Spence and Burbidge (Child support)

[2022] AATA 1554

Spence and Burbidge (Child support) [2022] AATA 1554 (17 February 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/BC022235

APPLICANT:  Mr Spence

OTHER PARTIES:  Child Support Registrar

Ms Burbidge

TRIBUNAL:Member K Dordevic

DECISION DATE:  17 February 2022

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – whether the adjusted taxable income declared by the liable parent should be applied to assessment – whether the income declared should be applied retrospectively – no grounds to apply retrospectively – 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. This review concerns the adjusted taxable income used for the father in a child support assessment. The father and the mother are the parents of one child. The current child support period is from 1 September 2021 to 30 November 2022.

2. Mr Spence (the father) and Ms Burbidge (the mother) are the parents of one child. There was a child support assessment registered with Services Australia – Child Support from 7 March 2019.

3. For the child support period 1 November 2020 to 31 January 2022 the relevant year of income is the 2020 financial year.

4. The father’s 2020 adjusted taxable income was required to calculate the administrative assessment from 1 November 2020. As Child Support did not have his Australian Taxation Office (ATO) assessed income for this financial year, the Registrar applied a provision income (income default) of $85,463 to determine the father’s child support liability. On 19 November 2020 the father lodged his 2020 income tax declaration, indicating that his adjusted taxable income was $48,000. This was applied to the administrative assessment from that date.

5. On 5 May 2021 the father lodged an objection to that decision. An extension of time in which to lodge his objection was granted on 25 May 2021. His objection was disallowed on 30 July 2021.

6. The father sought review of that decision by the Social Services and Child Support Division of the Administrative Appeals Tribunal (the tribunal) on 7 September 2021. The application was heard on 17 February 2022. The parents attended by MS Teams audio. The Child Support Registrar did not elect to appear before the tribunal. In addition to oral evidence, the tribunal had regard to documents provided by Child Support (folios 1 to 84).

ISSUE

1. The legislation relevant to this application is contained in the Child Support (Assessment) Act 1989 (the Act).

2. The central issue for the tribunal to determine in whether the father’s income tax declaration should apply to the child support assessment.

CONSIDERATION

1. Section 58 of the Act provides that, if Child Support cannot ascertain a person’s taxable income, it can determine an income to be used in the administrative assessment. Subsection 53(3) of the Act states that if a parent’s taxable income was assessed for the previous year of income, the Registrar may determine the parent’s adjusted taxable income is the amount worked out by multiplying the parent’s adjusted taxable income for the previous year by the adjusted taxable income indexation factor.

2. As outlined above, the father’s 2020 adjusted taxable income was required to calculate the administrative assessment from 1 November 2020. As he had not lodged his income tax assessment for that period (or in fact since the 2017 financial year), Child Support did not have the father’s ATO assessed income for that financial year and applied a provision income (income default) of $85,463 to determine his child support liability.

3. The tribunal finds that on 19 November 2020 the father made an income tax declaration of $48,000, which was reflected in the administrative assessment from that date onwards. On 24 November 2020 the father advised that his company has gone into administration due to his debts and that he would not be lodging his income tax returns for the 2018 to 2020 financial years as he does not have the information required for lodgement (at folio 24).

4. Section 58A of the Act provides that, if Child Support subsequently ascertains the person’s income, and the amount ascertained is less than the default income used:

   (1) The Registrar must immediately amend an administrative assessment of child support payable by or to a parent in relation to a child support period if:

   (a) the assessment was made on the basis of a determination under section 58; and

   (b) either:

   (i) the Registrar subsequently ascertains the amount of the parent's adjusted taxable income for the last relevant year of income; or

   (ii) the Registrar makes a later determination under section 58; and

(c)  either:

(i) if subparagraph (b)(i) applies--the amount that was subsequently ascertained is different from the amount that was determined under section 58; or

(ii) if subparagraph (b)(ii) applies--the later amount that the Registrar determines is different from the earlier amount determined under section 58.

Retrospective determinations

(2)  If:

(a) at the time the Registrar is to amend the administrative assessment under this section, the parent could lodge his or her tax return by the date required under Part IV of the Income Tax Assessment Act 1936 (taking into account any deferral under section 388-55 in Schedule 1 to the Taxation Administration Act 1953); or

(b) paragraph (a) of this subsection does not apply and:

(i) the amount subsequently ascertained, as mentioned in subparagraph (1)(b)(i), is higher than the amount that was determined under section 58; or

(ii) the later amount that the Registrar determines, as mentioned in subparagraph (1)(b)(ii), is higher than the earlier amount determined under section 58; or

(c) neither paragraph (a) nor (b) applies, but circumstances prescribed by the regulations for the purposes of this section apply in relation to the parent;

then the Registrar must immediately amend the administrative assessment for the child support period on the basis that the parent’s adjusted taxable income for that year of income is, and has always been, the amount that was subsequently ascertained or later determined (as the case requires).

