Stretton and Gosling (Child support)

[2018] AATA 1231

Stretton and Gosling (Child support) [2018] AATA 1231 (14 February 2018)

DIVISION:  Social Services & Child Support Division

REVIEW NUMBER:  2017/MC012705

APPLICANT:  Mr Stretton

OTHER PARTIES:  Child Support Registrar

Ms Gosling

TRIBUNAL:  Ms T Hamilton-Noy, Member

DECISION DATE:  14 February 2018

DECISION:

The tribunal affirms the decision under review.

CATCHWORDS
Child support - Whether estimated income correctly reconciled - 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 application relates to a decision by the Department of Human Services – Child Support (the Department) to reconcile Mr Stretton’s estimate of income for the 2016/2017 financial year.

2. Mr Stretton and Ms Gosling are the separated parents of [Child 1] and [Child 2].  Mr Stretton is the payer of child support and Ms Gosling the payee.

3. On 20 September 2016 Mr Stretton provided an estimate of income to the Department for the period 20 September 2016 to 30 June 2017 of $0.

4. The Department subsequently received information from the Australian Taxation Office that Mr Stretton’s adjusted taxable income for the 2016/2017 financial year was $68,755.

5. On 28 July 2017 an employee of the Department made a decision to reconcile Mr Stretton’s estimate of income of $0 to $43,025 for the period 20 September 2016 to 30 June 2017.

6. On 2 August 2017 Mr Stretton lodged an objection to this decision.

7. On 29 September 2017 an objections officer of the Department disallowed the objection.

8. On 17 October 2017 Mr Stretton made application to the Administrative Appeals Tribunal for an independent review of the Department’s decision.  The hearing was held on 14 February 2018, on which date both parties spoke to the tribunal by conference telephone and gave evidence on affirmation.  The tribunal was assisted in this matter by documents provided by the Department (1 to 409).  A copy of the documents was provided to the parties prior to the hearing and they both confirmed receipt of the documents with the tribunal. 

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act) and the Child Support (Registration and Collection) Act 1988 (the Registration and Collection Act).

2. The legal issue for the tribunal in this case is whether it was legally correct for the Department to reconcile Mr Stretton’s estimate of income for the period 20 September 2016 to 30 June 2017.

CONSIDERATION

1. Subdivisions C and D of Division 7 of the Act provide for a parent to elect their income. The tribunal accepted from the evidence before it that Mr Stretton was contacted by the Department on 20 September 2016 about his child support payments, at which time he advised the Department he was on leave without pay. The department organised to speak to him the following day, and he stated that he had been unwell, unable to work and was not being paid. He provided year to date income of $25,730 from [Business 1]and business income of -$9,568 (year to date loss). He provided an estimate of income of $0 and stated his family was supporting him and he was approaching his bank about refinancing.

2. Mr Stretton stated to the tribunal at the hearing that he had been on long-term sick leave and leave without pay at the time he contacted the Department in September 2016.  He has been unemployed since January 2017 and the reconciled income doesn’t correctly reflect his income for the period under review.  He submitted that his year to date income he had advised to the Department was not correct, as he was in a supermarket and was asked to give a figure.  He agreed that the figures provided in his income tax return for the 2016/2017 financial year were correct, however, submitted that the amount did not take into account that he had withdrawn his unpreserved superannuation to survive; income from an unfair dismissal case; deductions from his business running at a loss; and $47,000 damage to his house from termite damage that was incurred in February to March 2017.  As to the calculations undertaken by the Department to reconcile the income estimate (folio 167), Mr Stretton stated that he believed these were correct and that the amount seemed to be correct for his year to date income.

3. Ms Gosling did not seek to respond to the applicant’s evidence nor make comment about the Department’s decision.

4. The tribunal found from the evidence before it that as a result of the contact between the Department and Mr Stretton on 21 September 2016, the Department annualised the estimate of $0 for the period 20 September 2016 to 30 June 2017.  Notification was sent to the parties on 21 September 2016 by the Department.

5. Division 7A of the Act makes provision for the reconciliation of estimates of adjusted taxable income. At section 64 of the Act, the legislation provides for reconciliation using a parent’s actual adjusted taxable income where one income election has been made with the Department. Subsection 64(1) of the Act provides that the section applies in the following circumstances:

   (1) This section applies for the purposes of assessing a parent in relation to the costs of a child of the parent for a day in a child support period if:

   (a) the day occurs in the application period for an income election relating to a year of income that was made by the parent; and

   (b) the parent did not make more than one income election relating to the year of income; and

   (c) the parent's actual adjusted taxable income for the year of income has been ascertained by the Registrar; and

   (d) if the Registrar has made a determination under subsection 64AB(1) in relation to the parent--the parent's actual adjusted taxable income for the year of income is more than the parent's determined ATI for that year; and

   (e) if, under section 63A, 63B or 63C, the Registrar has amended an assessment of child support payable by or to the parent--the Registrar determines that this section should apply in relation to the parent.

6. The tribunal accepted in the present case that Mr Stretton made one income election relating to the 2016/2017 year of income. The Department states that Mr Stretton’s actual adjusted taxable income for 2016/2017 was $68,755. The tribunal viewed Mr Stretton’s income tax return for the relevant financial year and accepted this as correct. This is more than Mr Stretton’s determined adjusted taxable income for the year, which had been used to amend the administrative assessment of child support for the period 20 September 2016 to 30 June 2017. The circumstances set out in subsection 64(1) of the Act are met.

7. Where subsection 64(1) of the Act is met, subsection 64(3) provides that where the difference between the parent’s actual adjusted taxable income for the part of the year of income and the parent’s applicable year to date income for the year of income is more than the parent’s estimated ATI amount for the year of income, the parent’s adjusted taxable income for the income election period is taken to be the amount worked out in subsection 64(4). Subsection 64(4) provides a five-step method statement for working out the amount of each income election.

8. The tribunal noted Mr Stretton’s submissions about his financial concerns during the 2016/2017 financial year. The tribunal noted that Mr Stretton has a current change of assessment process being dealt with by the Department (which is not before this tribunal) which more appropriately deals with the matters raised by the applicant at the hearing. Section 43 of the Act provides the definition of “adjusted taxable income” for the purposes of the Act and states that a parent’s adjusted taxable income for a child for a day in a child support period is the total of the parent’s taxable income for the last relevant year of income in relation to the child support period; the parent’s reportable fringe benefits total 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; the total of the tax free pensions or benefits received by the parent in that year of income; and the parent’s reportable superannuation contributions for that year of income.

9. The tribunal accepted from the information provided by the Department that, as a result of the reconciliation of Mr Stretton’s estimate of income, the Department has calculated annualised income of $43,025 for the period 20 September 2016 to 30 June 2017.  The tribunal finds that the legislative requirements for the reconciliation of Mr Stretton’s estimate of income are met and therefore affirms the decision under review. 

DECISION

The tribunal affirms the decision under review.