Blanton and Grist (Child support)

[2021] AATA 2728

Blanton and Grist (Child support) [2021] AATA 2728 (10 June 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/BC020547

APPLICANT:  Mr Blanton

OTHER PARTIES:  Child Support Registrar

Ms Grist

TRIBUNAL:Member A Schiwy

DECISION DATE:  10 June 2021

DECISION:

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

·     Ms Grist’s adjusted taxable income is varied to $80,000 from 23 April 2020 to when a terminating event occurs; and

·     Mr Blanton’s annual child support liability be increased by $1,630 from 23 April 2020 to 22 April 2021.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the carer entitled to receive – alienation of income – school fees – 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 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 Blanton and Ms Grist are the separated parents of [Child 1] who is 15 years old.  This review is about the child support payable by Mr Blanton to Ms Grist for the child.

2. According to the child support records, a child support case has been registered since 2006.  Services Australia (Child Support) have determined that Ms Grist has had 100% care of [Child 1] since December 2019.  Child Support commenced collecting child support payments from 8 April 2020; up until then it had been private collect.

3. The administrative assessments for child support have been based on Ms Grist’s 2018–19 adjusted taxable income of $8,510.

4. On 23 April 2020 Mr Blanton lodged a departure application with Child Support. The application was made on the basis that the rate of child support payable under the administrative assessment was unfair because of the income and financial resources of Ms Grist.

5. On 7 September 2020 a Child Support case officer decided not to make a departure determination.

6. On 22 September 2020 Mr Blanton objected to this decision and on 11 December 2020 a Child Support objections officer partly allowed the objection.  The objection decision was:

   ·For the period 23 April 2020 to 30 September 2020 Ms Grist’s adjusted taxable income is varied to $63,000; and

   ·For the period 1 October 2020 to when a terminating event occurs, Ms Grist’s adjusted taxable income is varied to $56,000.

7. On 28 December 2020 Mr Blanton lodged an application with this tribunal for an independent review of the objections officer’s decision.  

8. A hearing was held on 27 May 2021.  Both Mr Blanton and Ms Grist gave evidence on affirmation at the hearing by conference telephone. 

9. The tribunal had been questioning Ms Grist for around 90 minutes when her telephone line dropped out.  Ms Grist had been making a number of complaints during the hearing about the private nature of the enquiries and how the hearing was a waste of time.  The tribunal attempted to contact Ms Grist, but the call went to her voicemail.  The tribunal assumed, given her complaints, that she no longer wanted to participate.  The tribunal continued with the hearing, and the remainder of the hearing was centred around Mr Blanton’s financial position.  No more evidence about Ms Grist’s finances was discussed.  Ms Grist contacted a case officer after her call dropped out, but the hearing had been completed before the tribunal received notification of this contact.  Given that Ms Grist had not disputed Mr Blanton’s income (he is a salary and wage employee), the tribunal did not think she was disadvantaged by not being present to hear his evidence about his financial position.  Ms Grist was given the opportunity to provide any further evidence/submissions she may have in writing by 4 June 2021.  She had received a copy of Mr Blanton’s Statement of Financial Position prior to the hearing and was therefore able to make comments about this if she wished.  Ms Grist then provided a further submission and documents, and these were exchanged with Mr Blanton and he was provided with an opportunity to comment.

10. In considering this matter, the tribunal took into account the oral evidence of Mr Blanton and Ms Grist and the relevant documentation provided by the Child Support Registrar (numbered 1 to 442), Mr Blanton (A1 to A44) and Ms Grist (B1 to B446). Copies of the Child Support papers were provided to all parties prior to the hearing.  Both parties provided further submissions after the hearing.  Ms Grist provided B447 to B466 and this was exchanged with Mr Blanton.  He provided a response (A45 to A48) and as this provided no new evidence it has been attached to the decision for information.

ISSUES

1. The statutory provisions relevant to this review are set out in the Child Support (Assessment) Act 1989 (the Assessment Act) and in the Child Support (Registration and Collection) Act 1988.

