Dalton and Norwood (Child support)
[2024] AATA 797
•8 March 2024
Dalton and Norwood (Child support) [2024] AATA 797 (8 March 2024)
DIVISION:Social Services & Child Support Division
REVIEW NUMBER: 2023/SC026563
APPLICANT: Ms Dalton
OTHER PARTIES: Child Support Registrar
Mr Norwood
TRIBUNAL:Member F Staden
DECISION DATE: 8 March 2024
DECISION:
The Tribunal sets aside the decision under review and, in substitution, decides that:
For the period 4 August 2022 to 3 August 2023, Mr Norwood’s annual child support liability is increased by $16,942; and
For the period 4 August 2023 to 31 December 2025, Mr Norwood’s annual child support liability is increased by $7,424.
CATCHWORDS
CHILD SUPPORT – departure determination – income, property and financial resources of the parents – costs of the child’s orthodontic treatment and higher level athletics participation - ground for departure established – decision to depart - 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
Ms Dalton and Mr Norwood are the separated parents of [Child 1], born 2011. There has been a child support assessment for this case from 10 October 2013. Mr Norwood is the parent liable to pay child support. Ms Dalton opted for collection of child support by Services Australia – Child Support (Child Support) from 27 May 2022.
There has been no previous change of assessment decision in this case. There is a relevant care percentage decision; it was this decision which prompted Ms Dalton to lodge a change of assessment application.
Prior to a 26 May 2022 care change notification by Mr Norwood, the parents’ care percentages for [Child 1] were 72% for Ms Dalton and 28% for Mr Norwood. Following a 4 August 2022 original decision and a 5 October 2022 objections officer decision and allowing for the date of effect rules following a late notification, the following care percentages are relevantly used in the assessment for [Child 1]:
· From 1 July 2019 to 25 May 2022, Ms Dalton’s care percentage is 58% and that of Mr Norwood 27%; and
· From 26 May 2022, Ms Dalton’s care percentage is 58% and that of Mr Norwood 42%.
Where care of the children is shared, each parent is assessed as having a child support liability to the other, with the lower rate being subtracted from the higher and the parent with the amount remaining is the parent with a child support liability.
On 14 November 2022, Ms Dalton applied for a change of assessment on the basis that the costs of maintaining [Child 1] were significantly affected by: the costs associated with meeting [Child 1]’s special needs, specifically her orthodontic treatment costs (orthodontic costs) (Reason 2); the costs of caring for, educating or training [Child 1] in the way both parents expected, specifically the costs of [Child 1]’s participation in higher level athletics (Reason 3); and money, goods or property provided for the benefit of [Child 1], again her orthodontic costs (Reason 5).
The assessments in place at the date of Ms Dalton’s application were:
· For the period 1 September 2022 to 14 April 2023, Mr Norwood’s annual child support rate is $12,738, based on Mr Norwood’s 2021−22 adjusted taxable income of $199,172 and Ms Dalton’s 2021−22 adjusted taxable income of $41,180; and, following [Child 1] turning 13
· For the period 15 April 2023 to 30 November 2023, Mr Norwood’s annual child support rate is $15,842, based on Mr Norwood’s 2021−22 adjusted taxable income of $199,172 and Ms Dalton’s 2021−22 adjusted taxable income of $41,180.
On 9 February 2023, Mr Norwood responded to Ms Dalton’s change of assessment application and on 2 March 2023 Ms Dalton responded to that response.
On 12 April 2023, a Child Support primary decision-maker found Reason 2 and Reason 3 established (Reason 5 was withdrawn) and made the following decision:
· Mr Norwood’s annual child support liability is increased by $16,847 for the period from 2 November 2022 to 1 November 2023 and by $7,418 from 2 November 2023 to 1 November 2024.
Mr Norwood lodged an objection to the 12 April 2023 decision on 18 May 2023. Ms Dalton responded to that objection on 23 June 2023.
On 20 July 2023, an objections officer allowed Mr Norwood’s objection and made the following decision:
· For the period from 2 November 2022 to 31 July 2023, Mr Norwood’s annual child support liability is increased by $16,847;
· For the period 1 August 2023 to 31 December 2023, Mr Norwood’s annual child support liability is increased by $9,734; and
· For the period 1 January 2024 to 31 December 2024, the annual rate payable by Mr Norwood is increased by $6,400.
On 10 August 2023, Ms Dalton applied to the Social Services and Child Support Division of the Administrative Appeals Tribunal (the Tribunal) for review of the objections officer’s decision.
