Timmins and Chiswick (Child support)

[2019] AATA 5202

Timmins and Chiswick (Child support) [2019] AATA 5202 (19 September 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/AC016940

APPLICANT:  Ms Timmins

OTHER PARTIES:  Mr Chiswick

Child Support Registrar

TRIBUNAL:Member S Cullimore

DECISION DATE:  19 September 2019

DECISION:

The Tribunal sets aside the decision under review and substitutes a new decision that it refuses to accept the nil estimate of Mr Chiswick lodged on 4 February 2019.

This means that the application for review is successful.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income - whether the estimate should have been accepted – estimate less than the amount likely to be parent’s income - 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 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. The following information is taken from the records of the Department for Human Services – Child Support (“the CSA”) and is not in dispute, and the Tribunal finds each matter as fact.

2. Ms Timmins and Mr Chiswick are the parents of three children who are now 9, 11 and 17.

3. As at 3 February 2019 Mr Chiswick was assessed to pay child support to Ms Timmins based on an administrative assessment which used his adjusted taxable income of $39,445 for the 2017/18 financial year. He was assessed to pay $4,398 pa in child support.[1]

   [1] See C19

4. On 4 February 2019 a delegate of the CSA accepted an income election (estimate of income) of nil from Mr Chiswick. This was initially applied to the child support assessment for the period from 4 February 2019 to 30 June 2019.[2]

   [2] See C9

5. On 5 March 2019 Ms Timmins lodged a written objection to this decision.

6. On 10 April 2019 a different delegate of the CSA accepted a further income election (estimate of income) of $36,500 from Mr Chiswick. This was initially applied for the period 10 April 2019 to 30 June 2019.[3]

   [3] C46 onwards

7. On 5 June 2019 an objections officer disallowed the objection.

8. On 15 July 2019 Ms Timmins sought a further review by this Tribunal.

DOCUMENTARY EVIDENCE AND HEARING

1. The Tribunal had before it the original bundle of documents provided by the Department. The bundle is referred to in this decision as documents C1 to C169.

2. The Tribunal obtained further information from the CSA prior to the hearing. This consisted of a statutory notice which they had sent to an employer of Mr Chiswick, [Company 1], in May 2019, and their response.

3. The parties attended the hearing on 18 September 2019 by telephone conference and each gave evidence and made verbal submissions.

ISSUES

1. The principal issues which arises in this case are:

   ·Was the original decision to accept a nil estimate for the period 4 February 2019 onwards the legally correct and preferable decision, or not; and, if not,

   ·What is the legally correct outcome in this case?

CONSIDERATION

The relevant child support law

13.The law relevant to this review is contained in the Child Support (Assessment) Act 1989 (“the Assessment Act”).

14.The Tribunal has also had regard to the Child Support Guide, the Department’s online policy and legislation resource.

15.The Assessment Act sets up a scheme for assessing child support liabilities under what are called “administrative assessments”.

16.Usually, the CSA determines child support liabilities using a child support formula for periods of up to 15 months (called “child support periods”). The formulas take into account a range of factors including the “adjusted taxable income” of each parent.

17.Under section 43 of the Assessment Act the adjusted taxable income for each parent is their taxable income from the last financial year that ended before the start of the child support period, plus such additional amounts as net investment losses.

18.The statutory scheme provides some flexibility for parents whose circumstances do genuinely change from one year to the next.

19.Relevantly, section 60 of the Assessment Act allows a person to elect that their adjusted taxable income is their current adjusted taxable income (ie in the current financial year) rather than the adjusted taxable income from the previous (and concluded) financial year.

20.Section 60 of the Assessment Act also sets out a method for calculating estimated income for a period. In essence, the method is to annualise estimated adjusted taxable income for the estimate period - whether the estimate period is a full year or a part year. This is done by identifying the amounts of any taxable income, eg from employment, plus any net investment losses which are relevant to the person, and expressing the total as an annual figure: subsection 60(2).            

21.In respect of an estimate that applies for part of a financial year, there is a discretion for the Registrar to refuse to accept the estimate where the Registrar (and now this Tribunal) is satisfied that the amount of income which the parent estimates that they will earn in the remainder or balance of the financial year is less than the amount which the Registrar “considers is likely to be” their actual adjusted taxable income for that period: see paragraph 63AA(2)(a).

22.In making a decision to refuse an income election, the Registrar (and now this Tribunal)  “may act on the basis of information received or obtained as to the financial circumstances of the parent” and “may, but is not required to, conduct an enquiry” into that matter: see subsection 63AA(4).

