Barrett And Barrett (Child support)

Barrett And Barrett (Child support) [2021] AATA 3683 (30 August 2021)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2020/BC020057
APPLICANT:  Mr Barrett
OTHER PARTIES:  Child Support Registrar
Ms Barrett

TRIBUNAL:Senior Member R Ellis
DECISION DATE: 30 August 2021
DECISION:

The Tribunal sets aside the decision under review and, in substitution, refuses to make a departure determination.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the both parents – where incomes of both parents do not result in unjust and inequitable assessment of child support – no ground for departure established - 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 omitted 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

This review is about whether or not there should be a departure from the administrative assessment of child support.
Mr Barrett and Ms Barrett are the parents of [Child 1] (born July 2015) and [Child 2] (born November 2017). There has been a child support assessment in place since 10 May 2017 and Mr Barrett is the liable parent under the assessment.
The following administrative assessments of child support are under consideration:
·     for the period from 1 July 2019 to 7 July 2019 Mr Barrett was assessed to pay an annual rate of $2,832 (the fixed annual rate) based on a 2019-20 income estimate of $0 for Mr Barrett and a 2017-18 adjusted taxable income of $66,923 for Ms Barrett;
·     for the period from 8 July 2019 to 31 August 2019 Mr Barrett was assessed to pay an annual rate of $427 (the minimum annual rate) based on a 2019-20 income estimate of $0 for Mr Barrett and a 2017-18 adjusted taxable income of $66,923 Ms Barrett; and
·     for the period from 1 September 2019 to 30 June 2020 Mr Barrett was assessed to pay an annual rate of $435 (the minimum annual rate) based on a 2019-20 income estimate of $0 for Mr Barrett and a 2018-19 adjusted taxable income of $51,457 for Ms Barrett.
On 4 August 2019 Ms Barrett applied to the Child Support Agency for a change to the assessment on the basis of a parent’s earning capacity (the ground commonly referred to as Reason 8B).
On 11 December 2019 the Child Support Agency made the decision to change the assessment so that for the period from 3 October 2019 to 2 October 2021 the adjusted taxable income of Mr Barrett is set at $210,145 (the original decision).
On 28 May 2020 Mr Barrett objected to this decision and an extension of time was granted on 23 June 2020.
On 15 September 2020 the Child Support Agency allowed the objection in part and made the decision to change the assessment so that for the period from 21 June 2019 to 31 October 2021 the adjusted taxable income of Mr Barrett is set at $87,504 (the objection decision).
On 15 October 2020 Mr Barrett applied for a review of the objection decision by the Administrative Appeals Tribunal.
A directions hearing was held on 27 April 2021. Mr Barrett and Ms Barrett attended by conference telephone. Prior to the directions hearing the Child Support Agency provided the Tribunal and the parties with a bundle of documents in accordance with section 37 of the Administrative Appeals Tribunal Act 1975 (528 pages).
Mr Barrett and Ms Barrett were directed to provide further information and both complied to the satisfaction of the Tribunal.
A hearing was held on 27 July 2021. Mr Barrett and Ms Barrett gave evidence on affirmation by conference telephone. Prior to the hearing the Tribunal received documents folioed A1 to A198 from Mr Barrett and B1 to B12 from Ms Barrett and these were distributed to the parties.
At the directions hearing and at the commencement of the hearing the Tribunal clarified with Mr Barrett and Ms Barrett the reasons for their concerns. Mr Barrett said the assessment of his income undertaken by the Child Support Agency was incorrect and he wanted a fair assessment of child support based on his actual taxable earnings. Ms Barrett said she thought the objection decision made by the Child Support Agency was fair and wanted an outcome from the Tribunal based on factual evidence.

ISSUES

The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act).
The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act.
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).
Section 98C provides that the Registrar may make a determination to depart from the administrative assessment and 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.
The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.
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 that:
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.
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”.
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.
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?

