Cameron and Cowper (Child support)

[2020] AATA 4922

Cameron and Cowper (Child support) [2020] AATA 4922 (21 October 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/SC019181

APPLICANT:  Mr Cameron

OTHER PARTIES:  Child Support Registrar

Ms Cowper

TRIBUNAL:Member K Dordevic

DECISION DATE:  21 October 2020

DECISION:

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

• during the period 1 July to 15 October 2019 the father’s adjusted taxable income is varied to $107,085 per annum; and

• during the period 16 October 2019 to 28 February 2020 the father’s adjusted taxable income is varied to $164,442 per annum.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent - 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. The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of the child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care of the children. The Act also provides for a departure from the administrative assessment in certain circumstances.

2. This case was registered with the Department of Human Services – Child Support on 23 February 2012 and has been collectable since that date. The parties have one child. From 16 August 2013 the care record reflects that the mother has 72% and the father has 28% care of the child.

3. The mother lodged a change of assessment application on 13 November 2019.

4. On 6 January 2020 a senior case officer accepted the application, determining that for the period 1 July to 31 December 2019 the father’s adjusted taxable income is varied to $107,085 and for the 2020 calendar year the father’s annual rate of child support is increased by $959.

5. On 3 February 2020 the father objected to that decision. On 15 April 2020 the objection was partly allowed. The objections officer determined that for the period:

   ·1 July to 20 October 2019 the father’s adjusted taxable income is varied to $107,085; and

   ·21 October to 31 December 2019 the father’s adjusted taxable income is varied to $164,442.

6. On 2 June 2020 the father sought further review with the Social Services and Child Support Division of the Administrative Appeals Tribunal (the tribunal).

7. The tribunal heard the matter on 21 October 2020. The mother and father appeared by conference telephone. The Child Support Registrar was not represented at the hearing. The tribunal has considered the sworn evidence of the mother and father. The tribunal also considered the documentation provided by the Department (folios 1–276), the father (folios A1–A10) and the mother (folios B1–B9).

ISSUES

1. The statutory provisions relevant to this review are outlined in section 98C of the Act, which states that a decision to depart from the administrative assessment may be made if the following three requirements are met:

   (i)that one, or more than one, of the grounds for departure referred to in subsection 117(2) exists; and

   (ii)that it would be:

   (A)just and equitable as regards the child, the liable parent, and the carer entitled to child support; and

   (B)otherwise proper;

   to make a particular determination under this Part …

2. Therefore, the issues which arise in this case are:

   ·     Does a ground exist for departure from the administrative assessment of child support? And if so,

   ·     Would it be just and equitable and otherwise proper to make a particular determination?

CONSIDERATION               

A ground for departure

1. Subparagraph 117(2)(c)(ia) of the Act provides a ground for departure if the administrative assessment would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent because of either party’s income or financial resources. This is the central issue in this matter.

2. The relevant history of this matter can be summarised as follows. On 13 January 2016 a senior case officer determined that for the period 1 February 2016 to 25 March 2022 the father’s adjusted taxable income is increased by $70,000. Another departure application was lodged on 1 May 2019; ultimately an objections officer determined that for the period 1 August 2019 to 30 November 2021 the annual rate of child support payable by the father is increased by $1,661, in recognition of the child’s orthodontic costs.

3. At the time that the mother lodged the departure application under review, the father’s annual rate of child support was $618 based on his 2020 income estimate of $57,357 and the mother’s 2019 adjusted taxable income of $93,015.

4. The tribunal finds that the father’s 2018, 2019 and 2020 taxable incomes were $107,085, $179,626 and $39,956 respectively. It is not in dispute that the father’s 2019 adjusted taxable income includes a lump sum and eligible termination payment.

5. The father notified Child Support on 28 June 2019 that he was dismissed from his employment with [Company 1] on 12 April 2019. As the tribunal understands it the father’s appeal to the Fair Work Commission was dismissed on 22 November 2019.

6. The father lodged an income estimate of $0 to be applied to the assessment from 1 July 2019. Ordinarily, his 2019 adjusted taxable income of $179,626 would have applied to the assessment from 1 September 2019, however this was replaced with his income estimate.

7. The father then advised Child Support on 21 October 2019 he secured new employment on 16 October 2019 and he updated his income estimate to $57,357 per annum.

8. At hearing the father stated that he did not receive a separation certificate or any other documentation regarding his termination and lump sum payment and that is why he did not provide such evidence to Child Support. The tribunal notes that it is highly unusual that such documentation is not in the father’s possession, particularly in a context where he took up the matter with Fair Work Australia. In the absence of such supporting documentation the tribunal accepts the father’s oral testimony that his lump sum payment from his employer included 46 weeks’ (or 230 workdays’) leave and other entitlements at his normal rate of income. The tribunal calculates that 46 weeks from 13 April 2019 is 28 February 2020.

9. The father’s 2018 adjusted taxable income was $107,085, presumably incorporating deductions similar to that in his 2019 taxable income totalling $4,029. Thus, the tribunal is satisfied that the father was in receipt of the same rate of income from [Company 1] for the 46 week period his lump sum payment covered (13 April 2019 to 28 February 2019). However, as he secured employment on 16 October 2019 with an annual salary of $57,357 his income and financial resources increased to $164,442 from this date until 28 February 2020. It reduced to his employment salary of $57,357 from 29 February 2020.

