Sheaman and Sheaman (Child support) - [2025] ARTA 497

Sheaman and Sheaman (Child support) [2025] ARTA 497 (20 February 2025)

Applicant: Mr Sheaman

Respondent: Child Support Registrar

Other Parties: Ms Sheaman

Tribunal Number: 2024/MC028570
Tribunal:Senior Member A Suthers
Place:Sydney
Date:20 February 2025
Decision:The Tribunal affirms the decision under review.

CATCHWORDS
CHILD SUPPORT – particulars of the administrative assessment – father’s adjusted taxable income from previous financial year included sale of fixed assets – delay in processing application and contacting father prevented him lodging earlier estimate – date of effect – no provision to backdate decision – 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 pursuant to subsection 16(2AB) of the Child Support (Registration and Collection) Act 1988.

Statement of Reasons

Background

Mr Sheaman and Ms Sheaman are the parents of [Child 1], aged five, and [Child 2], aged two.
The Child Support (Assessment) Act 1989 (the Act) provides for Services Australia – Child Support (Child Support) to make an administrative assessment of child support.
Under section 25 of the Act, a parent of a relevant child may apply for an administrative assessment. If the necessary conditions are met, Child Support must make the assessment using a formula containing variables such as the parties to the assessment’s (the parties) adjusted taxable incomes and the respective percentages of care the parties have provided or are likely to provide for each relevant child. Section 60 of the Act also provides for a parent to provide an estimate of their income which, if it meets the relevant statutory criteria and is accepted, is used in the assessment subject to a subsequent reconciliation process once the parent’s actual adjusted taxable income for the period is ascertained.
On 11 October 2023, Ms Sheaman made a compliant application for an administrative assessment of child support in respect of the children.
Child Support did not finalise processing that application until 16 December 2023. Prior to accepting the application, Child Support contacted Mr Sheaman and advised that they would be using his adjusted taxable income from the 2022/2023 financial year for the purposes of the assessment. That income was in the sum of $193,459. Mr Sheaman was concerned that his income in that year was artificially inflated by the sale of fixed assets which would not be replicated in the 2023/2024 financial year. He sought to make an income estimate, pursuant to section 60 of the Act.
On 16 December 2023, Mr Sheaman orally lodged an income estimate pursuant to section 60 of the Act, in the amount of $150,380 (annualised). The estimate was recorded, and accepted, as being for the period 16 December 2023 to 30 June 2024. Having reviewed the material lodged in the application, and having regard to the history of the matter, I think it likely that Child Support nominated the effective commencement date for the estimate, rather than Mr Sheaman. Indeed, on page 12 of the bundle of material lodged in the application by Child Support, it notes that Mr Sheaman was told on 16 December 2023 that Child Support ‘will back date his estimate as he did not know about the child support registration and there is a period of time before CS [sic] made contact’.