2. The Assessment Act provides for an administrative assessment of the child support payable. It uses a formula that contains variables including the parents’ adjusted taxable incomes; their percentages of care for the children; and the costs of the children. The Assessment Act also makes provision for the Registrar to amend administrative assessments and to make a departure from the administrative assessment in certain circumstances.

3. The issues which arise in this case are:

   ·     does a ground for departure from the administrative assessment for child support exist; and if so,

   ·     is it just and equitable to make a particular determination; and

   ·     is it otherwise proper to make a particular determination?

COMPLIANCE WITH DIRECTIONS

1. A telephone directions hearing was held on 7 April 2021 and Ms Grist was directed to provide various documents.  She was advised during the hearing that failure to provide the documents may result in the tribunal making an adverse inference against Ms Grist.  Written directions were issued on 7 April 2021 and these contained a similar warning.

2. The directed documents were as follows:

   - Completed statement of financial circumstances.
   - Bank statements and credit card statements for all accounts held in the party's name and/or joint names (including loan accounts); for the period 1 July 2019 to 31 March 2021.
   - Bank statements and credit card statements for all accounts held by 24 [Company 1] (including loan accounts); for the period 1 July 2019 to 31 March 2021
   - Statements setting out all transactions on the ‘Travelcard’ during the period 1 July 2019 to 31 March 2021.
   - Details of rent, repairs and ‘other expenses’ claimed by [Company 1] in the 2019-20 income tax return; including date and amount of payment, and name of the payee.
   - Personal loan details.  For each loan received since 1 January 2018 provide:

   ·     the name and relationship to you of the lender;

   ·     the date of the loan;

   ·     the amount of the loan;

   ·     how the loan was paid; and

   ·     details of any repayments to date.

3. Ms Grist failed to provide several of the directed documents or provided incomplete documents:

   ·Bank statements:  Child Support obtained information from [Bank 1] indicating that Ms Grist had five accounts with [Bank 1].  [Bank 1] provided statements as follows:

   ox3579 (28 September 2020 to 21 October 2020 – the account was opened and closed on these dates)

   ox2986 4 July 2020 to 21 October 2020

   ox2789 25 January 2020 to 7 October 2020

   ox0289 (Credit card) 21 July 2020 to 19 October 2020

   ox9794 – travel card with Thai Baht

   ·Ms Grist only provided statements for x2986 and x0289 and they were a list of transactions with no balances.  It is therefore not possible to verify if all transactions had been included.  It was clear from the statements provided by [Bank 1] to Child Support for x2986 that not all the transactions had been included; for example, three transfers into the account from x3579, totalling $26,000, were not included in the list of transactions (refer to page 272 and B45.) 

   ·Ms Grist provided no information for account x2789.  It had a balance of $75,012, as at 9 September 2020.  Over the next month she made a series of withdrawals, depositing all of the funds into x3579.  They were then transferred to another account but no information about the other account was provided.  Up until x2789 was closed on 7 October 2020, regular amounts were deposited with the reference “[specified]”; a total of around $23,000 was deposited from 14 April 2020 to 6 October 2020.  The business account shows that these deposits had been made to the business account up until March 2020 and the tribunal was therefore satisfied that the deposits were business income.  X3579 was closed in October 2020 but no more deposits from this source were made to the business account.  It is therefore more likely than not, that Ms Grist is banking them to another undisclosed account.

   ·According to information provided by Ms Grist the company has two [Bank 2] accounts and she has a mortgage with [Bank 2].  Ms Grist only provided a list of transactions (with no balances) for one [Bank 2] account and the current balance of the mortgage which was $391,539 on 9 May 2021. 

   ·Ms Grist said that:

   ·     Her son put together the bank statement information and she did not check them for accuracy;

   ·     Some of the bank accounts were closed so she didn’t provide the statements;

   ·     Her husband had the statements for one of the [Bank 2] accounts; and

   ·     Her financial information was private.