A ground for departure exists where, in the special circumstances of the case, application of the administrative assessment of child support would result in an unjust and inequitable determination of child support to be provided by the liable parent in respect of the child because of the earning capacity of either parent (subparagraph 117(2)(c)(ib) of the Act).
Ms Barrett told the Tribunal that since leaving his previous employment Mr Barrett had been working despite saying he was not. Ms Barrett referred to an email received from Mr Barrett and correspondence from his lawyer both of which, she said, confirmed he was working.
The Tribunal notes in evidence from the Child Support Agency a copy of an email from Mr Barrett to Ms Barrett dated 28 June 2019. In this email Mr Barrett states, relevantly, that “due to work and study, this weekend and fortnightly rotation are the only wkends I’m available”. The Tribunal further notes a letter addressed to Ms Barrett from [Business 1] acting for Mr Barrett. This letter, dated 5 July 2019, relates to care of the children and states, relevantly, “Our client is otherwise engaged with work and study commitments on the other alternative fortnight…”.
Ms Barrett said, furthermore, she had found a website advertising the services of Mr Barrett as [an occupation 1] for a company called [Employer 1]. She said [Employer 1] was a company owned by a good friend of Mr Barrett.
The Tribunal notes in evidence from Ms Barrett a screenshot from the [named website] dated 4 March 2021. It shows Mr Barrett listed as [an occupation 1] for [Employer 1] in [Town 1] and provides a contact mobile number for Mr Barrett.
Mr Barrett told the Tribunal he was [a (related) occupation 2] and had been employed by [Employer 2] on the [Project 1] in New South Wales until being made redundant when the project ended. Mr Barrett said he was made redundant on 17 June 2019 and was not currently working. Mr Barrett added that he did not intend to return to work for [Employer 2] as it involved long hours and was mentally stressful. Mr Barrett also said he did not wish to return to the type of employment that paid such a level of child support.
The Tribunal asked Mr Barrett if he was stating he would not work in high-paid employment again to avoid paying child support. Mr Barrett said that was not the case. He said the amount of time he was spending with the children did not, in his view, warrant the amount of child support he had been paying. Mr Barrett pointed out that he had since relocated from New South Wales to Queensland to be closer to the children. He said he wanted to move forward and support his children.
The Tribunal notes in evidence from the Child Support Agency a letter dated 3 June 2019 from the General Superintendent of the [Project 1] addressed to Mr Barrett. The letter states that due to the successful completion of his engagement on the project Mr Barrett was being made redundant with his employment ending on 17 June 2019.
Mr Barrett said he had performed unpaid work for [Employer 1] after leaving [Employer 2] in an attempt to gain more experience in the area of [occupation 1]. Mr Barrett explained that he had done this for a day or two a week on and off for about six months. He said no paid work had eventuated and he decided not to pursue this further. Mr Barrett said he could not explain why his name might still be listed as [an occupation 1] with the company but this was the work referred to in his email to Ms Barrett and the letter from his solicitor.
In a separate submission to the Tribunal dated 31 May 2021 Mr Barrett states that the type of work available for [an occupation 2] is typically project based and not of a “continuous, full-time nature”. Mr Barrett states that he has rarely been employed on a full-time basis and did not expect this to change. Mr Barrett points out that his income since being made redundant has substantially reduced for several reasons including his physical and mental health, the emergence of the COVID-19 pandemic and his relocation.
In order to establish that his earning capacity might be greater than that reflected in the child support assessment and render the assessment unfair, all three compulsory criteria set out in subsection 117(7B) of the Act must be satisfied. Those three criteria are:
(a)    one or more of the following applies:
·the parent does not work despite ample opportunity to do so (subparagraph 117(7B)(a)(i));
