Wilshere and Portlock (Child support)

[2022] AATA 4015

Wilshere and Portlock (Child support) [2022] AATA 4015 (29 September 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/MC024005

APPLICANT:  Mr Wilshere

OTHER PARTIES:  Child Support Registrar

Ms Portlock

TRIBUNAL:Member Y Webb

DECISION DATE:  29 September 2022

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – estimate reconciliation – whether estimate reconciliation correct – 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. This review relates to the child support assessment regarding Mr Wilshere and Ms Portlock’s child who is now 16 years old (the child).

2. Mr Wilshere has applied for review by the Administrative Appeals Tribunal (the Tribunal) of a decision of the Child Support Agency which determined on 4 May 2022 that Mr Wilshere’s objection should be disallowed and the decision which the Child Support Agency made to reconcile Mr Wilshere’s income estimate for the 2018/2019 financial year using his 2018/2019 adjusted taxable income was correct.

3. On 6 June 2019 Mr Wilshere lodged an income estimate of $16,790 for the 2018/2019 financial year.

4. The Child Support Agency calculated that Mr Wilshere’s total estimated income for the full 2018/2019 year comprised his year to date income for the period 1 July 2018 to 5 June 2019 ($15,640) plus his estimated income for the period 6 June 2019 to 30 June 2019 ($1,150) resulting in a total of $16,790. 

5. By letter dated 6 June 2019 the Child Support Agency wrote to Mr Wilshere accepting his estimate of income for the 2018/2019 year.  The letter enclosed summary details of his estimated income.

6. By letter dated 6 April 2021 the Child Support Agency wrote to Mr Wilshere to advise that his actual income for the 2018/2019 year was $22,334 which exceeded his total estimated income of $16,790.  The letter informed Mr Wilshere that this had increased his child support liability by $950.72.

7. On 18 February 2022 Mr Wilshere objected to the decision made on 6 April 2021 (having been granted an extension of time).  However, this was disallowed by an objections officer on 4 May 2022.

8. On 31 May 2022 Mr Wilshere requested a review by the Administrative Appeals Tribunal (“the Tribunal”).

9. Mr Wilshere and Ms Portlock attended a hearing by way of telephone conference with the Tribunal on 15 September 2022.  Both gave evidence on affirmation.

10. The Child Support Agency provided papers relevant to the review and these were marked (as a bundle) as Exhibit C1A.  Additional documents obtained by the Tribunal were marked as Exhibits C1–C5.

11. Following the hearing, Mr Wilshere provided additional information (marked as Exhibits A1–A2).  This was forwarded to Ms Portlock for her possible response. Ms Portlock responded on 26 September 2022 (marked as Exhibits B1-B2).  She explained the amounts of child support she had received and identified that the review related to the reconciliation of Mr Wilshere’s 2018/2019 estimated income using his actual 2018/2019 income.

12. On 29 September 2022 the Tribunal made its decision.

ISSUES

1. The main issue which arises in this case is:

   ·      What was Mr Wilshere’s 2018/2019 adjusted taxable income?

   ·      Was the actual (reconciliation) income calculated correctly?

CONSIDERATION

The child support law

1. The legislation relevant to this review is found in the Child Support (Assessment) Act 1989 (the Assessment Act) and the Child Support (Registration and Collection) Act 1988.

2. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Assessment Act. This requires the application of a statutory formula which takes into account factors such as the number of children, the level of care provided and the income of each parent. The specific income quantity is called a person’s adjusted taxable income, which is defined in section 43 of the Assessment Act.

3. The statutory scheme provides some flexibility for parents whose circumstances change from one year to the next. Relevantly, in specified circumstances, section 60 of the Assessment Act allows a person to elect that their adjusted taxable income is their current adjusted taxable income rather than the adjusted taxable income from the previous financial year.

4. Subsection 60(4) of the Assessment Act provides a method statement that must be followed where a parent makes a partial year election during an income year. Essentially this involves a calculation of annualising the parent’s estimate for the remainder of the year so that an annual amount is used to determine the parent’s child support income for a day in the child support period for the remainder of the income year that the estimate applies. The method statement is detailed below:

Method statement  

Step 1.Estimate each income component amount for the parent for the period (the remaining period):

(a)starting on the start day for the election; and

(b)ending at the end of the last day of the year of income.

Step 2.Add up those amounts. The result is the partial year income amount.

Step 3.Divide the partial year income amount by the number of days in the remaining period.

Step 4.Multiply the quotient by 365.

1. The Child Support Agency may refuse to accept the estimate if it is not accurate (section 63AA of the Assessment Act). Otherwise, it must accept the estimate and give effect to it.

2. A person making an estimate for part of a financial year must also advise the Child Support Agency of their income and supplementary amounts for the financial year up until the date that the estimate has effect. This is known as their “year to date income amount”. This is the total of the income component amounts for the period from the first day of the year of income to the day before the start day of the election (paragraph 60(3)(b) of the Assessment Act).

3. If the Child Support Agency accepts an estimate election, the income estimate amount becomes the adjusted taxable income amount for the purposes of assessing the annual rate of child support payable in the application period (subsection 61(1A) of the Assessment Act).

4. After the end of the income year, the Child Support Agency is required to undertake a reconciliation calculation which compares the parent’s estimated income with their actual income. If the actual income is higher than the estimated income, their assessment must be amended to use the actual income (sections 64 and 64A of the Assessment Act).

