Culver and Culver (Child support)
[2023] AATA 3405
•8 September 2023
Culver and Culver (Child support) [2023] AATA 3405 (8 September 2023)
DIVISION:Social Services & Child Support Division
REVIEW NUMBER: 2023/PC025864
APPLICANT: Mr Culver
OTHER PARTIES: Child Support Registrar
Ms Culver
TRIBUNAL:Member M Martellotta
DECISION DATE: 08 September 2023
DECISION:
The Tribunal sets aside the decision under review and, in substitution, decides to depart from the administrative assessment so that for the period 1 July 2022 to 31 December 2023 Mr Culver’s annual liability is increased by $3,210.
CATCHWORDS
CHILD SUPPORT – departure determination – high costs of child care – ground for departure established – 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
Mr Culver and Ms Culver are the parents of two children[1] who are in Ms Culver’s primary care and Mr Culver’s regular care.
[1] Born [date]/8/2013 and [date]/7/2015.
There has been an administrative assessment of child support case in place since 11 January 2020.
On 8 June 2022 Ms Culver applied for a change of assessment. The grounds in her application were Reason 6 and Reason 8A.[2] At the time, the administrative assessment in place was as follows:
For the period 1 September 2021 to 31 October 2022 the assessment was based upon Mr Culver’s 2020/21 adjusted taxable income (ATI) of $166,028 and Ms Culver’s ATI of $85,826
[2] Other grounds relating to special needs were withdrawn.
On 22 August 2022 a Services Australia (Child Support) decision maker decided that no grounds to depart from the administrative assessment had been established. Ms Culver objected to that decision.
On 28 February 2023 a Child Support decision maker concluded that Reason 6 was established and departed from the assessment so that:
For the period 1 July 2022 to 30 November 2024 the annual rate of child support payable by Mr Culver increased by $1,568.
Mr Culver has asked the Tribunal to review the decision.
The parties participated in a telephone directions hearing. The parties complied with directions issued by the Tribunal. On 5 September 2023 the Tribunal held a hearing. Mr Culver and Ms Culver participated by telephone. In addition to their submissions and evidence, the Tribunal (and the parties) had been provided with the following documents, Child Support files (567 pages), documents provided by Mr Culver (A1–A51) and documents provided by Ms Culver (B1–B102).
ISSUES
The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act). Section 98C of the Act, 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 …
Child support legislation is interpreted by Child Support with the aid of the Child Support Guide (the Guide). The Tribunal is not bound by law to apply the policy as set out in the Guide but, provided the policy is consistent with the legislation, it can have regard to it.[3]
[3] See Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634.
The issues for the Tribunal to determine in this case are:
· Does a ground for departure exist? If so,
· Would it be just and equitable as regards the child, the liable parent, and the carer entitled to child support to depart from the administrative assessment of child support?
· Is it otherwise proper to make a particular departure determination?
At hearing Mr Culver stated he disagreed with the objection decision because he does not think that he should be required to contribute to the costs of child care, he otherwise agrees with the decision. Ms Culver stated that she agrees with the objection decision.
CONSIDERATION OF LEGISLATION, SUBMISSIONS AND EVIDENCE
Issue 1 – Is there a ground to depart from the administrative assessment?
The rate of child support payable by a liable parent is usually based on an administrative assessment calculated using the relevant formula under Part 5 of the Act. This involves the application of a statutory formula, which takes into account factors such as the number of children, the age of each child, the level of care provided and the income of each parent. The income used in the calculation has a number of components making up the adjusted taxable income (ATI), which is worked out using section 43 of the Act. The general approach is that the Child Support Registrar (the Registrar) will utilise a parent’s ATI as assessed by the Australian Taxation Office (ATO) for the last relevant year of income.
Part 6A of the Act allows for a departure from an administrative assessment (a process commonly known as a change of assessment). The liable parent or carer may apply to the Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Act (section 98B). Section 98C of the Act provides that the Registrar may make a determination to depart from the formula assessment and as noted, establishes a three-step process.
The grounds for departure from the administrative assessment are set out in subsection 117(2) of the Act. Only one ground is required in the special circumstances of the case to depart from the administrative assessment and thereby satisfy the requirements of subsection 117(2) of the Act.[4]
Reason 6 – High costs of child care
[4] The phrase “special circumstances of the case” is not defined in the Act. However, the Family Court has held that “it is intended to emphasise that the facts of the case must establish something special or out of the ordinary” (Gyselman and Gyselman (1992) FLC 92-279). Likewise, in Phillippe and Phillippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”.
