Bosanguet and Bosanguet (Child support)

[2024] AATA 2767

Bosanguet and Bosanguet (Child support) [2024] AATA 2767 (4 July 2024)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2024/AC027409

APPLICANT:  Mr Bosanguet

OTHER PARTIES:  Child Support Registrar

Ms Bosanguet

TRIBUNAL:Senior Member S De Bono

DECISION DATE:  04 July 2024

DECISION:

The decision of the objections officer is varied so that, for the period 1 January 2024 to 30 June 2024 Mr Bosanguet’s adjusted taxable income is set at $45,000.

CATCHWORDS 
CHILD SUPPORT – change of assessment – ceased to be able to work due to car accident – an unjust and inequitable determination of the level of financial support – a ground for departure is established – adjusted taxable income varied – decision of the objections officer is varied

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 theChild Support (Registration and Collection) Act 1988

REASONS FOR DECISION

BACKGROUND

1. The issue to be considered in this application is whether there is a reason to change the administrative assessment of child support and, if so, whether it is just and equitable and otherwise proper to do so.

2. Ms Bosanguet and Mr Bosanguet are the parents of [Child 1]. Ms Bosanguet is recorded as having 75% care and Mr Bosanguet is recorded as having 25% of [Child 1], which has applied to the administrative assessment of child support from 17 January 2020. There has been a child support assessment in place from 2 September 2016. Mr Bosanguet has been the parent liable to pay child support. Child support has been collected from Services Australia (Child Support) from 13 January 2020.

3. The administrative assessments in place prior to the change of assessment application were as follows:

   ·      For the period 1 September 2022 to 30 June 2023 Mr Bosanguet was assessed to pay child support of $0 (nil) per annum based on his $11,445 2022/2023 estimated income, and the 2021/2022 adjusted taxable income (ATI) of $49,464 for Ms Bosanguet.

   ·      For the period 1 July 2023 to 31 August 2023 Mr Bosanguet was assessed to pay child support of $4,629 per annum based on his 2021/2022 ATI of $60,941 and Ms Bosanguet’s 2021/2022 ATI of $49,464.

   ·      For the period 1 September 2023 to 30 November 2023 Mr Bosanguet was assessed to pay child support of $0 (nil) based on his 2022/2023 provisional income of $8,875 and Ms Bosanguet’s ATI of $47,241 for the 2022/2023 financial year.

4. On 8 October 2023 Mr Bosanguet applied for a change of assessment on the basis of Reason 8A – that the income, property and financial resources for him were not an accurate reflection of his current situation and, Reason 8B – his earning capacity, on the basis that he had a reduced earning capacity due to injuries sustained in a motor vehicle accident in January 2022.

5. On 4 December 2023 a Delegate of the Registrar established Reason 8A and departed from the administrative assessment as follows:

   ·      For the period 1 July 2023 to 31 August 2023 the annual rate of child support payable by Mr Bosanguet reduced to $0 (nil).

   ·      For the period 1 November 2023 to 31 October 2024 the adjusted taxable income for Mr Bosanguet is set to $60,000.

6. On 15 December 2023 Mr Bosanguet objected to this decision. On 17 January 2024 an objections officer partially allowed Mr Bosanguet’s objection and varied the decision of the Delegate as follows:

   ·      For the period 1 July 2023 to 31 August 2023 the annual rate of child support payable by Mr Bosanguet reduced to $0 (nil).

   ·      For the period 1 January 2024 to 31 October 2024 the ATI for Mr Bosanguet is set to $45,000.

7. This meant the decision of the Delegate in setting Mr Bosanguet’s income to $60,000 applied for the period 1 November 2023 to 31 December 2023 following the decision of the objections officer. For the period 1 September 2023 to 30 September 2023 Mr Bosanguet’s child support was $0 (nil), which was the administrative assessment under the formula assessment (see paragraph 3 of these Reasons).

8. On 24 January 2024 Mr Bosanguet sought further review with the Social Services and Child Support Division of the Tribunal. Directions were issued to both parties on 21 May 2024. On 4 July 2024 a telephone hearing was held in which both Ms Bosanguet and Mr Bosanguet gave evidence under affirmation. The Tribunal considered the documents and information provided by Child Support and both parties prior to the hearing as well as the oral evidence from both parties.[1] Relevant aspects of the material and evidence will be referred to in the Tribunal’s Reasons for Decision.

