Calhoun and Calhoun (Child support)

[2019] AATA 4342

Calhoun and Calhoun (Child support) [2019] AATA 4342 (7 August 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/AC016598

APPLICANT:  Mr Calhoun

OTHER PARTIES:  Child Support Registrar

Ms Calhoun

TRIBUNAL:Member M Kennedy

DECISION DATE:  7 August 2019

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – fixed annual rate – whether current income is below rate of PP single payment – decision under review affirmed

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

1. Mr Calhoun has a child support liability in respect of three children.  From 1 November 2018, Mr Calhoun’s liability has been assessed under the provisions of the child support law that provide for a fixed annual rate in circumstances where a parent has a very low taxable income, did not receive an income support payment and has less than shared care of the children (section 65A of the Child Support(Assessment Act) 1999 (the Act)..

2. On 5 December 2018, Mr Calhoun had conversations with staff of the Department which were interpreted to be a request that the fixed annual rate not apply to him.

3. On 2 January 2019, an officer of the Department decided that the criteria that must be satisfied to relieve Mr Calhoun of the fixed annual rate were not satisfied, and the Department refused to reduce Mr Calhoun’s child support liability.

4. Mr Calhoun objected to that decision.  On 10 May 2019 an objections officer also decided that the criteria to reduce child support below the fixed annual rate were not satisfied.  Mr Calhoun applied to the Tribunal for review on 27 May 2019.

5. The other parent, Ms Calhoun, is also a party to these proceedings. She however has advised the Tribunal registry that she did not wish to participate in the hearing.  The hearing therefore proceeded in Ms Calhoun’s absence.

CONSIDERATION

1. The Child Support Registrar may decide that the provisions relating to the fixed annual rate should not apply, but only if criteria set out in section 65A of the Child Support (Assessment) Act 1999 (the Act) are first satisfied.

2. One particular criterion is determinative in this matter.  Paragraph 65B(2)(a) of the Act requires the parent making the application to provide evidence concerning their income to demonstrate that his or her income is less than the ‘pension PP (single) maximum basic amount.

3. The reference to ‘income’ in that paragraph is wider than ‘taxable income’.  Subsection 66A(4) broadens the meaning of income to essentially include any money earned, derived or received by the parent for his or her own use.

4. The ‘pension PP (single) maximum basic amount’ is essentially the maximum amount a single person would receive if they received Parenting Payment.  Relevantly for this review, that amount is $19,568pa.

5. The issue therefore is whether on the evidence before me provided by Mr Calhoun I can be satisfied that his income is less than $19,568.

6. Mr Calhoun explained to me that he had applied to the Tribunal because he has been experiencing difficulties around the breakdown of his relationship, and has found it difficult to sustain work.  Mr Calhoun confirmed he is a carpenter who works for builders.  He has structured his business through a family trust.  Mr Calhoun confirmed he is the only person who benefits from the family trust in practice. The sales of his business are not regular and are dependent on progress and completion of particular contracted jobs.

7. Mr Calhoun has provided the Department with financial evidence in the form of bank account statements for his mortgage, an offset account ,and a business account.  Mr Calhoun contends that when he withdraws money from his offset account he is borrowing money from the bank, and so has been living off debt.  I am not sure that construction is correct given the nature of an ordinary offset facility.  I accept that lowering the balance of an offset account will increase the amount of interest paid in a linked mortgage account.

8. I note that the objections officer tracked some transactions in the bank accounts and received explanations from Mr Calhoun.  Likewise, I had noted a series of ATM cash withdrawals amounting to $10,000 in April 2019 from Mr Calhoun’s business account.  Mr Calhoun told me these were repayments of loans from friends for living expenses.

9. Ultimately, I do not think that Mr Calhoun’s bank accounts provide the best evidence available to me for the purpose of identifying if Mr Calhoun’s income for the purposes of considering paragraph 65B(2)(a) of the Act. 

10. Mr Calhoun has provided a profit and loss statement from his family trust.  It has been prepared by his accountants and I have no reason not to rely on it as accurate.  It is much better evidence in my view of Mr Calhoun’s income than an examination of transactions across three bank accounts, that also include large cash withdrawals at ATMs.  The profit and loss statement however relates only to the first quarter of 2018/2019, so it does not provide a complete record of Mr Calhoun’s annual income earned through the family trust for that income year, but I consider it is the best evidence I have available. In this regard, I am conscious that sales through the family trust are irregular given the nature of Mr Calhoun’s work.

11. The profit and loss statement shows sales in that quarter of $10,178, for a gross profit of $8,188.  After expenses that appear to me to be proportionate and reasonable, quarterly profit is $5,207.

12. To extrapolate this amount across four quarters results in a figure of $20,828. 

13. On the best evidence available to me therefore, I conclude that Mr Calhoun has not demonstrated that his income is less than the ‘pension PP (single) maximum basic amount’ of $19,568.  In fact, on the best evidence available to me, it is likely that it will be more than that figure.

14. It follows therefore that an essential criterion to decide that the fixed annual rate should not apply has not been satisfied.  I cannot therefore decide not to apply the provisions relating to the fixed annual rate to Mr Calhoun.

DECISION

The decision under review is affirmed.