Backus and Klahn (Child support)

[2019] AATA 2528

Backus and Klahn (Child support) [2019] AATA 2528 (12 June 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/PC015511

APPLICANT:  Mr Backus

OTHER PARTIES:  Child Support Registrar

Ms Klahn

TRIBUNAL:Member S Brakespeare

DECISION DATE:  12 June 2019

DECISION:

The decision under review is varied so that there is a departure determination in the following terms:

• For the period 1 April 2018 to 1 August 2018 Mr Backus’s adjusted taxable income is varied to $32,508;

• For the period 2 August 2018 to 18 December 2018 Mr Backus’s adjusted taxable income is varied to $115,000;

• For the period 19 December 2018 to 14 July 2019 Mr Backus’s annual rate of child support is varied to the minimum annual rate;

• From 15 July 2019 Mr Backus’s child support liability is to be calculated in accordance with the administrative assessment provisions contained in Part 5 of the Child Support (Assessment) Act 1989.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent - decision under review set aside and substituted

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. Mr Backus is the parent liable to pay child support to Ms Klahn in respect of their two children, [Child 1], who is 7 and [Child 2] who is 3. The Child Support Agency records show that the children are in Ms Klahn’s sole care.

2. On 19 June 2018 Mr Backus lodged an application for a change of assessment with the Child Support Agency citing as grounds for departure: his income, property and financial resources; and his legal duty to support another person.

3. At the time the administrative assessment was as follows:

• for the period 15 March 2018 to 31 October 2019 Mr Backus is required to pay an annual rate of child support of $8,082. This assessment is based on an adjusted taxable income for Mr Backus of $68,172. Ms Klahn’s adjusted taxable income throughout the period was less than the self-support amount. The assessment also took into account Mr Backus’s relevant dependent child.

1. On 25 July 2018 an officer of the Child Support Agency refused to make a departure determination (the original decision).

2. Mr Backus objected to the original decision. An objections officer allowed the objection on 16 November 2018 and made a departure determination in the following terms:

   ·For the period 1 April 2018 to 1 August 2018 Mr Backus’s adjusted taxable income is varied to $35,208; and

   ·For the period 2 August 2018 to 31 October 2019 Mr Backus’s adjusted taxable income is varied to $100,000.

3. Mr Backus lodged an application for review of the decision with the tribunal. A directions hearing was held on 12 April 2019. Both parties participated and complied with the direction that was issued.

4. A hearing was held on 12 June 2019. The Child Support Agency provided the tribunal and the parties with documents relevant to the review (261 pages). The tribunal gathered further documents from the parties (the documents folioed A1 to A94 were received from Mr Backus and the documents folioed B1 to B22 were received from Ms Klahn). These documents were exchanged with the parties prior to hearing.

5. Relevant aspects of the evidence and material before the tribunal will be referred to in the tribunal’s consideration of the issues which it has to decide.

ISSUES

1. The statutory provisions relevant to these reviews are contained in the Child Support (Assessment) Act 1989 (the Act).

2. The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act.

3. Under Part 6A of the Act the liable parent or the carer of the child or children may apply to the Child Support Registrar for a determination to depart from the administrative assessment (section 98B).

4. Section 98C provides that the Registrar may make a determination to depart from the administrative assessment and it establishes a three-step process such that the issues for determination by this tribunal are:

   ·whether a ground is established to depart from the administrative assessment of child support; and

   ·if so, whether it is just and equitable to make a particular departure determination; and

   ·if so, whether it is otherwise proper to make a particular departure determination.

5. The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.

6. Each ground is prefaced by the words “in the special circumstances of the case”. The meaning of this expression is not defined in the Act, but the Family Court in Gyselman and Gyselman [1991] FamCA 93 has held:

   as a generality it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the Legislature is that the court will not interfere with the formula in the ordinary run of cases.

7. Likewise, in Philippe and Philippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”.

8. If the tribunal is satisfied that a ground exists and that it would be just and equitable and otherwise proper to make a particular determination, the tribunal may make one of the determinations prescribed in section 98S of the Act.

9. The range of determinations which can be made includes variations to: the annual rate of child support payable; or to the adjusted taxable incomes of the parents and/or carer; or to other components of the statutory formula used to calculate child support.

