Wassell and Mecaenus (Child support)

[2021] AATA 1760

Wassell and Mecaenus (Child support) [2021] AATA 1760 (3 May 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/MC020703

APPLICANT:  Mr Wassell

OTHER PARTIES:  Child Support Registrar

Ms Mecaenus

TRIBUNAL:Member M Baulch

DECISION DATE:  3 May 2021

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate of income – whether the estimate should have been refused – discretion to refuse estimate of income when year to date income higher than declared – 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 the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

1. The Child Support (Assessment) Act1989 (the Act) provides for an administrative assessment of the child support payable by one separated parent to the other.  It uses a statutory formula which contains variables such as the parents’ adjusted taxable incomes, the number of children, their ages, and their percentages of care. 

2. Mr Wassell and Ms Mecaenus are the separated parents of [Child 1], in respect of whom the Department of Human Services, now known as Services Australia – Child Support (Child Support) has made assessments under which Mr Wassell is liable to pay child support to Ms Mecaenus.

3. On 6 March 2020, Mr Wassell contacted Child Support and made an estimate of his adjusted taxable income to be applied in the child support assessment.  On 6 March 2020, a Child Support employee decided an estimated income of $0 per annum should apply to the child support assessment from 6 March 2020.

4. Ms Mecaenus objected to the decision to accept Mr Wassell’s estimate and, on 25 June 2020, that objection was allowed.  The objections officer decided that the estimate election made by Mr Wassell on 6 March 2020 should be refused (the decision under review).  Mr Wassell is now seeking an independent review of that decision by this tribunal.

5. A hearing into the application for review was held by the tribunal on 3 May 2021. Mr Wassell and Ms Mecaenus both participated in the hearing by conference telephone and both gave evidence during the hearing. A representative of the Child Support Registrar (the Registrar) did not participate in the hearing. The tribunal had before it relevant documents provided to it by Child Support pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (147 pages) and material lodged by Mr Wassell (labelled folios A1 to A6), copies of which both parties confirmed they had received prior to the tribunal hearing.

ISSUES

1. The statutory provisions relevant to this review application are found within the Act.

2. The issues which arise in this application for review are:

   ·      Is the income estimate made by Mr Wassell on 6 March 2020 likely to be less than his actual income for the period 6 March 2020 to 30 June 2020; or

   ·      Is the year-to-date amount provided by Mr Wassell, when he made his estimate on 6 March 2020, likely to be more than his actual income for the period 1 July 2019 to 5 March 2020; and if so

   ·      Should Mr Wassell’s income estimate have been refused?

CONSIDERATION

1. Child Support makes child support assessments using a formula outlined in Part 5 of the Act.  The elements of this formula include, amongst other things, the adjusted taxable income of each parent.  The adjusted taxable income for each parent is defined in section 43 of the Act and includes primarily the taxable income from the year of income in relation to the child support period.  The term year of income is defined in subsection 5(1) of the Act and generally means a financial year.

2. Section 60 of the Act allows a parent to elect to estimate his or her adjusted taxable income for a year of income and use the estimated income to replace their adjusted taxable income.  The parent can make an estimate prior to the year of income based on their estimate of their income for that year; or they can make an estimate during an income year based on what they estimate they will earn for the rest of the year.

3. Where a parent has provided an estimate of their income for a part of a year of income, section 63AA of the Act provides that the Registrar may refuse to accept that estimate of the parent’s income if:

   ·      The estimated amount is less than the amount the Registrar considers is likely to be the parent’s actual adjusted taxable income for the period to which the estimate relates (paragraph 63AA(2)(a) of the Act); or

   ·      The amount provided as the parent’s income for the period starting on 1 July and ending on the day before the estimate is made, is likely to be more than the parent’s actual adjusted taxable income for that period (paragraph 63AA(2)(b) of the Act).

4. Mr Wassell made an estimate election for the remainder of the 2019-20 income year on 6 March 2020.  He estimated that his income for the remainder of that year (6 March 2020 to 30 June 2020) would be $0, and his income for the period 1 July 2019 to 5 March 2020 was $193,373.

Is the income estimate made by Mr Wassell on 6 March 2020 likely to be less than his actual income for the period 6 March 2020 to 30 June 2020?

1. On 6 March 2020, Mr Wassell estimated that his income for the remainder of the year of income (that is, 6 March 2020 to 30 June 2020) would be $0.  The objections officer decided that Mr Wassell’s estimate should be refused because he received a termination payment of $93,873 on 14 March 2020.

