Ruffer and Bignot (Child support)

Ruffer and Bignot (Child support) [2024] AATA 4137 (22 August 2024)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2021/HC020866
APPLICANT:  Ms Ruffer
OTHER PARTIES:  Child Support Registrar
Mr Bignot

TRIBUNAL:Deputy President K Dordevic
DECISION DATE: 22 August 2024
DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – adjusted taxable income correctly determined – exempt car benefit – total net investment loss – 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

Ms Ruffer and Mr Bignot are the parents of two children. The younger child remains a child of the assessment. Mr Bignot is the parent liable to pay child support. There has been a registered child support assessment in place since 15 March 2002.
From 1 November 2019 Mr Bignot’s child support liability was calculated on the basis of his 2019 adjusted taxable income of $88,285 and Ms Ruffer’s 2019 provisional income of $19,998.
On 29 October 2020 the Australian Taxation Office (ATO) advised Services Australia – Child Support (Child Support) that Mr Bignot had lodged his 2020 income tax return and his 2020 adjusted taxable income was $94,811. On 30 October 2020 Child Support applied Mr Bignot’s 2020 adjusted taxable income to the administrative assessment from 1 December 2020.
On 20 November 2020 Ms Ruffer objected to the decision. An objections officer disallowed the objection on 29 January 2021.
On 24 February 2021 Ms Ruffer lodged an application for review of the objections officer’s decision to the Social Services and Child Support Division of the Administrative Appeals Tribunal (the Tribunal). The Tribunal was constituted by Member Cullimore, who heard and determined the application on 24 June 2021, affirming the decision made by the objections officer.
Ms Ruffer lodged a notice of appeal in the Federal Circuit and Family Court of Australia. [In] September 2021 the matter was remitted to the Tribunal by consent on the basis that the Tribunal’s decision was affected by an error of law as the child support period should have commenced on 1 November 2020. The order dictated that the Tribunal was to be differently constituted.
The hearing took place on 30 November 2021. On 14 January 2022, the Tribunal, constituted by Senior Member Ellis, set aside the decision under review and, in substitution, decided that Mr Bignot’s 2020 adjusted taxable income should be applied to the administrative assessment from 1 November 2020.
Ms Ruffer again lodged a notice of appeal in the Federal Circuit and Family Court of Australia. [In] January 2024 the Court ordered that the Tribunal’s decision be set aside and the matter was remitted to the Tribunal to be determined according to law by a differently constituted Tribunal.
On 5 February 2024 the Tribunal asked the Child Support Registrar to exercise the Registrar’s powers to obtain the information and/or documents from the ATO, [Fund 1], [Employer 1] and [Business 1] to obtain the information and/or documents listed below:
1.A copy of Mr Bignot’s 2019/2020 income tax return, including any schedules;
2.A transaction statement from Mr Bignot’s superannuation provider [Fund 1] for the period 1 July 2019 to 30 June 2020;
3.A copy of all employment contracts between Mr Bignot and [Employer 1], in addition to a statement from this employer as to all components of remuneration paid to Mr Bignot in the 2019/2020 financial year; and
4.All statements for the period 1 July 2019 to 30 June for all accounts and/or SMSF’s held with [Business 1], whether they are held solely in Mr Bignot’s name, or jointly by Mr Bignot and another person, or funds and/or accounts to which Mr Bignot is a signatory.
The final responses to the above order were received on 18 April 2024 (marked folios C1 to C37). A copy was provided to Ms Ruffer and Mr Bignot.
The matter was set down for hearing on 1 May 2024. Both Ms Ruffer and Mr Bignot elected to have the application heard on the papers.
On 16 May 2024 the Tribunal issued directions seeking further information from Mr Bignot in respect of the benefit he receives from the provision of a motor vehicle from his employer, in the following terms:
Mr Bignot must provide the following evidence to the Administrative Appeals Tribunal (AAT) by the close of business on 31 May 2024:
6.1A declaration stating the make and model of any car registered in your name in the 2020 financial year, attaching proof of registration of that vehicle for the same period;

