Ruffer and Bignot (Child support)

[2021] AATA 3853

Ruffer and Bignot (Child support) [2021] AATA 3853 (24 June 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/HC020866

APPLICANT:  Ms Ruffer

OTHER PARTIES:  Mr Bignot

Child Support Registrar

TRIBUNAL:  Member S Cullimore

DECISION DATE:  24 June 2021

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – whether the adjusted taxable income of the liable parent was correctly applied – when a new child support period ought to commence - 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. The following information is taken from the records of the Department of Human Services – Child Support (“the CSA”) and is not in dispute, and the Tribunal finds each matter as fact.

2. Ms Ruffer and Mr Bignot are the parents of two children, now aged 20 and 13.

3. The child support case was registered from 9 December 2004 and it has been Registrar Collect since that date.

4. The case for the older child ended in about November 2019.

5. A previous child support period commenced 1 November 2019 and was to end 31 January 2021.

6. On 29 October 2020 Mr Bignot lodged his 2019/20 tax return.

7. On the same day, the CSA decided to fix his adjusted taxable income (“ATI”) for 2019/20 at $94,811 and to start a new child support period from 1 December 2020.

8. His new child support liability was $15,615 pa.

9. Ms Ruffer lodged an objection to that decision and on 29 January 2021 an objections officer disallowed the objection.

10.On 24 February 2021 Ms Ruffer sought a further review by this Tribunal.

DOCUMENTARY EVIDENCE AND HEARING

11.The Tribunal had before it a bundle of documents provided by the CSA. This bundle is referred to in this decision as C1 to C77.

1. Ms Ruffer provided a lengthy submission on 26 May 2021. This was A1 onwards.

2. The hearing originally scheduled for that day was deferred to 24 June 2021.

3. Ms Ruffer and Mr Bignot attended both hearings via teleconference and gave evidence and made verbal submissions.

ISSUES

15.The principal issues to be decided by the Tribunal are:

·What ATI should be used for Mr Bignot for 2019/20: and

·When should the new child support period start?

CONSIDERATION

The relevant child support law

1. The relevant law is contained in the Child Support (Assessment) Act1989 (“the Act”).

2. Administrative assessments for the most part use the ATIs of the parents derived from their most recent tax returns.

3. An administrative assessment is made for a “child support period”.

4. Child support periods start and end as prescribed by section 7A of the Act, which relevantly states as follows:

   What is a child support period?

   (1)A child support period is a period that:

   (a)starts at a time described in subsection (2); and

   (b)ends at the time described in subsection (3) that occurs soonest after the start of the period.

   …..

   When does a child support period start?

   (2)Each of the following times is the start of a child support period:

….

(d)immediately after the end of the preceding child support period that relates to child support payable for the child (whether it was a period starting as described in paragraph (a), (b) or (c) or this paragraph).

…

(3)The child support period ends at whichever of the following times occurs soonest after the start of the period:

(a)the time 15 months after the period started;

(b)the end of the calendar month during which the Registrar makes an assessment relating to the annual rate of child support payable for the child as required by section 34A (assessment when new tax figure is available);

(c)…..

1. The Registrar must assess the new rate of child support after a new tax return is lodged. This obligation is set out in section 34A of the Act, as follows:

   34ARegistrar must make assessment when new tax figure is available

   Application of section

   (1)This section requires the Registrar to assess the annual rate of child support payable in some cases if:

   (a)child support is payable by a liable parent for a child for a day in a child support period (the earlier period); and

   (b)during the earlier period, an assessment (the tax assessment) is made under an Income Tax Assessment Act of the taxable income, or any other component of the adjusted taxable income, of the liable parent or the other parent, for the latest year of income (the last year) that ended after the start of the earlier period.

   Registrar must make assessment using new tax figures

   (2)As soon as practicable after the tax assessment is made, the Registrar must assess the annual rate of child support payable for the child for days in a child support period starting on the first day of the next calendar month (after the calendar month in which the Registrar makes the assessment).