·the parent has reduced the number of hours per week of their employment or other work below the normal number of hours per week that constitutes full-time work for the occupation or industry in which the parent is employed or otherwise engaged (subparagraph 117(7B)(a)(ii));
·the parent has changed their occupation, industry or working pattern (subparagraph 117(7B)(a)(iii)); and
(b)    the parent’s decision not to work, to reduce the number of hours, or to change their occupation, industry or working pattern is not justified on the basis of:
·the parent’s caring responsibilities (subparagraph 117(7B)(b)(i)); or
·the parent’s state of health (subparagraph 117(7B)(b)(ii)); and
(c)    the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child (paragraph 117(7B)(c)).
The Tribunal notes Mr Barrett was being assessed on his 2018-19 provisional adjusted taxable income of $198,168 until he lodged an income estimate of $0 on 21 June 2019 for the 2019-20 financial year.
The Tribunal is satisfied that Mr Barrett is not currently working despite ample opportunity to do so. Although Mr Barrett has told the Tribunal that part of the reason for his lack of work relates to his physical and mental health he has not provided any medical evidence to confirm this is the case. There is nothing to suggest he is not working due to his caring responsibilities. Both the first and second criterion are therefore met.
The intent of the legislation in relation to earning capacity is primarily to protect against a situation where, after an assessment of child support is issued, a parent has deliberately reduced their income and this has had a significant effect on the assessment. It is not designed to assess a parent on their potential earnings or what a parent might be able to do.
Mr Barrett has explained he left [Employer 2] in New South Wales after being made redundant and subsequently relocated to Queensland to be closer to the children. The evidence supports this contention. The Tribunal notes that Mr Barrett was in receipt of income support payments in the form of jobseeker from 26 May 2020.
The courts have held that the onus of proving “a major purpose” for the decision about a change in working arrangements was not to affect child support rests on the person who made the choice. As Mr Barrett was made redundant, affecting the child support assessment would not have been a major purpose for his decision to leave employment as [an occupation 2].
As all three criteria must be satisfied, it follows that if one is not satisfied, then this ground cannot be considered. The Tribunal finds that the earning capacity criteria (set out in subsection 117(7B) of the Act) are not met for Mr Barrett in this case. A ground for departure on this basis does not exist.
Although Ms Barrett did not make her application for a change of assessment on the basis of a parent’s income, property and financial resources (Reason 8A), many of the issues she has raised relate to this ground. The Tribunal notes these matters were considered in the objection decision and so it is appropriate to address them further.
A ground for departure exists where, in the special circumstances of the case, application of the administrative assessment of child support would result in an unjust and inequitable determination of child support to be provided by the liable parent in respect of the child because of the income, property and financial resources of either parent (subparagraph 117(2)(c)(ia) of the Act).
Mr Barrett was made redundant by his employer on 17 June 2019 and Ms Barrett made her application for a change of assessment on 4 August 2019. The Tribunal examined the 2019-20 individual tax return for Mr Barrett in evidence provided by the Child Support Agency. It shows an adjusted taxable income of $22,257 comprised of his salary of $3,600 from a company called [Employer 3], an eligible termination payment of $15,750, government benefits of $2,874 and gross interest of $42. Work related deductions amount to $9.
Mr Barrett told the Tribunal he had worked for [Employer 3] on a contract basis for a couple of weeks at most and had not worked for them again. Mr Barrett said he had been in receipt of the jobseeker payment up until about six weeks ago but that had ended because he did not wish to attend an interview. He said he was now supporting himself on what little savings he had remaining and was living on “the bare bones”. Mr Barrett reiterated that his only income in the past 12 months had been from the jobseeker payment.