CONSIDERATION

[1] Administrative Appeals Tribunal Act 1975, subsection 37(1) Statement and Documents provided by Child Support numbered 1 to 298, section 38AA Request and Documents, Mr Bosanguet’s documents numbered A1–A23 and Ms Bosanguet’s documents numbered B1–B13.

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 Assessment Act). The liable parent or a carer may apply for a determination departing from the administrative assessment under Part 6A of the Assessment Act.

2. Section 98C of the Assessment Act establishes a three-step process to be satisfied: that there is a ground for departure; that it is just and equitable to depart; and that it is otherwise proper to make a departure determination. Once satisfied, the Tribunal may make one of the determinations prescribed in section 98S of the Assessment Act.

Is there a reason to depart from the administrative assessment of child support?

Reason 8A – the income, property and financial resources of Mr Bosanguet

1. The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Assessment Act. Paragraph 117(2)(c) of the Assessment Act – commonly referred to as “Reason 8A” – states as follows: “that, in the special circumstances of the case, application in relation to the child … 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”.

2. The term “special circumstances” is not defined in the Assessment Act. In Gyselman and Gyselman [1991] FamCA 93, the Full 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 Bosanguet explained that he sustained serious injuries including multiple fractures following a motorbike accident on the evening of 31 January 2022. He was admitted to [a] Hospital on 2 February 2022 and discharged on 9 February 2022.[2]

   [2] Page 129 of the subsection 37(1) Statement and Documents.

4. Mr Bosanguet said prior to his injury he worked as [an occupation] on a part-time basis but he would usually work full-time equivalent hours. He has not been able to work since his motorbike accident.

5. Evidence before the Tribunal shows Mr Bosanguet was in receipt of jobseeker payment from April 2022 and disability support pension from February 2023. The Tribunal is satisfied that Mr Bosanguet has not worked in paid employment since February 2022.

6. The formula assessment of child support from 2 August 2022 shows that Mr Bosanguet was assessed to pay child support on the basis of his 2021/2022 taxable income of $60,941. This was Mr Bosanguet’s income which applied to 30 June 2022, notwithstanding that he ceased work on 31 January 2022.

7. The administrative assessment in place at the time of Mr Bosanguet’s change of assessment application was as follows:

   ·For the period 1 September 2023 to 30 November 2023 Mr Bosanguet was assessed to pay child support of $0 (nil) based on his 2022/2023 provisional income of $8,875 and Ms Bosanguet’s ATI of $47,241 for the 2022/2023 financial year.

8. The Tribunal is satisfied that from April 2022 Mr Bosanguet was in receipt of income support payments from Centrelink, initially jobseeker (sickness) and then disability support pension from February 2023, and that he ceased to be able to work from 31 January 2022. The Tribunal is satisfied that Mr Bosanguet’s income from 1 July 2023 was not $60,941 and that his only income at that time was Centrelink income support payments.

9. Mr Bosanguet was paid the balance of his superannuation following a claim for Total Permanent Disability with the Australian Retirement Trust. Mr Bosanguet received the full balance of his remaining superannuation of $76,032.30, paid to him on 10 November 2023.[3] A PAYG payment summary provided by Mr Bosanguet confirms this was a superannuation lump sum payment of which the taxed element was $48,536 and the tax-free component was $38,443, with total withheld tax of $10,678.[4]

   [3] Page 189 of the subsection 37(1) Statement and Documents.

   [4] A14 of Mr Bosanguet’s submissions.

10. Mr Bosanguet was of the view that none of these funds should be included as a financial resource and included as income, because he accessed his superannuation in order to repay debts arising from his motorbike accident and to support himself due to his continuing inability to work following this accident.

11. Mr Bosanguet said he borrowed money from his mum who is on an age pension, as well as other friends and family. He also had to sell a motorbike belonging to his stepson to raise needed funds during this period. Mr Bosanguet confirmed he has two accounts with [a company]. However, the Tribunal notes there are three accounts which are active, the first account ending in numbers 2425, the second ending in 3610, and the third ending in 3636. There are transfers from 2425 to 3610, which is a transaction account.

12. The account ending in 3636 is the account that the superannuation lump sum payment was paid into. The account ending in 2425 is the account that Mr Bosanguet’s Centrelink payments are deposited into.