2. The CSA Guide at 2.3.2 states:

“The Registrar makes an assessment when the ATO issues an income tax assessment for one of the parents

The Registrar must make a new assessment when an income tax assessment issues for either parent for the latest financial year that ended during the existing child support period…..(CSA Act section 34A). The Registrar must do this as soon as it is practicable after the ATO issues the assessment (CSA Act section 34A(2)).

Generally it is practicable to make an assessment in the month that the tax assessment issues if it issues on or before the 15th of the month. If the tax assessment issues after the 15th of the month the Registrar will make the assessment in the following month and commence that assessment and a new child support period on the first of the month after that.

The new assessment applies to a new child support period that starts on the first day of the month after the month in which the assessment was made (CSA Act section 7A(2)(d)).”

1. “ATI” is made up of various “income components” as set out in section 43 of the Act, as follows:

   43Working out parent’s adjusted taxable income

   (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, …..

   (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.

   ……

2. The fixing of a person’s ATI is (by itself) a decision subject to objection rights and review in the AAT, as is the decision that a child support period starts or ends on a certain date. These matters affect the “particulars of the assessment”.

3. Part 6A of the Act creates a process known as “change of assessment”.

4. Under Part 6A of the Act, the Registrar, on application by a parent, may depart from the administrative assessment, or in other words, change in some way the manner of working out the child support liability of the payer, in certain circumstances.

5. These include where, “in the special circumstances of the case”, the administrative assessment produces a rate of child support which is “unfair” “because of ….the income property and financial resources of either parent” (this ground for departure is generally known as “Reason 8A”)

6. The Registrar may also initiate such a change of assessment process under section 98K of the Act.

7. These matters are dealt with initially by a delegate or “Decision Maker”, whose decision is subject to objection rights.

8. Where Reason 8A is in issue, both the original decision maker (the delegate) and the objections officer commonly undertake an extensive investigation into the financial circumstances of each parent.

9. The AAT hears applications for review from decisions of objections officers in change of assessment matters, and, while it may require the parents to provide further information to it as part of that process, the AAT is not an original decision-making or investigative body. Put another way, it is not the role of the AAT to investigate and be the primary decision maker in an application for a change of assessment. Rather, the AAT’s role is confined to reviewing those decisions, once made.

DISCUSSION OF EVIDENCE, CONCLUSIONS AND REASONING

Previous matters and appeals

1. The Tribunal noted that this is effectively the fourth challenge in recent years by Ms Ruffer to the issue of (in broad terms) what is the correct income of Mr Bignot which should be used for child support purposes.

2. Ms Ruffer has previously lodged two change of assessment applications, on 6 August 2018 and on 10 December 2019.

3. Each application sought a determination, under Reason 8A, that the ATI being used by the CSA for Mr Bignot did not reflect his “true” income and financial resources, which is (as she conceded to the Tribunal) precisely the argument of Ms Ruffer here.

4. Both of those change of assessments came to the AAT, on review from an objection decision. These were matters 2020/HC015824 (the AAT decision was the decision of Member C Breheny dated 16 July 2019) and 2020/HC019187 (Member A Schiwy decision dated 10 September 2020).

5. In each of those matters, Ms Ruffer’s arguments as to the “true” income and financial resources of Mr Bignot were thoroughly canvassed but in the end rejected by both the CSA and the AAT.

6. Ms Ruffer has also challenged in the AAT a previous objection decision concerning the fixing of the ATI to be used for Mr Bignot, for the 2018/19 financial year. This was matter 2020/HC018199. That matter was very similar in most respects to this matter.

7. The AAT (Member S Letch) originally dismissed that matter summarily under section 42B of the Administrative Appeals Tribunal Act 1975 as having “no reasonable prospect of success”. This was on 6 April 2020.

8. Ms Ruffer appealed that decision, which was set aside by Justice Kerr in the Federal Circuit Court in August 2020.

9. Justice Kerr found that the AAT had not provided “procedural fairness” to Ms Ruffer in that matter, and remitted that matter back to the AAT to “determine according to law”.

10. The AAT then rejected her arguments in that matter, when it heard her appeal on the merits: this was Member K Buxton’s decision dated 23 November 2020.

