understanding.

   [2]Page 71 of the hearing papers.

7. At the hearing, Mr Roylance could not recall being given that explanation and he could not explain the figure of $3,711. It is the annualised rate that would have resulted if he had estimated that he would receive $600 during the 59 days from 3 May 2021 to 30 June 2021.[3] Even more perplexing is a CSA letter which effectively states that Mr Roylance estimated that his income for the remainder of the year would be $0 + $0 + $0 + $0 + $0 = $600.[4] On balance, I accept Mr Roylance’s oral evidence and the CSA’s file note that Mr Roylance provided an estimate of income of $0. He did not provide an estimate of $3,711 per annum and the CSA therefore could not accept an estimate of $3,711 per annum.

   [3]Page 146 of the hearing papers.

   [4]Page 75 of the hearing papers.

8. At the hearing, Mr Roylance said he ceased attending his place of employment on 29 April 2021 but he was required to give seven days’ notice of his intention to terminate his employment. He provided a copy of a heavily redacted termination letter dated 1 May 2021. According to information the CSA obtained from Mr Roylance’s ex-employer, his employment ended on 9 May 2021. He was paid $5,514.56 per fortnight which, if one assumes he was paid at a constant daily rate, would equate to earnings during the seven days from 3 to 9 May 2021 of $2,757.28, and on 12 May 2021 he received a further “Annual Leave Taken on Terminat[ion]” payment of $795.26,[5] bringing his total likely earnings during the 59 days from 3 May 2021 to 30 June 2021 to $3,552.42, which equates to $21,977 per annum.

   [5]Page 119 of the hearing papers.

9. On 4 September 2020 the CSA noted: “[Mr Roylance] advised Bank interest of $1800 and the net financial investment income out of that will be $1602 for 2020/21”.[6] That information does not explain the $600 that the CSA apparently added to the estimate that Mr Roylance provided on 3 May 2021 because $1,602 / 365 x 59 = $258.95. At the hearing, Mr Roylance said that under the terms of his contract with the financial institution that is holding his savings, he is only entitled to interest payments if he maintains a certain rate of deposits and he was unable to maintain that rate of deposits whilst unemployed. He therefore did not expect to receive any interest payments from 3 May 2021 to 30 June 2021. On balance, I accept his evidence on that point. However, as an aside, it is worth noting that ($3,552.42 + $258.95) / 59 x 365 = $23,578 per annum.

   [6]Page 44 of the hearing papers.

10. In summary, I find that Mr Roylance provided an estimate of income of $0 on 3 May 2021 but his likely income for the remainder of the financial year was $21,977 per annum. He provided an underestimate. It is therefore necessary to consider whether his estimate should have been refused.

11. The administrative assessment formula includes a self-support amount which was $25,575 per annum as at 3 May 2021.[7] The administrative assessment formula also includes each parent’s child support income, which, relevantly, is their adjusted taxable income minus the self-support amount, with any negative result taken to be nil: section 41 of the Act. Put simply, if a person’s adjusted taxable income is less than or equal to the self-support amount, their child support income is nil and they are required to pay the minimal annual rate or fixed annual rate of child support payable, depending on their circumstances: see generally 2.4.11 and 2.4.12 of the Child Support Guide. Mr Roylance’s estimate of $0 was an underestimate. An accurate estimate would have been $21,977 per annum. However, both rates of income are less than the self-support amount. The broader point is that Mr Roylance was about to become unemployed and his estimate, whilst mathematically incorrect, nevertheless fairly reflected that fact for child support purposes. The preferable decision at first instance was to accept his estimate of $0.

    [7]Page 82 of the hearing papers.

DECISION

The decision under review is set aside and, in substitution, Mr Roylance’s estimate of income of $0 from 3 May 2021 is accepted.