Bywaters and Jinks (Child support)

Bywaters and Jinks (Child support) [2019] AATA 1691 (2 June 2019)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2018/AC015447
APPLICANT:  Mr Bywaters
OTHER PARTIES:  Child Support Registrar
Mrs Jinks

TRIBUNAL:Senior Member K Millar
DECISION DATE: 2 June 2019
DECISION:

The decision under review is set aside and the matter is sent back to the Child Support Registrar for reconsideration in accordance with the direction that the Registrar consider the grounds for departure from the administrative assessment raised by Mr Bywaters in accordance with this decision.

CATCHWORDS

CHILD SUPPORT – departure determination – whether there was a ground for departure – whether the financial resources of the liable parent are fairly represented in the administrative assessment – withdrawal from superannuation decision under review set aside and remitted for reconsideration

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

Mr Bywaters and Mrs Jinks are the parents of [Child 1], who is [age] years old. Mr Bywaters pays child support to Mrs Jinks for the support of [Child 1].
Mr Bywaters is unable to work as a result of his medical conditions. As a result, he withdrew money from his superannuation in the 2016/2017 financial year. This resulted in him having a taxable income, as reported by the Australian Taxation Office, of $73,597 for the 2016/2017 financial year.
This taxable income was used both for reconciling the estimate Mr Bywaters had lodged of his income for the 2016/2017 financial year and as the basis for calculating the amount of child support for the period 1 August 2017 until 29 January 2018, when Mr Bywaters lodged a new estimate of his income.
Mr Bywaters does not consider payment made to him from his superannuation should be considered in calculating the amount of child support he pays. On 29 January 2018, he applied for a departure from the administrative assessment on the basis that his income, property and financial resources made the administrative assessment unfair and because it did not reflect his earning capacity. Following discussion with the Child Support Agency, this was amended on the ground that his capacity to provide financial support for [Child 1] was significantly reduced because of the commitments he has to support himself.
To depart from the administrative assessment, a ground to depart from the assessment must be established. A senior case officer found that a ground to depart from the administrative assessment had not been established, and refused the application. Mr Bywaters’ objection to this decision was disallowed by an objections officer on 13 August 2018.
Mr Bywaters applied for a review of this decision on 16 September 2018, and was granted an extension of time in which to lodge his application.
A related application in which he sought review of the reconciliation of his taxable income with the estimate of his income was withdrawn.
Mr Bywaters and Mrs Jinks appeared before the Tribunal by teleconference on 23 April 2019. In issue in the hearing was whether there was a ground to depart from the administrative assessment of child support, and if so whether any particular determination was just and equitable and otherwise proper.

ISSUES

The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act) and the Child Support (Registration and Collection) Act 1988 (the Registration and Collection Act).
In the usual course of events, the rate of child support is based on an administrative assessment under Part 5 of the Act. The rate is calculated according to a statutory formula that takes into account factors such as the number of children, the percentage of care provided and the income of each parent.
A parent or a carer can apply to the Child Support Registrar under section 98B of the Act for a decision to depart from the administrative assessment under Part 6A of the Act. To change the administrative assessment of child support, the parent must show the matters set out in section 98C of the Act, being:
· There is one or more of the grounds for departure from the administrative assessment listed in subsection 117(2) of the Act; and
· It is just and equitable to depart from the administrative assessment; and
· It is otherwise proper to depart from the administrative assessment (section 98C of the Act).
The Tribunal considered first whether there was a ground to depart from the administrative assessment.

CONSIDERATION

Is there a ground to depart from the administrative assessment?

In his application to depart from the administrative assessment, Mr Bywaters relied on his income, property and financial resources as well as his earning capacity. Following discussion with the CSA this was amended to the ground that his capacity to provide child support for [Child 1] is significantly reduced due to his necessary commitments to support himself. In the course of his submissions, he raised the costs of having contact with [Child 1].
The senior case officer and the objections officer did not consider a ground for departure other than the ground that relates to Mr Bywaters’ necessary commitments to support himself. However, in the view of the Tribunal, the ground initially raised by Mr Bywaters; being whether in the special circumstances of the case the application of the administrative assessment of child support would result in an unjust and inequitable assessment of the child support because of his income should be assessed. This was put to both parties at the hearing and both were given an opportunity to respond.

