Vannoy and Keaton (Child support)

[2022] AATA 1711

Vannoy and Keaton (Child support) [2022] AATA 1711 (3 March 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/BC023015

APPLICANT:  Mr Vannoy

OTHER PARTIES:  Child Support Registrar

Miss Keaton

TRIBUNAL:Member J Leonard

DECISION DATE:  3 March 2022

DECISION:

The decision under review is affirmed.

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 correctly refused – 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. Mr Vannoy and Miss Keaton are the parents of [Child 1] (born 2004). Mr Vannoy is the parent liable to pay child support to Miss Keaton.

2. On 26 August 2021, Mr Vannoy contacted Services Australia (Child Support) to lodge an income estimate for the period 26 August 2021 to 30 June 2022. Mr Vannoy estimated his income to be “nil”. Prior to this his child support liability was assessed by reference to his 2020-21 adjusted taxable income of $74,639. His estimate was accepted, and on 9 September 2021 Miss Keaton objected to that decision.

3. On 22 December 2021 an objections officer allowed Miss Keaton objection and decided to refuse to accept Mr Vannoy’s income estimate of $0 per annum.

4. On 23 December 2021 Mr Vannoy applied to the Social Services and Child Support Division of the Administrative Appeals Tribunal (the Tribunal) for an independent review of the objection decision. The application was heard on 3 March 2022. Mr Vannoy and Miss Keaton attended the hearing by conference telephone and gave evidence on affirmation. A representative of the Child Support Registrar did not attend the hearing and provided documents numbered 1 to 158 relevant to the review. Prior to the hearing Mr Vannoy provided additional documents which were numbered A1 to A2.

ISSUES AND CONSIDERATION

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

2. In general, a person’s child support liability is calculated by using an adjusted taxable income, which is based on the person’s taxable income for the previous financial year.  In this case the child support period in question is the period 1 August 2021 to 31 October 2022, which would generally use 2020-21 taxable incomes of $74,639 for Mr Vannoy and $22,891 for Miss Keaton.

3. The Act makes provision, however, for a child support assessment to be based on an estimate of current income provided there has been a decrease in income of at least 15%. Section 60 of the Act generally provides that where an income estimate is made part-way through a tax year, the 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.

4. An estimate of income by its nature is unlikely to be precise. In essence, what is required in this context 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.

5. Mr Vannoy stated that he is self-employed. He had been employed under a contract which ceased at the end of the 2020-21 financial year. His partner was expecting a child in August 2021 and he planned to have some time at home to help his partner following the birth. He was still looking for little jobs but also had planned a family holiday to Western Australia so had limited time to do work over the coming months. They left in late December and due to COVID-19 they decided to stay away from home longer. They returned to Queensland in mid-February 2022.

6. In response to the Tribunal’s questions regarding his estimate (page 36), Mr Vannoy stated he received an amount for dad and partner pay in September 2021 and this may account for his estimate of $1,546 for the period 26 August 2021 to 30 June 2022. The deductions of $2,080 in this period probably represent his running costs for the business associated with insurance, overheads and expenses associated with quoting for work.

7. Mr Vannoy provided an income and expenditure report for the period 1 July to 31 December 2021 prepared by his accountant. It has not been audited. It listed sales of $605 and expenses of $2,176 in that period.

8. Section 63AA of the Act, provides a discretion to refuse to accept an income estimate election. Paragraph 63AA(2)(a) enlivens the potential exercise of discretion to refuse if Mr Vannoy’s estimate of income for the period 26 August 2021 to 30 June 2022 was likely to be too low.

9. Mr Vannoy stated that the Child Support employee decided to record the income estimate as being “nil” and then told Mr Vannoy to contact again once his income changed. However, as stated above, the income estimate is for the remainder of the tax year (in this case to 30 June 2022). It is not an estimate of current income. Mr Vannoy acknowledged that he had ongoing expenses to meet such as a mortgage and that he expected to pick up more work after he returned to Queensland.

10. In making an estimate, the person is attempting to forecast future income, so absolute precision cannot be expected. The provisions in the Act which allow for the amendment of estimates by the Registrar if circumstances change, and for estimate reconciliation after the end of the tax year once the actual income is ascertained, suggest that an overzealous approach in scrutinising an income estimate is not warranted. Consistent with this, it is also relevant to note that the power to refuse to accept an estimate is discretionary, not mandatory, even if the Registrar is satisfied that the estimate is too low.

11. On the other hand, if the Registrar were to take a lax approach, that may well encourage people to underestimate their income to avoid paying child support or to pay child support at a lower rate. A balance must be struck and the Tribunal considers that it is appropriate to ascertain whether the estimate was reasonable when it was given.

12. The Tribunal considers that Mr Vannoy would have been aware that the reduction to $0 per week would only be temporary. He had elected to reduce his availability to work, and then had chosen to take time off following the birth of his child and his impending holiday. He anticipated that his income would increase once he returned to Queensland. On 23 December 2021 Mr Vannoy advised Child Support that he could potentially earn $20,000 in the final four months of the financial year.

13. The Tribunal notes that Mr Vannoy’s 2019-20 adjusted taxable income was $45,108.

14. Mr Vannoy submitted that the estimate was genuinely made at the advice of Child Support. He submitted that in circumstances where it is clear he had suffered a significant decrease to income, he should not be required to pay child support based on his 2021-21 adjusted taxable income. This, however, is the ordinary operation of the Act. If Mr Vannoy considers that in the special circumstances of the case the outcome is unfair, it is open to him to bring a departure application.

15. The Tribunal considers that Mr Vannoy’s income estimate election of $0 for the period 26 August 2021 to 30 June 2022 was always likely to be too low.  The Tribunal is therefore satisfied that the most appropriate course here is to refuse Mr Vannoy’s income estimate election and affirm the decision under review.   

DECISION

The decision under review is affirmed.