6.2A declaration as to whether the car provided by your employer in the 2020 financial year is either:
a.   A panel van or utility truck, designed to carry a load of less than one tonne; or
b.   Used for taxi travel, designed to carry a load of less than one tonne and not a limousine; or
c.   Any other road vehicle designed to carry a load of less than 1 tonne.
6.3A declaration as to whether the car provided by your employer was garaged or kept at or near your place of residence during the 2020 financial year;
6.4A declaration as to whether you were entitled to use the car provided by your employer during the 2020 financial year for private use;
6.5A declaration about whether there was any private use of the car provided by your employer during the period 1 July 2020 to 31 March 2020 other than work-related travel or other private use other than that which was minor, infrequent and irregular;
6.6A declaration about whether the prohibition on using the car provided by your employer for anything other than business use, travel between home and work, and minor, infrequent and irregular private use is consistently enforced and if so, a description of that enforcement;
6.7A declaration providing the description of the travel that occurred between your workplace and home in the car provided by your employer (as declared on 31 March 2021), including how many kilometres were travelled per day and the days on which you usually attended your workplace in the 2020 financial year;
6.8Submissions as to whether the information contained in your 2018 and 2019 annual salary reviews that the value of the provision of a motor vehicle is $5,000 reflects a reportable fringe benefit; and if so,
6.9Whether the formula outlined in section 135P of Fringe Benefits Tax Assessment Act 1986 should apply to this $5,000, so indicating a reportable fringe benefit of $9,434 (applying a relevant rate of 47%).

Ms Ruffer may provide the following evidence to the Administrative Appeals Tribunal (AAT) by the close of business on 31 May 2024:
7.1Any submissions she intends to rely on in respect of the assessment of Mr Bignot’s total reportable fringe benefits.

Mr Bignot complied with the Tribunal’s directions on 31 May 2024 (marked folios B7 to B13). Ms Ruffer also complied with the Tribunal’s directions on 31 May 2024 (marked folios A138 to A273).
On 3 June 2024 the Tribunal provided Ms Ruffer the additional documents provided by Mr Bignot and Mr Bignot the relevant additional documents provided by Ms Ruffer. Both Ms Ruffer and Mr Bignot were advised that they had until close of business 12 June 2024 to provide written submissions in response to the other party’s additional submissions.
No response was received from either party.
On 28 June 2024 the Tribunal issued further orders, requiring compliance by 13 July 2024, to Mr Bignot’s employer to provide a copy of Mr Bignot’s completed Motor Vehicle Declaration for the period ending 31 March 2020 and all payslips for the period 1 April to 30 June 2020 and to the Australian Construction Industry Redundancy Trust (ACIRT) to advise whether Mr Bignot has received, or is entitled to receive, a trust distribution from ACIRT in the 2019 to 2024 financial years and whether Mr Bignot made a regular contribution to ACIRT in the 2019 to 2024 financial years.
A response was received from Mr Bignot’s employer on 1 August 2024 (marked folios D1 to D16). Ms Ruffer was provided a copy of these documents and she provided a response on 7 August 2024 (marked folios A274 to A278).
A response was received from ACIRT on 8 August 2024 (marked folios E1 to E3). A copy of these documents was exchanged with the mother and father who were both given until close of business on 21 August 2024 to provide submissions in response.
The mother provided a response on 21 August 2024 (marked folios A279 to A281). No response was received from Mr Bignot.
The Tribunal reached its decision on 22 August 2024. In reaching its decision the Tribunal took into account the documents provided by Child Support (marked folios 1 to 98), Ms Ruffer (marked folios A1 to A281) and Mr Bignot (marked folios B1 to B13) in addition to the documents received in compliance with the orders issued by the Tribunal (C1 to C37, D1 to D16 and E1 to E3).

ISSUES

The relevant legislation is contained in the Child Support (Assessment) Act 1989 (the Act).
The issues to be considered by the Tribunal are:
· Whether the quantum of Mr Bignot’s 2020 adjusted taxable income was correctly determined; and
· From what date should Mr Bignot’s 2020 adjusted taxable income be applied to the administrative assessment?

CONSIDERATION

What was Mr Bignot’s 2020 adjusted taxable income?