   ·Ms Grist was provided with a further opportunity to provide the missing bank statements after the hearing.  She provided statements for the second [Bank 2] account (x019) for the period 11 January 2021 to 9 April 2021.  There was nothing in the account and Ms Grist stated that the account was not used.  This may be the case, but Ms Grist failed to provide the statements for the period requested which would have verified if it had not been used.  She provided bank statements for the mortgage account for the period 1 February 2021 to 25 May 2021, which was not for the period requested. 

   ·Ms Grist’s response about the missing transactions during the hearing was that her son prepared the information and she didn’t check it.  The tribunal did not accept this as being credible.  The missing transactions were from an account that was being used to deposit business income; the tribunal found that Ms Grist deliberately deleted them from the information provided in an attempt to hide the fact that she had been putting business income into another account and then transferring it out to another undisclosed account.  It is not credible that her son would have decided, on his own, to delete those particular transactions.

   ·Details of various expenses:  Ms Grist has printed off a list of transactions that were not itemised and no totals provided.  It would have been a very arduous task to try and reconcile what she provided to the amounts she claimed as expenses in her tax return.  Given that she has completed the tax return it is clear she would have had to prepare totals for each expense item, but she failed to do this for the tribunal.

   ·Personal loan:  On 5 October 2020 Ms Grist told Child Support that she had borrowed $60,000 from her parents ‘to make ends meet’.  She did not provide any of the information about the loans that she was directed to provide.  At the hearing she said she borrowed $13,000 from her father-in-law in 2017, $15,000 in cash in 2018 from her father and $15,000 in cash from her mother in 2018.  This only adds up to $43,000.

4. The tribunal was hampered by Ms Grist’s failure to provide documents that would assist to determine her financial position and income.  The tribunal did not accept that Ms Grist could not provide the directed information or that it was reasonable to excuse herself from the requirement to provide the information because it was private.  It would appear that she has attempted to hide her true financial position and the amount of income actually earned by her business.

5. In Humphries & Berry (SSAT Appeal) [2008] FMCAfam 409 Federal Magistrate Slack dealt with the issue of the disclosure of financial information in matters before the tribunal. His Honour stated that the principle of full and frank disclosure applicable to proceedings in the Family Court was also applicable to proceedings before the Social Security Appeals Tribunal (now the Social Services and Child Support Division of the tribunal). He stated at paragraph 31:

   In financial proceedings under the Family Law Act, the authorities make it clear that a Court should not be unduly cautious about making findings in favour of the other party if it is not satisfied that proper disclosure has been made (see Chang & Su (2002) FLC93-117).

6. Also, in Agrippa & Horton (SSAT Appeal) [2010] FMCAfam 1144 Federal Magistrate Halligan stated at paragraph 25:

   If the SSAT is satisfied that a parent has made a deliberate non-disclosure of his or her financial circumstances, it should be reasonably robust in assessing the non-disclosing parent’s financial circumstances adversely to that parent and in favour of the other parent. That is not to say that it may arrive at an entirely arbitrary result, but rather that it may draw generous inferences adverse to the non-disclosing party about that parties financial circumstances.

CONSIDERATION

Issue 1 – Does a ground for departure from the administrative assessment for child support exist?

Income and financial resources – Ms Grist

1. Subparagraph 117(2)(c)(ia) of the Assessment Act provides that a ground for departure exists where, in the special circumstances of the case, application of the provisions of the Assessment Act relating to the 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 children because of the income, property and financial resources of either parent.

2. The term ‘special circumstances’ is not defined in the Assessment Act. In Gyselman and Gyselman (1992) FLC 92-279 (Gyselman) the Full Court of the Family Court indicated that for there to be special circumstances, the facts of the case must establish something which is special or out of the ordinary.

3. Mr Blanton’s application was based on his submission that Ms Grist’s income was much higher than her taxable income as she runs a successful business and is a qualified [Occupation 1].  He also alleged that Ms Grist had a rental property and bank accounts in other names.

