Bestall and Thorn (Child support)

[2023] AATA 278

Bestall and Thorn (Child support) [2023] AATA 278 (19 January 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/BC024688

APPLICANT:  Mr Bestall

OTHER PARTIES:  Child Support Registrar

Ms Thorn

TRIBUNAL:Member S Letch

DECISION DATE:  19 January 2023

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that:

(a)for the period 1 January 2022 to 31 January 2022, Mr Bestall’s annual rate of child support liability is reduced by $5,920;

(b)for the period 1 February 2022 to 7 February 2022, Mr Bestall’s annual rate of child support liability is reduced by $7,360;

(c)for the period 8 February 2022 to 31 December 2022, Mr Bestall’s annual rate of child support liability is reduced by $3,170;

(d)for the period 1 January 2023 to 31 December 2023, Mr Bestall’s annual rate of child support liability is reduced by $3,170.

CATCHWORDS

CHILD SUPPORT – departure determination – costs of education - a ground for departure established – decision to depart - 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

1. Mr Bestall and Ms Thorn are the parents of [Child 1] (born 2007), [Child 2] (born 2008), [Child 3] (born 2011) and [Child 4] (born 2012). Mr Bestall seeks a review of an objection decision by the Child Support Agency (the CSA) which disallowed his objection to a “change of assessment” decision of 30 March 2022.

2. It is convenient to set out some extracts from the objections officer’s decision dated 19 August 2022 by way of background:

   …

   At the time of the most recent CoA application lodged by Mr Bestall, the assessment was as follows:

   - For the period 1 Janua1y 2022 until 31 Janua1y 2022, Mr Bestall was assessed to pay $15,616 per annum, based on his 2019/20 Adjusted Taxable Income (ATI) of $180,395 and Ms Thorn's 2019/20 ATI of$69,698.

   - For the period 1 February 2022 to 7 February 2022, Mr Bestall was assessed to pay $13,548 per
   annum, based on his 2020/21 ATI of $174,673 and Ms Thorn`s 2020/21 ATI of $81,659.

   - For the period 8 February 2022 to 30 June 2022, Mr Bestall is assessed to pay $18,256 per annum, based on the same 2020/21 income for him and Ms Thorn`s 2021/22 estimated income of $47,198.

   DECISION UNDER REVIEW

   On 12 January 2022, Mr Bestall applied for a change to the assessment under Reason 3 and Reason 8A, due to the previous decision regarding the school fees having expired on 31 December 2021.

   On 30 March 2022, DM Wilkins found Reason 3 established for the older two children, Reason 8A was not established and the following decision was made:

   - For the period 1 January 2022 to 31 January 2022, the annual rate for Mr Bestall will reduce by
   $4,360.
   - For the period 1 February 2022 to 7 February 2022, the annual rate for Mr Bestall will reduce by
   $5,420.
   - For the period 8 February 2022 to 31 December 2022, the annual rate for Mr Bestall will reduce by $2,336.

   …

   I will firstly address the issue raised by Mr Bestall regarding DM Young`s decision. I note that there is a reference in the decision to there not being any intention to educate [Child 3] and [Child 4] privately and Ms Thorn does not support a private education for them. While there is now relevance regarding the mutual intention of [Child 3], at the time of that decision both [Child 3] and [Child 4] were being educated in public primary schools, so there was no specific consideration required to be given to this matter.

   In consideration of the first threshold, it is clear [Child 1] and [Child 2] were already at [School 1] for their seconda1y education prior to the parent's separation, therefore I am satisfied the parent s jointly agreed to them both having a private education. The first threshold is satisfied here.
   Regarding [Child 3], the evidence does not show Ms Thorn has signed [Child 3]’s enrolment form or has she signed and agreed to the binding agreement te1ms that outline his education requirements.

   Ms Thorn' s email that clearly states she has concerns with sending [Child 3] to [School 1] in [Grade] and suggests he may cope better commencing there is [a later year].

