Steer and Mayler (Child support)

[2019] AATA 1222

Steer and Mayler (Child support) [2019] AATA 1222 (9 April 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/SC015716

APPLICANT:  Ms Steer

OTHER PARTIES:  Child Support Registrar

Mr Mayler

TRIBUNAL:Member W Budiselik

DECISION DATE:  09 April 2019

DECISION:

The decision under review is set aside and the matter is sent back to the Child Support Registrar for reconsideration in accordance with the directions that the department review the father’s 2016/2017 income declaration by seeking relevant documentation from him in relation to his 2016/2017 income, in particular:

a)Information about net rental income received by him in 2016/2017 in relation to his [Town 1] property; and

b)Payslips for the months March – June 2017, so a decision can be made about the post adjustment component of his remuneration package, if it has not already been considered.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – income determination - whether the income for a year of income was correctly determined - further investigation required - decision under review set aside and sent back for reconsideration with directions

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. Ms Steer (the applicant mother) and Mr Mayler (the father) are the parents of two children. A case was registered with the Department of Human Services Child Support (the department) in respect of the children on 1 April 2010. The case is a private collect case from 1 April 2010. The father is the paying parent.

2. On 18 November 2017 an officer from the department wrote to the applicant mother and father setting out its decision in relation to the child support period 1 January 2018 to 31 March 2019. It set out for the period 1 January 2018 to 12 February 2019, the father’s child support liability was $236 per month based on the applicant mother’s 2016/2017 provisional income of $46,478 and the father’s 2016/2017 provisional income of $0; and for the period 13 February 2019 to 31 March 2019, the father’s child support liability was $2,280 per month based on the applicant mother’s 2016/2017 provisional income of $46,478 and the father’s 2016/2017 provisional income of $140,039.

3. On 31 January 2018, the applicant mother lodged an objection to the decision. On 18 July 2018, a departmental officer granted an extension of time for the applicant mother’s objection.

4. The applicant mother’s objection was based on her belief that the father’s remuneration package from his employment in [Country 1] was greater than that declared by him.

5. On 1 December 2018, an objections officer from the department partly allowed the objection. The objections officer decided:

• To affirm a departmental decision to replace the father’s 2016/2017 provisional income of $0 with a later provisional income of $140,039 from 1 January 2018;

• To accept the father’s 2016/2017 income tax declaration of $125,909 from 1 May 2018.

1. On 7 January 2019, the applicant mother lodged an application for a review of the department’s decision with the Administrative Appeals Tribunal (the tribunal). On 9 April 2019, the tribunal conducted a hearing into the application. The applicant mother participated in the hearing over the phone. The father did not participate in the hearing. Prior to the hearing the department provided the tribunal and the applicant mother and father with a bundle of documents taken from the relevant department file (folios 1–155). In addition the applicant mother and father provided submissions to the tribunal (folios A1–A88 and B1–B3, respectively). These submissions have been provided to the department.

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act).

2. The issue which arises in this case is whether the father’s 2016/2017 provisional income is a reasonable approximation of his income.

CONSIDERATION

Issue: Has the department correctly determined the father’s 2016/2017 provisional income?

1. Section 43 of the Act sets out how to work out a parent’s adjusted taxable income. Relevant to this matter a parent’s adjusted taxable income includes among others the following components:

   ·the parent’s taxable income for the last relevant year of income in relation to the child support period for that year of income;

   ·the parent’s target foreign income for that year of income;

   ·the parent’s total net investment loss for that year of income.

10.Division 7 of Part 5 of the Act deals with assessments and estimates of adjusted taxable income.

1. Section 58 of the Act deals with determination by the Registrar of a parent’s adjusted taxable income. This section provides how the department is to determine a parent’s adjusted taxable income if the person’s taxable income for the last relevant year of income has not been assessed under Australian taxation law. Subsection 58(2) of the Act provides that if the department has relevant documentation to hand that provides a reasonable approximation of the income for the relevant financial year the Registrar may determine that is the parent’s adjusted taxable income for that year. Subsection 58(4) provides the Registrar with a means of determining a person’s adjusted taxable income based on earlier income tax assessments.

