Wornum and Egerton (Child support)

[2022] AATA 738

Wornum and Egerton (Child support) [2022] AATA 738 (3 March 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBERS:  2021/PC022678; 2021/PC022581

APPLICANT:  Mr Wornum

OTHER PARTIES:  Child Support Registrar

Ms Egerton

TRIBUNAL:Member S Letch

DECISION DATE:  3 March 2022

DECISION:

The decisions under review are affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – review of an estimate of income – the Registrar not prevented from reviewing the estimate – reconciliation correct in first matter – estimate of income correctly accepted in second matter – both decisions 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

1. Mr Wornum has been assessed by the Child Support Agency (CSA) as liable to pay child support. This decision is concerned with two separate objection decisions.

2. In application number 2021/PC022581, an objections officer, on 12 October 2021, found the following:

DECISION UNDER REVIEW

Mr Wornum is objecting to our decision made on 29 July 2021 to reconcile his 2019/2020 estimate of
income of $14,500 with his 2019/2020 Australian Tax Office (ATO) adjusted taxable income (ATI)
of $29,492.

Mr Wornum has objected to this decision as he holds the estimate to be true be correct.

Mr Wornum objects to any penalty, as the 10% requirement is too tight an estimate to be able to meet due
to the variable nature of his income. In reality, Mr Wornum states, the estimate is not all that far away from

the actual tax return income which is below $25,000.

…

REASONS FOR THE DECISION

An estimate is an election for the child support assessment to be calculated based on a parent's
estimate of their future taxable income and other component amounts (i.e. their adjusted taxable
income). A parent's adjusted taxable income is the total of the following components:
- taxable income for the last relevant year of income (including overseas income)
- reportable fringe benefits total for that year of income
- target foreign income for that year of income
- the parent's total net investment loss for that year of income
- the total of the specified tax free pensions or benefits received in that year of income, and
- the parent's reportable superannuation contributions.

After the end of the year of income, we will compare the parent's estimated income with their actual
income for the year. If the actual income is less than or equal to the estimated income, the records
will be noted to show that no further action is required. If the parent's actual income is more than
their estimated income, the assessment will be amended using their actual income.

The objection relates to the reconciliation of Mr Wornum`s full year estimate for the period 1 July 2019
and 30 June 2020. The relevant financial year is the 2019/2020 financial year.

Mr Wornum`s 2019/2020 adjusted taxable income: $29,492
Total estimated income: $15,400

The total difference between Mr Wornum`s estimated and reconciled income is $14,992 ($29,492 -
$15,400).

As Mr Wornum`s actual income is more that his estimated income, the assessment will be amended using

his actual income.

We find Mr Wornum`s estimate of adjusted taxable income for the period 1 July 2019 to 30 June 2020 is
to be reconciled to $29,492.

This objection is disallowed.

1. In application number 2021/PC022678, an objections officer, on 13 October 2021, found the following:

   DECISION UNDER REVIEW

   Mr Wornum is objecting to our decision made on 5 July 2021 to apply Ms Egerton`s 2020/2021 provisional
   income (ITD) of $10,000 to the child support assessment from 1 July 2021.

   Mr Wornum has objected to this decision because he states Ms Egerton is not reporting income from her
   Western Australian state superannuation annuity nor are we properly assessing her investment
   income, which we are required to do. Mr Wornum states Ms Egerton has assets other than her house in
   excess of $700,000 and is claiming this only returns 1% where ordinarily it should be being

   assessed at least at the deeming rate or higher according to Dwyer v McGuire.

   …

   REASONS FOR THE DECISION

   An income tax declaration is a derived income.

   An ITD is a customer's declaration of their taxable income for a relevant year. It is also considered a
   derived income based on information provided by the customer. An ITD can only be accepted if we
   are satisfied that it is a reasonable approximation of the customer`s adjusted taxable income (ATI).

   In this case, Ms Egerton has provided an ITD for 2020/2021 of $10,000.