   Generally speaking, there is consideration to be given to children changing from prima1y school
   into high school. The CoA process will often consider that a new dete1mination regarding the
   commencement of high school and mutual intention is often required to be reviewed for high
   school. The matter of following siblings into the same high school does cany some weight
   regarding how the parents may have intended to educate all their children, but alone does not fo1m mutual intention for younger children.

   I accept the orders put forward by Mr Bestall outline specific requirements for the children's
   education. However, the fact this has not been signed by Ms Thorn means it cannot be relied upon, even if this is being followed.

   The evidence before me suggests the Mr Bestall has acted unilaterally in enrolling [Child 3] for Grade 6 at [School 1] and I cannot be satisfied that th.is was mutually intended. Therefore, [Child 3’s] school fees for Grade 6 for his prima1y school education, will not be considered as pa1t of this decision. Similarly, [Child 4] continues with her public prima1y education and therefore, there are no compulso1y tuition fees for consideration.

   In consideration of the second threshold the tuition fees, levies and costs for [Child 1] and [Child 2] are $22,968 per annum for the 2022 school year.

   The cost of child calculated in the assessment is $11,459 per child, or $22,918 for both, and the
   school fees are $11,484, which is over 100% of the cost of child value. I accept that this expense
   has a significant impact on the costs of maintaining [Child 1] and [Child 2] overall.

   Based on the above info1mation I am satisfied special circumstances exist. I am also satisfied [Child 1] and [Child 2] are being cared for, educated or trained in a way that both parents intended and that the associated costs significantly affect the costs of maintaining [Child 1] and [Child 2] when compared to the assessed costs in the current child support assessment.

   Reason 3 is established.

   …

   In order to establish Reason 8A I must be satisfied that the child support assessment is unfair
   because of Mr Bestall's income, property or financial resources.

   Mr Bestall s incomes were considered in the previous CoA objection decision by DM Young, where he did raise the issue about the RFB. If I was to consider the income of $168,000 for Mr Bestall as compared to the 2019/20 ATI of $180 395, it still does not meet the administrative option to lodge an estimate of income because it is not less than 15%.

   There are circumstances that may warrant consideration of a change to income that is less than 15% but there must be a compelling reason to do so. In this case, I have no information that any
   amendments have taken place for Mr Bestall by either his employer or the ATO, so it is difficult to consider making a change on that basis.

   The assessment now utilises Mr Bestall`s 2020/21 ATI of $174,673 from 1 February 2022.
   Therefore, any changes to Mr Bestall`s 2019/20 income would result in a retrospective adjustment to the assessment from prior to 1 February 2022. Any reduction in the assessment for a past period would then place Ms Thorn in overpayment and while this is not a determining factor as to make a change or not, I am not satisfied there is enough information that warrants considering this further.

   …

   Mr Bestall also had the opportunity to raise this in the objection and provide any new evidence, but there has been nothing new provided during this process either.

   The income currently used in the assessment is $174,673. Based on the above info1mation I do not find Mr Bestall's current income is significantly lower and I am not satisfied the child support assessment is unfair.

   Reason 8A is not established.

   …

   The total 2022 cost for [Child 1] and [Child 2] are $22 968. Mr Bestall is paying 100% of their school fees and he is seeking a reduction in his children support for Ms Thorn s share of the children s education costs.

   Mr Bestall earns a substantially higher income than Ms Thorn and they have shared care of all the children. I find it would be fair to apportion the share of the school fees based on the relevant income percentages for each parent used in the assessment.

   For the period 1 January 2022 to 31 January 2022, Ms Thorn percentage is 18.98%.
   For the period 1 February 2022 to 7 February 2022, Ms Thorn s percentage is 23.60%.
   For the period 8 February 2022 to 30 June 2022, Ms Thorn s percentage is 10.17%.
   For the period 1 July 2022 to 31 December 2022, Ms Thorn`s percentage is 10.80%.

   Given the minimal difference in income percentage between the last two periods for Ms Thorn (10.17% to 10.80%) and to avoid making unnecessary changes to the assessment, the income percentage of 10.17% will be used only for the last period of the decision.

   I am satisfied it is fair to use the above percentages for Ms Thorn s share of the school fees and reduce this amount from the annual rate payable by Mr Bestall.

