Martell and Martell (Child support) [2020] AATA 4286 (7 September 2020)

Last Updated: 29 October 2020

Martell and Martell (Child support) [2020] AATA 4286 (7 September 2020)

DIVISION: Social Services & Child Support Division

REVIEW NUMBERS: 2020/HC019291 & 2020/HC019292

APPLICANT: Ms Martell

OTHER PARTIES: Child Support Registrar

Mr Martell

TRIBUNAL: Member M Baulch

DECISION DATE: 7 September 2020

DECISION:

The decisions under review are affirmed.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment – determination of adjusted taxable income – late lodged tax returns – whether retrospective adjustment should occur – no special circumstances – 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. The Child Support (Assessment) Act 1989 (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 and ages of their children and the percentages of care.
2. Ms Martell and Mr Martell are the parents of two children. Since 5 November 2004 the Department of Human Services (now known as Services Australia) – Child Support (Child Support) has made child support assessments under which one parent has been liable to pay child support to the other and vice versa.
3. For the period 1 September 2013 to 31 July 2014, the assessments of child support were calculated having regard to a provisional adjusted taxable income of $44,758 for Ms Martell determined by the Child Support Registrar (the Registrar), as Ms Martell had not lodged an income tax return with the Australian Taxation Office (the ATO) for the 2012-13 tax year.
4. For the period 1 August 2014 to 31 October 2015 the assessments of child support were calculated having regard to a provisional adjusted taxable income of $47,046 for Ms Martell determined by the Registrar, as Ms Martell had not lodged an income tax return with the ATO for the 2013-14 tax year.
5. On 29 January 2020, Child Support received information about Ms Martell’s taxable income for the 2012-13 and 2013-14 tax years. On 29 January 2020, an employee of child support amended the assessment such that Ms Martell’s:
   • adjusted taxable income of $9,563 replaced the provisional amount of $44,758 for the 2012-13 tax year; and
   • adjusted taxable income of $13,059 replaced the provisional amount of $47,046 for the 2013-14 tax year.
6. Mr Martell objected to that decision and, on 27 May 2020, that objection was allowed. The objections officer decided that the initial amounts determined by the Registrar – $44,758 for the 2012-13 tax year and $47,046 for the 2013-14 tax year – would continue to apply to the child support assessment (the decisions under review). Ms Martell has now applied to this tribunal seeking an independent review of Child Support’s decisions.
7. A hearing into the application for review was held by the tribunal on 7 September 2020. Ms Martell and Mr Martell both participated in the hearing by conference telephone and both gave sworn evidence during the hearing. A representative of the Registrar did not participate in the hearing. The tribunal had before it relevant documents provided to it by the Registrar pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (346 pages) copies of which Ms Martell and Mr Martell confirmed they had received prior to the tribunal hearing.

ISSUES

8. The statutory provisions relevant to this review are found within the child support legislation, in particular, the Act and the Child Support (Assessment) Regulations 2018 (the Regulations).
9. The issue which arises in this case is whether Ms Martell’s declared income for the 2012-13 and 2013-14 tax years can be retrospectively applied to the child support assessment.

CONSIDERATION

10. Part 5 of the Act provides that the Registrar must make an administrative assessment of child support in accordance with the statutory formula set out in that Part. The statutory formula requires that there be a determination as to each parent’s adjusted taxable income. Section 43 of the Act defines a parent’s adjusted taxable income to be the sum of the following:
    • The parent’s taxable income for the last relevant year of income in relation to the child support period;
    • The parent’s reportable fringe benefits total for that year of income;
    • The parent’s target foreign income for that year of income;
    • The parent’s total net investment loss (within the meaning of the Income Tax Assessment Act 1997) for that year of income;
    • The total of the tax-free pensions or benefits received by that parent in that year of income; and
    • The parent’s reportable superannuation contributions (within the meaning of the Income Tax Assessment Act 1997) for that year of income.

For the purposes of determining a parent’s adjusted taxable income, their taxable income is the amount determined by the ATO (see section 56 of the Act).