23.The Registrar must later reconcile all estimates after the end of the relevant financial year when it receives advice from the Australian Taxation Office of the parent’s taxable income for the relevant tax year.

The relevant facts

24.The Tribunal has considered the documentary evidence and the evidence of Ms Timmins and Mr Chiswick and finds the relevant facts as follows:

·Ms Timmins has sole care of the three children;

·Mr Chiswick worked for [a business] from 22 November 2018 to 25 January 2019;[4]

[4] C49

·He provided the nil estimate on 4 February 2019;

·Mr Chiswick worked for [Company 1] Australia from 11 February 2019 to 2 May 2019;

·His job was permanent full time on an income of about $2,800 pf;

·On 10 April 2019 he provided another income estimate, which a delegate accepted that day, with his income annualised to an amount of $36,500;

·Mr Chiswick lodged his 2018/19 tax return on or about 6 July 2019;

·His taxable income was $36,260;

·The CSA then reconciled Mr Chiswick estimates with the following outcomes:[5]

[5] C120 onwards

oFor the period from 4 February 2019 to 7 May 2019 his child support liability is $427.00 pa (the minimum annual rate);

oFor the period from 8 May 2019 to 30 June 2019 his child support liability is $7,284 pa (using a “reconciled estimate” for that period of $49,224);

·The administrative assessment currently uses his 2018/19 taxable income. His child support liability is now $3,309 pa.[6]

[6] C132

DISCUSSION OF EVIDENCE, CONCLUSIONS AND REASONING

25.Ms Timmins’ principal argument was that a nil estimate should not have applied in any of the various administrative assessments which have been in force since early February 2019, because Mr Chiswick was only out of work for a brief period in February 2019, perhaps as little as one week. His nil estimate was not a genuine reflection of his likely income for the balance of that financial year.

26.The Tribunal notes that the CSA had in fact obtained bank statements which showed Mr Chiswick receiving income after February 2019 and had received specific information from the second employer, [Company 1] Australia, that Mr Chiswick was employed by them full time after 11 February 2019. The objections officer seems to have ignored this information completely.

27.When asked by the Tribunal, Mr Chiswick could not offer any explanation why he did not lodge a fresh estimate with the CSA as soon as he had started this new job. Instead he delayed doing so until 10 April 2019.

28.Under subsection 63AA(2) of the Assessment Act, the Tribunal is satisfied that the amount of estimated income of nil was less than the amount that was “likely to be” his actual adjusted taxable income for the balance of the 2018/19 financial year.

29.Under those circumstances the Tribunal “may” - but not must - now refuse to accept the estimate.

30.The Tribunal has concluded that it should refuse to accept the nil estimate.

31.The primary reason for this finding is that Mr Chiswick failed without good reason to disclose his new employment to the CSA for some months, and this allowed the minimum annual rate ($472 pa) to continue to apply to him, when it should not have done.

32.The Tribunal notes that after reconciliation of the two estimates Mr Chiswick was assessed to pay $4,398 pa for the period from 1 July 2018 to 3 February 2019; then the minimum annual rate ($472 pa) from 4 February 2019 to 7 May 2019; then $7,284 pa from 8 May 2019 to 30 June 2019. This adds up to an assessed child support liability for the 2018/19 financial year of about $3,750.

33.That figure is more than his current assessed liability based upon his 2018/19 adjusted taxable income, but it is significantly less than what he would have been assessed to pay had the nil estimate been refused. In that event, the rate of $4,398 pa would have continued to apply up to 9 April 2019 and after 10 April 2019 the reconciled estimate rate of $7,248 pa would have applied. This adds up to an assessed child support liability for the 2018/19 financial year of about $5,000. By lodging a nil estimate and not updating it he has obtained an unfair reduction in his child support liability.

34.Ms Timmins stated that a further reason for her appeal she that was convinced that Mr Chiswick had in fact earned substantially more than about $36,000 in 2018/19.

35.The issue of whether the recent administrative assessments have been “unfair” to her or the children “because of” Mr Chiswick’s true income, for child support purposes, can be scrutinised and determined in a change of assessment process, which Ms Timmins has been advised is a process available to her to commence by lodging a change of assessment application.

DECISION

The Tribunal sets aside the decision under review and substitutes a new decision that it refuses to accept the nil estimate of Mr Chiswick lodged on 4 February 2019.

This means that the application for review is successful.