   I must also consider the date of effect of this decision, bearing the following in mind:
   - The parent`s capacity to pay any debt that is generated by this decision;
   - Whether the application arose from a parent`s misstatement of his or her income; or
   - Whether the applicant unduly delayed making his or her application for a change of assessment.

   The previous CoA determination that considered [Child 1] and [Child 2]`s school fees ran until 31 December 2021 and Mr Bestall has applied on 12 January 2022 in order to have the 2022 year considered. I find it fair to commence the decision from 1 January 2022.

   Regarding the end date, ideally a decision would be made to capture a longer period of time to
   prevent the parents having to reapply under the same Reason. In this case however, I find a shorter term decision is required as [Child 3] will commence [specified year] in 2023 and in the future there may be a need to consider [Child 4’s] commencement at [School 1] as well. Therefore, the decision will run until 31 December 2022.

   I have no information before me that would indicate this reduction in child support will cause Ms
   Thorn or the children any undue hardship.

   Should there be any significant changes in the parents` circumstances or the circumstances of the children, either parent is free to lodge a new application with the agency to have the matter
   reviewed.

   …

   DECISION

   The outcome of this objection is that it has been disallowed.

   DM Wilkins' decision below is affirmed and there will be no change to the child support
   assessment as a result of this decision.
   - For the period 1 Janua1y 2022 to 31 January 2022, the annual rate for Mr Bestall will reduce by $4,360.
   - For the period 1 February 2022 to 7 February 2022, the annual rate for Mr Bestall will reduce by $5,420.
   - For the period 8 February 2022 to 31 December 2022, the annual rate for Mr Bestall will reduce by $2,336.

…

1. Mr Bestall applied for further review by the Tribunal. Mr Bestall and Ms Thorn participated in the Tribunal’s hearing by conference telephone. In making its decision, the Tribunal took into account the CSA materials, and the additional materials submitted by both parties.

CONSIDERATION

The legislative framework

1. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act 1989 (the Act). A formula is used. It takes into account variables including each parent’s adjusted taxable income for the last relevant year of income, the number of children and the level of care provided by each parent.

2. Part 6A of the Act allows for a departure from an administrative assessment (a process commonly known as a “change of assessment”). Under subsection 98C(1), the Registrar may make such a departure determination if three matters are established:

   ·     one, or more than one, of the grounds for departure referred to in subsection 98C(2) exists (subparagraph 98C(1)(b)(i));

   ·     a departure is just and equitable as regards the children and each parent (sub-subparagraph 98C(1)(b)(ii)(A)); and

   ·     it is otherwise proper to make a departure decision (sub-subparagraph 98C(1)(b)(ii)(B)). 

3. Subsection 98C(2) provides that the grounds for departure are the same as the grounds set out in subsection 117(2).

4. If satisfied that a ground or grounds exist 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. It permits a range of determinations, including varying the rate of child support payable, the adjusted taxable income or the cost percentage for a child.

Issue 1 – Is there a ground to depart?

1. Subparagraph 117(2)(c)(ia) of the Act, commonly referred to by the CSA as Reason 8A, provides as a ground for departure:

   (c)that, in the special circumstances of the case, application in relation to the child of the provisions of this 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:

   …

   (ia)      because of the income, property and financial resources of either parent; or

2. Subparagraph 117(2)(b)(ii) of the Act, commonly referred to as Reason 3, provides as a ground for departure:

   that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:

   …

   (ii)    because the child is being cared for, educated or trained in the manner that was expected by his or her parents …

10.The starting proposition is that the child support formula should apply. Only in special circumstances should a departure be made. The words “in the special circumstances of the case” are not defined in the legislation. Whilst it is not possible to define with precision the meaning of that term, 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 Tribunal will not interfere with the administrative formula result in the ordinary run of cases. In Gyselman v Gyselman (1992) FLC 92–279, it was held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”. The Tribunal’s approach to the interpretation and application of the particular grounds in subsection 117(2) must be guided by that qualification.