4. On 27 May 2020 Ms Grist responded to Mr Blanton’s application and stated that her taxable income for 2019 was correct, that the business was jointly owned and had made losses for the last four years and that she did not receive any Centrelink payments until the COVID-19 pandemic.  She provided a profit and loss statement to the tribunal for the period June 2019 to 31 March 2021 showing a loss of over $30,000 as evidence that her business has not made any money.

5. Ms Grist is a [Occupation 1] and runs a [business] through a company, [Company 1] (‘the company’).  Ms Grist’s adjusted taxable incomes in recent years have been:

   ·2016–17   $3,184

   ·2017–18   $12,013

   ·2018–19   $8,510 (includes salary from the company of $10,250 and work deductions of $1,640)

   ·2019–20   $6,979 (the company tax return indicates she was paid $1,000 salary and            the balance is likely to be jobseeker payments)

Alienation of income through the company

1. It is a long established principle of law when a person conducts their business through an intermediary such as a company or trust that it is proper to lift the corporate veil to determine the value of the company or trust to that person (see in particular Stein and Stein (1986) FLC 91-779 and Ashton and Ashton (1986) FLC 91-777). The tribunal took this case law into account in reaching its conclusions.

2. Ms Grist is the sole director of the company and she and her husband each own half of the issued shares.  Ms Grist has provided evidence that she funded the purchase of the business herself; she paid $60,000 for the business in 2016 out of savings she had from a compensation payout.  There is no evidence that anyone other than Ms Grist is employed by the company.  The tribunal was satisfied that the business income is attributable to the capital outlay made by Ms Grist for the initial purchase and her personal exertion.

The company’s income

1. The company owns a [specified business].  Ms Grist said that in addition to [Specified Service 1] she also provides [Specified Service 2] to some clients at a cost of $30 for half an hour.  She said the [business] has around 300 members and charges an initial joining fee of $89 plus $26 per fortnight to be a member.  Ms Grist said she has been reducing the amount of [Specified Service 2] she does and ceased providing this service two months ago.  Ms Grist said that members usually pay via EFTPOS, and sometimes in cash.

2. The main expense for the company is rent, insurance, telephone, security and equipment maintenance.  Ms Grist said that in five years the business only made a profit in one year (2019–20).

3. The [business] is currently for sale and has been advertised for $140,000.  Ms Grist said she wants this amount to recoup what she has put into the business; it is not necessarily a reflection of what it is worth.

4. The company’s income tax returns show the following:

2018–19	2019–20
Gross income	$161,729	$125,032
Rent	$157,887	$56,665
Other expenses	$31,847	$26,836
Net profit/(loss)	$(28,005)	$41,531

1. As discussed, the tribunal has not been provided with full disclosure of Ms Grist’s bank accounts and it is clear that business income has been deposited to those accounts.  There was over $23,000 deposited to one account from ‘[named business]’ and in addition there are ad-hoc amounts deposited from clients directly to Ms Grist’s account.  Ms Grist was asked about one particular deposit during the hearing.  She said the client was a friend and she gave him half price membership on the basis that he deposits the money directly to her private account.  Ms Grist also said she receives some income in cash but there are no cash deposits included in the list of income transactions provided. 

2. Ms Grist made submissions about how it was all right for a person to pay themselves money from a business if they had lent the business money previously and such payments were not income.  The tribunal agrees that drawings from the business account are not necessarily income (unless they are dividends), however income from clients deposited directly to her account is business income; it has not yet been brought to account in the company’s profit and loss.

3. The tribunal noted, based on Ms Grist’s evidence, that the fortnightly fees from members would provide a gross income of $202,800 (300 x $26 x 26 fortnights); around $184,000 net of GST.  This does not include joining fees and personal training fees.  This is nearly $60,000 more than the company’s gross income for 2019–20 and over $20,000 more than the 2018–19 gross income.

4. The tribunal could not review the expenses claimed by the company, because as discussed, Ms Grist did not comply with the directions about her expenses.  She provided a list of transactions during 2019–20 and it appeared that some private expenditure may be being claimed as expense items.  For example, a payment for $190 for a used tablet referenced ‘[Child 1]’ was almost certainly private expenditure.