CONSIDERATION

Issue 1 – Is there a ground for departure?

1. A ground for departure exists where, in the special circumstances of the case, application in relation to the child of the provisions of the Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child because of the income, property and financial resources of either parent (subparagraph 117(2)(c)(ia) of the Act).

2. The administrative assessment requires Mr Backus to pay an annual rate of child support of $8,082 based on an adjusted taxable income for him of $68,172.

3. Mr Backus ceased employment with [Employer 1] [in] March 2018 due to a shortage of work. During the period [April] 2018 to [August] 2018 Mr Backus worked casually for two employers earning $32,508 annualised.

4. Mr Backus commenced with [Employer 1] again [in] August 2018 and worked there until [December] 2018. He provided the tribunal with his pay advices and his employment separation certificate with respect to that employment. The tribunal finds that during that 138-day period Mr Backus earned gross wages of $43,482 which, when annualised becomes $115,000. The tribunal finds that Mr Backus’s income since 19 December 2018 has been limited to newstart allowance (as evidenced by bank statements he provided to the tribunal), which is less than the self-support amount allowed for in the child support formula.

5. Mr Backus confirmed that he is a [Occupation 1] and he has been unable to secure any contracts since his last contract ended in December 2018.

6. The tribunal finds that when Mr Backus’s gross income, as calculated above, is applied to the child support rate calculator for the relevant periods the resulting liability would be significantly less than the amount assessed under the administrative assessment in the period 1 April 2018 to 1 August 2018 and again from 19 December 2018. In the period 2 August 2018 to 18 December 2018 his liability would be significantly more than the amount assessed under the administrative assessment. Overall, Mr Backus would be paying approximately $2,500 more under the administrative assessment to 30 June 2019, assuming he remains on newstart allowance until that time.

7. The tribunal finds that there are special circumstances, being Mr Backus’s inconsistent work arrangements, and the administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by Mr Backus.

8. This means that there is a ground for departure.

Issue 2 – Is it just and equitable to make a particular determination?

1. As the tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable as regards the children, the liable parent, and the carer entitled to child support to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the tribunal to consider the matters discussed below,[1] which are as set out in subsection 117(4) of the Act:

   [1] The tribunal is required to give “overt consideration” to relevant factors listed in subsection 117(4) of the Act: Tyagi & Meares (SSAT Appeal) [2008] FMCAfam 886.

   (4) In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:

   (a) the nature of the duty of a parent to maintain a child (as stated in section 3); and

   (b) the proper needs of the child; and

   (c) the income, earning capacity, property and financial resources of the child; and

   (d) the income, property and financial resources of each parent who is a party to the proceeding; and

   (da) the earning capacity of each parent who is a party to the proceeding; and

   (e) the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:

   (i) himself or herself; or

   (ii) any other child or another person that the person has a duty to maintain; and

   (f) the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and

   (g) any hardship that would be caused:

   (i) to:

   (A) the child; or

   (B) the carer entitled to child support;

   by the making of, or the refusal to make, the order; and

   (ii) to:

   (A) the liable parent; or

   (B) any other child or another person that the liable parent has a duty to support;

   by the making of, or the refusal to make, the order; and

   (iii) to any resident child of the parent (see subsection (10)) by the making of, or the refusal to make, the order.

2. In having regard to the proper needs of the child, regard must be had to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained, and any special needs of the child (subsection 117(6) of the Act). Ms Klahn indicated that the eldest child is attending a private school, being a Catholic primary school, and that she is liable for the fees. However, she said that the choice of schooling was a decision that she made without reference to Mr Backus. The tribunal finds that the private education expenses are not in line with the expectations of both parents and therefore they will not be considered in the assessment. The tribunal finds that there are no extra costs to be taken into account in respect of the children’s needs and therefore it is appropriate to calculate the costs of their needs by reference to the Costs of the Children Table.[2]

   [2] Provided for in section 155 of the Act.

3. The tribunal is satisfied that the children do not have any income, earning capacity, property or financial resources that should be taken into account for the purpose of child support.

4. The tribunal has determined that Mr Backus’s income for the purpose of the child support assessment is as follows:

   ·$32,508 per annum for the period 1 April 2018 to 1 August 2018; and

   ·$115,000 per annum for the period 2 August 2018 to 18 December 2018.