As the Tribunal understands it Ms Ruffer submits that Mr Bignot’s adjusted taxable income may not be reflective of the income and financial resources available to him during the same period.
Subsection 43(1) of the Act states:
(1) Subject to this Part, a parent's adjusted taxable income for a child for a day in a child support period is the total of the following components:
(a) the parent's taxable income for the last relevant year of income in relation to the child support period, disregarding the parent's assessable FHSS released amount (within the meaning of the Income Tax Assessment Act 1997) for that year of income;
(b)  the parent's reportable fringe benefits total for that year of income;
(c)  the parent's target foreign income for that year of income;
(d)  the parent's total net investment loss (within the meaning of the Income Tax Assessment Act 1997) for that year of income;
(e)  the total of the tax free pensions or benefits received by that parent in that year of income;
(f)  the parent's reportable superannuation contributions (within the meaning of the Income Tax Assessment Act 1997 ) for that year of income.
The Tribunal shall address each paragraph in subsection 43(1) in turn.
Subsection 56(1) of the Act states that the meaning of taxable income, for the purposes of assessing a parent in respect of the costs of a child in relation to a child support period is, if the parent’s taxable income has been assessed under the Income Tax Assessment Act for the last relevant year of income in relation to the child support period, the parent’s taxable income for that year is the amount assessed.
Relying on Mr Bignot’s 2020 income tax return in evidence the Tribunal finds, pursuant to paragraph 43(1)(a) of the Act, that Mr Bignot’s 2020 taxable income is $94,811 (total income of $95,914 – $1,103 in deductions = $94,811).[1]
[1] Folio C4
The Tribunal next considered paragraph 43(1)(b) of the Act.
Section 5 of the Act defines the term "reportable fringe benefits total" for a year of income for a person who is an employee (for the purposes of the Fringe Benefits Tax Assessment Act 1986 (the FBT Act), whether it applies of its own force or because of the Fringe Benefits Tax (Application to the Commonwealth) Act 1986) means the employee’s reportable fringe benefits total (as defined in the FBT Act for the year of income).
Subsection 136(1) of the FBT Act states that the term “reportable fringe benefits amount” for a year of income in respect of the employment of an employee by an employer has the meaning given by sections 135P or 135Q. Only section 135P is relevant in Mr Bignot’s case.
Section 135P relevantly states:
Employee's reportable fringe benefits amount --general rule
Does an employee have a reportable fringe benefits amount?
(1)  An employee has a reportable fringe benefits amountfor a year of income in respect of the employee's employment by an employer if the employee's individual fringe benefits amount for the year of tax ending on 31 March in the year of income in respect of the employee’s employment by the employer is more than $2,000.
Example 1:  On 31 May 2007, Sylvia waives a debt of $2,545 that her employee Angela owes her, thus providing Angela with a debt waiver fringe benefit with a taxable value of $2,545 for the year of tax ending on 31 March 2008. Angela has a reportable fringe benefits amount for the year of income ending on 30 June 2008 in respect of her employment by Sylvia.
Example 2:  On 1 March 2008, Angela's employer Neil waives a debt of $1,900 Angela owes him, providing Angela with a debt waiver fringe benefit with a taxable value of $1,900 for the year of tax ending on 31 March 2008. However, he does not provide any other fringe benefits for that year of tax in respect of her employment, so Angela does not have a reportable fringe benefits amount for the year of income ending on 30 June 2008 in respect of her employment by Neil.
Size of the reportable fringe benefits amount
(2)  The reportable fringe benefits amountis the amount worked out using the formula:
where:
"individual fringe benefits amount" is the employee's individual fringe benefits amount for the year of tax in respect of the employee's employment by the employer.
Mr Bignot’s income tax return states that his total reportable fringe benefits was nil.[2] The Tribunal notes that this does not accord with the information contained in Mr Bignot’s 2018 and 2019 annual salary reviews which states that his total salary package includes $5,000 under the line item “Company Motor Vehicle”. These review notices go on to state that the motor vehicle “is provided for company business use only. The only private use permitted, apart from minor, infrequent or irregular use, is home to work travel (and vice versa) together with any travel that is incidental to carrying out your employment duties”.[3]
[2] Folio C5
[3] Folios C36 and C37