The Tribunal pointed out to Mr Barrett that the Child Support Agency had found links between him and [Employer 3]. A search of Australian Securities and Investments Commission (ASIC) records undertaken by the Child Support Agency had found Mr Barrett was listed as a director of a separate company with a similar name, [Business 2], which had since been deregistered. The Child Support Agency had also determined that the registered address of [Employer 3] was the home address recorded on file for Mr Barrett by both the Australian Taxation Office and the Child Support Agency.
Mr Barrett said he did not establish [Employer 3] and was not involved with the business. Mr Barrett acknowledged that the director of [Employer 3] was a friend, [Mr A], but said he was not alienating income as the Child Support Agency had implied. Mr Barrett reiterated he had only worked for [Employer 3] briefly. He said [Mr A] had given him the 2019-20 tax return for [Employer 3] which shows the income he had received.
The Tribunal notes in evidence provided by Mr Barrett a copy of the 2019-20 tax return for [Employer 3]. It shows total income of $11,141 and total expenses of $10,774 leaving a profit of $367. Expenses include salaries of $3,600 which is the amount declared in Mr Barrett’s individual tax return for 2019-20. The Tribunal further notes in evidence provided by Mr Barrett an ASIC company extract which shows [Mr A] is the sole director and shareholder of [Employer 3]. The registered address of the company is the home address of [Mr A].
Ms Barrett said Mr Barrett was driving a [brand] ute which she believed belonged to [Mr A]. Mr Barrett acknowledged that [Mr A] had given him the use of the ute while he was not working.
The Tribunal notes in evidence from the Child Support Agency bank statements for four [Bank 1] accounts held by Mr Barrett. The following relevant information was obtained:
·     statements for the first account ending in 2216 are for the period from 25 July 2019 to 2 September 2019 and show a $0 balance. The statements show a transfer of $70,000 to his second account ending in 5492 on 8 August 2019 which was subsequently transferred in two tranches to a third party;
·     the second account ending in 5492 appears to be the account used by Mr Barrett for everyday transactions. The statements for the period from 22 July 2019 to 18 October 2019 and then from 22 April 2020 to 8 July 2020 show now regular deposits which might indicate Mr Barrett is receiving an income, however, the latter accounts show ongoing jobseeker payments. There are deposits to this account of $5,712.69 and $4,287.31 on 30 June 2020 from separate superannuation funds;
·     statements for the third account ending in 4804 indicate this account is not in use and Mr Barrett told the Tribunal it had since been closed;
·     the fourth account is an investment account ending in 9775 which was opened on 19 June 2020. On 19 June 2020 Mr Barrett deposited $6,000 in cash into this account and on 1 July 2020 Mr Barrett transferred $9,000 from the account ending in 5492 into this account (part of the money acquired from his superannuation funds).
Mr Barrett said the $70,000 transferred to a third party was likely to Ms Barrett as part of their property settlement and Ms Barrett confirmed this to be the case. Mr Barrett said the money received from his superannuation funds was through early access to his superannuation during the COVID-19 pandemic. He said this was subsequently transferred to his investment account and invested in shares which were later sold.
In response to directions Mr Barrett provide the Tribunal with summaries of his [share] trading accounts for 2019-20 and 2020-21. The summary for 2019-20 shows Mr Barrett held shares valued at $14,400 and $670.05 in the investment account for a total of $15,070.05 as at 30 June 2020. The summary for 2020-21 shows Mr Barrett held no shares and had an amount remaining in the investment account of $0.99 as at 30 June 2021. It appears from the transaction summary that Mr Barrett made an overall loss on his share trading for the year ended 30 June 2021.
Mr Barrett also provided the Tribunal with a Statement of Financial Circumstances received on 14 July 2021. Mr Barrett declares total average weekly income of approximately $400 from jobseeker. His only assets include a motorbike valued at $2,000 and household contents of $10,000. He has a credit card liability of approximately $9,323. Mr Barrett lists his personal expenditure at $200 per week including minimum credit card payments of $150 per week and child support of $50 per week. His average weekly expenses total $740 including rent of $500 per week and food of $150 per week. He has superannuation of $100,000.