2. Mr Wassell disputes that the payment was made on 14 March 2020 and asserted that he actually received his termination payment on 25 February 2020. 

3. In support of this assertion he has provided details from a bank statement (A2 & A3) which disclose that his former employer paid $59,397 into his bank account on 25 February 2020.  Mr Wassell has also provided email correspondence from his former employer that states:

   This is confirmation that [Company 1] manually paid your entitlements of net $59,397.80 on the 25/02/2020, this was updated in the next monthly payrun (sic) on 14 March 2020.

   A printout from a payroll system shows that Mr Wassell’s gross entitlements of $93,873.80 were, after tax, a net amount of $59,397.80.

4. Ms Mecaenus did not dispute that Mr Wassell had received his termination payment from his employer before making his estimate election on 6 March 2020.

5. Having regard to the evidence, I was satisfied that Mr Wassell received the lump sum payment of $93,873.80, gross, from his employer on 25 February 2020.  I therefore concluded that, as at 6 March 2020, it was not likely that Mr Wassell’s actual adjusted taxable income for the period 6 March 2020 to 30 June 2020 would be more than $0.

6. Therefore, paragraph 63AA(2)(a) of the Act is not satisfied and the accuracy of Mr Wassell’s estimated income is not a basis to refuse that estimate.

Is the year-to-date amount provided by Mr Wassell, when he made his estimate on 6 March 2020, likely to more than his actual income for the period 1 July 2019 to 5 March 2020?

1. When he made his estimate election on 6 March 2020, Mr Wassell advised Child Support that his income for the period 1 July 2020 to 5 March 2020 had been $193,373 (see folio 132).

2. The print out from the payroll system provided by Mr Wassell (at folio A6) shows that Mr Wassell’s year to date gross salary was $95,022.83 and a gross payment, which I accepted was made on 25 February 2020, of $93,873.80.  This evidence suggests that Mr Wassell’s gross actual income for the period 1 July 2019 to 5 March 2020 was $188,896.63 ($95,022.83 + $93,873.80), which is less than the amount of $193,373 he provided when making his estimate on 6 March 2020. 

3. I noted that the year to date gross amount obtained by Child Support from an “ICP search” on 25 June 2020 (at folio 74) shows that Mr Wassell’s year-to-date gross earnings for paydays 14 March 2020 and 15 April 2020 were $188,896.22.  If Mr Wassell received no payments from his employer after 6 March 2020, which I what I have found above, the inevitable conclusions is that Mr Wassell’s year-to-date amount from his employer, as at 6 March 2020, was $188.896.22.

4. I therefore found that Mr Wassell’s actual income for the period 1 July 2019 to 5 March 2020 is likely to be $188,896.  This means that the amount he reported as his year-to-date income of 6 March 2020, of $193,373, is likely to be more than his actual adjusted taxable income for that period.

5. Therefore, paragraph 63AA(2)(b) of the Act is satisfied and the accuracy of Mr Wassell’s reported year-to-date income enlivens a discretion to refuse Mr Wassell’s estimate.

Should Mr Wassell’s income estimate have been refused?

1. Although Mr Wassell’s estimated income of $0 was likely to be correct, the amount he reported for his adjusted taxable income, for the period 1 July 2019 to 5 March 2020 was higher than his likely income for that period (paragraph 63AA(2)(b) of the Act).  This enlivens the power provided for in section 63AA of the Act to refuse to accept Mr Wassell’s income estimate.

2. Mr Wassell explained that he had taken the year-to-date amount of $193,373 from his payslip and was unable to provide an explanation as to why it was different to the likely amount of $188,896 that is disclosed by A6, which is also reflected in folio 74.

3. When asked why, in any case, his estimate should be accepted, Mr Wassell pointed out that his income was, at that time, $0 and I am satisfied that was the case.  However, the amount reported by Mr Wassell for the period 1 July 2019 to 5 March 2020, being $193,373, was not correct and it was my view that this would likely impact on the accuracy, or otherwise, of the child support assessment once any estimate is reconciled (see section 64 of the Act).

4. Ultimately, it was up to Mr Wassell, when he made his estimate election, to provide accurate information about his income for the period 1 July 2019 to 5 March 2020 and he did not do so.  I was not persuaded that there are any cogent reasons to accept Mr Wassell’s estimate and therefore concluded that the estimate election, made by Mr Wassell on 6 March 2020, should be refused.

5. Therefore, and for these reasons, I decided to affirm the decision under review.

DECISION

The decision under review is affirmed.