Claydon and Claydon (Child support)

[2018] AATA 3210

Claydon and Claydon (Child support) [2018] AATA 3210 (19 June 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/SC013591

APPLICANT:  Mrs Claydon

OTHER PARTIES:  Child Support Registrar

Mr Claydon

TRIBUNAL:Member J Leonard

DECISION DATE:  19 June 2018

DECISION:

The decision under review is set aside and a decision substituted to depart from the child support assessment by:

·         increasing the annual rate of child support payable by Mr Claydon by $1,396 from 1 August 2017 to 31 January 2018.

CATCHWORDS
Child support – Departure determination – High costs of child care - 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 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

1. This review concerns an application for a change to a child support assessment made by Mrs Claydon on 11 September 2017.

2. Mrs Claydon and Mr Claydon are the parents of [Child 1] (born 2006) and [Child 2] (born 2013). There has been a child support assessment in place, made by the Department of Human Services – Child Suppo rt (the Department), since 30 May 2016. Mr Claydon is the parent liable to pay child support.

3. For the period 1 August 2017 to 30 June 2018 Mr Claydon was assessed to pay an annual rate of child support of $9,502. This was based on his adjusted taxable income of $97,217 for the 2016/17 financial year and Mrs Claydon’s estimated income of $74,108. The assessment was based on Mr Claydon having a care percentage of 14% for [Child 1] and 21% for [Child 2] and Mrs Claydon having a care percentage of 86% for [Child 1] and 79% for [Child 2].

4. Mrs Claydon applied to the Department for a departure from the assessment on the basis that the costs of caring for [Child 2] were high, and also because of the costs of educating [Child 1].

5. On 30 November 2017 a decision was made to depart from the assessment and to increase the annual rate of child support payable by Mr Claydon by $4,674 for the period 1 January 2017 to 31 December 2017.

6. Mr Claydon objected to that decision. His objection was partly allowed on 1 February 2018. The objection officer decided to depart from the child support assessment by:

   ·         increasing the annual rate of child support payable by Mr Claydon by $5,142 from 1 August 2017 to 31 January 2018 to take into account his share of the 2017 child care fees in respect of [Child 2].

7. On 27 February 2018 Mrs Claydon lodged an application for a review of that decision with the Tribunal.

8. The Tribunal had access to the statement and documents provided by the Department (folios 1 to 315). The Tribunal held a directions hearing on 24 April 2018 and informed Mrs Claydon of the possibility that the decision of the Tribunal could be adverse to her. Mrs Claydon elected to proceed. In response to the Tribunal’s directions, Mrs Claydon provided the documents numbered A1 to A18. Mr Claydon provided documents numbered B1 to B12. Copies of those documents were sent to the parties. The additional submission received by the Tribunal from Mrs Claydon on the morning of the hearing was numbered A19 to A21. It was discussed with Mr Claydon at hearing, and a copy will be attached to this decision.

9. The matter was heard on 19 June 2018. Mrs Claydon did not attend the hearing and the Tribunal decided to proceed in her absence. Mr Claydon attended the hearing by telephone conference.

CONSIDERATION

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). This requires the application of a statutory formula which takes into account factors such as the number of children, the level of care provided and the income of each parent.

2. A liable parent or a carer may apply to the Child Support Registrar for a determination to depart from the child support assessment under Part 6A of the Assessment Act (section 98B). Section 98C provides that the Registrar may make a determination to depart from the formula assessment and establishes a three step process. The Registrar, and the Tribunal standing in place of the Registrar, must be satisfied:

   (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; …

3. The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Assessment Act. If satisfied that a ground exists and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal may make one of the determinations in section 98S of the Assessment Act. That section permits a range of determinations, including varying the annual rate of child support payable or a parent’s adjusted taxable income.

Issue One – Does a ground exist to depart from the administrative assessment?

1. Paragraph 117(2)(b) of the Assessment Act provides as grounds for departure:

   (b)that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:

   …

   (ib)because of high child care costs in relation to the child; or

   (ii)because the child is being cared for, educated or trained in the manner that was expected by his or her parents

2. The term ‘special circumstances’ is not defined in the Assessment Act. In Gyselman v Gyselman (1992) FLC 92-279 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.

Are the costs of child care ‘high’?

1. The requirements of subsection 117(3A) of the Assessment Act are met as [Child 2] was under 12 years of age at the start of the child support period commencing 1 August 2017. Subsection 117(3B) of the Assessment Act states that child care costs can only be ‘high’ for the purposes of subparagraph 117(2)(b)(ib) if they are more than 5% of a parent’s adjusted taxable income for the child support period.

2. In 2017 [Child 2] attended child care for three days a week while Mrs Claydon was at work. [Child 2] commenced school in February 2018. The fees for [Child 2] to attend child care were $324 per week from January 2017. Mrs Claydon provided a statement from the child care provider showing that she received child care rebate as a 50% reduction on her child care fees. The invoice indicated a reduction of $0 per week for child care benefit.