2. Section 58A of the Act (as it applied at the relevant time) deals with subsequently ascertaining components of a parent’s adjusted taxable income. In part it provides that if an assessment is made under section 58 of the Act and the Registrar subsequently ascertains the parent’s actual taxable income then the Registrar must immediately amend the relevant administrative assessment of child support payable (if the amount is different to what was determined under section 58).  If the parent has not lodged their income tax return within the period prescribed in the Income Tax Assessment Act 1936, the parent will not benefit from an income tax assessment, when it is lodged, which is lower than the provisional assessment (subsections 58A(2) and (3)).

3. Section 162A of the Act deals with obtaining information in relation to residents of reciprocating jurisdictions. It provides the Registrar may, by written notice, request the person to give the documents as necessary to determine the overseas income.

4. The father was employed in Australia by [Agency 1] for part of the 2016/2017 financial year (1 July 2016 to 28 February 2017). The father received gross payments from the [Agency 1] of $95,379. This is evidenced by a PAYG payment summary. On 1 December 2018, the father discussed this income with the department. The department accepted the father’s taxable income for the 2016/2017 financial year from the [Agency 1] was $91,216 (i.e. after allowing accepted deductions).

5. The applicant mother’s contention is that this portion of the father’s income is understated because it does not include a net rental return, which she said resulted from her and the father renting out their former home in [Town 1].

6. The applicant mother said she had completed her 2016/2017 tax return and her portion of the profit derived from the rental property was $5,136 and given the property was rented out by her and the father she concluded his portion of the profit would also be $5,136.

7. The tribunal decided it would be appropriate to put to the father whether he had omitted this component of his 2016/2017 income, when he developed his income estimate.

8. The tribunal notes that the applicant mother did not raise this concern with the department at the time she objected to the decision of 18 November 2017.

9. The father accepted an appointment on 15 March 2017 with [Agency 2] based in [Country 1], from 1 March 2017, with an assessable salary of US$81,836 gross per annum. This information was evidenced by a letter of appointment. The father calculated this income equated to an income of $34,693 for the period 1 March 2017 to 30 June 2017.

10. On 1 December 2017, the father provided an income tax declaration to the department setting out his 2016/2017 income was $125,909.04 (i.e. $91,216 plus $34,693).

11. The applicant mother asserts that the employment income from [Agency 2] is under-declared because it does not include a component described as ‘post adjustment’. The applicant mother referred the tribunal to information she had accessed which described the post adjustment portion of the father’s remuneration package in the following way:

    The post adjustment is one of the two main elements (base salary and post adjustment) comprising the salary of staff in the professional and higher categories.

    …

    The post adjustment is paid in addition to the base salary.

12. On the basis of information provided the tribunal was unable to draw a conclusion about whether the post adjustment component of the father’s remuneration package was included in the father’s assessable salary (i.e. in the letter of appointment), or whether it is excluded.

13. In the circumstances the tribunal decided it was prudent for the department to seek pay records from the father so it could examine them and satisfy itself the father’s income had been estimated taking into account the relevant documentation.

Other matter

24.Both parents provided written submissions to the tribunal, which the tribunal appreciated. The father explained in his submission that he did not feel he would be able to participate in the hearing and that he therefore relied on his written submission.

25.In this case, the matter before the tribunal may have been able to be resolved had he participated in the hearing.

26.Both written submissions detailed various concerns they have with the child support assessment and arrangement that is in place between them. However, the concerns raised are outside the remit of the tribunal when it is considering the determination of the father’s adjusted taxable income for 2016/2017, so it could feed into subsequent assessments. Throughout the department’s dealings with the applicant mother it was emphasised that if she feels the assessment is unfair because of the father’s income, property and financial resources the administrative remedy is to lodge a change of assessment application with the department. The same can be said to the father.

DECISION

The decision under review is set aside and the matter is sent back to the Child Support Registrar for reconsideration in accordance with the directions that the department review the father’s 2016/2017 income declaration by seeking relevant documentation from him in relation to his 2016/2017 income, in particular:

a)Information about net rental income received by him in 2016/2017 in relation to his [Town 1] property; and

b)Payslips for the months March – June 2017, so a decision can be made about the post adjustment component of his remuneration package, if it has not already been considered.