On 29 November 2023, a telephone directions hearing was conducted with Ms Dalton and Mr Norwood. Directions were issued on 29 November 2023. Both parents complied with directions.
A hearing was held on 25 January 2024. Ms Dalton and Mr Norwood gave sworn evidence by MS Teams audio. The Tribunal had before it papers provided by Child Support (590 pages), Ms Dalton (pages A1 to A104) and Mr Norwood (pages B1 to B24). Copies of all documents were provided to all parties before the hearing.
Relevant aspects of the evidence before the Tribunal are referred to in the consideration below.
ISSUES
The rate of child support payable by a liable parent is usually based on an administrative assessment under the Child Support (Assessment) Act 1989 (the Assessment Act). The formula used to calculate the rate takes into account factors such as the number of children, the levels of care provided and the income of each parent.
Under section 98B of the Assessment Act, a liable parent or carer receiving child support can apply to the Child Support Registrar for a determination to depart from the administrative assessment. This is known as a change of assessment.
Under section 98C of the Assessment Act, the Child Support Registrar, here the Tribunal, may change the assessment if the case meets the following three criteria:
· There is a ground to depart from the assessment (subsection 117(2) of the Assessment Act lists those grounds). Only one ground has to be established for the Tribunal to proceed to consider the next criterion (Marsh & Eccles [2008] FMCAfam 1417);
· It is “just and equitable” to make particular changes to the assessment; and
· It is “otherwise proper” to make those changes to the assessment.
CONSIDERATION
Issue 1: Is there a ground to depart from the administrative assessment?
Subparagraph 117(2)(b)(ia) of the Assessment Act provides a ground for departure exists where, in the special circumstances of the case, the costs of maintaining the child are significantly affected because of the special needs of the child. Special needs may result in costs which are essential or desirable for a child’s welfare but are outside the ordinary costs of a child that can be met from the administrative assessment (Lightfoot and Hampson (1996) FLC 92-663).
The term “special circumstances” is not defined in the Assessment Act. In Gyselman and Gyselman [1991] FamCA 93, 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.
The Child Support Guide is a policy manual which assists Child Support officers to apply child support law consistently. Although not bound to apply these guidelines, the Tribunal will usually do so unless there are cogent reasons to do otherwise (see Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634). In relation to orthodontic treatment the Child Support Guide states:
The costs of orthodontic treatment that is considered to be essential or desirable for a child’s welfare may be significant enough to affect the costs of maintaining the child.
As not all children need orthodontic treatment, the Tribunal was satisfied that those who do need orthodontic treatment meet the requirement of having a special need which differentiates them from most children.
Ms Dalton provided evidence that the total cost of [Child 1]’s orthodontic treatment was $11,876. She said that she was not going to pursue an additional $500 cost for clear braces. Mr Norwood did not dispute the orthodontic costs.
The costs-of-the-child amount used in the assessment varies according to the parents’ incomes, the number of children and the age of the children. At the relevant time here, [Child 1]’s orthodontic costs were equivalent to around 40% of the total cost amount used for a child in her circumstances, $29,192. The Tribunal therefore found that the costs of [Child 1]’s orthodontic treatment were outside the usual range of dental costs for a child without this special need and that this was a special circumstance in this case.
The Tribunal further found that the cost of maintaining [Child 1] was significantly increased by her orthodontic treatment and so a ground for departure was established. The issue of how that additional cost is best shared between the parents is considered below.
Issue 2: Is it just and equitable to depart from the administrative assessment?
To decide whether it is just and equitable to depart from the administrative assessment, the Tribunal must consider the matters required by subsection 117(4) of the Assessment Act, plus any other matters raised in the change of assessment application.
Duty of a parent to maintain a child/commitments necessary for self-support or the support of anyone else the parent has a duty to maintain
Section 3 of the Assessment Act makes it clear that the parents of a child have the primary duty to maintain the child, and that this duty has priority over all commitments of the parents other than commitments necessary for self-support or the support of another person the parent has a duty to maintain.
Ms Dalton and Mr Norwood each have the primary duty to financially support [Child 1].
Ms Dalton has a legal duty to maintain a child who is taken into account by the assessment as a relevant dependent child. [Child 1] is Mr Norwood’s only child covered by a child support assessment.