A reason for departing from an administrative assessment of child support may be established if, as set out in subparagraph 117(2)(b)(ib) of the Act, in the special circumstances of the case, the costs of maintaining a child are significantly affected because of high childcare costs. Criterion specific to this ground for departure are set out in paragraphs 117(3A) and (3B) of the Act.
Subsection 117(3A) provides that the costs must be incurred by a parent or non-parent carer and the child in care must be under 12 years of age at the start of the child support period.
In this case the relevant child support period is 1 September 2021 to 31 October 2022 this is a period of 426 days. At the start of that period the Tribunal is satisfied and finds that both children were under the age of 12.
The Tribunal considered whether the childcare costs are “high”. Subsection 117(3B) of the Act provides that child care costs are only “high” if, during a child support period, they total more than 5% of the amount worked out by dividing the payee’s ATI for the period by 365 and multiplying the quotient by the number of days in the period.
Ms Culver’s income for the relevant child support period was that applied to the assessment for that period which in this case was $85,826. Using the formula this results in an income over the relevant period of $100,169.52. Her child care costs need to exceed 5% of that income ($5,008).
Ms Culver provided evidence of child care costs incurred confirming that she incurred child care costs for both children during that period.
A child care invoice for the period 5 July 2021 to 4 July 2022 (a period of 365 days) shows out-of-pocket costs of $5,640.33[5] This is equivalent to about $108 per week.
[5] Page 293.
A childcare invoice for the period 1 July 2022 to 30 June 2023 shows out-of-pocket costs of $10,700.65. This is equivalent to about $205 per week.
Using this information Ms Culver incurred out-of-pocket costs of $8,237 over the child support period.[6] This is an amount which exceeds 5% of the amount worked out under the formula of $5,008. The Tribunal is satisfied that the costs are high.
[6] $4752 and $3485 per respective invoice.
Mr Culver made submissions that a proportion of the costs incurred are not necessary nor reasonable, because Ms Culver does not avail herself of a casual childcare service and he also has care of the children. Ms Culver stated that she has a long established relationship with the childcare provider. She utilises the service because she works full time. She does not use a casual service provider because of the necessity of ensuring that the children have a consistent place and she does not have to continually reorganise the care arrangements.
The legislation does not make any reference to the necessity or reasonableness of the costs.[7] The Guide however does make reference to consideration of whether such costs are necessary or reasonable. It discusses the notion of there being an element of necessity, for example work related purposes. As noted, the Tribunal is not bound to apply Child Support interpretation of the legislation. In any event in this case the Tribunal is satisfied that as Ms Culver works full time the costs incurred by her are both necessary and reasonable.
[7] The Tribunal further considers Mr Culver’s submissions under the issue of just and equitable.
In this case the Tribunal is satisfied that the costs have been incurred and that the costs based on the formula are high. In this case, having considered the rate of child support and the income of the parents, the Tribunal is satisfied that the costs of maintaining the children are significantly affected because of high child care costs.[8]
[8] Potter & Burbage (SSAT Appeal) [2010] FMCAfam 1009,
The Tribunal is satisfied that a ground to depart is established.
Issue 2 – Is it just and equitable to make a particular departure determination?
As the Tribunal is satisfied that there is a ground to depart from the assessment of child support as set out above, the next step for the Tribunal is to consider whether it is just and equitable as regards the child and the parental parties to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the Tribunal to consider the matters set out in subsection 117(4) of the Act, which is discussed in the following paragraphs.[9]
Proper needs of the children
[9] The Tribunal notes the Federal Magistrates Court case of Tyagi & Meares [2008] FMCAfam 886 which directs that in considering the matters set out in subsection 117(4) the provision need not be ‘slavishly followed, each of the relevant factors listed … should be considered’.
In determining the proper needs of the children, it is necessary to have regard at a broad level to the manner in which the children are being, and in which the parents expect the children to be, cared for, educated or trained, and also any other needs of the children. There were no specific submissions presented on this aspect.
Income, earning capacity, property and financial resources of the children
In having regard to the income, earning capacity, property and financial resources of the children the Tribunal must disregard any entitlement of the children or the carer entitled to child support to an income tested pension, allowance or benefit (subparagraph 117(7)(b)(ii) of the Act). Ms Culver confirmed that the children do not have any such financial resources. This was not disputed by Mr Culver.
