J E R v Inland Revenue Department

JurisdictionNew Zealand
Judgment Date19 March 2010
Docket NumberFAM-2009-032-000726
CourtFamily Court
Date19 March 2010

[2010] NZFC 10



In The Matter Of The Child Support Act 1991

Commissioner Of Inland Revenue Department

Ms Strachan for the Appellant

Mr Luxford for the Respondent

RESERVED JUDGMENT OF JUDGE J F MOSS [As to Appeal Against Child Support Decision]

The appellant is the subject of a decision made by the Commissioner for Inland Revenue on 4 August 2009 to disallow a claim for inclusion within his living allowance of a dependent child. That inclusion relates to the financial years ended 2005, 2006, 2007, 2008 and 2009. The continued inclusion of the relevant dependent child was a mistake. That child was financially independent from the end of 2004 in fact, and statutorily ineligible for inclusion as a dependent child from the time of his 19th birthday in June 2005.


Because the appellant's living allowance included a dependent child it was larger than that to which he was entitled. As a result, he paid less child support to the custodial parent of his other two children through that period. He paid $9,317 less than he should have paid.


The mistake as to the inclusion of the dependent child arose at the time when that child became financially independent. At that time the child was living in a shared care arrangement with his parents, which had been approved as such. Thus, both of his parents paid to each other some child support, and both were eligible to include him as a dependent child for calculation of the living allowance. When he became financial independent his mother telephoned Inland Revenue to confirm that. Her living allowance was adjusted. Her obligation to pay child support for him ended. Her claim for child support for him also ended. It was the fourth administrative action which did not occur which had led to this sum of arrears. Inland Revenue conceded that at the same time the living allowance claimed by the father should have been adjusted to exclude the dependent child.


At the time of the change, and nine times later, culminating in the decision dated 4 August 2009 Inland Revenue sent to the appellant notification that his child support liability was calculated on the basis of a single or married adult claiming an allowance for one dependent child. The appellant was not asked to confirm the accuracy of the calculation. The standard form letter includes the following paragraph:

“If the details in your assessment are incorrect, you can make an objection in writing under section 91 of the Child Support Act 1991 by [date]. You also have the right (under Part VI A) of the Act to ask Inland Revenue to review the assessment if you consider you have special circumstances that should be taken into account. If you are not satisfied with our decision you may apply to the Family Court (under Part VII of the Act) for a departure order.”


The form letter does not include reference to the obligation upon the tax payer to advise a change of circumstances. Nor does it dictate an obligation to inform Inland Revenue if the assessment is wrong.


Once the mistake was discovered, and after initial contact between the appellant and Inland Revenue, the Commissioner has conceded the error, and confirmed he will waive penalties initially imposed. He has entered into a time payment arrangement with the appellant as tax payer, acknowledging the failure of the Commissioner to give effect to the changed circumstances.


The decision of the Commissioner to give effect to the change, although it was four years late, is a decision under s 86 of the Child Support Act against which an objection can be filed (s 90(1)(j)). The appellant did file that objection. It was disallowed, the Commissioner having reconsidered the circumstances in the calculations. After the objection was disallowed a right of appeal arose pursuant to s 102, and that appeal right was exercised. Section 102 of the Child Support Act empowers the Court to:

“Make such order as it considers appropriate in relation to the decision to which the appeal relates, including an order confirming or varying the decision” (s 102(4)).


The appellant sought an order cancelling the decision of the Commissioner, whereby the arrears of child support arose. The Commissioner sought an order dismissing the appeal.


The appeal has proceeded by way of rehearing. Section 102 Child Support Act does not impose a particular appellate approach. The Family Court Rules are silent as to that matter. Rule 14.17 District Court Rules 2009 governs the conduct of the hearing in this matter. The power of the Court in determining the appeal is set out in Rule 14.23. Although a power of substitution in a decision is specifically provided (14.23.1(b)) this is not a case which is suitable for that process, there still being an option for the appellant to raise the applicability of special circumstances which would justify a departure. That matter was specifically reserved at the end of the hearing before me.


The benefit of the outstanding child support payable by the appellant is owed both to the State and to the mother of the children. For part of the relevant period she received a Domestic Purposes Benefit, and thus the child support is payable to the New Zealand Government. The mother's total private entitlement is $5,199.50 (paragraph 20, affidavit of Emily Purdy 23 December 2009). Records produced for the Court by Inland Revenue show that the mother ceased to receiving the Domestic Purposes Benefit on 30 March 2006. The mother has not intervened in these proceedings. She has, however,...

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