5. From 1 July 2019 to 30 June 2020 the company declared a taxable profit of $41,531 after paying Ms Grist a salary of $1,000.  The tribunal was satisfied that the company earned a larger profit than this given the undisclosed income and the likelihood that some private expenditure has been claimed.  It was difficult to determine how much Ms Grist has been making from the business as she has not provided full disclosure of all her accounts.  The tribunal decided that based on Ms Grist’s evidence about the gross income of the company, the net profit from the business is likely to be at least $80,000 per annum net (including any wages paid to Ms Grist).  

1. Ms Grist submitted that business income dropped during the COVID-19 shut down.  The tribunal noted that according to her [social media] page, the [business] was closed from 23 March 2020 until 10 June 2020, a period of around 11 weeks.  It is clear from the account information that clients were still paying fees, although it is unknown if all of them did.  The tribunal accepts that net profit may have decreased during this period but not significantly.

2. Ms Grist has been receiving jobseeker allowance since around April 2020; however, in accordance with subparagraph 117(7A)(b)(ii) of the Act any entitlement of the carer entitled to child support (in this case Ms Grist) to an income-tested pension, allowance or benefit is to be disregarded for the purposes of determining the carer’s income, property and financial resources.

3. After considering all of the evidence the tribunal concluded that Ms Grist derives an annual income of $80,000 from the company.

4. The amount of child support payable on an adjusted taxable income of $8,510 for Ms Grist, and an estimated income of $134,267 and $83,428 for Mr Blanton, is approximately $21,000/$13,200.  If Ms Grist’s income was increased to $80,000, the amount of child support payable decreases to around $17,900/$11,100.  As there is a significant difference in liability, the tribunal was satisfied that there are special circumstances in this case and finds that a ground for departure does exist in relation to Ms Grist’s income.

5. The tribunal noted that because Ms Grist has 100% care of [Child 1], any further increase to her income only results in a relatively small change to the amount of child support payable; this is because the costs of the child increase as the parents’ income increases.  For example, an income of $90,000 would have resulted in a child support liability of $10,750, only around $400 per annum difference.

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

1. As the tribunal is satisfied that a ground to depart from the administrative assessment exists, the tribunal must 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 (subparagraph 98C(1)(b)(ii) of the Assessment Act). Subsection 117(4) of the Assessment Act sets out a variety of factors that must be considered in deciding whether it would be ‘just and equitable’ to make a particular determination. These factors include the duty to maintain the children; the proper needs and costs of caring for the children; income, property and financial resources of the parents and children; earning capacity of the parents and children; the parents’ commitments to support themselves and other children; and any hardship that would be caused by departing or not departing from the formula.

2. Section 3 of the Assessment Act makes it clear that the parents have the primary duty to maintain their children and that this duty has priority over all commitments of the parents, other than commitments necessary for self-support or for the support of another person they have a duty to maintain. In this case Ms Grist and Mr Blanton have the primary duty to support their child.

Ms Grist’s income, property and financial resources

1. Ms Grist’s income has been discussed above and the tribunal concluded that she is earning $80,000 per annum.  The tribunal was also satisfied that Ms Grist is working full time and has no further earning capacity.  Her income is supplemented by family tax benefit and jobseeker payment.

2. Ms Grist jointly owns, with her husband her residence which she values at around $460,000.  The home was built by them in 2012.  There is a mortgage of around $390,000.  It is not known if Ms Grist is pursuing a property settlement.

3. It is unclear how much Ms Grist has in the bank as she has not fully disclosed her bank accounts.  Ms Grist said she has $36,000 in superannuation.  Two deposits of $10,000 superannuation were deposited to her bank account in June and July 2020, presumably under the COVID-19 arrangements for superannuation access and it is unknown if she still has this money. 

4. Ms Grist listed her weekly tax expense to be $12 per week.  The company has not paid any tax as it has reported taxable losses since the business began and these offset the recent profit made.  Ms Grist benefits significantly from paying less tax than others would have to on an annual income of $80,000.

