Turrell and Turrell (Child support)

[2018] AATA 1219

Turrell and Turrell (Child support) [2018] AATA 1219 (29 March 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/BC013427

APPLICANT:  Mr Turrell

OTHER PARTIES:  Child Support Registrar

Mrs Turrell

TRIBUNAL:Member A Byers

DECISION DATE:  29 March 2018

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that for the purposes of section 61 of the Child Support (Assessment) Act 1989 effect is to be given to Mr Turrell’s estimate of $87,000 per annum for the period 15 September 2017 to 30 June 2018.

CATCHWORDS
Child support – Estimate of adjusted taxable income correctly made – 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. Mr Turrell is the parent liable to pay child support to Mrs Turrell for their children [Child 1] and [Child 2].  On 15 September 2017 Mr Turrell contacted the Child Support Agency (CSA) to advise his income had reduced following a change of employer.   

2. Mr Turrell is recorded as advising his earnings to 14 September 2017 totalled $16,050, comprising $7,570 from his former employer [and] $8,480 from his current [employer].  He estimated his annual rate of income from 15 September 2017 to 30 June 2018 at $87,000.

3. By notices dated 15 September 2017 the CSA informed both parties of its decision to accept Mr Turrell’s estimate. This matter concerns whether that estimate should in fact be accepted.

4. On 15 January 2018 an objections officer allowed Mrs Turrell’s objection by refusing to accept Mr Turrell’s estimate.  The result is that Mr Turrell’s 2016/17 adjusted taxable income of $109,176 continued to apply from 15 September 2017.

5. On 2 February 2018 Mr Turrell sought review by the Tribunal of this decision and the application was heard on 29 March 2018 in Brisbane by conference telephone.   The parties gave sworn evidence

6. At hearing I accepted into evidence the subsection 37(1) documents provided by the CSA, comprising folios 1 to 218 (marked Exhibit 1).     

CONSIDERATION

1. The provisions covering estimates of adjusted taxable income are contained in Subdivisions C to E of Division 7 of Part 5 of the Child Support (Assessment) Act 1989.[1]  Section 60 provides, as far as is relevant:

   [1]        All subsequent legislative references are to this Act unless otherwise stated.

   60  Parent may elect to estimate his or her adjusted taxable income for a year of income

   (1)  A parent may, before a year of income starts or during a year of income, elect that the parent’s adjusted taxable income for the year of income is to be the amount that applies under subsection (2) or (3) if:

   (a)  the parent is to be assessed in respect of the costs of a child of the parent for a day in a child support period; and
   (b)  the amount that would apply under that subsection is not more than 85% of:

   (i)  the total of the parent’s adjusted taxable income determined in accordance with section 43 for the last relevant year of income for the child support period; ...

2. Subsections 60(3) and (4) then set out the manner in which a person is to make their estimate for a part year.  In particular, Mr Turrell was required under subsection 60(4) to estimate his adjusted taxable income from 15 September 2017 to 30 June 2018. 

3. Under paragraph 63AA(2)(a), the CSA may refuse to accept a person’s estimate for part of a year (to 30 June) where it is considered the estimate is likely to be less than their actual adjusted taxable income for that period. 

10.  Mrs Turrell objected to the CSA’s decision to accept Mr Turrell’s estimate (of $87,000 per annum) as Mr Turrell indicated to her while they were still together that he anticipated receiving bonuses from [his current employer] which would take his overall income to at least that received from [his former employer].

11.  Mr Turrell is [an occupation] whose job with [his current employer] involves servicing clients from Noosa to Coolangatta.  Mr Turrell lives in [a town] and I accept this involves a significant amount of travel.  [The current employer]has completed a CSA questionnaire on 20 December 2017 confirming Mr Turrell commenced on 21 August 2017 on a salary of $95,000 per annum.  The company advises Mr Turrell does not salary sacrifice and does not receive any additional benefits or allowances.

12.  At hearing Mr Turrell confirmed he is not paid a travel allowance and explained that, contrary to his initial expectations, it is highly unlikely he will receive any bonuses prior to 30 June 2018.  Mr Turrell said [the current employer] has two incentive schemes.  One involves KPI based payments made when all ongoing service arrangements with his existing client base are met.  The second relies on bringing in new business.  However, KPI based incentives are not paid unless new business is introduced, which involves billing of at least $40,000 per quarter.

13.  Mr Turrell said the present barrier to introducing new business is the resignation of three other [colleagues].  This has obliged him to take over their client base and leaves no room to introduce new business.  He professes not to be happy with this outcome but is content at this point to have employment. 

14.  Following the CSA’s indication that it would need evidence supporting his estimate, Mr Turrell engaged his tax agents, BR Accountants, to set out his anticipated work-related expenses.  BR Accountants supplied this information in a memorandum of 31 January 2018.  In total, work related expenses for 2017/18 of $18,555 are anticipated.  Of this $17,105.37 are vehicle expenses.  The remaining expenses involve professional memberships ($800), the cost of a direct equities qualification ($500) and laundry ($150).

15.  Regarding vehicle expenses, Mr Turrell purchased a new [vehicle] by way of a loan on 11 October 2017 and is claiming 90% work use supported by a log book.   The expenses include loan interest ($2,309.33), insurance ($1,061.64), petrol and running costs ($3,500), capped servicing ($1,200), registration ($800), tyres ($1,000) and depreciation ($9,130).  I accept these are legitimate expenses, although I do not anticipate Mr Turrell will need to replace the vehicle’s tyres by 30 June 2018.

16.  Mr Turrell indicated that his log book entries to date show he is within one or two percent of the 90% business use claimed.  If tyre replacement costs are left aside, I accept Mr Turrell will be able to claim expenses for 2017/18 of around $17,555.  I accept accordingly that Mr Turrell’s anticipated annualised adjusted taxable income for the period 15 September 2017 to 30 June 2018 is likely to be materially less than his estimate of $87,000.  On this footing it should be accepted, as it is also less than 85% of his 2016/17 assessed adjusted taxable income.

17.  For completeness, I note from the hearing papers that the CSA has accepted an estimate by Mr Turrell for 2017/18 of $83,694 from 1 February to 30 June 2018.  This evidently stems from Mr Turrell’s contact on 1 February 2018 in connection with BR Accountant’s memorandum of 31 January 2018 (discussed in these reasons).  Although there may be some technicalities stemming from the fact that this retrospectively becomes a second estimate, my decision is not intended to disturb the CSA’s assessment.   

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that for the purposes of section 61 of the Child Support (Assessment) Act 1989 effect is to be given to Mr Turrell’s estimate of $87,000 per annum for the period 15 September 2017 to 30 June 2018.