13. The Tribunal asked Mr Bosanguet about the deductions from the account ending in 3636 for the period from 10 November 2023 when his superannuation lump sum was paid into his account. From 10 November 2023 to 20 November 2023 the balance of this account reduced to $46,750.[5]

    [5] Page 189 of the hearing papers.

14. Mr Bosanguet told the Tribunal that he had borrowed about $20,000 from his mum following the accident. On 10 November 2023 Mr Bosanguet transferred a total of $9,953.30 to his mum’s account which he said were some repayments to his mum for the money borrowed from her.[6] Mr Bosanguet said he has now repaid the outstanding balance of $20,000 owed to his mum. The Tribunal accepts this submission.

    [6] Page 189 of the hearing papers.

15. The Tribunal asked Mr Bosanguet about a withdrawal of $4,000 on 12 November 2023. Mr Bosanguet said this was a purchase of a motorbike for [Child 1]. The Tribunal also asked Mr Bosanguet about the debit of $8,000 on 15 November 2023.[7] Mr Bosanguet said this was a replacement motorbike for his stepson’s motorbike. In the period of 10 days a total of nearly $30,000 was withdrawn from this account.

    [7] Page 189 of the hearing papers.

16. Mr Bosanguet said he now has depleted any remaining funds from the superannuation lump sum payment.

17. The Tribunal considered whether the lump sum superannuation payment should be considered a financial resource available to Mr Bosanguet.

18. In Costa & Fairbank, the Court held a view about the interpretation of the term “financial resource”:[8]

    “Financial resource” refers to something which is not property but from which financial benefit is or may be gained. In light of the objects of the [Assessment] Act, the term should be broadly defined and would refer to any financial benefit that would enhance the capacity of parents to provide a proper level of financial support for their children.

    [8] (SSAT Appeal) [2010] FMCAfam 39.

19. The Tribunal is satisfied that payment of $76,032.30 paid to Mr Bosanguet on 10 November 2023 is a financial resource available to him of which the taxed element is $48,536 for the 2023/2024 financial year. This means for the purposes of Mr Bosanguet’s tax return his gross income for the financial year ending 30 June 2024 will be recorded as $48,536, and the untaxed component of $38,443 will not be included in Mr Bosanguet’s tax return and will not be recorded as income.

20. The Tribunal is satisfied that at the time Mr Bosanguet lodged his change of assessment application with Child Support on 8 October 2023 that Mr Bosanguet’s only source of income was disability support pension. The Tribunal is satisfied that these are special circumstances which means the administrative assessment in place at that time resulted in an unjust and inequitable determination of the level of financial support to be provided by Mr Bosanguet as he was asked to pay $4,629 per annum in child support when his only income at that time was disability support pension. Accordingly, a ground for departure in accordance with subparagraph 117(2)(c)(ia) of the Assessment Act, commonly known as Reason 8A, is established.

Would departure from the administrative assessment be just and equitable?

1. Having found that special circumstances exist such that the administrative assessment has resulted in an unjust and inequitable result, so a ground for departure is established in relation to subparagraph 117(2)(c)(ia) of the Assessment Act, the next step for the Tribunal is to consider whether it is just and equitable to depart from the administrative assessment.

2. In deciding whether it is just and equitable, the Tribunal had regard to the matters set out in subsection 117(4) of the Assessment Act. Section 3 of the Assessment Act makes it clear that the parents of a child have the primary duty to maintain the child over all commitments of the parents other than commitments necessary for self-support or the support of another person to whom they have a duty.

The proper needs of [Child 1]

1. In relation to the proper needs of the child, the Assessment Act provides that regard must be had to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained, and any special needs of the child (subsection 117(6) of the Assessment Act).

2. Ms Bosanguet told the Tribunal that [Child 1] attends a state government public school but it has a [sports] program. Initially, [Child 1] was able to enrol in the school when he lived outside of the school catchment area because he is a keen [sports] player. Ms Bosanguet said in addition to the standard government school fees she pays an additional $450 a year for [Child 1] to participate in the [sports] program. Ms Bosanguet told the Tribunal that as a student of the [sports] program he has an additional code of conduct that he is required to adhere to.