Mr Bywaters’ income, property and financial resources

Subparagraph 117(4)(c)(ia) of the Act states it is a ground to depart from the administrative assessment where, in the special circumstances of the case the application of the provisions of the Act relating to the administrative assessment would result in an unjust and inequitable amount of child support because of the income, property or financial resources of the parent.
In this case, Mr Bywaters lodged an estimate of his income for the 2016/2017 financial year of $15,121, which was the amount of government payments he expected to receive in this time because he was not working. He also withdrew money from his superannuation. The amount he withdrew was taxable income, and the Australian Taxation Office reported that for the 2016/2017 financial year his taxable income was $73,597. This was found to be his adjusted taxable income for child support purposes, and when reconciled with his estimate, resulted in him having significantly underpaid child support.
In the usual course of events, a person’s taxable income from the previous financial year is used in the administrative assessment for the following child support period. For example, for a child support period commencing in August 2018, the 2017/2018 taxable income is used.
In this case, a new child support period commenced on 1 August 2017. The adjusted taxable income used for this child support period is based on Mr Bywaters’ adjusted taxable income for the 2016/2017 financial year. As Mr Bywaters’ taxable income was not available until 24 January 2018, this income was then used to calculate the administrative assessment of the amount of child support Mr Bywaters pays for the period 1 August 2017 until he lodged a new estimate of his income on 29 January 2018.
Mr Bywaters believes his superannuation withdrawals should not be taken into account in assessing his taxable income. This is because a financial agreement regarding the property of his marriage to Mrs Jinks dated 5 May 2014 states at cl.5.14.5 that he shall retain, among other things, his superannuation. Mr Bywaters has in fact retained his superannuation, but has withdrawn money from it. This does not affect his right to the superannuation, however once he withdraws money it becomes income for tax purposes and therefore forms part of his taxable income. His argument that his superannuation cannot be considered due to the financial agreement is misconceived. To ensure clarity; this means the Tribunal finds that the Child Support Agency is correct to use his taxable income as reported by the Australian Taxation Office, which included payments from his superannuation.
The Tribunal further finds that using a taxable income as reported by the Australian Taxation Office is not a special circumstance, nor does it result in an unjust or inequitable amount of child support as he has received a financial benefit which can be used to support [Child 1].
However, Mr Bywaters says he only had this income for the one tax year, and has not since drawn on his superannuation. The Tribunal does not have his tax return for the 2017/2018 financial year to establish whether this is the case. Mr Bywaters says he has not lodged his tax return because his income is below the threshold.
If it is the case that he did not have income other than government payments in the 2017/2018 financial year, and he only lodged a new estimate of his income on 29 January 2018, it would appear that in the period from 1 July 2017 to 29 January 2018, the assessment was based on his taxable income of $73,597.
If this has the effect of an income of $73,597 both for the period 1 July 2016 to 30 June 2017 and the period 1 July 2017 to 29 January 2018, and he did not have this income for this period, this may result in making the assessment unfair.
It appears at least possible that the taxable income from the 2016/2017 financial year was also used to reconcile his estimate for the period 1 July 2017 until 30 June 2018. If this is the case, it may amount to special circumstances that would make the administrative assessment unjust and inequitable. However, this would depend on the view of a decision maker about the delay in lodging his tax return, and any other relevant information.
The Tribunal requested further information from the Registrar in an attempt to clarify if this has occurred, but is not satisfied that the information provided shows whether or not this was the case, and it is not possible to make a determination of whether an income of $73,597 in a 12 month period has been used as Mr Bywaters’ adjusted taxable income for a 19 month period from 1 July 2016 to 28 January 2018.
Mrs Jinks stated it was her understanding that the application of the income of $73,597 was for the 2016/2017 period alone.
The Registrar has not considered this ground for departure, and has not considered whether an income for a 12 month period has in fact been used for a 19 month period. The Tribunal is not satisfied on the information available to it that the $73,597 income has not been used for a longer period than the estimate period. As a result, the Tribunal will set aside the decision under review and remit it for reconsideration in accordance with the direction that the Registrar consider whether a ground for departure exists, in particular whether Mr Bywaters’ income, property and financial resources made the administrative assessment of child support unjust and inequitable.
When undertaking a further assessment of this matter, the Tribunal notes that Mr Bywaters asserts at hearing that he also relied on loans from his mother, that this is not a gift and he held a loan agreement that supports his contention that this money is not a gift.
Prior to the hearing, Mr Bywaters had provided a statutory declaration from his mother dated 16 February 2017. This statutory declaration states her occupation is company director. It also states:
I have been assisting Mr Bywater financially for the past 3 years. There has been approximately $26,000 plus of assistance which can be confirmed with copies of bank transfers, receipts for utilities, groceries, car registration & service petrol & other living expenses. This will continue until he is well enough to resume work.
Mrs Jinks said she did not believe the money provided by Mr Bywaters’ mother was a loan as she had her own business.
It was put to Mr Bywaters that this amount may be considered to be a financial resource to him. As he asserted there was a loan agreement he could provide, he was requested to provide this after the hearing.
Mr Bywaters provided a “personal loan agreement” between himself and his mother dated 24 April 2019, the day after the hearing.
This agreement will need to be considered in coming to a conclusion about Mr Bywaters’ income, property and financial resources.

Costs of contact with [Child 1]

A ground for departure in sub-subparagraph 117(2)(b)(i) of the Act is that the costs of maintaining the child are significantly affected by high costs incurred in having contact with a child. This only applied where the parent has less than regular care of the child. According to subsection 117(2B), costs are only high if they are more than 5% of the person’s adjusted taxable income. If a person has at least regular care of the child, the only costs that can be taken into account are costs related to travel to allow the parent to spend time with or communicate with the child.
The Tribunal further notes that Mr Bywaters raised the costs of having contact with [Child 1], and says he has a 100 km round trip when he spends time with [Child 1].
This ground also requires further consideration by the Registrar as it has not previously been considered.

CONCLUSION

This matter has had a lengthy history, and it is unfortunate for the parties that this will need to be returned to the Registrar for reconsideration. However in the absence of information that clearly shows the period in which an adjusted taxable income of $73,597 was used to assess Mr Bywaters’ rate of child support, it is not satisfactory to proceed. The Tribunal is also mindful that the Registrar has not made a decision on the ground raised by Mr Bywaters in his application, and the Tribunal should not be a first instance decision maker.

DECISION

[2019] AATA 1691

2 June 2019

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Jurisdiction

Judicial Review

Remedies

Statutory Construction