The hearing

11.In short, Mr Bestall told the Tribunal that [Child 3] should be included in the calculation of a reduction of his child support liability. He also urges an effective 50% contribution from Ms Thorn (not the roughly 10% contribution as assessed by the CSA). Mr Bestall told the Tribunal that following separation, there was a meeting in early 2020 where it had been “agreed nothing would be changing” regarding schooling plans. Mr Bestall insisted there was a “parenting plan” despite Ms Thorn’s evidence she has never agreed to a parenting plan and has never signed one; Mr Bestall agreed Ms Thorn had not signed a plan “as such”. Mr Bestall said that following their agreed property settlement, Ms Thorn has been in a position to make an effective 50% contribution towards school fees. He said that would be fair as she has 50% care of the children. This year, the three oldest children will be in years [specified]. He expects [Child 4] will commence at [School 2] in 2024 (this was disputed by Ms Thorn, who told the Tribunal she has plans for [Child 4] to attend a much cheaper private school).

12.Mr Bestall also raised the issue of his amended adjusted taxable income for the 2019/20 tax year (from around $180,000 to $168,000); he disputes the refusal by the CSA to apply this figure in 2021 when the wrong figure had been applied. He had raised the incorrect assessment of a fringe benefit with the CSA in 2021. It took a long time for the amendment to be finalised by the Australian Taxation Office. Mr Bestall said he is intending to lodge his 2021/22 tax return within a week or so of the hearing. The children are in years [specified] this year ([Child 4] is in [specified year] – Mr Bestall said he expects to send [Child 4] to [School 2] in 2024).

13.Ms Thorn told the Tribunal she could not remember what was discussed in 2020 as it was a very emotional time. None of the proposed parenting plans were ever finalised. The property settlement, parenting plan and binding child support agreement were all being negotiated at the same time; only the property settlement has been concluded. Ms Thorn did not recall any specific conversation with Mr Bestall about [Child 3] and [Child 4’s] schooling when they were together, or since. Mr Bestall told the Tribunal that the expectation that [Child 3] and [Child 4] attend [School 2] had been discussed. Ms Thorn said Mr Bestall had “unenrolled” [Child 3] from his previous school and enrolled him at [School 2] without any involvement from her. She did not expect [Child 3] to start there until [a later year]; he was doing well where he was and was concerned he would not cope with a new school. Mr Bestall disputed this, and said [Child 3] is doing very well at [School 2].

14.Ms Thorn told the Tribunal she has a limited income and does not have the resources to make a 50% contribution towards school fees. She lives in a rental property. The property settlement included superannuation which she is not able to touch until she turns 65. Ms Thorn said Mr Bestall is a “[School 2] old boy” which is why he wants the children to go there. She said she would be “forced to eat bread and butter” and would be “out on the street” if she was required to make a 50% contribution.

15.Both parties suggested that in terms of any departure going forward, an “end date” of 31 December 2023 might be appropriate.

16.Mr Bestall confirmed he still works for the same employer. Aside from school fees, he did not raise any other particularly unusual or excessive expenses for himself or the children. Ms Thorn confirmed she earns around $1,000 per week before tax. She did not raise any particularly unusual expenses.

17.Both parties suggested that in terms of any departure going forward, an “end date” of 31 December 2023 might be appropriate.

Conclusion

18.The school fees being met by Mr Bestall amount to over $30,00 per annum. This is a very material expense in the context of the child support assessment. There are special circumstances which render the formula assessment unfair; there is a ground to depart from the formula.

Issue 2 – Is it just and equitable to depart from the administrative assessment?

19.The next relevant consideration for the Tribunal is whether a departure from the administrative assessment is just and equitable. This enquiry directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.

20.Mr Bestall urges a reduction in his liability on the basis of a contribution from Ms Thorn towards school fees at [School 2] for [Child 1], [Child 2] and [Child 3] in the 2022 calendar year, and beyond. It seems to the Tribunal that there was no serious dispute that [Child 1] and [Child 2] were intended by both parents to be educated at [School 2]. Whilst Ms Thorn did not recall any specific discussion about [Child 3], the Tribunal considers it likely both parents, prior to separation, would have expected a private education for him.