3. Ms Bosanguet said [Child 1] plays [sports] for the school which is about four days a year and progression to the next round depends upon their result in the previous rounds. [Child 1] also plays for [a] Club, where he plays on a Friday night, some Saturdays and one or two games on a Sunday. Ms Bosanguet said [Child 1] has recently qualified for the [State] Team. He will be attending the Australian School Sports Championships for [sports] in late July 2024 to be held [in City 1]. Ms Bosanguet said [Child 1] is hoping to be selected to [a specified] team. Ms Bosanguet said the trip to [City 1] will be about $4,200. She recently had to purchase a new [sports equipment] for [Child 1] and other [sports] [equipment,].[9] Ms Bosanguet said she meets all the costs associated with [Child 1]’s [sports].

   [9] B9 of Ms Bosanguet’s submissions.

4. Ms Bosanguet also said [Child 1] has been diagnosed with ADHD and is on medication. He is also on medication for his acne. The medications are covered by the Pharmaceutical Benefits Scheme and Ms Bosanguet pays about $15 every two months for these medications. Ms Bosanguet did not identify any other special needs for [Child 1].

5. It is generally expected that unless there are special reasons, [Child 1]’s extracurricular costs would be generally incurred by his parents whether he attends a public or private school. For example, uniforms, books etc. Normally, it is expected that the child support payments calculated in the formula assessment would cover these costs to some degree. Mr Bosanguet has been paying child support following the decision of the Delegate and then the objections officer which would assist Ms Bosanguet in meeting some of these costs. However, there have been periods where Mr Bosanguet’s child support liability has been assessed as $0 (nil) when Mr Bosanguet is solely in receipt of income support from Centrelink. The Tribunal acknowledges that Ms Bosanguet is meeting the majority of the costs for [Child 1] and will take this into account in a general way when considering the issue of just and equitable.

6. Ms Bosanguet confirmed that [Child 1] does not have any income or financial resources of his own. He did earn $600 when he participated in a weekend of umpiring, which he has saved to go towards his [City 1] trip. Mr Bosanguet said [Child 1] volunteers in the canteen at the [sports] club which in turn results in a reduction to the fees to the club. Ms Bosanguet agreed that [Child 1] volunteers for canteen duty but he does not get a reduced club fee for doing this.

The income, property and financial resources of Ms Bosanguet

1. Ms Bosanguet said she is currently working as a[Occupation 1] for [Employer 1] ([Employer 1]). She commenced employment with [Employer 1] in October 2023 on a part-time basis. Ms Bosanguet said she has always been employed on a part-time basis. She said her base hours are 20 hours a week, but she is able to regularly increase her hours to around 28 hours a week.

2. Payslips provided by Ms Bosanguet show her current annual base salary is $48,494. Ms Bosanguet said her taxable income for the financial year ending 30 June 2023 is $55,393. Ms Bosanguet said she is in private rental accommodation and pays $400 per week rent.

3. Ms Bosanguet’s Statement of Financial Circumstances (SOFC) shows weekly expenses totalling about $1,606.97 or $83,562 annually.[10] Ms Bosanguet indicated liabilities of $5,000 for a [credit] card which is currently at its limit.[11] The Tribunal notes that Ms Bosanguet has probably overestimated some of her expenses but accepts that as she has savings of about $200 that she exhausts her income each fortnight on expenses. Ms Bosanguet also receives family assistance of around $15,000 annually.[12] This would supplement her income.

   [10] B7 of Ms Bosanguet’s submissions. The Tribunal has extrapolated Ms Bosanguet’s expenses and calculated them as weekly expenses.

   [11] B6 of Ms Bosanguet’s submissions.

   [12] B3 of Ms Bosanguet’s submissions.

4. Ms Bosanguet said she does not have a legal duty to support anyone else.

The earning capacity of Mr Bosanguet

1. Mr Bosanguet also applied for a change of assessment on the basis of subsection 117(7B) which provides that if all three compulsory criteria are met then Mr Bosanguet’s earning capacity may be greater than reflected in the administrative assessment of child support.

2. Subsection 117(7B) provides:

   (7B)  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.

