Threlkeld and Armett (Child support)

[2023] AATA 421

Threlkeld and Armett (Child support) [2023] AATA 421 (12 January 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/BC024869

APPLICANT:  Mr Threlkeld

OTHER PARTIES:  Child Support Registrar

Ms Armett

TRIBUNAL:Senior Member S Trotter

DECISION DATE:  12 January 2023

DECISION:

The decision under review is set aside and, in substitution, the Tribunal decides to accept Mr Threlkeld’s 18 July 2022 annualised income estimate of $46,198.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income - whether the estimated income is less than the amount likely to be the actual income - estimate of income should be accepted - decision under review set aside and substituted

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 the Child Support (Registration and Collection) Act 1988. 

REASONS FOR DECISION

BACKGROUND

1. Mr Threlkeld and Ms Armett are parties to a child support case registered with the Child Support Agency (the CSA) since 16 September 2020. Mr Threlkeld is the parent liable to pay child support.

2. On 18 July 2022, Mr Threlkeld is recorded as contacting the CSA and lodging an estimate of his income for the period 18 July 2022 to 30 June 2023.

3. On 1 August 2022, the CSA accepted Mr Threlkeld’s annualised estimate of adjusted taxable income of $46,198 for the period 18 July 2022 to 30 June 2023.

4. Ms Armett objected to the decision to accept Mr Threlkeld’s income estimate.

5. On 18 October 2022, a CSA objections officer allowed Ms Armett’s objection and refused to accept Mr Threlkeld’s income estimate of $46,198 on the basis that the then available evidence showed Mr Threlkeld’s actual income for the relevant period to be higher, and specifically that for the first week of the estimate period, 18 to 24 July 2022, he was paid $1,066.60 gross rather than $886 per week upon which the $46,198 estimate had been based, meaning that the estimate was less than what it was considered his likely adjusted taxable income would be.

6. On 19 October 2022, Mr Threlkeld applied to the Tribunal for review of the objections officer’s decision stating as follows:

   CSA are using my taxable income from 2021-22 of $86,556 for my current assessment. I started new employment in July earning $886.00 plus living away allowance $45. non taxable per night, If I went away overnight and now recently ceased. When I lodge my estimate with CSA I said I was getting paid $886 per week before tax. when I lodge at the end of the year my adjusted taxable income will be close to the the income estimate I lodged of $46,198. How can CSA use a figure of $86,556 , approx $40,000 , near double of what I am going to earn. My self support amount is $27,063. My estimate was lodged on 18 July , the objection was on the 15 August and the decision on the 18 October , two months later , I now only earn $886.00 per pre tax.

7. A hearing was held on 10 January 2023. Mr Threlkeld attended the hearing in person and Ms Armett spoke with the Tribunal by conference telephone. Mr Threlkeld and Ms Armett both gave evidence on affirmation. The Tribunal had before it documents provided by the CSA (marked as Exhibit 1, pages 1 to 226), copies of which were provided by the CSA to Mr Threlkeld and Ms Armett before the hearing and documents provided by Mr Threlkeld to the Tribunal after the hearing, which were discussed with both parents at hearing and copies of which will be provided to Ms Armett with this decision (marked as Exhibit A, pages 1 to 4).

ISSUES

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

2. Child support liability is usually determined using the child support formula in Part 5 of the Assessment Act for periods of 15 months (child support periods). The formula usually used to calculate the rate of child support payable by a liable parent takes into account various factors including each parent’s adjusted taxable income, as defined in section 43 of the Assessment Act.

3. The legislation provides some flexibility for parents whose circumstances change. When a parent’s income reduces by 15% or more as assessed against their adjusted taxable income for the last relevant year of income, the parent may make an estimate of future income under section 60 of the Act.

4. For an income estimate to be accepted in place of an adjusted taxable income amount, the requirements of section 60 of the Assessment Act must be met. Where an income estimate is made partway through a tax year, an applicant is required to provide information about their year-to-date adjusted taxable income and an estimate of likely adjusted taxable income for the remainder of the tax year, on and from the date of the income estimate election, which figure is then annualised.

5. An estimate of income by its nature may be unlikely to be precise. In essence, what is required is a forecast of likely income for the rest of the tax year, taking into account any allowable deductions. The estimate should take account of what is known, as well as what is reasonably in contemplation as likely. However, when reviewing the efficacy of an income estimate, it is not appropriate to have regard to changes in circumstances that could not reasonably have been anticipated when the estimate was given; a point-in-time approach is required.

6. If an estimate is accepted, it is used as the adjusted taxable income in calculating the rate of child support from the date the estimate was made: section 61 of the Assessment Act. The Child Support Registrar may, however, refuse to accept an estimate if satisfied that the person has over-reported their year-to-date income, or that the estimated future income is less than the amount the Registrar considers is likely to be the parent’s actual adjusted taxable income for the remaining part of the tax year: subsection 63AA(2) of the Assessment Act.

