Summerfield and Vickers (Child support)

[2024] AATA 4126

Summerfield and Vickers (Child support) [2024] AATA 4126 (1 August 2024)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2024/PC027534

APPLICANT:  Ms Summerfield  

OTHER PARTIES:  Child Support Registrar

Mr Vickers

TRIBUNAL:Member J Nalpantidis

DECISION DATE:  1 August 2024

DECISION:

The decision under review is affirmed.

CATCHWORDS 

CHILD SUPPORT – particulars of the Assessment – father didn’t attend the hearing – changes of circumstances – reduction in father’s income – it was correct for Child Support not to apply the discretion to refuse father’s estimate of his income – 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 so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of theChild Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

1. Ms Summerfield and Mr Vickers are the parents of [Child 1] (aged eight years), in respect of whom a child support assessment is in place. The start date of the case was 9 December 2015.

2. From 24 August 2021 the child support liability was calculated by taking into account adjusted taxable income (ATI) for Mr Vickers of $128,858 (2022/2023). On 11 September 2023, Mr Vickers elected to lodge an estimate of his income being $3,660 per fortnight, calculated by Services Australia – Child Support (Child Support) to an annualised amount of $95,421. On 11 September 2023, Child Support accepted the estimate of $95,421 lodged by Mr Vickers, and the child support liability changed accordingly for the period 11 September 2023 to 30 June 2024.

3. On 12 September 2023, Ms Summerfield objected to the decision because she wanted the child support assessment to apply Mr Vickers’ income of $128,858 as advised by the Australian Taxation Office (ATO), as there has been no change to Mr Vickers’ employment and he had also just bought a house.

4. On 17 February 2024, an objections officer decided to disallow Ms Summerfield ’s objection and the estimate of income from Mr Vickers of $95,421 annualised, for the period 11 September 2023 to 30 June 2024, continued to be applied to the child support assessment. The effect of the objection decision was there was no change to the assessment.

5. Ms Summerfield applied to the Administrative Appeals Tribunal (the Tribunal) for an independent review of the objection officer’s decision on 20 February 2024.

6. The hearing was initially set for 21 June 2024 at which time the parties advised they did not receive the Child Support documentation. As he did not have the opportunity to review the Child Support documentation, Mr Vickers advised he preferred not to proceed with the hearing and requested the matter be rescheduled. The Tribunal granted the reschedule request and arranged for the Child Support documentation to be re-sent to the parties.

7. The Tribunal conducted a hearing on 1 August 2024. Ms Summerfield participated in the hearing by MS Teams audio and gave oral evidence and submissions under affirmation. Mr Vickers did not attend the hearing as scheduled. Ms [A] (support worker from [a] Centre) was present with Ms Summerfield as a support. The Tribunal had before it documents provided by the Agency from its file (71 pages). Ms Summerfield provided a Statement of Financial Circumstances dated 27 February 2024 (A1 to A10). This material was provided to the parties prior to the hearing.

8. The Tribunal was satisfied that Mr Vickers was given appropriate notice of the time and place of the hearing, and was provided with details to participate by MS Teams audio, scheduled to be held on 1 August 2024. The Tribunal called Mr Vickers on the telephone number he advised, and there was no response. The Tribunal made further attempts to call Mr Vickers after the scheduled hearing time and he did not respond to the Tribunal’s repeated attempts to call him.

9. Mr Vickers did not contact the Tribunal prior to advise that he would not be available or to make alternative arrangements with the Tribunal.

10. The Tribunal decided to proceed with the hearing with Ms Summerfield, and Mr Vickers not being present.

11. Relevant aspects of the evidence and material before the Tribunal will be referred to in the Tribunal’s consideration of the issues to be decided.

CONSIDERATION

1. A parent may elect to estimate their current income as the ATI to be used for the child support assessment (instead of the usual ATI based on prior year’s taxation assessment).

2. An estimate can only be made for a financial year, that is, 1 July to 30 June, or for the remainder of a financial year. When it is the first election in the financial year, the estimate election must not be more than 85% of the parent's ATI for the last relevant year of income. If a parent makes the estimate during the financial year, the parent also must estimate their year to date income amount. A parent may not make an estimate election if an income amount order is in force in relation to the parent (i.e. a departure determination or ‘change of assessment’ decision).

3. In the circumstances of this case, those essential criteria in relation to Mr Vickers’ estimate are all satisfied (paragraphs 60(1)(a), 60(1)(b) and subsection 60(6) of the Child Support (Assessment) Act 1989 (the Act).

4. In Mr Vickers’ case, the basis on which the estimated figure was calculated by Child Support was the fortnightly income figure of $3,660 provided by Mr Vickers on 10 September 2023, which was $76,860 ($261.43 per day multiplied by 294 days), annualised by Child Support at $95,421 ($76,860 divided by 294/365), which appears to follow the method for identifying the estimate required in the Act (subsections 60(3) and 60(4) of the Act).

5. In circumstances where the essential criteria are satisfied and the correct method is followed for making the estimate, the estimate will be ‘accepted’, subject to a residual discretion held by the Registrar to refuse to accept it: section 63AA of the Act. The Registrar may refuse to accept the estimate if satisfied that the amount worked out is less than the amount the Registrar considers is likely to be the parent’s actual adjusted taxable income for the remaining period of the financial year to which the estimate related: paragraph 63AA(2)(b) of the Act. The Registrar exercised that discretion in this case, to not refuse the estimate. The practice of the Tribunal is to consider whether that discretion ought to have been exercised when reviewing the particulars of the assessment reflecting the making of the estimate.