Both Ms Dalton and Mr Norwood have significant health issues with associated expenses that they will each need to address. Ms Dalton has an upcoming appointment with a rheumatoid arthritis specialist; has some gynaecological issues which require medical attention; and has been assessed as needing glasses which will cost $840. Mr Norwood is having hernia-related surgery later this year and is showing signs of emphysema. He wants to retire soon but will carry on working to support [Child 1] through school. The Tribunal was not persuaded that the current health expenses of either parent warrant any change to the assessment, although this may change in future.
The proper needs of the child
In determining the proper needs of a child, it is necessary to consider any special needs of the child and the manner in which the parents expected the child to be cared for, educated or trained.
Psychological support
Mr Norwood agreed with Ms Dalton that [Child 1] needs ongoing psychological support. Ms Dalton provided evidence of her costs associated with [Child 1]’s sessions with a psychiatrist and a psychologist in the three-year period from December 2020 to December 2023. Here, the Tribunal focussed on Ms Dalton’s out-of-pocket costs from 1 July 2022 onwards. These totalled $517, $285 for psychiatric support and $232 for support provided by a psychologist. Ms Dalton does not have health insurance, Mr Norwood does but it does not currently cover [Child 1]. The parents were open to discussing the possibility of [Child 1] being covered by Mr Norwood’s health insurance in the future.
Athletics costs
Both Ms Dalton and Mr Norwood want to support [Child 1] to participate in higher level athletics and agree that there are extra costs associated with her doing so. Those costs include the entry fees for regional and national events, travel and accommodation associated with events and event-specific uniforms plus specialist shoes, coaching and physiotherapy as needed.
Critical to an understanding of Ms Dalton’s claims in relation to [Child 1]’s athletics costs are the 4 August 2022 and the 5 October 2022 care percentage decisions which effectively reduced Ms Dalton’s care percentage for [Child 1] from 73% to 58% from 1 July 2019 and increased Mr Norwood’s care percentage from 27% to 42% from 26 May 2022. It is Ms Dalton’s view that Mr Norwood does not realise that his shared care of [Child 1] means that he should be paying for a greater proportion of [Child 1]’s everyday costs than he currently does, including contributing to [Child 1]’s extracurricular costs. She did note that there had been some improvement of late.
Ms Dalton’s argument was that she meets almost all of [Child 1]’s out-of-the-ordinary costs associated with her involvement in higher level athletics on top of paying more of [Child 1]’s everyday costs than warranted by her care percentage.
Based on evidence provided by Ms Dalton, the original decision-maker in this matter determined that the total out-of-the-ordinary costs incurred by Ms Dalton in relation to [Child 1]’s athletics were $12,365 in the period from January 2022 to April 2023, $9,280 annually. Ms Dalton did not dispute this amount. Mr Norwood told the original decision-maker that he too incurred out-of-the-ordinary costs in relation to [Child 1]’s athletics, for example, travel to see her participate in carnivals and paying her coach $10 a week, but he did not provide evidence about this.
The objections officer found that the total out-of-the-ordinary costs incurred by Ms Dalton in relation to [Child 1]’s athletics in the period from January 2022 to April 2023 were $12,157. However, the officer reduced the $12,157 by $1,500 on the basis that this amount represented meals and fuel Ms Dalton could meet from the normal rate of child support; contributions made by Mr Norwood; and a donation from [Child 1]’s school. This reduced the total out-of-the-ordinary costs incurred by Ms Dalton to $10,657 for the period from January 2022 to April 2023, around 8,000 annually. However, Ms Dalton convincingly argued that some of this reduction was unfair or based on incorrect information.
Ms Dalton provided evidence to the Tribunal that she continues to meet most of [Child 1]’s out-of-the-ordinary costs associated with her athletics participation. While Mr Norwood disputed some items and noted that he too had outgoings in relation to [Child 1]’s athletics, he accepted overall that Ms Dalton meets the bulk of such costs. Ms Dalton explained that the apparent decrease in recent costs commented on by Mr Norwood was because the full athletics season was not represented in the post-April 2023 information available. The Tribunal accepted this.
The Tribunal was clear to the parents that it would not be taking a forensic approach to [Child 1]’s out-of-the-ordinary athletics costs, that is, costs over and above the usual costs of extracurricular sporting activity engaged in by many children. On the evidence before it, the Tribunal found that the annual cost of [Child 1]’s out-of-the-ordinary athletics costs in both 2022 and 2023 could be reasonably assumed to be around $9,280.
Income, earning capacity, property and financial resources of the child
Ms Dalton and Mr Norwood agreed that [Child 1] has no access to income, property or financial resources which could be used for her self-support.