7. A party to a child support case has legal obligations to ensure an estimate remains accurate and legislative mechanisms are in place for the estimate to be reconciled and the assessment adjusted if there is a variation between actual adjusted taxable income and the estimate, and there is the potential for a penalty if appropriate.

8. It follows that the issues to be determined by the Tribunal are as follows:

(a)Is the annualised estimate for the partial year 18 July 2022 to 30 June 2023 not more than 85% of Mr Threlkeld’s adjusted taxable income for the last relevant year of income? And, if so,

(b)Should the discretion to refuse to accept the estimate be exercised?

CONSIDERATION

Issue 1 ꟷ Is the annualised estimate for the partial year 18 July 2022 to 30 June 2023 not more than 85% of Mr Threlkeld’s adjusted taxable income for the last relevant year of income?

1. The estimate provided by Mr Threlkeld for the period 18 July 2022 to 30 June 2023 was $46,198. This is not more than 85% of Mr Threlkeld’s adjusted taxable income for the last relevant year of income, 2020/2021, of $81,627.

Issue 2 ꟷ Should the discretion to refuse to accept the estimate be exercised?

1. Mr Threlkeld told the Tribunal at the time he contacted the CSA that he was finishing up his old job and about to start a new job. He said he was wanting a job that involved less travel away from home. At the time he made the estimate he did not have the payslips that are now available. He had not yet started the new job. He based his estimate on the amount he understood he would be receiving, $866 per week. He did not at that time anticipate he would be travelling for work. Further, he did not, in making his estimate, take into account any tax deductions that he would be able to claim thus reducing his estimate of taxable income, as he wanted to err on the side of caution.

2. Mr Threlkeld acknowledged that when he started the new job he did end up travelling as part of the job for some weeks (although that situation did not continue) and he did receive a living away from home allowance for those weeks. However, he did not know that at the time. Mr Threlkeld agreed that after starting the job he realised that his income was going to be more than $866 per week when he travelled on account of the living away from home allowance (which he now also understands is a taxable allowance). However, even then he did not think that his taxable income was going to be more than he estimated at the time including because he had not deducted the allowable tax deductions he would be able to make, which based on his previous experience were going to be at least $3,000. When queried by the CSA about tax deductions at the time he made the estimate, he said to leave the deductions out of the calculation.

3. As already noted, an estimate of income by its nature is unlikely to be precise given it is a forecast of likely future income. The Tribunal accepts Mr Threlkeld’s evidence that at the time of making the estimate he was not anticipating that he would be travelling as part of the new job, and therefore was not anticipating the additional income in the form of a living away from home allowance. Although in hindsight it is now known that Mr Threlkeld’s actual income for part of the relevant period was slightly higher because he was required to travel for a number of weeks in his new job, the Tribunal is satisfied that at the time of giving the estimate it was based upon information then known to Mr Threlkeld. As at the date of giving the estimate, the Tribunal is satisfied that the estimate was not less than the likely amount of Mr Threlkeld’s adjusted taxable income for that period at that point in time; that is at the point in time that Mr Threlkeld made the estimate.

4. Having taken all of these matters into account, the Tribunal is not satisfied that the discretion to refuse to accept the estimate should be exercised and it will set aside the decision under review and in substitution accept Mr Threlkeld’s 18 July 2022 annualised income estimate of $46,198.

5. The Tribunal notes the CSA has since accepted a further income estimate from Mr Threlkeld from 19 October 2022. After the end of the 2022/23 financial year the CSA will likely reconcile the income estimates made by Mr Threlkeld against his actual income for that year. The parents both have the right to have any such reconciliation reviewed should they believe it to be incorrect.

OTHER MATTERS

1. Only those matters of relevance to the issues before the Tribunal are canvassed in these Reasons. As discussed at hearing, there are other matters which, while understandably of importance to the parties, are of no relevance to the issues before the Tribunal. The Tribunal notes that Ms Armett’s objection was made on the basis that Mr Threlkeld’s wages dramatically dropped. In her written objection (Exhibit 1, page 91), Ms Armett refers to the fact of Mr Threlkeld changing jobs to a job with a much lower income than he had received previously and also suggests that Mr Threlkeld is utilising other mechanisms (e.g. a trust) to avoid paying full child support. Such matters are not the subject of this application to the Tribunal. There are other mechanisms provided for within the child support legislation, such as a change of assessment application, which Ms Armett may pursue if she wishes. However, as discussed at hearing it is not the Tribunal’s role to provide advice and nor are such matters the subject of this application.

DECISION

The decision under review is set aside and, in substitution, the Tribunal decides to accept Mr Threlkeld’s 18 July 2022 annualised income estimate of $46,198.