Other party receiving money, goods and property for the benefit of the children
There were no submissions in this regard and the Tribunal concludes there is no basis for any adjustment pursuant to this consideration.
The income, property and financial resources of each parent who is a party to the proceeding
Mr Culver
Mr Culver derives his income from employment as a [occupation]. He works offshore on a three week on and a three week off basis. He says that his income is that as reflected in the individual income tax return as assessed by the ATO.
Mr Culver said that he utilises the estimate processes under child support legislation because at various times there have been some changes in his work arrangements.
At hearing Mr Culver provided the following evidence:
a) He has worked on the same project [for] some years.
b) He originally worked on that project through a hire company but then from September 2021 the contract was taken on by a company ([Company 1]) who employed workers through a [company].
c) In March 2023 [Company 1] lost the contract and he was made redundant however the new contractor taking over the project [Project 1] negotiated a transfer of the workers to continue in their roles on the project.
d) He received a redundancy of about $13,500 from [Company 1] and started with [Project 1] from March 2023. That company employs workers through a related company, [name] Pty Ltd.
e) He will receive a lower income with the new company as he is employed as a casual. He works the same hours each shift with this new company. In addition to his wages he also receives offshore and leading hand allowances
f) His 2022/23 ATI should not be used in the assessment because it was inflated by the redundancy he received.
g) He should be assessed on an annual income of about $190,000.
Mr Culver’s statement of financial circumstances (SOFC) and evidence disclosed the following:
a) He is the sole registered proprietor of his principal place of residence which he values at $925,000. That property is subject to a mortgage of about $600,000
b) He has financial savings of about $14,000
c) He owns a vehicle valued at $60,800
d) His superannuation fund has about $200,000 in it.
Mr Culver’s income tax returns disclose his taxable income as:
a) 2020/21 $166,028
b) 2021/22 $191,256
c) 2022/23 $225,618
Income statements and payslips pertaining to his current employer show that his year-to-date gross income (for the period 1 July 2023 to 28 July 2023) was $25,174 (including overtime).
The Tribunal notes that from the evidence that Mr Culver’s employment status with his new employer is casual and this has resulted in him being paid a higher hourly rate than he was being paid by his former employer. His average daily hours or work are 12.5 x 21 days (this does not include the days of travel in and out) 262.5 hours x his hourly rate of 85.92 = $22,554 plus allowances and overtime. This would result in a gross income of about $195,468 (not including allowances and overtime) under his new work arrangement.
Ms Culver
Ms Culver works full time as a [occupation]. She has been with the same employer for about four years. Her income tax returns disclose her taxable income as:
a) 2020/21 $85,826
b) 2021/22 $86,903
c) 2022/23 Income Statement shows gross payments of $92,309.
Her SOFC and evidence disclosed the following:
a) She is the sole registered proprietor of her principal place of residence which she values at about $760,000. This is subject to a mortgage of about $380,000.
b) Her financial savings are about $700.
c) She owns a vehicle valued at about $7,400.
d) Her superannuation fund has about $200,000 in it.
The Tribunal is satisfied that the parties’ relevant income, financial resources and property are those as disclosed at hearing. In terms of income, both parties derive their income as salary and wage earners and the Tribunal is satisfied that their respective ATIs as assessed by the ATO for the last relevant year of income are the incomes that are to be utilised in the assessment. In the case of Mr Culver, the Tribunal notes that in the most recent financial year he has received a redundancy. In the Tribunal’s view that is also a relevant consideration in determining any departure from the assessment.[10]
[10] See discussion at 2.6.14 of the Guide.
The Tribunal notes that Mr Culver has regularly submitted estimates of income. Supplementary papers provided by Child Support show that they have reconciled Mr Culver’s previous estimates with his actual ATI and this has resulted in adjustments to the assessment. The current assessment utilises his 2021/22 ATI of $191,212. The Tribunal is satisfied that the usual administrative processes will apply in such a way that any future estimates lodged by Mr Culver will be reconciled with his actual ATI as and when assessed by the ATO.
Earning capacity
A ground for departure exists if, in the special circumstances of the case, the 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 because of the earning capacity of either parent (subparagraph 117(2)(c)(ib)).
There was no evidence of any relevant changes to either parent’s work arrangements and the Tribunal concludes there is no basis for any adjustment pursuant to this consideration.
The commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support himself or herself, or any other child or another person that the person has a duty to maintain
Mr Culver provided a SOFC which disclosed that his average weekly expenses were about $1930 per week. Ms Culver’s SOFC included weekly expenses of about $2,125 per week. Both parties stated that their main expenses were their respective mortgages which had also increased as a result of interest rate rises.
