Tribunal: Member Michelle Baulch
This application for review concerns the child support assessments that have applied in respect of the three children of Mr and Ms Carrington. Since 16 January 2009 the Department of Human Services – Child Support (the Department) had made child support assessments under which Mr Carrington was liable to pay child support to Ms Carrington. Mr Carrington’s liability to pay child support ended on 11 March 2015. At this time there were outstanding amounts of $12,148.03 in total, including late payment penalties.
The Child Support (Assessment) Act 1989 (the Act) provides a statutory formula to be used when calculating the child support payable by one separated parent to the other. This formula contains variables such as parents’ adjusted taxable incomes. Mr Carrington had not lodged an income tax return with the Australian Taxation office (ATO) since the 2007-2008 tax year. Therefore, since 16 April 2010 the Department was required to determine his taxable income for those years in order to calculate the child support payable to Ms Carrington.[1]
Mr Carrington lodged his income tax returns for the 2008-09, 2009-10, 2010-11, 2011-12, 2012-13, 2013-14, 2014-15 and 2015-16 tax years and assessments of his taxable income were made. The Department reassessed Mr Carrington’s liability based on this taxable income and reduced the amount of child support owed to $888.50. Ms Carrington objected to that decision and an objections officer allowed the objection deciding that Mr Carrington’s taxable incomes could not be applied retrospectively to his child support liability. Mr Carrington applied to the Tribunal for a review of the decision.
Subsection 58(5) of the Act provides some guidelines for the Department to follow when making an assessment of taxable income in cases where tax returns have not been submitted in a timely manner. These guidelines were followed by the Department and resulted in assessments of adjusted taxable incomes significantly higher than the taxable incomes assessed by the Australian Taxation Office.
Subsection 58A(2) of the Act provides a limit on a retrospective amendment to the assessment of child support in circumstances when the amount of taxable income later proved was lower than the amount determined by the Department. The lower amount may only apply retrospectively if the parent was unable to provide information about their adjusted taxable income to the Department at the time the particular assessment was made because there were specific circumstances prescribed by the regulations.
Mr Carrington claimed he thought that because his income was below the tax-free threshold he did not need to lodge income tax returns. The Tribunal noted he did not appreciate that as he was subject to a child support assessment he was required by taxation legislation to lodge an income tax return no matter how low his income. The Tribunal noted that each time the Department applied a default assessment figure to a child support assessment Mr Carrington was sent a notice outlining that assessment.
The Tribunal concluded that Mr Carrington had not been sufficiently diligent in attending to his child support matters and there were no specific circumstances prescribed by the regulations that prevented Mr Carrington from providing the Registrar with information about his adjusted taxable income for a particular year in a timelier manner. The Tribunal found that the taxable incomes should not be applied retrospectively.
The Tribunal affirmed the objection decision.
Read the full written decision on AustLii.
[1] Section 58 of the Child Support (Assessment) Act 1989