Section 8 of the FBT Act states that there are exempt car benefits. Subsection 8(2) of the FBT Act states that a car benefit provided in a year of tax in respect of employment is an exempt benefit in relation to that year of tax if it is a panel van or utility truck and there was no private use of the car during that same period other than work related travel and other private use of a car that was minor, infrequent and irregular. Subsection 136(1) of the FBT Act defines work-related travel as travel between an employee’s place of residence to their place of employment or travel incidental to performing the duties of their employment. This is consistent with ATO guide on the same point, which states that FBT does not apply if an employee only uses the eligible vehicle for travel between work and home, travel that is incidental to travel in the course of employment and non-work-related use that is minor, infrequent and irregular. [4]
[4]>
The evidence suggests that the provision of the motor vehicle by Mr Bignot’s employer is an exempt car benefit, pursuant to subparagraphs 8(2)(b)(i) and (ii) of the FBT Act. There is no evidence that Mr Bignot’s use of the work vehicle fell outside the permissible parameters outlined above. Furthermore, no FBT benefit is declared in the payroll activity report in evidence.[5] The Tribunal concludes that the provision of a motor vehicle by Mr Bignot’s employer provides him with a financial benefit.
[5] Folio C35
The Tribunal finds, pursuant to paragraph 43(1)(b) of the Act, that Mr Bignot’s reportable fringe benefits is nil in the 2020 financial year.
He has declared 20866 trust distributions from ACIRT of $6 per fortnight, but there is no evidence as to whether it was income included in his return or related to superannuation given the terms of the applicable Enterprise Agreement.
The Tribunal finds that, pursuant to paragraph 43(1)(c) of the Act, that Mr Bignot’s 2020 total target foreign income for the 2020 financial year was $0.[6] In reaching this conclusion, the Tribunal notes that Mr Bignot’s 2020 income tax return includes supplement income section assessable foreign source income of $9. This is included in the quantum of his total supplement income and the calculation of his taxable income[7] and is consistent with the evidence provided by ACIRT.[8]
[6] Folio C5
[7] Folios C6
[8] Folio E2
The Tribunal next turned its attention to paragraph 43(1)(d) of the Act, whereby it is required to make a finding in respect of Mr Bignot’s total net investment loss.
Section 995.1 of the Income Tax Assessment Act 1997 defined total net investment loss in the following terms:
of an individual for an income year means the sum of:
(a) the amount (if any) by which the individual's deductions for the income year that are attributable to financial investments exceed the individual's gross income for that year from those investments; and
(b) the amount (if any) by which the individual's deductions for the income year that are attributable to rental property exceed the individual's gross income for that year from rental property.
The 2020 income tax return in evidence indicates that Mr Bignot’s declared net rental income of $235 (gross rental income of $9,232 – interest deductions of $6,167 – other rental deductions of $2,830).[9] Further, he reported a net financial investment loss.[10] Whilst the tax return also indicates that Mr Bignot had a net capital loss carried forward to later income years of $10,840, this is not relevant to the determination of his total net investment loss.[11]
[9] Folio C6
[10] Folio C5
[11] Folio C6
The Tribunal finds, pursuant to paragraph 43(1)(d) of the Act, that Mr Bignot’s 2020 total net investment loss was $0.
The Tribunal finds that Mr Bignot did not receive any tax free government pensions[12] or reportable employer superannuation contributions[13] in the 2020 financial year. Thus, pursuant to paragraphs 43(1)(e) and (f) of the Act, Mr Bignot’s 2020 tax free pensions and employer superannuation contributions were $0.
[12] Folio C5
[13] Folios C5, C22 to C28
The Tribunal’s findings are summarised below:

Financial Year	2020
A - Taxable Income	$94,811
B – Reportable Fringe Benefits	$0
C – Target Foreign Income	$0
D – Total Net Investment Losses	$0
E – Tax Free Pensions or Benefits	$0
F – Reportable Superannuation Contributions	$0
Adjusted Taxable Income	$94,811

The Tribunal is therefore satisfied that the application of an adjusted taxable income of $94,811 to the administrative assessment was correct.

From what date should Mr Bignot’s 2020 adjusted taxable income be applied to the assessment?

Subsection 34A(2) of the Act states that the Child Support Registrar must, as soon as practicable after a parent lodged their tax return, make a new assessment of the annual rate of child support payable, the new assessment is to begin on the first day of the next calendar month.
It is not in dispute that the ATO notified the Child Support Registrar on 29 October 2020 that Mr Bignot had lodged his tax return. Therefore, as the next calendar month is November, the new child support period must start on 1 November 2020.

Conclusion

As the Act dictates that Mr Bignot’s 2020 adjusted taxable income is $94,811 and must be applied to the administrative assessment from 1 November 2020, the decision under review is affirmed.

DECISION

The decision under review is affirmed.

[2024] AATA 4137

22 August 2024

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Statutory Construction

Judicial Review

Jurisdiction