Mr Sheaman then lodged an objection to the decision on 22 January 2024 to accept his estimate in those terms, on the basis that Child Support’s delay in contacting him between 11 October 2023 and 16 December 2023 had prevented him lodging an earlier estimate. He maintained in the objection that the estimate ought to be backdated to commence on 11 October 2023.
By a decision dated 7 September 2024, Mr Sheaman’s objection was disallowed. He was notified of his rights of review in the Tribunal but, also, at the end of the objection decision, of the potential to bring a departure application based on special circumstances. Mr Sheaman elected to seek review in the Tribunal and has done so within time.
Whilst I am to independently review the totality of Child Support’s decision, Mr Sheaman’s only concern with the decision is the refusal by Child Support to backdate the date of effect of his income estimate to 11 October 2023. He points out the potential unfairness of Child Support taking so long to consider the initial application, and thereby preventing him from having his estimate apply from an earlier date. Whilst Mr Sheaman in his written submissions suggested that Child Support was bound to determine the assessment application made by Ms Sheaman within 14 days, he acknowledged at the hearing that the effect of section 31 of the Act is that Child Support had to determine Ms Sheaman’s application and make the assessment ‘as quickly as possible’.
Otherwise, having reviewed the material and heard from Mr Sheaman and Ms Sheaman by telephone at the hearing, I am satisfied that Child Support’s decision to accept the estimate was validly made and the correct or preferable decision. So much, as I say, is not in contention.
At the hearing on 17 December 2024, I heard from Mr Sheaman and Ms Sheaman. Child Support elected not to participate. I also had regard to the bundle of 150 numbered pages lodged in the application by Child Support (1–150). Specifically, I gave Mr Sheaman the opportunity to comment upon the apparent effect of subsection 60(5) of the Act, which provides in respect of income estimates that:
(5) The start day for the election must be:
(a) the day on which the parent makes the election; or
(b) the first day of a child support period, so long as that day is not before the day referred to in paragraph (a).
Mr Sheaman did not raise any direct challenge to the application of that subsection of the Act to his income estimate. Nor did he suggest that it should be given a meaning other than its apparently ordinary meaning. He was, however, of the understanding that several Tribunal decisions had backdated income estimates such as the one that he made.
Mr Sheaman was not immediately able to identify such decisions. At Mr Sheaman’s request, and without objection from Ms Sheaman, I gave Mr Sheaman a period of seven days in which to lodge a copy of any such decisions for my consideration. I gave Ms Sheaman a further 14 days to respond in respect of the correctness of the applicability of those decisions. Whilst Mr Sheaman provided material beyond the period provided for in my direction, Ms Sheaman has elected to make no response, and having reviewed the material, I see no practical injustice in not hearing further from Ms Sheaman.
What Mr Sheaman provided was, relevantly:
(1) Reference to a reported decision of the former Administrative Review Tribunal of Mortimer and Burton (Child Support) [2016] AATA 2011, which I infer Mr Sheaman suggests supports his position that his estimate can be backdated (A4); and
(2) A partial print of two pages of an undated and unidentified report of the Commonwealth Ombudsman (A1–A3).