5. The tribunal finds that Mr Backus has been in receipt of newstart allowance since [December] 2018. His income from that point in time is less than the relevant self-support threshold in the child support formula.

6. Mr Backus told the tribunal that he has no savings and his assets are limited to a car and some personal effects.

7. Ms Klahn is in receipt of parenting payment. In accordance with paragraph 117(7A)(ii) of the Act, the tribunal must disregard that income. Ms Klahn undertook some casual work between September 2018 and May 2019. Her pay advices indicate that she earned a gross income of approximately $24,908 in that period. Ms Klahn told the tribunal that the work has now ceased as she has just given birth to her third child. The tribunal finds that Ms Klahn’s income from employment is only marginally higher than the self-support threshold contained in the child support formula and would have minimal impact on the assessment.

8. Ms Klahn indicated in her Statement of Financial Circumstances that she has no savings or assets.

9. The tribunal is satisfied that the earning capacity provisions do not apply in this case. Mr Backus is unemployed due to his contract ending. Ms Klahn ceased her casual work due to the birth of her third child.

10. Mr Backus’s only commitment of significance is his rent which is $250 per week. He is the sole supporter of his son who lives with him. He does not receive child support in respect of his son. His Statement of Financial Circumstances did not indicate any expenditure that was out of the ordinary.

11. Ms Klahn pays rent of $350 per week. Her other major commitment is the private school fees in respect of the eldest child. Ms Klahn is the sole carer of her three children. She told the tribunal that she has not yet claimed child support from the father of her youngest child, as the child is only three weeks old. Ms Klahn said that she is struggling to make ends meet.

12. The tribunal proposes to make a departure determination in the following terms:

    ·For the period 1 April 2018 to 1 August 2018 Mr Backus’s adjusted taxable income is varied to $32,508;

    ·For the period 2 August 2018 to 18 December 2018 Mr Backus’s adjusted taxable income is varied to $115,000;

    ·For the period 19 December 2018 to 14 July 2019 Mr Backus’s annual rate of child support is varied to the minimum annual rate;

    ·From 15 July 2019 Mr Backus’s child support liability is to be calculated in accordance with the administrative assessment provisions contained in Part 5 of the Act.

13. Mr Backus’s liability will be approximately $28 per week from 1 April 2018, approximately $326 per week from 2 August 2018 and approximately $8 per week from 19 December 2018.

14. From 15 July 2019 the assessment will rely on Mr Backus’s 2017/18 adjusted taxable income of $56,503. It will be open to Mr Backus to use the estimates process from that date if he remains unemployed or on a reduced income.

15. The proposed assessment is likely to reduce Mr Backus’s child support arrears and his ongoing weekly liability. The tribunal acknowledges that Ms Klahn’s child support entitlement will be reduced by the proposed determination. However, the tribunal finds the proposed determination to be just and equitable as it reflects Mr Backus’s actual income, property and financial resources.

Issue 3 – Is it otherwise proper to make a particular departure determination?

1. The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Act. Subsection 117(5) sets out the matters that must be considered when deciding whether it would be “otherwise proper” to make a departure determination. It focuses on the balance of support carried between the parents on one hand and the taxpayer on the other. It is appropriate for the children to be primarily supported by their parents rather than by government assistance. The tribunal must consider whether the level of a benefit, in particular family tax benefit, received by the party caring for the children may be affected by the level of child support.

2. Both Mr Backus and Ms Klahn receive family assistance payments. The proposed determination is likely to increase Ms Klahn’s entitlement. That increase is likely to be partially offset by a reduction in Mr Backus’s family assistance payments. The tribunal finds the proposed determination accurately reflects the income of each parent and therefore it is otherwise proper.

DECISION

The decision under review is varied so that there is a departure determination in the following terms:

• For the period 1 April 2018 to 1 August 2018 Mr Backus’s adjusted taxable income is varied to $32,508;

• For the period 2 August 2018 to 18 December 2018 Mr Backus’s adjusted taxable income is varied to $115,000;

• For the period 19 December 2018 to 14 July 2019 Mr Backus’s annual rate of child support is varied to the minimum annual rate;

• From 15 July 2019 Mr Backus’s child support liability is to be calculated in accordance with the administrative assessment provisions contained in Part 5 of the Child Support (Assessment) Act 1989.