Mr Culver and Ms Culver made submissions challenging some of the expenses listed in each other’s SOFC particularly as they pertained to some expenses related to the education and medical costs for their children. Overall, the Tribunal is satisfied that both parents contribute to those costs as set out in their respective statements.
The Tribunal is further satisfied taking into account the relevant costs of self-support utilised in the assessments and based upon the available evidence that there is no basis to make any adjustments on this basis.
Any hardship that would be caused
Mr Culver stated that the departure as determined by the objections officer is unfair and he is unable to financially meet the additional costs which relate to making a contribution towards the high child care costs incurred by Ms Culver.
As noted, he made submissions that Ms Culver has the option of reducing her child care costs by utilising a casual child care provider who has recently commenced operating at the school. He also has care of the children.
Ms Culver said that if Mr Culver is not required to make a contribution to her costs of child care, then she will have to make budget changes which will negatively impact upon the children.
Overall conclusions
In this case the income of the parties is significantly different. Mr Culver has a greater income than Ms Culver. Ms Culver’s costs of self-support as described in her SOFC are higher than those identified by Mr Culver. Mr Culver also has the benefit of the lump sum payment he received as part of his redundancy package.
The Tribunal has concluded that Ms Culver’s out-of-pocket childcare costs for the relevant child support period were $8,237 and a ground to depart was established. The Tribunal is satisfied taking into account all of the factors as noted that it is also just and equitable to depart from the assessment so as to require Mr Culver to make a financial contribution to those costs. Ms Culver seeks that a departure in any terms be extended to when both children turn 12. Mr Culver submits that would not be appropriate as schooling arrangements for their daughter are currently being revisited and so the childcare arrangements are not certain beyond 2023.
In terms of her out-of-pocket expenses Ms Culver incurred out-of-pocket child care costs for the 2021/22 financial year of $5,640.33 (about $108 per week). In 2022/23 her out-of- pocket expenses were $10,700.65 (equivalent to about $205 per week). At hearing Ms Culver stated that her out-of-pocket expenses are still currently about $205 per week.
At the time of Ms Culver’s change of assessment application the annual liability payable by Mr Culver was about $17,300. As noted Mr Culver’s estimates have been reconciled with his actual ATI and this has resulted in adjustments to his annual liability to an amount of about $20,000 per annum.
Ms Culver made her application for a change of assessment on 8 June 2022, any departure in the Tribunal’s view would appropriately commence from 1 July 2022. The evidence is that Ms Culver’s out-of-pocket costs for child care from the beginning of the 2022/23 financial year are about $10,700 per annum.
On balance, taking into account all of the factors, the Tribunal concluded that it is just and equitable that Mr Culver contribute a third of those child care costs, this means an annual amount of $3,210 (an additional $61 per week). Given there is some uncertainty regarding the schooling and care arrangements for one of the children the Tribunal concludes that the departure should conclude as of the end of 2023.
By comparison to the position of the parties following the objections officer’s decision, whilst Mr Culver’s annual liability has increased it also concludes earlier for the reasons identified by the Tribunal.
The proposed departure is in the following terms, that for the period 1 July 2022 to 31 December 2023 Mr Culver’s annual liability is increased by $3,210.
The Tribunal is satisfied that Mr Culver has the financial ability to meet these additional costs as noted which amount to about $61 per week. His stated household expenses of $1930 per week are well below his weekly income which averages to about $3,600.[11]
Issue 3 – Would it otherwise be proper to make a particular departure determination?
[11] Based upon the current ATI used in the assessment for Mr Culver.
The final step is for the Tribunal to determine whether it is ‘otherwise proper’ to make a particular departure determination. Subsection 117(5) requires the Tribunal to take into account whether the proposed departure is proper in the context of public interest and welfare expenditure of the community. A prime objective of the legislation is that parents are obliged to support their own children to the extent of their real capacity and such obligation should not be unnecessarily left to the public welfare system.
The Tribunal notes that according to her SOFC, Ms Culver receives FTB Part A and B. and the proposed departure from the administrative assessment may impact her entitlement to government assistance. In this case the Tribunal finds that the requirements under paragraph 117(5)(a) of the Act are met.
DECISION
The Tribunal sets aside the decision under review and, in substitution, decides to depart from the administrative assessment so that for the period 1 July 2022 to 31 December 2023 Mr Culver’s annual liability is increased by $3,210.
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