1. When he contacted Child Support on 19 November 2020 the father advised that he had not lodged his 2020 income tax return. Instead he made an income tax declaration of $48,000. The tribunal finds that there was sufficient evidence before the Registrar to amend the father’s adjusted taxable income for the last relevant year of income, pursuant to subsection 58A(1) of the Act.

2. The tribunal next considered whether there were grounds to apply the father’s income tax declaration retrospectively to the administrative assessment. Paragraph 58A(2)(a) of the Act, which addresses times within which tax returns can be lodged, is not applicable to the father; he could lodge his tax return by the date required under the law. His income tax declaration was less than that previously determined by Child Support. Therefore, paragraph 58A(2)(b) of the Act is not satisfied. Thus, the only relevant provision is paragraph 58A(2)(c) which refers to particular circumstances prescribed in the Child Support (Assessment) Regulations 2018 (the Regulations).

3. Regulation 11 sets out the prescribed circumstances for the purposes of section 58A of the Act. In short, if any of the prescribed circumstances apply to the father, the effective date of the amendment of the assessment would be the commencement of the appropriate child support periods:

   11 Adjusted taxable income - prescribed circumstances

   (1)   For the purposes of section 58A of the Act, the following circumstances are prescribed in relation to a parent who was unable to provide information about the parent’s adjusted taxable income to the Registrar at the time the relevant administrative assessment was made:

   (a)  one or more of the following applied in relation to the parent at that time:

   (i)  the parent did not know that an application for the assessment had been made and accepted;

   (ii)  the parent had a serious illness or injury;

   (iii)  the parent was under detention or imprisonment;

   (iv)  the parent resided in a remote location which made it difficult to contact the Registrar;

   (v)  a natural disaster prevented the parent from being able to contact the Registrar;

   (vi)  there was some other exceptional circumstance that prevented the parent from providing the information;

   (b)  the Registrar confirms that the parent was unable to provide the information at that time because of a circumstance mentioned in paragraph (a);

   (c)  the parent later provides the information to the Registrar as soon as is practicable in the circumstances.

4. At hearing the father explained that the period that this decision concerns was a very difficult time for him. His mental health was poor and so he had difficulties managing his affairs, including his dealings with Child Support. He had thought that when he contacted on 19 November 2020 he was lodging an income estimate. He explained that he has not completed his 2018 to 2020 income tax returns as he is not required to do so as his bankruptcy was finalised in June 2021.

5. The father provided the following evidence in respect of his care application (also before this tribunal) which is relevant to this matter:

   ·A hospital discharge summary from [Hospital 1] dated [in] November 2018 which states that the father was an in-patient after other periods of hospitalisation in public and private facilities in [City 1]. His discharge diagnoses were adjustment disorder with mixed disturbance of mood, alcohol use disorder in early remission on a background of probable ADHD and borderline personality traits;

   ·A report from [Dr A], consultant psychiatrist, [Clinic 1] dated [in] February 2019 which states that the father was under her care during an inpatient admissions as he had severe symptoms of anxiety and depression and was self-medicating with alcohol. [Dr A] stated that the father had a major depressive episode complicated by significant alcohol misuse and severe social stresses and that his mood symptoms had largely resolved with psychological treatment and marked reduction in his alcohol consumption; and

   ·A letter from [Ms B], solicitor, [Law Firm 1], dated 4 March 2019, confirming that the father was admitted to [Hospital 2] [in] September 2018 after a suicide attempt, admitted to [Clinic 1] [from] October [to] November 2018, and then again admitted to [Hospital 2] after a suicide attempt from [later in] November 2018. He was then admitted to [Hospital 1] [in] November 2018 and discharged on 21 November 2018. [Ms B] confirmed that from 23 November 2018 the father continued to attend regular medical and psychological appointments.

6. The tribunal accepts that there was a serious deterioration in the father’s mental health in late 2018 and that he required in-patient treatment as well as ongoing psychological support. However, there is no medical or other documentary evidence to suggest that during or immediately after the end of the 2020 financial year the father had a serious illness or that there was some other exceptional circumstance that prevented him from providing the income tax declaration at a date earlier than 19 November 2020.

1. The tribunal concludes that Child Support correctly amended the administrative assessment from 19 November 2020 on the basis that the father’s adjusted taxable income was $48,000.

2. The tribunal notes that the father contacted Child Support on 17 May 2021, advising that the income tax declaration of $48,000 was incorrect. Instead, he states that his 2020 adjusted taxable income was $0. He asked to have this nil income reflected in the administrative assessment from 19 November 2020. The tribunal notes that no (original) decision was made by Child Support pursuant to section 58A of the Act in respect of this notification. The father had already been advised that a remedy in respect of the income tax declaration of $48,000 for the 2020 financial year being applied to the administrative assessment from 19 November 2020 was a departure application (at folio 29). As Child Support has not made a decision in respect of the 17 May 2021 notification, this is not a matter that can be reviewed by this tribunal. If the Registrar subsequently ascertains the father’s 2020 adjusted taxable income pursuant to section 58A of the Act, then the Registrar would be required to consider retrospective application. Such a decision would carry its own objection rights. 

DECISION

The decision under review is affirmed.