3. Depending on his or her circumstances, a person may be entitled to two payments to assist with the cost of child care; child care benefit and child care rebate.

4. A person such as Mrs Claydon who uses an approved service can select to receive child care benefit as a fee reduction, or as a lump sum. Under the lump sum option, a person pays their total child care fees throughout the year and then claims reimbursement at the end of the financial year. Centrelink calculates the person’s child care benefit entitlement using the person’s actual adjusted taxable income, attendance information provided by the service and total fee reductions received for that child.

5. The second form of assistance available to a person using an approved child care is child care rebate. For individuals in receipt of a nil amount of child care benefit such as Mrs Claydon, the full 50% child care rebate will be paid up to the annual limit ($7,500 per child for the 2016/17 financial year).

6. The Department’s decisions did not factor in Mrs Claydon’s entitlement to child care benefit. In response to the Tribunal’s directions Mrs Claydon provided a printout of a Centrelink screen (folio A14) showing a payment of $5,174.26 gross paid on 27 July 2017 in respect of the 2016/17 financial year. An amount of $2,083 was withheld from the arrears.

7. Mrs Claydon provided a spread sheet (folio A12) claiming that in respect of the 2016/17 financial year she had child care expenses of $16,112, received child care rebate of $7,552 and received an amount of $2,083.12 in child care benefit, however Mrs Claydon’s calculations are not supported by the evidence.

8. Mrs Claydon had received $7,500 child care rebate in respect of the 2016/17 financial year. It is likely she was overpaid an amount of child care rebate once her entitlement to child care benefit was reconciled. The document from Centrelink provided by Mrs Claydon provided a handwritten notation that the amount of $2,083.12 is ‘CCR debt’ and the Tribunal considers it likely that the amount was an adjustment to her child care rebate entitlement.

9. Mrs Claydon was advised prior to the hearing that she should provide evidence of her reconciled entitlement to family assistance for the 2016/17 financial year however nothing further was provided. Based on the available Centrelink document, the Tribunal considers it likely that Mrs Claydon was entitled to $5,174 child care benefit and $5,417 child care rebate for the 2016/17 financial year; a total benefit of $10,591.

10. Mrs Claydon claimed the total charge for child care fees for 2016/17 was $16,112. The Tribunal finds that Mrs Claydon’s out of pocket expenses for the 2016/17 financial year was approximately $5,521.

11. The costs of childcare are high only if they total more than 5% of a parent’s adjusted taxable income for the child support period. Mrs Claydon’s adjusted taxable income for the child support period commencing 1 August 2016 and ending 31 July 2017 was $82,675 and 5% of her income over this period is $4,134. The Tribunal was satisfied that the cost of child care for [Child 2] was high and the out of pocket expenses she incurs significantly affect the cost of maintaining [Child 2] as required by subparagraph 117(2)(b)(ib) of the Assessment Act and a ground is established to depart from the assessment.

12. Mrs Claydon’s estimate of income of $74,108 has been used in the assessment from 1 August 2017. Five per cent of Mrs Claydon’s adjusted taxable income over the child support period commencing 1 August 2017 is $4,747. Despite the Tribunal’s directions, Mrs Claydon did not provide evidence of childcare fees for the period after 2 July 2017 and her reconciled entitlement to child care benefit will not be known until after the end of the 2017/18 financial year. The Tribunal accepts however that [Child 2] continued to attend child care three days per week and on this basis the Tribunal estimates that Mrs Claydon’s out of pocket expenses would have been similar to the 2016/17 financial year up until [Child 2] commenced primary school in February 2018.

Are there special circumstances for which to depart from the assessment?

1. The ordinary costs which may be incurred in raising a child, such as the cost of child care, will not be considered as a ground for departure as those costs do not set a particular case apart in a way that establishes special circumstances. However the Tribunal considers that the amount by which the child care costs exceed 5% of Mrs Claydon’s adjusted taxable income, $1,387 per annum, provide special circumstances for which to depart from the assessment as the amount of child support Mr Claydon is assessed to pay is reduced because Mrs Claydon’s income from employment is taken into account in the assessment. The Tribunal is satisfied that without access to child care Mrs Claydon would not be able to earn the same level of income. It finds that the high child care costs provide special circumstances for which to depart from the assessment.

Issue Two – Would a departure from the administrative assessment be just and equitable?

1. As the Tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable to depart from the assessment having regard to the matters set out in subsection 117(4) of the Assessment Act.

2. Section 3 of the Assessment Act states that it is the duty of both parents to financially support their children. In accordance with the objects set out in section 4 of the Assessment Act, [Child 2] and [Child 1] should receive a proper amount of financial support from their parents in accordance with their capacity to contribute.

The children’s needs

1. Mrs Claydon claimed that the costs of maintaining [Child 1] are significantly affected by the cost of her Catholic primary school education. At the time Mrs Claydon lodged the departure application [Child 1] was in year 5. Neither parent paid the school fees since separation in 2016. The Tribunal finds that neither parent has met the costs of [Child 1]’s school fees and so the cost of maintaining her is not significantly affected by the expense.

