Yardley and Kinsley (Child support)

[2018] AATA 1233

Yardley and Kinsley (Child support) [2018] AATA 1233 (15 March 2018)

DIVISION:  Social Services and Child Support Division

REVIEW NUMBER:  2017/BC012708

APPLICANT:  Mr Yardley

OTHER PARTIES:  Child Support Registrar

Ms Kinsley

TRIBUNAL:Member J Cuthbert

DECISION DATE:                           15 March 2018

DECISION:

The decision under review is set aside and remitted to the Child Support Registrar with directions that consideration is given to determining a new year to date income amount for Mr Yardley under section 63AE of the Child Support (Assessment) Act 1989 before reconciling the estimated income if necessary.

CATCHWORDS
Child support - Reconciliation of estimated income - Year to date income amount incorrect - Decision under review set aside and sent back with directions

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. This review concerns the adjusted taxable income used for Mr Yardley in a child support assessment from 30 May to 30 June 2017.

2. Mr Yardley and Ms Kinsley are the parents of [Child 1](born 2000). There has been a child support assessment in place made by the Department of Human Services – Child Support (the Department) for the children since 2002. From 30 May 2017 the assessment was based on Mr Yardley’s estimated income for the period 30 May to 30 June 2017, an annualised figure of $13,974.

3. On 18 July 2017 a decision was made to reconcile the estimated income and to use an adjusted taxable income of $61,878 for Mr Yardley in the assessment from 30 May to 30 June 2017.

4. Mr Yardley’s written objection to that decision was disallowed on 22 September 2017. On 17 October 2017 Mr Yardley made an application to the tribunal for a review of that decision.

5. The application was heard on 15 February 2018. Mr Yardley and Ms Kinsley both attended the hearing by telephone. In addition to documents provided by Mr Yardley (folios A1 to A13), the tribunal had regard to documents provided by the Department (folios 1 to 139 and 140 to 151).

6. Following the hearing Mr Yardley provided the tribunal with further documents (folios A14 to A19) which were sent to Ms Kinsley for comment. As no comments were received, the tribunal made a decision on 15 March 2018.

ISSUES

1. The issues in this matter are:

   ·     whether or not Mr Yardley’s estimate of income should have been reconciled, and if so

   ·     the adjusted taxable income to be used in the assessment.

CONSIDERATION

1. The legislation relevant to this review is contained in the Child Support (Assessment) Act 1989 (the Assessment Act). Usually child support liabilities are determined using a child support formula in Part 5 of the Assessment Act for periods of 15 months (child support periods). The formulas take into account a range of factors including the adjusted taxable incomes of each of the parents.

2. The adjusted taxable income for each of the parents (section 43 of the Assessment Act) is the taxable income from the last tax year that ended before the start of the child support period (plus supplementary amounts, if relevant). Prior to lodging an estimate on 30 May 2017 the child support assessment for the child support period which started on 1 September 2016 was based on Mr Yardley’s 2015/16 adjusted taxable income of $114,214. The tribunal accepts that Mr Yardley was unemployed for a period from March 2017 and received income support payments from Centrelink from 31 March to 30 June 2017.

3. The legislation provides some flexibility for parents whose circumstances have changed. Section 60 of the Assessment Act allows a person to lodge an income estimate. The period affected by an estimate is set out in section 60. The period starts on the day the person made an estimate or the start of the tax year, whichever is the later, and ends at the end of the tax year. The effect of an income election is set out in section 61 of the Assessment Act. It is used in the assessment for a specified period unless refused under section 63AA of the Assessment Act. When lodging an estimate for part of a tax year a person is required to provide the Department with a figure for their income in the year to date.

4. The Department must reconcile estimates after the end of the relevant financial year when it receives advice from the Australian Taxation Office of the parent’s taxable income for the relevant year. The Assessment Act provides different methods for reconciling estimates depending on whether a parent made one or more estimates for the whole or part of a tax year. In this case Mr Yardley estimated that his income from 30 May to 30 June 2017 would be $1,225. He told the Department that he had earned income of $52,955 up until 29 May 2017. The estimated income of $13,974 used in the assessment represented the annual income he would receive in the 32 days to 30 June 2017.

5. Section 64 of the Assessment Act provides a formula for reconciling a single income election for part of a tax year. That section applies to the estimate made by Mr Yardley for the period 30 May to 30 June 2017. Mr Yardley’s adjusted taxable income for 2016/17 is $58,380. Subtracting the year to date income figure he provided of $52,995 means that he earned $5,385 in the 32 days from 30 May to 30 June 2017, an annualised income of $61,878.

6. However, Mr Yardley’s income tax return indicates that while he earned $52,995 from one employer, he worked for another employer from 1 to 8 July 2016 and received a gross amount of $1,796. He also received Centrelink payments of $1,653 for the period 23 August to 24 October 2016 and $2,574 for the period 31 March to 30 June 2017. On the basis of this information, the year to date income Mr Yardley provided to the Department was understated. Section 63AE of the Assessment Act provides that if a person’s year to date income amount is incorrect, a new amount can be determined.

7. Mr Yardley provided a copy of a letter he received from Centrelink on 13 April 2017 which states that his regular fortnightly payments from 28 April 2017 will be $676.60. This suggests that his estimate of income may have been roughly accurate.

8. The tribunal is satisfied that Mr Yardley’s year to date income of $52,995 was understated and therefore the information upon which his estimated income was reconciled was flawed. The tribunal finds that Mr Yardley’s estimated income should not have been reconciled to $61,878 for the period 30 May to June 2017 for that reason.

DECISION

The decision under review is set aside and remitted to the Child Support Registrar with directions that consideration is given to determining a new year to date income amount for Mr Yardley under section 63AE of the Child Support (Assessment) Act 1989 before reconciling the estimated income if necessary.