6. During a financial year, a parent may revoke their estimate election and make a new one, for example, when circumstances change. A parent making an estimate incurs specific obligations to notify the Registrar of relevant changes and is at risk of criminal penalties if the obligation is not complied with.

7. As explained to the parties during the hearing, the issue to be determined by the Tribunal is whether the discretion to refuse to accept the estimate ought to have been exercised at the time the estimate was made. That question will not necessarily be informed by subsequent changes to circumstances if they were not known at the time the estimate was made. Essentially the Tribunal must determine if the estimate was not going to be accurate based on the circumstances at the time the estimate was made, and not by reference to what may now be known about Mr Vickers’ income. The obligations imposed on Mr Vickers to notify of changes of circumstances, and the availability of the amended estimate process and the application of reconciliation and penalties are intended to address subsequent variations from the estimate.

Ms Summerfield ’s evidence and contentions

1. Ms Summerfield told the Tribunal that when she was together with Mr Vickers, he was earnings $128,000 per annum, and the estimate of $95,00 that he provided in September 2023 was not reflective of his income because his job had not changed. Ms Summerfield contends it was simply a figure that Mr Vickers came up with to reduce his child support liability and was not a realistic figure. She contends that Mr Vickers does not want to pay the full amount of child support and that is why he provided an estimate.

2. Ms Summerfield told the Tribunal that the estimate provided by Mr Vickers has subsequently been reconciled by Child Support and it assessed Mr Vickers had a debt of $4,400. Ms Summerfield told the Tribunal that Child Support advised her Mr Vickers’ actual income for 2023/2024 was reconciled on 21 July 2024 and his ATO-advised income was $116,732 (as compared to the estimate provided by Mr Vickers of $95,421). Ms Summerfield submitted that should not have been accepted by Child Support in the first place because Mr Vickers did not provide evidence to support his estimate. Child Support should have asked for such evidence.

3. In response to the Tribunal’s question about what evidence she had to put forward to the Tribunal about Mr Vickers’ income, at the time of the estimate, she responded that she knows he earns more than $95,000 per annum based on discussions she had at the time. She said it is reflected in her understanding he was doing the same work and had a promotion; she also understands he has purchased a big house and has a lot of expenses which would not be covered by the estimated salary.

4. In Mr Vickers’ non-attendance at the hearing, the Tribunal referred to the Child Support material. The objections officer stated:

   Mr Vickers verbally stated he earns $3,660.00 a fortnight. This is what he has used for his estimate.

   Mr Vickers stated financially this year is not as strong as last financial year.

   Based on this information, we cannot confirm that Mr Vickers s estimated income of $95,421.00 is not an accurate reflection of Mr Vickers s income from 11 September 2023 to 30 June 2024.

We have made the decision to accept Mr Vickers’s 2023/2024 estimate of adjusted taxable income of $95,421.00 (annualised) for the period 11 September 2023 to 30 June 2024.

Therefore, on review the objection is disallowed.

Once Mr Vickers’s taxable income for the 2023/2024 financial year is received, we will reconcile the estimate against the taxable income to ensure the estimated income is correct. If Mr Vickers s taxable income is less than the estimated income there will be no arrears created, if Mr Vickers s taxable income is higher, we will raise arrears for the difference in amounts as an overpayment which will be payable to Ms Summerfield.

Conclusions

1. There is no dispute that up to 1 September 2023, the child support assessment was based on Mr Vickers’ ATI of $128,858 for the financial year 2022/2023, to calculate the child support payable by Mr Vickers to Ms Summerfield for the child.

2. On 10 September 2023, Mr Vickers’ year to date income was $23,231 which covers approximately 10 weeks and reflects an average income of approximately $2,300 per week, or $4,600 per fortnight. On 10 September 2023, Mr Vickers provided an estimate of his income going forward of $3,660 per fortnight. Essentially, it was Mr Vickers’ verbal evidence to Child Support that his workload had reduced from his previous year’s income and an income of $3,660 per fortnight was more reflective of his current circumstances. Mr Vickers’ estimate was accepted by Child Support and applied to the child support assessment from 11 September 2023 to 30 June 2024.

3. Ms Summerfield contends there was no reduction in Mr Vickers’ income and the estimate of $3,660 per fortnight going forward from 11 September 2023, provided by Mr Vickers, should not have been accepted by Child Support. Ms Summerfield gave evidence that Child Support reconciled Mr Vickers’ estimate against his actual 2023/2024 income, of approximately $116,732, on 21 July 2024. While Mr Vickers’ actual income, which became known in July 2024, exceeded the estimate he provided in September 2023, Ms Summerfield was unable to provide evidence in support of her contention that in September 2023, Child Support should have applied the discretion available under paragraph 63AA(2)(b) of the Act to refuse Mr Vickers estimate.

4. In the circumstances of this case, the Tribunal accepts the available evidence to Child Support (in September 2023) when the estimate was accepted, did not support a refusal of the estimate of $95,421 per annum being Mr Vickers’ income for the 2023/2024 financial year. Based on the available evidence the Tribunal accepts it was correct for Child Support not to apply the discretion to refuse Mr Vickers’ estimate of his income from 11 September 2023 to 30 June 2024, noting that the estimate would be reconciled against Mr Vickers’ actual income once that is known. Ms Summerfield gave evidence that this has occurred and as Mr Vickers’ actual income was higher than his estimate, and Ms Summerfield is entitled to arrears of child support payable by Vickers to her.

DECISION

The decision under review is affirmed.