21.The Tribunal understood Ms Thorn’s evidence to be that she had not expected [Child 3] to attend [School 2] until [a later year]; in any event, she points to her relatively straitened financial position and contends she could not possibly afford to make a 50% contribution (over $15,000 per annum) for the fees in 2022, 2023 and beyond.

22.The Tribunal is satisfied that both parents had expected [Child 3] to be educated privately. In the ordinary course, that expectation would be fulfilled from the time [Child 3] started [specified year], as had been the case for the older children. It would be just and equitable for consideration of [Child 3’s] additional costs to be accounted for in the assessment.

23.There is a large disparity in the parents’ incomes. The Tribunal is not satisfied that Ms Thorn could afford to make an effective contribution of over $15,000 per annum towards school fees. The property settlement is an entirely separate matter to the ongoing child support assessment, which is based on the ongoing incomes of the parents. It would not serve the interests of the children for Ms Thorn to be put in a position of severe hardship. The Tribunal considers the adoption of the respective “income percentages” represents a fair method to calculate a reduction in Mr Bestall’s annual liability.  In round terms, the fees for all three children were $31,200 for three children. The Tribunal will adopt the same percentages applied by the CSA for the three periods in 2022 (based on a total annual cost of $31,200 rather than $22,968). For simplicity, the Tribunal will apply an income percentage of 10.17% (the same as for the bulk of the 2022 year) on the figure of $31,200 for 2023 (resulting in a decrease in Mr Bestall’s annual liability of $3,170 for the 2023 calendar year.

24.Mr Bestall urges a backdating of his reduced adjusted taxable income for the 2019/20 financial year. Whilst the Tribunal accepted he had raised his concerns with the income for that year earlier with the CSA, he made his change of assessment application in January 2022. There would need to be compelling reasons to backdate a departure; it is a relevant concern that doing so would put Ms Thorn in an overpayment situation. In weighing the respective financial positions of the parties, the Tribunal is not of the view that it would be just and equitable to make any retrospective adjustment by a departure in the terms urged by Mr Bestall; that it is best left for the usual operation of the formula provisions which govern retrospective (amended) adjusted taxable incomes.  

25.The Tribunal is satisfied that the formula assessment of both Mr Bestall’s and Ms Thorn’s adjusted taxable incomes adequately reflect their respective financial capacities (Mr Bestall on a provisional income of some $179,000 and Ms Thorn on an estimate of her current year income). There is no requirement to make an adjustment to the usual operation of the formula.

26.In the Tribunal’s assessment, no other particularly material expenses were raised by either party in respect of their own situations, or in respect of the children, which would warrant any further adjustment. 

27.The Tribunal has indicated that, going forward, it would be appropriate to reduce Mr Bestall’s annual child support liability until the end of 2023. At such time, an accounting for [Child 4’s] likely commencement of private schooling and any other changes can be taken into account in a possible departure from the beginning of 2024.

1. The Tribunal is satisfied that with appropriate budgeting, Mr Bestall will be able to meet his child support liability without suffering undue financial hardship. It is just and equitable to make a departure in the terms set out above.

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

29.The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community. It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances and benefits. Parents rather than the community have the primary duty to maintain a child.

30.The rate of child support should reflect the obligation of both parents to take financial responsibility for the children and, where increased, may decrease any income-tested benefits payable. A departure is therefore proper.

31.As the Tribunal has reached a different conclusion to the objections officer, the decision under review will be set aside.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that:

(a)for the period 1 January 2022 to 31 January 2022, Mr Bestall’s annual rate of child support liability is reduced by $5,920;

(b)for the period 1 February 2022 to 7 February 2022, Mr Bestall’s annual rate of child support liability is reduced by $7,360;

(c)for the period 8 February 2022 to 31 December 2022, Mr Bestall’s annual rate of child support liability is reduced by $3,170;

(d)for the period 1 January 2023 to 31 December 2023, Mr Bestall’s annual rate of child support liability is reduced by $3,170.