5. Ms Grist listed her weekly expenses for herself and [Child 1] to be $1,031 and this includes $480 per week on the mortgage.  It is likely that this amount could be reduced given the amount of the mortgage and current low interest rates. The expenses listed appeared unremarkable and included discretionary expenditure of $40 per week for entertainment, holidays and gifts.  Ms Grist said she separated from her husband in December 2019.  He was making payments on the mortgage but has refused to make any further payments.  She has received no other financial support from him since December 2019.           

6. Given her income and expenses, the tribunal found that Ms Grist would not suffer financial hardship if her child support payments reduced from around $13,200 to $11,100.

Mr Blanton’s income, property and financial resources

1. Mr Blanton is a [Occupation 2].  His recent taxable incomes are:

   ·2018–19   $223,992

   ·2019–20   $135,455

   ·2020–21 – Mr Blanton has been lodging estimates for this financial year, commencing at $134,267 and currently at $83,428.

2. Mr Blanton works as an employee and his income has dropped dramatically during 2019–20.  Mr Blanton said he was working up in Darwin and receiving very large amounts of overtime and penalties.  However, there was a downturn in the mining industry and a resultant reduction in construction in Darwin.  He returned to his place of residence, [City 1], in January 2019 and was working as a casual.  He was then made permanent, but this resulted in a reduction in his pay of $8 per hour.  He is currently on $38 per hour and has not been getting overtime.  He provided recent payslips from his current employer and as at 13 April 2021 he had a year to date gross income of $47,019.  The payslip verified that he is working full time (38 hours per week) and grosses $38.76 per hour, $1,472 per week.  This annualises to around $77,000 per year.  

3. Mr Blanton’s estimate for the year is $83,428.  He is likely to earn around this much (it is not clear how much he grossed before he commenced with his current employer or what overtime, if any, he will receive prior to 30 June 2021).  If Mr Blanton has underestimated his income for the year this will be dealt with through the income reconciliation process carried out when he lodges his tax return.  The tribunal was therefore satisfied that Mr Blanton’s income does not need to be altered in a departure determination.

4. Given Mr Blanton is a full-time employee the tribunal was satisfied that he has no further earning capacity.

5. Mr Blanton has a house valued at $380,000 with a mortgage of around $300,000, giving him net equity of $80,000.  He also has $162,000 in superannuation.  He owes around $8,000 on his credit card.  Mr Blanton’s child support liability as at 4 May 2021 was $870.

6. Mr Blanton listed his weekly expenses, $22 for medical insurance and $1,122 for household expenses.  Tax deducted on his current income is $325 per week.  The weekly expenses included $380 for mortgage payments.  Given current interest rates it is possible that Mr Blanton could reduce this payment.  Some of the estimates appeared high, in particular $110 per week for medical and pharmaceutical.  Mr Blanton said that he suffered from hay fever and used Nicorette.  The expenses included discretionary amounts for holidays, entertainment, gardening and cleaning and gifts, of $80 per week.  After reviewing the expenses listed it is likely that Mr Blanton could reduce his overall spending if necessary and the tribunal noted that the amount allowed for in the child support formula for self-support was around $26,000 per annum.

7. Mr Blanton said his expenses have been exceeding his income and he has been drawing down on savings for some time. 

8. Mr Blanton also lives with his partner but failed to disclose this in his statement of financial position.  It would therefore be reasonable to expect that his partner contributes to some of the household costs.

9. The amount of child support payable based on the administrative assessment for child support is around $13,200 or $253 per week.  Mr Blanton’s capacity to pay child support based on the expenses he listed is nil.  However, as discussed, there were a number of expenses that were discretionary and may have been overestimated and Mr Blanton could seek a contribution to the household expenses (like mortgage and utilities) from his partner.  The tribunal was satisfied that if Mr Blanton was required to pay the assessed amount, it would not place him in financial hardship.

The child

1. [Child 1] has a casual job and earns around $120 to $150 per week; he does not pay Ms Grist any board.

