Boiter and D’Esposito (Child support)

[2021] AATA 1687

Boiter and D’Esposito (Child support) [2021] AATA 1687 (29 April 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/MC019934

APPLICANT:  Mr Boiter

OTHER PARTIES:  Child Support Registrar

Ms D’Esposito

TRIBUNAL:Member J Leonard

DECISION DATE:  29 April 2021

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that there is no ground to depart from the administrative assessment.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – whether benefits derived from business – no evidence of additional financial resources – earning capacity of carer entitled to receive – no ground for departure – 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. Ms D’Esposito and Mr Boiter are the parents of [Child 1] (born 2005) and [Child 2] (born 2010). Mr Boiter has sought review of a decision of Services Australia (Child Support) about the amount of child support payable in respect of [Child 1] and [Child 2].

2. The administrative assessment of child support for the period 28 November 2019 to 30 June 2020 required Mr Boiter to pay to Ms D’Esposito the annual rate of child support of $11,352  based on his 2018/19 adjusted taxable income of $82,136 and a 2018/19 income estimate of $3,389 for Ms D’Esposito. The children were recorded as being in the primary care (69%) of Ms D’Esposito and the regular care (31%) of Mr Boiter.

3. On 7 January 2020 Ms D’Esposito applied for a departure from the administrative assessment on the grounds that in the special circumstances of the case:

   ·     the assessment did not correctly reflect Mr Boiter’s income, property, financial resources or earning capacity,

   ·     the costs of maintaining [Child 1] and [Child 2] are significantly affected by their special needs and by the costs of educating them in the way both parents intended, and

   ·     the child support assessment is unfair because Mr Boiter has given money, goods or property to the children.

4. Mr Boiter cross applied on the grounds that in the special circumstances of the case, the assessment did not correctly reflect Ms D’Esposito’s income, property, financial resources or earning capacity.

5. On 11 April 2020 a delegate of Child Support determined that a ground to depart from the administrative assessment did not exist. Ms D’Esposito objected to that decision and on 18 August 2020, an objections officer allowed the objection and decided that, for the period 12 May 2020 to 31 October 2022 Mr Boiter’s adjusted taxable income was to be varied to $115,000 per annum.

6. Mr Boiter applied to the Tribunal to have the objections officer’s decision reviewed. The Tribunal hearing took place on 29 April 2021. Mr Boiter and Ms D’Esposito appeared by conference telephone and gave evidence under affirmation. In reaching its decision, the Tribunal has considered the oral evidence given during the hearing together with the documentation provided by Child Support (446 pages), Mr Boiter (A1 to A202) and Ms D’Esposito (B1 to B16).

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 which 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. A parent may apply for a departure from the assessment, under Part 6A of the Act, in certain circumstances. However, the legislative intent is that the Tribunal will not interfere with the administrative formula result in the ordinary run of cases. Under subsection 98C(1) of the Act, a change of assessment can be made only if:

   a.    a ground (or more than one ground) for departure exists; and

   b.    departure from the administrative assessment would be:

   i.just and equitable as regards [Child 1] and [Child 2] and each parent; and

   ii.otherwise proper.

2. 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 range of determinations, prescribed in section 98S of the Act, which include varying the rate of child support payable, the adjusted taxable income or the cost percentage for a child.

Ground for departure

1. Ms D’Esposito clarified at the directions hearing that she did not intend to seek a departure from the administrative assessment on the basis that the child support assessment is unfair because Mr Boiter has given money, goods or property to the children.

10.  At the hearing Ms D’Esposito advised that she had not incurred out of pocket expenses in relation to [Child 1]’s special needs in 2020 and did not intend to pursue this ground for departure.

11.  [Child 1] attends a public school and the Tribunal accepts Ms D’Esposito’s evidence that she has the usual expenses associated with his education. She has met the cost of school fees.

12.  The Tribunal finds that the costs incurred by Ms D’Esposito to educate [Child 1] in the state education system do not constitute a special circumstance such that a ground to depart from the administrative assessment is made out; subparagraph 117(2)(b)(ii) of the Act.

Mr Boiter’s Income, property, financial resources and earning capacity

13.  The Act provides, as grounds for departure from the administrative assessment of child support (in subparagraph 117(2)(c)(ia)):

(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.

14.  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. In Gyselman and 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 will consider whether the application of the administrative assessment would result in an unjust and inequitable determination of child support payable, having regard to the evidence relevant to the parents’ financial positions.

15.  Mr Boiter was the director of [Company 1]. A tax return has not been completed since the 2014/15 financial year and the company is deregistered.

16.  Mr Boiter was the director of [Company 2]. from 27 October 2005 to 27 November 2006. He has had no relationship with the company since 2006. 

17.  Mr Boiter owns [Company 3]. This company is the non-trading trustee for [an] Investment Trust which owns Mr Boiter’s 50% shareholding in [Company 4] Pty Ltd ([Company 4]). Mr Boiter is one of two directors of [Company 4] which provides [services]. He is paid a salary of $82,192. No distributions were paid in the 2017/18 or 2018/19 financial years. The profit and loss account shows a net loss of $123,758 in 2017/18 and a net loss of $181,479 in the 2018/19 financial year.

18.  Mr Boiter held a 50% shareholding in [Company 5] Pty Ltd. Mr Boiter stated this company is not active and ceased trading in 2013. Company returns for 2017/18 and 2018/19 show nil income.

19.  Mr Boiter was a director of [Company 5] from 10 March 2011 to 2 April 2012 and from 29 September 2018 to 25 May 2019. He stated [Company 5] did not pay any directors’ fees. He was appointed as a director as [Company 4] as an agreement with [Company 5] to provide [services]. He ceased to be a director as it was of no interest or benefit to him.

