Sarka and Smullen (Child support)

[2019] AATA 694

Sarka and Smullen (Child support) [2019] AATA 694 (5 March 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/SC015536

APPLICANT:  Miss Sarka

OTHER PARTIES:  Child Support Registrar

Mr Smullen

TRIBUNAL:Deputy President J Walsh

DECISION DATE:  5 March 2019

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that Miss Sarka’s 2017/18 income estimate of $20,857 per annum on 7 June 2017 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 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

1. The general context for assessing child support liabilities is that, ordinarily, a liable parent’s liability will be assessed by reference to their most recently assessed adjusted taxable income; this is the basis of a Part 5 formula assessment under the Child Support (Assessment) Act 1989. However, provision is made for a child support assessment to instead be based on an estimate of current income, provided there has been a decrease in income of at least 15%. Where an income estimate election is accepted by the Child Support Registrar (by delegates in the CSA), it is open to the person to subsequently provide updated income information and have their income estimate reassessed. Once accepted by the CSA, the income estimate or revised estimate will be used in the child support assessment until the end of the particular financial year. There is also a power to refuse an estimate election if the CSA considers the estimate is likely to be too low. Against that background, I consider it clear enough that, at least generally, only reasonably accurate income estimate elections should be accepted.

2. Here, the applicant mother’s 2016 adjusted taxable income was $65,169. Ordinarily, her child support liability would have been assessed by reference to this income from 1 July 2017. However, she provided a 2017/18 income estimate in June 2017, based on income of $400 per week. Her liability was then assessed from 1 July 2017 based on an income of $20,857 per annum. The father subsequently objected and, by decision dated 24 August 2018, his objection was allowed. The reasons for the objection decision indicate that the mother’s gross income from July 2017 was $450 per week, which was more than the $400 per week the estimate was based on. The consequence of the objection being allowed was that the mother was assessed on an adjusted taxable income of $65,169 from 1 July 2017. She incurred arrears of over $2,000 as a result.

3. The mother then applied for review by the Tribunal. Her position is straightforward: her actual adjusted taxable income for 2017/18 has been assessed as $16,671, taking account of allowable deductions claimed against her gross income. It follows that her income estimate of $20,857 per annum was actually higher than her actual income for 2017/18. Her estimate should not be refused in those circumstances.

4. The father doubted the veracity of the evidence as to the mother’s income. He contended the matter should be reviewed by the ATO. He accepted he had no direct evidence to demonstrate the available evidence was unreliable. In these circumstances, I do not consider there to be any proper basis here to delay determining this matter on the available evidence.

5. The basis of the CSA objection decision here seems to be, simply, that the mother’s income estimate was not accurate and therefore it had to be refused. That approach misunderstands the correct legal position. Section 63AA of the Assessment Act provides a discretion, not an obligation, to refuse to accept an income estimate election. Relevantly here, subsection 63AA(1) enlivens the potential exercise of discretion to refuse if the mother’s estimate of income on 7 June 2018 was likely to be too low. The obvious problem with the basis of the objection decision is that no allowance for deductions from gross income was made. And it turns out that the mother’s assessed 2017/18 adjusted taxable income was lower than her income estimate in any event.

6. In my view, the CSA objection decision-making has miscarried here. The discretion to refuse the mother’s income estimate arose only if her estimate was likely to be too low. In the circumstances, there was no proper basis upon which to come to that conclusion. Accordingly, it was not open to the CSA to refuse her estimate on objection. It is therefore appropriate to set aside the objection decision and restore the original decision that the mother’s 2017/18 income estimate of $20,857 per annum be accepted.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that Miss Sarka’s 2017/18 income estimate of $20,857 per annum on 7 June 2017 is accepted.