11. Where a parent’s taxable income for a particular year has not been assessed by the ATO, for example, when a parent has not lodged an income tax return, section 58 of the Act allows the Registrar to make their own determination of that parent’s adjusted taxable income for that year and provides various methods for doing so.
12. Ms Martell had not lodged an income tax return for the 2012-13 and 2013-14 tax years. Therefore, her adjusted taxable income used to determine the child support liability from:
    • 1 September 2013 was a provisional amount of $57,247; and
    • 1 August 2014 was a provisional amount of $47,046.

These amounts were determined by the Registrar pursuant to section 58 of the Act.

13. On 29 January 2020, Ms Martell provided Child Support with information about her taxable income for a number of tax years, including the 2012-13 and 2013-14 years. Ms Martell is seeking to have her declared income of $9,563 for 2012-13 applied from 1 September 2013 and $13,059 for 2013-14 applied from 1 August 2014.
14. Where a parent had their adjusted taxable income assessed pursuant to section 58 of the Act, and information about a component of their adjusted taxable income later becomes available, subsection 58A(2) of the Act provides a limitation on a retrospective amendment to the assessment of child support having regard to that information. When that later amount is lower than the amount determined under section 58 of the Act – and this is what has occurred in this case – the lower amount can only be applied to the administrative assessment of child support in circumstances prescribed by the Regulations.
15. Where the parent does not live overseas, those circumstances are that the parent was unable to provide information about their adjusted taxable income to the Registrar, as follows (regulation 11 of the Regulations):

(1) For the purposes of section 58A of the Act, the following circumstances are prescribed in relation to a parent who was unable to provide information about the parent’s adjusted taxable income to the Registrar at the time the relevant administrative assessment was made:

(a) one or more of the following applied in relation to the parent at that time:

(i) the parent did not know that an application for the assessment had been made and accepted;

(ii) the parent had a serious illness or injury;

(iii) the parent was under detention or imprisonment;

(iv) the parent resided in a remote location which made it difficult to contact the Registrar;

(v) a natural disaster prevented the parent from being able to contact the Registrar;

(vi) there was some other exceptional circumstance that prevented the parent from providing the information;

(b) the Registrar confirms that the parent was unable to provide the information at that time because of a circumstance mentioned in paragraph (a);

(c) the parent later provides the information to the Registrar as soon as is practicable in the circumstances.

16. Ms Martell’s evidence was that she had periods of ill-health and hospitalisations during 2013 and 2014. She suffered from a mental health condition and was treated for cancer. Ms Martell did not dispute that the periods of ill-health were intermittent. In November 2019 Ms Martell commenced a period of imprisonment.
17. Ms Martell’s evidence was that she did not always reliably receive her mail from Child Support. She said that she did not always keep Child Support advised of her address, because she assumed that being on Centrelink payments would provide a means for Child Support to contact her. I noted that the child support assessment notices and letters sent to Ms Martell since 2011 included the statement to the effect:

Important

To ensure that your child support assessment reflects your current situation, you need to tell CSA within 14 days of any changes to your circumstances, such as care arrangements, income, employment status or contact details. We can only make the changes from the date you let us know. [my emphasis].

Ultimately, the obligation to keep Child Support appraised of up-to-date contact details fell on Ms Martell.

18. I identified no reason to doubt Ms Martell’s evidence that she suffered from periods of ill-health during 2013 and 2014. However, there is no evidence that she was incapacitated due to ill-health for the entire time from 1 September 2013 (when the provisional income of $44,758 was first applied to the assessment) and her commencing her incarceration in November 2019. Ms Martell did not provide Child Support with information about her taxable income for the 2012-13 and 2013-14 tax years until 29 January 2020.
19. As there were periods between 1 September 2013 and November 2019 when Ms Martell was not affected by ill-health, and the information about her taxable income was not provided to Child Support until 29 January 2020, I was not persuaded that she has provided that information to the Registrar as soon as was practicable in the circumstances.
20. As paragraph 11(1)(c) of the Regulations is not satisfied in Ms Martell’s case, the requirements of paragraph 58A(2)(c) of the Act are not met. Therefore, it is not possible to apply the new information about Ms Martell’s 2012-13 and 2013-14 taxable incomes to the child support assessment instead of the provisional incomes determined pursuant to section 58 of the Act.
21. Consequently, and for these reasons, I therefore affirmed the decisions under review.

DECISION

The decision under review are affirmed.