Sondergeld and Varane (Child support)

[2019] AATA 5198

Sondergeld and Varane (Child support) [2019] AATA 5198 (22 July 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/HC016443

APPLICANT:  Mr Sondergeld

OTHER PARTIES:  Child Support Registrar

Ms Varane

TRIBUNAL:Member M Baulch

DECISION DATE:  22 July 2019

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – application for fixed annual rate not to apply – income greater than the maximum basic rate of parenting payment (single) – application refused - decision under review affirmed

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

BACKGROUND

1. Mr Sondergeld and Ms Varane are the parents of two children.  Since 28 July 2004 Mr Sondergeld has been assessed as liable, by the Department of Human Services – Child Support (the Department), to pay child support to Ms Varane.

2. From 1 January 2019, the Department assessed Mr Sondergeld to pay the fixed annual rate of child support of $2,886.

3. On 15 January 2019, Mr Sondergeld applied to the Department to have the fixed annual rate not apply to him.  On 15 January 2019, the Department refused the request (the decision under review) and, on 17 April 2019, Mr Sondergeld’s objection to that decision was disallowed.  Mr Sondergeld has now applied to this tribunal for an independent review of the Department’s decision.

4. A hearing into the application for review was held by the tribunal on 22 July 2019. Mr Sondergeld attended the hearing in person and gave evidence under affirmation. Neither Ms Varane nor a representative of the Child Support Registrar (the Registrar) participated in the hearing. The tribunal had before it relevant documents provided to it by the Department pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, which were labelled folios 1 to 44, copies of which Mr Sondergeld confirmed he had received prior to the tribunal hearing.

ISSUES

1. The Registrar usually makes child support assessments using a statutory formula in Part 5 of the Child Support (Assessment) Act 1989 (the Act).  The formula includes variables such as self-support amounts, adjusted taxable incomes for each parent, the ages of the children and their percentages of care.

2. A formula assessment will result in an annual rate of zero if the liable parent’s adjusted taxable income is below a self-support amount.  However, the Act provides that a liable parent who does not share care of a child will nonetheless be liable to pay:

   ·      The minimum annual rate of child support for all children of the assessment if they are receiving income support from Centrelink (section 66 of the Act); or

   ·      The fixed annual rate for each child if they are not receiving income support from Centrelink (section 65A of the Act).

3. Under section 65B of the Act, a person assessed to pay the fixed annual rate of child support may apply for it not to apply.  The Registrar may grant the application if:

   ·      The person’s current income is below the maximum basic rate of parenting payment (single) – in respect of this case that amount is $19,981 per annum[1]; and

   ·      It would be unjust and inequitable for them to pay the fixed annual rate of child support.

   [1] See Department of Social Services, version 4.41

4. The tribunal (in place of the Registrar) considered whether this was the case for Mr Sondergeld.

CONSIDERATION

1. When determining the statutory rate of child support, regard must be had to a parent’s adjusted taxable income, which includes taxable income and supplementary amounts reported to the Australian Taxation Office (section 43 of the Act).  In Mr Sondergeld’s case, his adjusted taxable income used in the assessment of child support applying from 1 July 2018 was his estimated income for the 2018–19 year of $500.

2. As Mr Sondergeld’s adjusted taxable income was less than the self-support amount and he was not in receipt of Centrelink payments, the Department assessed him as liable to pay the fixed annual rate for the child support period that commenced on 1 January 2019.  On 15 January 2019, Mr Sondergeld made an application for the fixed annual rate not to apply.  For his application to succeed, he must demonstrate that his current income was less than $19,981 per annum and that it would be unjust and inequitable for him to be required to repay the fixed annual rate of child support.

Is Mr Sondergeld’s current income below $19,981 per annum?

1. When considering an application for the fixed annual rate not to apply, income is not a person’s adjusted taxable income used in the child support assessment, but is instead defined to include “… any money earned, derived or received by the parent for his or her own use or benefit” (subsection 66A(4) of the Act).  The only exclusions are those provided for in regulation 13 of the Child Support (Assessment) Regulations 2018, which are:

   ·      Amenity allowances or gratuities (incidental payments for personal items or other minor expenses, but not payments for work, study or participation in approved programs) paid to prisoners;

   ·      Disability support pensions, pensions paid to veterans who are totally and permanently incapacitated and Special Rate Disability Pension for veterans, where at least 85% of the pension is paid to another person for the provision of ongoing care to the pension recipient; and

   ·      A National Disability Insurance Scheme amount (as defined in the National Disability Insurance Scheme Act 2013).

1. In respect of determining a parent’s current income, the Explanatory Memorandum of the Bill[2] which introduced these provisions indicated as follows:

   In determining whether the annual rate should not apply to the parent, the Registrar will consider the current income of the parent for the 12 months commencing from the date the person applied to not have the annual rate apply.

   [2] Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formula and Other Measures) Bill 2006

2. The Child Support Guide[3] (the Guide) at 2.5.3 reiterates that intention as follows:

   a parent's current income is generally their income for the 12 month period from the date of the application.

   In this instance, Mr Sondergeld made his application for the fixed annual rate not to apply on 15 January 2019.  I therefore considered what his income was likely to be for the period 15 January 2019 to 18 January 2020.

   [3] Guides to Social Policy Law: Child Support Guide, Department of Social Services, version 4.41

3. Mr Sondergeld’s evidence was that when he made his request for the fixed annual rate not to apply, his income constituted his taxable income and a non-taxable allocated pension which was then paid at $26,000 per annum.  I noted Mr Sondergeld’s evidence that he has recently reduced the amount of his allocated pension.  However, I am considering what the situation was, as at 15 January 2019, when Mr Sondergeld made his request for the fixed annual rate not to apply.

4. Mr Sondergeld submitted that his allocated pension should not be treated as income for the purposes of his request for the fixed annual rate not to apply, as it represents amounts which constitute his own superannuation contributions.  He also submitted that the funds from which his allocated pension is drawn represent salary sacrifice amounts that he made while he was working, and were then added back to his taxable income to determine an adjusted taxable income for child support purposes.  Essentially, Mr Sondergeld was asserting that he has already paid child support on those amounts.

5. Mr Sondergeld also asserted it was unfair to define income so broadly for the purposes of determining whether or not the fixed annual rate not apply, when usually child support assessments are usually based upon taxable income.

6. Having considered the matter, I was satisfied that Mr Sondergeld’s allocated pension does fall within the definition of income set out in subsection 66A(4) of the Act, as it represents money which he receives for his own use of benefit.  I therefore found that Mr Sondergeld’s income, as at 15 January 2019, exceeded the maximum basic rate of parenting payment (single) – in respect of this case, that amount is $19,981 per annum.  As a consequence, his request to have the fixed annual rate not apply to his child support assessment should be refused.

7. Mr Sondergeld advised me that he is aggrieved by his treatment by the Department and the matter in which it has dealt with his objections.  Unfortunately, the child support law gives me no discretion to take those concerns into account.

8. Having found that Mr Sondergeld’s request that the fixed annual rate not apply should be refused, I therefore affirmed the decision under review.

DECISION

The decision under review is affirmed.