2. Apart from the cost of child care, the Tribunal finds that Mrs Claydon and Mr Claydon appear to have the usual costs for [Child 2] and [Child 1] as others in their financial circumstances would have for children of their ages.

The children’s income, property, financial resources and earning capacities

1. Mr Claydon stated that [Child 2] and [Child 1] have bank accounts with a balance of approximately $40,000. The Tribunal does not consider however that either [Child 2] or [Child 1] has any income, property or financial resources or any unused earning capacity that needs to be taken into account in the child support assessment.

The income, property, financial resources and earning capacity of Mr Claydon

1. Mr Claydon is a wage and salary earner employed full-time. He has no unused earning capacity. Mr Claydon stated he has utilised leave entitlements to care for [Child 2] and this cost has not been recognised in the child support assessment. The Tribunal considers that there is no basis to depart from the administrative assessment for this reason as Mr Claydon’s income has not reduced. Mr Claydon has savings of approximately $40,000 and receives dividends and interest. The Tribunal is satisfied his income is properly reflected in the child support assessment.

2. Mr Claydon and Mrs Claydon separated in 2016 and the division of their property is yet to be settled.

Mr Claydon’s necessary commitments

1. Mr Claydon lives with his parents and pays for board and lodging. On the basis of the evidence he provided, the Tribunal is satisfied that he has the ability to meet his reasonable and necessary expenses and to pay child support for [Child 2] and [Child 1].

The income, property, financial resources and earning capacity of Mrs Claydon

1. Mrs Claydon is employed full-time. The Tribunal is satisfied she has no unused earning capacity. She disclosed a savings account with St George Bank and shares. Mr Claydon stated Mrs Claydon has approximately $500,000 invested with ING and in October 2017 provided a screen shot showing an account in Mrs Claydon’s name with a balance of $455,603. Previous financial statements provided by Mrs Claydon to the Department list a cash asset as a result of an inheritance. No balance was advised however in November 2017 she advised the Department she receives $8,000 per year interest. The Tribunal finds Mrs Claydon has savings of more than $450,000 (on which she receives interest).

Mrs Claydon’s necessary commitments

1. The balance of the joint home mortgage is approximately $2,000 however neither Mr Claydon nor Mrs Claydon are making repayments. At the time of completing her statement of financial circumstances Mrs Claydon had a balance of approximately $4,000 on her credit cards.

2. The Tribunal considers Mrs Claydon is able to meet the reasonable and necessary expenses that she has for herself and the children.

The parents’ duty to support others

1. There is no evidence that either Mr Claydon or Mrs Claydon have a legal duty to support any other person apart from [Child 2] and [Child 1].

Terms and period of departure

1. Mrs Claydon applied for a departure from the assessment on 11 September 2017. She indicated that she was seeking a departure from March 2016 however the spreadsheet she provided listed out of pocket expenses for the 2015/16 financial year of $2,127 which the Tribunal considers is not ‘high’ as required by subsection 117(2) of the Assessment Act.

2. The Tribunal proposes to increase the annual rate of child support payable by Mr Claydon by $693 per annum. This represents 50% of the amount by which child care fees in respect of [Child 2] exceed more than 5% of Mrs Claydon’s adjusted taxable income.

3. Mrs Claydon advised the Department in November 2017 that she did not make an earlier application in relation to child care fees or school fees because she thought Mr Claydon ‘would chip in’. The effect of the proposed decision is to increase the annual rate of child support for the period 1 August 2017 to 31 January 2018 to reflect Mr Claydon’s 50% share of the out of pocket child care expenses for 2017. The Tribunal considers that it is not just and equitable to backdate any change to the child support assessment for an earlier period.

4. The Tribunal proposes to increase the annual rate of child support payable by Mr Claydon by $1,396 from 1 August 2017 to 31 January 2018.

Hardship

1. Mr Claydon had arrears of child support of about $1,954 in April 2018. The Tribunal’s decision will reduce the arrears owed and will not cause Mr Claydon hardship.

2. The Tribunal considers that the payment of child support proposed (about $209 a week to 31 January 2018) will not cause Mrs Claydon or the children hardship.

Issue Three – Is it otherwise proper to depart from the administrative assessment?

1. The final step for the Tribunal to undertake is to determine whether it is ‘otherwise proper’ to depart from the administrative assessment. Subsection 117(5) of the Assessment Act requires the Tribunal to take into consideration the following matters:

   (a)the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and

   (b)the effect that the making of the order would have on:

   (i)any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or

   (ii)the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.

2. The child support law recognises that each parent has a primary duty to maintain their children. Mrs Claydon does receives family tax benefit and the Tribunal is satisfied that it is otherwise proper to depart from the administrative assessment in this matter and to properly reflect the costs of child care as well as both parents’ incomes and financial resources.

DECISION

The decision under review is set aside and a decision substituted to depart from the child support assessment by:

·         increasing the annual rate of child support payable by Mr Claydon by $1,396 from 1 August 2017 to 31 January 2018.