   A review of ATO records confirms historically Ms Egerton`s income is within the vicinity of what she
   has advised her income will be for the 2020/2021 financial year.

   Ms Egerton has not signed any employment declaration forms with a new employer.
   Mr Wornum raised issues regarding whether the income being used in the assessment for Ms Egerton is
   actually reflecting her income resources and earning capacity.

   An objection officer does not have the legislative power to consider a person`s property, financial
   resources, or earning capacity, however; a Decision Maker in the Change of Assessment process
   can sometimes consider this.

   A Decision Maker can consider changing the formula assessment in a range of special
   circumstances.

   Based on the information available we are satisfied that the amount advised by Ms Egerton is a
   reasonable approximation of her gross income earned in the 2020/2021 financial year.

   Therefore, on review the objection is disallowed.

   Parents can apply to have their assessment changed if their special circumstances are not adequately
   reflected in their child support assessment. An application to change your assessment (special
   circumstances) must be lodged on the approved Application to Change Your Assessment in Special
   Circumstances form, signed and lodged by either mail, fax or electronically. This form can be

   accessed at servicesaustralia.gov.au.

2. In advance of the hearing listed in these matters, Ms Egerton informed the Tribunal she did not wish to participate. Mr Wornum participated in the Tribunal’s hearings by conference telephone.

3. In short, Mr Wornum told the Tribunal that he deferred to his previously stated representations as to why he disagrees with the CSA decisions. He indicated to the Tribunal that he had no confidence the Tribunal would conduct a fair review, and would simply follow the CSA.

4. The Tribunal observes it is entirely separate and independent from the CSA. The Tribunal does not “follow” the CSA. The Tribunal conducts independent merit view, and like the CSA is obliged to apply the statutory provisions enacted by Parliament.

Review number 2021/PC022581

1. This matter concerns the “reconciliation” of Mr Wornum’s estimated 2019/20 income. On
   2 July 2010, Mr Wornum told the CSA he estimated his income for 2019/20 would be $14,500. His estimated income was wrong; he derived $29,492.

2. Simply put, the legislative regime – quite fairly when regard is had to object of the child support scheme – permits a parent in certain circumstances to be assessed on a reduced income estimate: section 60 of the Child Support (Assessment) Act 1989 (the Act). As might be expected – where that estimate proves wrong – the consequence is that a retrospective assessment is undertaken to recalculate child support liability on the basis of actual income: section 64 of the Act.

3. That is precisely what happened in Mr Wornum’s case. Mr Wornum raises no particular issue with the arithmetic applied by the CSA; the Tribunal has carefully examined the CSA materials, and finds no error.

4. As the Tribunal has reached the same conclusion as the objections officer, the decision under review will be affirmed.

Review number 2021/PC022678

1. This matter is concerned with the decision to apply an “income declaration” by Ms Egerton on 5 July 2021 that her 2020/21 adjusted taxable income amounted to $10,000. In conducting its due diligence, the CSA uncovered no evidence which would lead it to conclude Ms Egerton’s declaration was inaccurate.

2. Mr Wornum suggests Ms Egerton is not disclosing superannuation or investment income. The difficulty for Mr Wornum is that there is no evidence of undisclosed taxable income. It was entirely appropriate for the CSA to accept Ms Egerton’s declaration on the evidence available to it: section 58 of the Act.

3. The Tribunal makes two observations. The first is that if Ms Egerton’s declaration is proven incorrect, there can be a retrospective adjustment to the child support assessment (much in the same way as Mr Wornum’s incorrect estimate was retrospectively reassessed). The second observation is that, consistent with the suggestion put to him by the CSA on what appears multiple occasions, if Mr Wornum considers the child support assessment unfair on the basis of alleged financial resources available to Ms Egerton which do not form part of her adjusted taxable income, he may seek to apply for a “change of assessment” to depart from the formula regime. He is at liberty to seek assistance from the CSA should he choose that path if he has not already done so.

4. As the Tribunal has reached the same conclusion as the objections officer, the decision under review will be affirmed.

DECISION

The decisions under review are affirmed.