10. Application of the tribunal’s calculations of the father’s income and financial resources to the child support assessment would result in an annual rate of $5,020 from 1 July 2019, increasing to $9,216 from 16 October 2019 to 28 February 2020. At the time the mother lodged her departure application, the father’s annual child support liability was $618.

11. As the father’s income and financial resources are not properly reflected in the child support assessment, there are special circumstances such that the application of the administrative assessment would result in an unjust and inequitable determination of child support payable. The tribunal therefore concludes that the ground provided for in subparagraph 117(2)(c)(ia) of the Act is established.

Just and equitable

1. The requirement to consider whether a departure would be just and equitable directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the needs of the child, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.

2. The tribunal finds that the mother’s 2018, 2019 and 2020 taxable incomes were $79,517, $93,015 and $80,223 respectively. The mother was an [Occupation 1] and completed her [Occupation 1] training in 2019.  The mother explained at hearing that this meant that she went from the top pay scale as an [OCCUPATION 1] to a new graduate salary, explaining part of the reduction in her adjusted taxable income in the 2020 financial year. The tribunal accepts the mother’s testimony that her earning capacity will markedly increase in the next few years and so is satisfied that she does not have an unused earning capacity. The mother also asserted that [(her) employer) also mandated that overtime was no longer permitted. In her Statement of Financial Circumstances, dated 18 June 2020, the mother declares receipt of employment income of $1,517 per week.  Her assets include savings of $86, a motor vehicle valued at $2,000, a bike valued at $500 and $104,200 in superannuation. Her only liability is $9,000 in legal fees relating to the parenting matters. She reports $581 per week in personal expenditure and household expenses of $2,425, of which $1,480 relate to her partner and $454 to the child.  

3. The parties’ do not dispute that child is in good health. She attends a public primary school and will transition to a public secondary school in 2021. The mother submits that the father has met half of the child’s current orthodontic costs. However, she raised that the child will require further orthodontic work next year. She is concerned that the father will refuse to meet half of these costs, as he sent an email in August 2020 stating that he would only agree to meet half of this cost if the mother agreed to waive his outstanding child support. The mother is aware that she can lodge a new departure application upon further orthodontic costs being incurred.

4. The father completed a Statement of Financial Circumstances on 23 June 2020. He declared weekly income of $1,126 per week ($58,552 per annum). The tribunal is of the view that his asset declaration was disingenuous; upon clarification at hearing he conceded that it was not the value of his home (which he estimates to be $600,000) but his equity of $270,000 that he declared in his Statement of Financial Circumstances. He also declared savings of $1,400, a motor vehicle valued at $3,000, household contents valued at $5,000 and $252,555 in superannuation. His only liability is a mortgage of $309,900. He reports weekly personal expenditure of $452, made up of child support of $12, tax and superannuation of $333 and private health insurance of $107. He reports weekly household expenditure of $1,250, including $485 in relation to his partner and $55 per week in relation to the child and his relevant dependent. There is no evidence that he has any out of the ordinary health costs.

5. The father submits that his finances are perilous. The tribunal accepts his evidence that he will have difficulty in securing employment with an income commensurate with his [Company 1] income given that his employer cited fraud and deception as being the reason he was dismissed. In response to the mother’s submissions that he has significant discretionary spending by way of a [Sport 1] club membership (about $3,500 per annum), gambling and restaurant and alcohol purchases, the father responded by stating that [Sport 1] is his only sport and therefore is a reasonable expense.

1. Apart from meeting his necessary self-support expenses, the father has no greater priority than to maintain his children. The tribunal has determined that it is appropriate to amend the father’s adjusted taxable income to $107,085 per annum from 1 July to 15 October 2019 and to $164,442 from 16 October 2019 to 28 February 2020. Given the tribunal’s conclusion regarding his income and financial resources, the tribunal is satisfied that the father has capacity to meet such a liability. Moreover, these funds are necessary for the mother to adequately provide for the child. The tribunal’s decision will increase the father’s child support arrears by about $4,760. The tribunal is satisfied that the payment of the child support arrears and his ongoing child support liability will not cause him undue hardship.

2. The tribunal is satisfied that the administrative assessment is unfair given the father’s income and financial resources and this results in an unjust and inequitable level of child support given the circumstances of each parent. For all the reasons above, the tribunal finds it just and equitable to depart from the administrative assessment.

Otherwise proper

1. The requirement to consider whether a departure would be otherwise proper 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 and benefits. Parents rather than the community have the primary duty to maintain a child. The mother is in receipt of income-tested benefits. Departing from the administrative assessment by increasing the child support payable by the father will result in a more appropriate apportionment of financial responsibility between the parents and the community.

2. The determination is otherwise proper.

DECISION

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

• during the period 1 July to 15 October 2019 the father’s adjusted taxable income is varied to $107,085 per annum; and

• during the period 16 October 2019 to 28 February 2020 the father’s adjusted taxable income is varied to $164,442 per annum.