2. [Child 1] is educated at a private school, [College 1], and it is not disputed that both parents agreed for him to attend the school.  Mr Blanton stated that up until Ms Grist applied for Child Support to collect payments they had agreed that he would pay for [Child 1]’s school fees and music lessons.  He stated that he paid the fees for Term 1 in 2020.  Ms Grist stated that the fees were $4,347 per annum and she paid the balance for the year.

3. Ms Grist told Child Support that it was unknown if [Child 1] would attend private school in 2021.  It would appear, from the evidence available, that [Child 1] is now attending a public school.

4. The tribunal decided it would be reasonable for the parents to contribute half of the school fees each from Term 2 (when the agreement between Mr Blanton and Ms Grist ceased) given both agreed that [Child 1] should attend the school.  The balance of the fees is around $3,260 and it is not disputed that Ms Grist paid this amount.  Mr Blanton would need to contribute an amount of $1,630 to pay 50%.

5. The tribunal noted that the costs of the child, where the parents’ incomes are as found by the tribunal is approximately $26,784 (when Mr Blanton’s income is $134,267) reducing to $21,586 (when Mr Blanton’s income is $83,428).  Ms Grist currently has 100% care of [Child 1] and would therefore incur the majority of these costs.

Summary

1. In summary the tribunal noted that:

   ·Both parents have a responsibility to maintain their child.

   ·Ms Grist is earning $80,000 and Mr Blanton has estimated his current earnings to be $83,428. 

   ·The amount of child support payable, based on these incomes, is approximately $11,100.

   ·Mr Blanton has equity in his home of around $80,000 and $162,000 in superannuation.  Ms Grist’s net assets are unknown as she has not disclosed all of her accounts and it is unclear what she would receive from a property settlement, if one is reached.

   ·Mr Blanton has the capacity to pay child support in accordance with the administrative assessment without suffering financial hardship.  Ms Grist has the capacity to receive a reduced rate of child support without suffering financial hardship.

   ·[Child 1] was attending private school and since Term 1 of 2020 his fees were around $3,260; the tribunal has decided that Mr Blanton should contribute half of the fees.

2. After taking into account the above, the tribunal decided that it would be just and equitable to make a departure determination to:

   ·Vary Ms Grist’s adjusted taxable income to $80,000; and

   ·Increase Mr Blanton’s child support liability by $1,630 per annum for a 12-month period.

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

1. The requirement to consider whether it is ‘otherwise proper’ to depart from the administrative assessment 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 or benefits (subsection 117(5) of the Assessment Act).

2. It is a prime objective of the child support legislation that parents should be obliged to support their own children to the extent of their real capacity, and that that obligation should not be unnecessarily abrogated to the public welfare system when the parents themselves have the capacity to maintain their children.

3. Ms Grist currently receives family tax benefit.  A decrease in child support payments from Mr Blanton will increase the amounts she receives which is ‘otherwise proper’.

Conclusion

1. The tribunal decided that it was just and equitable, and otherwise proper, to make the proposed departure determination.

2. The tribunal then considered what an appropriate start and end date for the departure determination would be. 

3. Mr Blanton applied for a departure determination on 23 April 2020 which is around the time the parents’ private arrangement ended. The tribunal decided that it would be reasonable to date the departure determination from the date of application.

4. In considering an end date the tribunal noted that:

   ·Ms Grist’s taxable income is unlikely to ever reflect her actual income.

   ·The case is likely to end around 30 November 2023 (assuming [Child 1] completes Year 12).

   The tribunal decided to end the departure determination for Ms Grist’s income when a terminating event occurs (in approximately two and a half years).  This will give Mr Blanton some certainty as to the amount of child support payable.  The increase in child support liability to cover the 2020 school fees will be set for a 12-month period.

5. The tribunal noted that it is open to either parent to apply for a new departure determination if there is a significant change in circumstances.

DECISION

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

·     Ms Grist’s adjusted taxable income is varied to $80,000 from 23 April 2020 to when a terminating event occurs; and

·     Mr Blanton’s annual child support liability be increased by $1,630 from 23 April 2020 to 22 April 2021.