The Tribunal finds that in 2019-20 Mr Barrett had an adjusted taxable income of $22,257. The Tribunal is not satisfied, however, that Mr Barrett’s true income and financial resources are accurately reflected by his taxable income alone.
Mr Barrett gained access to his superannuation under provisions introduced by the Commonwealth Government in response to the COVID-19 pandemic. While eligibility requirements under this scheme mean Mr Barrett would have been experiencing financial hardship, the Tribunal nonetheless considers the funds he received to be a resource for the purposes of child support. In considering the most appropriate way of accounting for these funds, the Tribunal is mindful of policy advice set out in the ‘Child Support Guide’ released by the Child Support Agency. Although not bound by such policy, the Federal Court has held that a tribunal should take into account relevant government policy which is not inconsistent with the provisions or objects of the legislation. In this case, when considering the matter of lump sum payments, the Guide states at 2.6.14:
Where a parent receives a substantial amount of money (a lump sum) that would otherwise not form part of his or her income amount used for child support purposes, and therefore is not included in the assessment of child support, the lump sum may be taken into account in deciding whether the assessment should be changed.
Such payments may arise as a consequence of the parent:
·being retrenched from their employment,
·drawing funds from a superannuation fund,
·receiving a distribution from a deceased estate,
·being compensated for some loss or damage, or
·being successful in a lottery or some other gambling venture.
In each case it will be necessary to decide whether receiving the money makes the amount of child support payable unjust and inequitable.
It is the principal object of the Act to ensure children receive a proper level of financial support from their parents. The level of that financial support should be determined according to the capacity of the parents to reasonably provide for the needs of their child. In this case the Tribunal is satisfied the superannuation funds Mr Barrett received are a significant financial resource that enhances his capacity to contribute to the support of the children.
Ms Barrett also raised the possibility of Mr Barrett earning cash income. There is no evidence before the Tribunal to support this argument. Scrutiny of his bank statements show no significant or regular deposits that may be related to some form of income, except for the jobseeker payment he was receiving until a few weeks ago. Mr Barrett was working for [Employer 3] for a short period, however, the 2019-20 tax return for the company shows it generated little income in this financial year. While Mr Barrett may well be working for cash such a contention is very difficult to prove. The Tribunal will not consider this further.
The Tribunal finds that Mr Barrett had access to income, property and financial resources equivalent to a person with an adjusted taxable income of approximately $32,257 in 2019-20 (his adjusted taxable income plus superannuation funds received). Mr Barrett has stated the only income he received in 2020-21 was from the jobseeker payment. The Tribunal is satisfied, based on the evidence provided, that this is the case.
The Tribunal also considered the income, property and financial resources of Ms Barrett.
Ms Barrett told the Tribunal she was [an occupation 3] working for [Employer 4]. Ms Barrett explained she was a permanent employee but worked two days a week and occasionally did [casual occupation 3 jobs]. Ms Barrett said this had been the case for the duration of her employment at [Employer 4]. Ms Barrett said she also received rental income from an investment property which had recently been sold. She said this income and a small amount of income from share dividends were all declared in her individual tax return.
In response to directions Ms Barrett provided the Tribunal with a copy of her individual tax return for 2019-20. It shows a taxable income of $62,170 comprised of salaries from [Employer 4] and [another employer] as well as a small amount of dividends less work-related deductions. The Tribunal notes a net rental loss of $70 which would be added back to her taxable income for the purposes of child support.
Ms Barrett told the Tribunal she had just completed her individual tax return for 2020-21 and expected her income would be very similar to that in 2019-20.
Ms Barrett also provided the Tribunal with a Statement of Financial Circumstances received on 25 June 2021. Ms Barrett declares her average fortnightly income at $2,183 including her salary of $1,587 per fortnight, government benefits of $545 per fortnight and child support of $51 per fortnight. Ms Barrett states she also receives additional income from [casual occupation 3 jobs] on an infrequent basis. Ms Barrett has assets including a car valued at $12,000, household contents of approximately $20,000, shares valued at approximately $30,047 and $31,062 in cash at bank. Ms Barrett has no liabilities. She lists personal expenditure at approximately $317 per fortnight. Her average weekly expenses total approximately $1,204 per week.
The Tribunal finds Ms Barrett had an adjusted taxable income of $62,240 in 2019-20. The Tribunal is satisfied this amount fairly represents her income, property and financial resources for the purposes of child support. Ms Barrett told the Tribunal she was just able to meet her expenses and did not have a comfortable lifestyle.
The administrative assessment in place at the time Ms Barrett made her application for a change of assessment on 4 August 2019 was based on a 2019-20 income estimate of $0 for Mr Barrett and a 2017-18 adjusted taxable income of $66,293 for Ms Barrett. Mr Barrett was assessed to pay an annual rate of $427, known as the minimum annual rate, which was approved by the Child Support Agency. Immediately prior to this Mr Barrett was assessed to pay the fixed annual rate of $2,832. The Tribunal has found that in 2019-20 Mr Barrett had access to income property and financial resources equivalent to a person with an adjusted taxable income of approximately $32,257. Ms Barrett had an adjusted taxable income in 2019-20 of $62,240 which is slightly lower than the amount used in the assessment at the time she made her application for a change.
When the incomes used for the parents as determined by the Tribunal for 2019-20 are applied in the child support formula it makes little difference to the amount of child support payable by Mr Barrett when compared to the administrative assessment. Even if the Tribunal were to add back an amount of, say $5,000, to the adjusted taxable income of Mr Barrett in consideration of the motor vehicle he uses that is provided by his friend, this will again make little difference to the amount of child support payable when compared to the administrative assessment.
The Tribunal finds that the administrative assessment does not result in an unjust and inequitable determination of the level of child support to be provided because of the income, property and financial resources of either Mr Barrett or Ms Barrett.
The Tribunal has not found that a ground for departure exists. The Tribunal therefore refuses to make a departure determination.
This means the administrative assessment will remain in place as determined by the Child Support Agency.

DECISION

The Tribunal sets aside the decision under review and, in substitution, refuses to make a departure determination.

[2021] AATA 3683

30 August 2021

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Statutory Construction

Jurisdiction

Appeal

Remedies