1. The Tribunal is satisfied that Mr Bosanguet no longer works despite ample opportunity to do so, therefore the requirement in subparagraph 117(7B)(a)(i) is met. However, the Tribunal is satisfied that Mr Bosanguet’s decision not to work is justified on the basis of his state of health, therefore, the requirement in subparagraph 117(7B)(b)(ii) is not met. As all three criteria in subsection 117(7B) are not met, the Tribunal is satisfied that Mr Bosanguet’s earning capacity is not greater than the income reflected in the administrative assessment of child support and has reduced because of his health.

Conclusion

1. Mr Bosanguet did not want any of the lump sum superannuation payment included in the administrative assessment of child support. While the Tribunal understands that Mr Bosanguet has been unable to work since sustaining multiple injuries following his motorbike accident on 31 January 2022 and accepts that he has used this money to repay loans, purchase two motorbikes and other expenses, it is the Tribunal’s view that at least a portion of these funds should be considered in working out Mr Bosanguet’s child support liability for [Child 1]. The requirement in section 3 of the Assessment Act requires that a parent has a primary duty to maintain their child and this has priority over all other commitments other than the parent’s commitments necessary to be able to support themselves.

2. Mr Bosanguet in his SOFC indicates he is financially supported by his current partner and his disability support pension is reduced accordingly by his partner’s income from employment. Mr Bosanguet indicates personal weekly expenses of $240.[13] This means that Mr Bosanguet has limited funds available for day-to-day living expenses. Mr Bosanguet indicates pay day loans [of] $6,500 but these balances have now reduced to $5,178.[14]

   [13] A8 of Mr Bosanguet’s submissions.

   [14] A6 of Mr Bosanguet’s submissions.

3. The Tribunal is also mindful that Mr Bosanguet has now exhausted his superannuation and this account has now been closed, and the lump sum superannuation payment has been depleted.

4. Given that the taxable component of Mr Bosanguet’s superannuation payment is $48,536, the Tribunal finds that the decision of the objections officer in setting Mr Bosanguet’s income to $45,000 results in a similar outcome in relation to Mr Bosanguet’s child support liability when compared with setting his income to $48,536. Accordingly, the Tribunal will also set Mr Bosanguet’s income at the same rate as the objections officer of $45,000.

5. However, given that Mr Bosanguet’s funds from the superannuation lump sum payment have been depleted the Tribunal will vary the departure period to end on 30 June 2024 which is the end of the 2023/2024 financial year, as this period more adequately reflects the period for which the lump sum was paid and will be assessed in that financial year.

6. This means the Tribunal will vary the objections officer’s decision as follows:

   ·      For the period 1 January 2024 to 30 June 2024 the ATI for Mr Bosanguet is set to $45,000.

Will there be resulting hardship from a departure from the administrative assessment?

1. While the Tribunal acknowledges that Ms Bosanguet bears the majority of the costs for [Child 1], the Tribunal is also mindful that Mr Bosanguet has not been able to work since 31 January 2022.

2. Setting Mr Bosanguet’s income to $48,536 will result in child support payable by Mr Bosanguet annually to approximately $2,473. Setting Mr Bosanguet’s income to $45,000, being the same as the objections officer’s decision from 1 January 2024 will mean that Mr Bosanguet’s child support payable annually is approximately $1,854. This is a difference of $619 annually, or about $11.90 weekly, when compared to setting Mr Bosanguet’s ATI to $48,536.[15]

   [15] These calculations were made using the 2024 Child Support Calculator and Ms Bosanguet’s 2022/2023 ATI of $47,241.

3. Mr Bosanguet told the Tribunal he is currently in child support arrears of about $432. Shortening the departure period will not cause hardship to Mr Bosanguet because he is already in arrears with his child support payments. The Tribunal finds shortening the departure period strikes a more equitable balance for Mr Bosanguet.

4. The Tribunal is also satisfied that shortening the departure period will not cause hardship to Ms Bosanguet or [Child 1] because Mr Bosanguet is in arrears with his child support and Ms Bosanguet will not incur a debt as a result of the Tribunal’s decision. The decision of the Tribunal means that child support will revert to the administrative assessment from 1 July 2024 instead of 1 November 2024.

Is it otherwise proper to make a particular departure determination?

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

2. The Tribunal notes that it is open to either party to lodge further change of assessment applications should future circumstances of either party change significantly from the circumstances upon which this decision is based.

DECISION

The decision of the objections officer is varied so that, for the period 1 January 2024 to 30 June 2024 Mr Bosanguet’s adjusted taxable income is set at $45,000.