Was Mr Wilshere’s estimate correctly reconciled?

1. It appears that Mr Wilshere objected to the decision of the Child Support Agency on the grounds that he disagreed with the decision that his child support liability should be increased as a result of the reconciliation of his estimate.

2. It was difficult to ascertain from Mr Wilshere whether he was dissatisfied with reconciliation of his estimate for the 2018/2019 financial year or for the 2017/2018 financial year.  His main concern appeared to be that he considered he had been billed twice for the same amount.  He asserted that a portion of his income tax refund had been used to satisfy his child support debt and, in addition, an identical amount had been added to his child support liability.  However, the Tribunal is only able to consider in its decision whether his 2018/2019 estimate of income was correctly reconciled with his 2018/2019 adjusted taxable income.

3. The Child Support Agency confirmed in its letter of 6 June 2019 the basis upon which it had accepted Mr Wilshere’s estimate of income. The letter confirmed that Mr Wilshere’s year to date income was $15,640 and his estimated income for the remaining estimate period of 6 June 2019 to 30 June 2019 was $1,150. The letter contained a notice pursuant to section 160 of the Assessment Act notifying Mr Wilshere that if there was any event or change which affected his estimate of adjusted taxable income, he needed to contact the Child Support Agency within 14 days. Mr Wilshere did not contact the Agency regarding the amount of $1,150 being recorded as his estimated income for the period 6 June 2019 to 30 June 2019, nor did Mr Wilshere dispute that his annualised estimated income for the 2018/2019 year was $16,790.

4. On 6 April 2021 Mr Wilshere’s estimate of income was reconciled by comparing his actual income earned during the estimate period with the estimated income he stated he would earn during the estimate period. If the actual income is higher than the estimate, the assessment must be amended to use the actual income (sections 64 and 64A of the Assessment Act).

5. Mr Wilshere’s actual adjusted taxable income for the 2018/2019 year was $22,334 ($22,326 of disability support pension plus $8 of bank interest). Mr Wilshere’s estimated income for the period 6 June 2019 to 30 June 2019 (25 days) was $1,150 based on his estimate of income of $16,790. Mr Wilshere lodged only one relevant income estimate which was the estimate lodged by him and accepted by the Child Support Agency on 6 June 2019. Subsection 64(1) of the Assessment Act determines how the reconciliation process will be carried out. Subsections 64(3) and (4) provide a formula for reconciling a single estimate. They provide as follows:

   Reconciliation--election for a part of a year of income

   (3)  Subject to this section, if:

   (a)  subsection 60(3) applied to the income election; and

   (b)  the difference between:

   (i)  the parent's actual adjusted taxable income for the year of income; and

(ii)  the parent's applicable year to date income amount for the year of income;

is more than the partial year income amount worked out by the parent under subsection 60(4);

the parent's adjusted taxable income for a day that occurs in the application period for the income election is taken to be, and to have always been, the amount worked out under subsection (4).

(4)  For the purposes of subsection (3), the amount is worked out by:

(a)  dividing the amount worked out under paragraph (3)(b) by the number of days in the remaining period to which the income election related; and

(b)  multiplying the quotient by 365.

1. Mr Wilshere’s 2018/2019 adjusted taxable income was $22,334.  The year to date income as worked out when the estimate was lodged on 6 June 2019 was $15,640.

2. Therefore, $22,334 minus $15,640 = $6,694.  The next step in the above formula is to divide $6,694 by the number of days in the estimate period which is 25 days.  This equals $267.76 per day.  The final step is to then multiply that daily amount by 365 = $97,732.40 (as an annualised figure to be used in the child support assessment for the period 6 June 2019 to 30 June 2019).

3. Mr Wilshere provided documents marked A1 and A2 which he explained would clarify his dissatisfaction with the decision of the Child Support Agency.  It is clear that he has been seeking an explanation as to whether the amounts taken from his income tax refund have been correctly applied to his child support payment record.  It is clear that he has spoken with Centrelink, the Australian Taxation Office and the Child Support Agency without a resolution to his queries.  It seems that Mr Wilshere’s concerns may relate more to his 2017/2018 income than to his 2018/2019 income.

4. However, the Tribunal’s jurisdiction is limited to reviewing the decision of the objections officer made on 4 May 2022 regarding the reconciliation of his income estimate for the 2018/2019 financial year using his 2018/2019 adjusted taxable income.

5. Ms Portlock stated that Mr Wilshere had been on the disability support pension for a long time, but if he had been undertaking paid work and received additional income she believed it was appropriate that their daughter should benefit from that additional income.

6. In relation to the decision under review, the Tribunal is satisfied that Mr Wilshere’s estimated income figure of $16,790 was used in the assessment of his child support liability and that the child support assessment was not being calculated on his actual income. In other words, the actual income earned by Mr Wilshere during the estimate period ($6,694) was greater than the income he estimated he would earn ($1,150). Upon reconciliation, this generated additional child support liability for Mr Wilshere. The Tribunal is satisfied that the Child Support Agency has correctly reconciled Mr Wilshere’s 2018/2019 estimate in accordance with subsections 64(3) and (4) of the Assessment Act.

DECISION

The decision under review is affirmed.