11. Ms Ruffer has since appealed both that matter and Member Schiwy’s change of assessment decision to the Federal Circuit Court.

12. Those appeals were heard on 3 May 2021.

13. Decisions are awaited.

14. The Tribunal must decide this matter quickly, and cannot defer this matter to await those decisions.

Fixing the ATI of Mr Bignot

1. The Tribunal has now considered the arguments and decisions in these previous matters, and the lengthy written submissions which Ms Ruffer has lodged in this matter.

2. In short, the Tribunal finds that Ms Ruffer is simply recycling the same arguments which she has relied upon in the previous matters discussed above.

3. Her submissions regarding such matters as Mr Bignot’s “secret salary packaging”, the validity of tax deductions claimed by Mr Bignot, the alleged making of cash payments to Mr Bignot, his alleged extensive personal use of a company vehicle, his alleged “improper claiming” of private health insurance costs, all centre around change of assessment issues, in particular Reason 8A issues. In other words, they might be proper submissions in a matter of that kind, but this matter (critically) is not a change of assessment matter.

4. In fixing the ATI of Mr Bignot at $94,811, the Registrar has applied the provisions of section 43 of the Act.

5. That provision states that a person’s ATI “for a child for a day in a child support period” is the total of the various “components” (which are income components) set out in paragraphs (a) to (f) of that section. Most taxpayers would only have income covered by component (a).

6. Mr Bignot gave verbal evidence that in 2019/20 he only had income falling under component (a). The Tribunal accepts that evidence and finds accordingly.

7. If Ms Ruffer (or the Registrar who can act on his own initiative under section 98L of the Act) now believe that Mr Bignot in fact has income or financial resources of a larger amount than his ATI, then the mechanism exists in Part 6A of the Act for a change of assessment application to be made, and that is the proper and correct process in which those arguments should be put.

8. Further, a change of assessment matter is far more complex than simply fixing one parent’s ATI at a different figure than that fixed by the CSA under section 43 of the Act. Many other factors must be investigated and then taken into account, including the “just and equitable factors” and whether it is “otherwise proper” to change the assessment.

9. In summary, the view of the Tribunal is that, while there could be some unusual circumstances where the fixing of a person’s ATI at an amount is in fact legally incorrect (eg because the Registrar has simply overlooked some income components such as fringe benefits or excess super contributions, which can readily be quantified) care needs to be taken that a challenge to the fixing of an ATI for a parent does not descend into complex argument and factual dispute about the true value to a person of their terms of employment, or benefits flowing from employment.

10. Those are exactly the sort of matters raised in Ms Ruffer’s submissions in this matter, and are matters which Part 6A is intended to deal with, not a “direct challenge” to the fixing of an ATI.

11. The Tribunal can see no obvious error of the type referred to above in this matter, and therefore affirms the decision to fix the ATI of Mr Bignot at $94,811 for 2019/20.

Start of the new child support period

1. This is a new and discrete argument.

2. The Tribunal has carefully noted the relevant provisions of the Act, as set out above.

3. The key wording is that the Registrar, after a new tax return is lodged, must, as soon as practicable, “make an assessment” of the new rate of child support.

4. That assessment of the new rate of child support takes effect on the first day of the month after the assessment is made (not after the tax return is lodged).

5. What the legislation does not say is that the new assessment of child support is to be effective from the first day of the month after the tax return is lodged.

6. There could be a gap of a short period of time between the lodging of the tax return and the “making” of the new assessment. This of course would be necessary to identify the relevant income components of the person for section 43 purposes.

7. The CSA policy of taking the fifteenth of the month as the key factor in determining which first of the month is to be used is not unreasonable or inconsistent with the legislation and, as in all matters relating to internal policy of an agency, it is desirable in the interests of consistency to follow this policy, unless there is some good reason not to. There is no good reason not to follow this policy here.

8. The new child support period in this matter therefore starts on 1 December 2020.

9. The objection decision was therefore correct in all respects.

DECISION

The decision under review is affirmed.