Consideration of the material relied upon by Mr Sheaman and the effect of subsection 60(5) of the Act

I turn firstly to the decision of Mortimer and Burton (Child Support) [2016] AATA 2011 (Mortimer), and whilst I have no reason to doubt the correctness of the learned Member’s decision, it does not assist Mr Sheaman’s position.
Mortimer concerned a correction (by amendment) to an estimate made by Child Support to Mr Mortimer’s particulars used in the assessment. That amendment was made under section 63A of the Act, which provided, relevantly, at the time, as follows:
Amendment of assessment based on income election if event affecting accuracy of estimate occurs
(1) This section allows the Registrar to amend an assessment of child support payable by or to a parent for some days in a child support period if:
(a) those days occur in the application period for an income election that the parent has made; and (emphasis added)
(b) the Registrar has given the parent a notice under section 160 ... requiring or requesting the parent to notify the Registrar of the occurrence of an event that may affect the accuracy of an estimate on which the election is based.
Mr Mortimer made an estimate commencing 4 July 2014: see the decision at [4].
The Registrar later amended the effect of that estimate, but at no point in the decision‑making process, including on review in the former Administrative Appeals Tribunal, was that amendment given effect prior to 4 July 2014: see the decision at [4], [5] and [31].
Given there is no reviewable decision before me made under section 63A of the Act, and the effect of paragraph 63A(1)(a) even if there was, Mortimer does not assist Mr Sheaman.
The excerpt of the Ombudsman’s report relied upon by Mr Sheaman states that:
Backdating decisions
5.37Administrative assessments generally cannot be backdated by the CSA to before the date the Agency is notified of a change in circumstances by a parent. However, SCOs may backdate a decision to make a change to an assessment where there is a good reason to do so. This mostly occurs in situations where a payer parent has lodged an estimate, which affects the assessment for the prospective period, but has had a lower income for a previous period and for some reason was unable to lodge the estimate sooner. For example, the parent may have been unaware of the estimate process, was incapacitated, or for some other reason was unable to contact the CSA. An important consideration for SCOs in deciding whether to backdate is the effect a change will have on the parents, for example, whether backdating will create a debt for the payer or an overpayment for the payee. (emphasis added)
5.38Where a SCO decides that the assessment should only apply prospectively, a number of events can trigger the start date. These include the date of application for the COA, a period of a week (or some other time) after the application was lodged (allowing time for the respondent to be made aware of the application), the date of the conference between the SCO and the parents, or the date of the SCO's decision.
5.39Approximately one-third of the cases examined in this study involved backdating to before the date of application. Where decisions were backdated, it was for an average of six months and a median of four months.
5.40Two issues were identified in the analysis of the decisions. Firstly, it seemed that there was scope for greater consistency in defining when a prospective decision should start, that is, whether it should be from the date of application, the date of hearing, the date of the decision, or some other date.
5.41Secondly, and more importantly, was the reluctance of SCOs to create a debt for payer parents by backdating. The impact on a payer parent is a relevant factor in deciding whether a decision is ‘just and equitable’, but the interests of the payee parent are also [a] factor in that decision. A failure to backdate can result in an unfair outcome for a payee parent, particularly in situations where it seemed that a payer had taken specific steps to reduce their taxable income, for example, through the creation of a company, and had been paying a reduced rate of child support for some time. While it could be argued that a payee in this situation could have applied for a COA sooner, they may not have been aware of the payer’s circumstances or of the COA process.
Whilst it is understandable that reference to this excerpt, in isolation, may have confused Mr Sheaman, particularly in respect of the passage I have emphasised in italics, I am satisfied that this passage refers to the change of assessment, or departure order, process provided for in Part 6A, Divisions 2 and 3 of the Act. There is no doubt that Child Support, and the Tribunal on review, has power to backdate changes to the assessment in that context: Note 2 to subsection 98B(1) of the Act; Note 2 to subsection 98K(1) of the Act. Indeed, the passage in italics appears to refer to exactly the situation Mr Sheaman finds himself in, in that circumstances beyond his control prevented him from lodging an estimate for the entire period he may wish to, and so a change of assessment application was required to provide a separate power to allow a backdated change to the assessment. I note that is consistent with the position explained to Mr Sheaman by Child Support in the objection decision.
The plain meaning of subsection 60(5) of the Act, though, is that the start date of a valid income estimate must be no earlier than the day on which the parent makes the election. In this case, that was 16 December 2023.

Conclusion

I ‘stand in the shoes’ of the original decision-maker, in that I am to determine for myself on the material before me the decision which can, and which I consider should, be made in the exercise of the power or powers conferred on the original decision-maker for the purpose of making the original decision. I am also subject to the same constraints as the original decision-maker: Frugtniet v Australian Securities and Investments Commission [2019] HCA 16 at [51] discussing relevantly indistinguishable provisions of the former Administrative Appeals Tribunal Act 1975.
Just as Child Support was bound to give effect to subsection 60(5) of the Act when considering Mr Sheaman’s income estimate, I am also bound to do so in respect of this review.
I have no power to backdate the effect of the income estimate as sought by Mr Sheaman. An estimate that purportedly commenced before it was made would be invalid: subsection 60(5) of the Act. On that basis, the application for review must be unsuccessful and the objection decision affirmed.
As I have tried to make plain, Child Support’s decision on the objection had indicated that Mr Sheaman may wish to seek to make an application for a change of assessment (or departure application) on the basis of his special circumstances. It will be a matter for Mr Sheaman to consider whether that is appropriate and still available.

DECISION

The decision under review is affirmed.

Date of hearing:	Tuesday 17 December 2024
Representative for the Applicant:	Mr Sheaman
Representative for the Other party:	Ms Sheaman