20.  [Company 5] Pty Ltd provide third party contractors to [Company 4].  Mr Boiter’s business partner is the director of [Company 5] Pty Ltd and a director of [Company 5] Pty Ltd. Mr Boiter stated he has no relationship to this company.

21.  Mr Boiter stated at hearing that he should be assessed on his income as determined by the Australian Taxation Office which is derived from his salary from [Company 4] ($1,580 per week) and shares dividends ($5.73 per week). He derives no financial benefit from [Company 4] other than his salary and no financial benefit from any other company.

22.  The Tribunal has examined Mr Boiter’s personal credit card and bank statements. As Mr Boiter is a signatory to the accounts held by [Company 4], the Tribunal also examined the credit card and business account statements for [Company 4].

23.  The only deposits into Mr Boiter’s personal account #4372 is his salary, tax refund and redraw from his mortgage. From this, repayments are directed towards his mortgage, credit card, child support and health insurance. Mr Boiter is paying slightly more than the minimum amount on his mortgage repayments, and utilises the redraw facility as needed. 

24.  While the business account for [Company 4] shows some deductions for amounts identified as ‘Coles and Optus’, they are not significant and Mr Boiter stated they were all work related expenses. The profit and loss statement shows an amount of $4,756 for motor vehicle expenses for the 2018/19 financial year. Mr Boiter stated they were related to expenses incurred by his business partner. Occasionally Mr Boiter may use his own car for work related matters, but [Company 4] does not pay anything towards registration or insurance. He may claim parking fees.

25.  There are no apparent discrepancies between the amount paid for wages in 2018/19, $340,276, and the amount debited from the [Company 4] account #3040 over a six-month period. 

26.  On his Statement of Financial Circumstances Mr Boiter advised of household expenses of $942 per week and other expenses of $867 per week which includes child support, income tax, health insurance and credit card repayments. This exceeds his net income of $1,585 per week. Mr Boiter stated this includes an amount of $86 per week which he is paying towards a child support debt arising from the objection officer’s decision. He is utilising his credit card to meet the shortfall in income.

27.  Ms D’Esposito was of the view that Mr Boiter had arranged his business affairs to hide his financial resources.

28.  In the Tribunal’s view, the fact that Ms D’Esposito is of the opinion that Mr Boiter has additional financial resources in circumstances where there is no available evidence to support a conclusion, does not of itself permit a finding that there are special circumstances for the purposes of subparagraph 117(2)(c)(ia) of the Act.

Ms D’Esposito’s income, financial resources and earning capacity

29.  Ms D’Esposito last worked on 14 December 2018. Her employment separation certificate shows she left work due to ‘mutual separation’. Ms D’Esposito’s 2017/18 adjusted taxable income was $83,984. She reported that this was incorrect as she was working in the not-for-profit sector and the amount was inflated due to the effect of grossing up her reportable fringe benefits. The papers show that Ms D’Esposito’s 2018/19 amended taxable income was $47,088.

30.  On 28 November 2019 Ms D’Esposito provided an income estimate of $3,389.

31.  The records show that Ms D’Esposito was in receipt of a Commonwealth payment for a period from July to September 2020.  During this period the child support assessment was based on Ms D’Esposito’s 2018/19 adjusted taxable income. 

32.  On 30 September 2020 Ms D’Esposito provided a 2020/21 estimate of $2,920. Child Support’s reconciliation process will address any unfairness in the period the assessment was based on an estimate of income and so the Tribunal sees no reason to depart from the administrative assessment on that basis.

33.  Ms D’Esposito stated her partner is employed and he provides financial support. He makes the mortgage repayments. Ms D’Esposito’s Statement of Financial Circumstances shows there is a shortfall in her declared expenses and household income. Ms D’Esposito denied receiving the benefit of any financial resources other than her declared Centrelink payments and child support.

34.  Mr Boiter was of the opinion that Ms D’Esposito has unused earning capacity.

35.  In order for a person to be assessed in accordance with their earning capacity rather than their actual income, the three tests set out in subsection 117(7B) of the Act must be satisfied:

In having regard to the earning capacity of a parent of the child, the court may determine that the parent’s earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:

(a) one or more of the following applies:

(i) the parent does not work despite ample opportunity to do so;

(ii) the parent has reduced the number of hours per week of his or her 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;

(iii) the parent has changed his or her occupation, industry or working pattern; and

(b) the parent’s decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:

(i) the parent’s caring responsibilities; or

(ii) the parent’s state of health; 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.

36.  Ms D’Esposito is no longer employed and so paragraph 117B(a) of the Act is satisfied. At the time of her departure application Ms D’Esposito was in receipt of carer allowance in respect of the care she provides to [Child 1]. She advised that this was paid to her since 2013.

37.  Despite the reduction in her income following the cessation of her employment in December 2018, Ms D’Esposito did not advise Child Support of a reduction in her income, or provide an estimate of her current financial year income until 28 November 2019. She stated affecting the child support assessment was not on her mind when she made the decision to cease work.

38.  The Tribunal is satisfied that Ms D’Esposito’s statements do not demonstrate that the effect on the administrative assessment of child support was indeed a major purpose behind her decision to cease employment. The Tribunal concludes that the provisions of subsection117(7B) of the Act are not met.

Conclusion

39.  Taking into consideration all of the factors present in this case, the Tribunal determines that a ground for departure has not been established.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that there is no ground to depart from the administrative assessment.