Income, property and financial resources and earning capacity of Ms Dalton
Ms Dalton works on a casual basis as a [Occupation 1]. Her hours can vary from 12 hours to 20 hours a week. She additionally has caring responsibilities in relation to her eight-year-old child as well as [Child 1]. The Tribunal found no issue in relation to Ms Dalton’s exercise of her earning capacity.
Ms Dalton receives $120 each from her adult son and former mother-in-law who are both living with her. She stated that the money she receives goes towards their food, internet use, contribution to utility bills and so on and that she makes no profit from their living with her. Mr Norwood accepted this as did the Tribunal.
Ms Dalton’s 2021−22 and 2022−23 adjusted taxable incomes were $41,180 and $47,152 respectively and consisted of earned income, employment-related allowances and interest. Payslips for the period 30 October 2023 to 10 December 2023 indicate that Ms Dalton’s
2023–24 earnings and allowances will not differ significantly from the previous two years. The Tribunal was satisfied that any changes to Ms Dalton’s adjusted taxable income will be properly taken into account by the assessment.Ms Dalton’s assets consist of her savings of $32,383, her household contents of $20,000 and her car, which she valued at $10,000.
Ms Dalton’s most significant liability is her credit card debt which remains steady at about $5,000. The last of the around $1,220 in family tax benefit debts she accrued as a result of the care percentage decision set out above, was paid off with her 2022–23 income tax refund. Ms Dalton has no other debts.
Overall, the Tribunal found nothing in Ms Dalton’s Statement of Financial Circumstances (SoFC) and related evidence to indicate that she has access to any income, property or financial resources not being taken into account in the assessment. Mr Norwood accepted that this was the case.
Income, property and financial resources and earning capacity of Mr Norwood
Mr Norwood works full-time as an [Occupation 2]. The Tribunal was satisfied that he is fully exercising his earning capacity.
Mr Norwood’s earnings vary according to, for example, the shifts he works, the bonuses on offer and the impact of any injuries on his ability to work. He thought it likely that his 2023−24 adjusted taxable income would be much the same as that of 2022−23 which he thought was about $180,000. The Tribunal noted that after adjustment Mr Norwood’s 2022−23 adjusted taxable income was $184,688.
Mr Norwood has a mortgage of around $300,000 on a house he valued at $750,000. He is paying at least $200 more than each required mortgage repayment. He is also making additional superannuation payments of $100 a fortnight.
In terms of other assets, Mr Norwood has shares valued at about $16,500; a car valued at $63,750 which is on a novated lease; a boat valued at $70,000; cash of about $2,500; and household contents valued at $1,000.
Mr Norwood’s only listed liabilities are his mortgage and his child support for [Child 1]. His average weekly expenses were unexceptional except for weekly medical expenses of $211.50 for [Child 1]. Mr Norwood was unable to recall what he was referring to when he wrote this figure and so it could not be explored further. Mr Norwood agreed with the Tribunal that he could perhaps have been thinking of his additional child support payments to assist with [Child 1]’s orthodontic costs.
Overall, the Tribunal found nothing in Mr Norwood’s SoFC and related evidence to indicate that he has access to any income, property or financial resources not being taken into account in the assessment. Ms Dalton accepted that this was the case.
Direct and indirect costs of providing care for the child incurred by the parent entitled to child support
Ms Dalton did not identify any particular costs associated with caring for [Child 1] other than the costs already discussed above.
What determination should be made taking into account the above factors?
Any proposed departure determination in this case must reflect the disparate incomes of the parents when adjusting the assessment to take into account [Child 1]’s additional costs in relation to her orthodontic treatment and her higher level athletics participation. The Tribunal was not persuaded that at this stage [Child 1]’s additional medical costs were such as to warrant a change to the assessment, especially given that [Child 1] may well be covered by Mr Norwood’s health insurance going into the future. Based on the 2022−23 adjusted taxable incomes of Ms Dalton and Mr Norwood, $47,152 and $184,688 respectively, the Tribunal found that 20:80 would be a reasonable contribution ratio.
The parents agree that the orthodontic costs totalled $11,876. The Tribunal has found above that [Child 1]’s annual out-of-the-ordinary athletics costs can be taken to be $9,280.
The proposed departure determination is that:
· For the period 4 August 2022 to 3 August 2023, Mr Norwood’s annual child support liability is increased by $16,942; and
· For the period 4 August 2023 to 31 December 2025, Mr Norwood’s annual child support liability is increased by $7,424.
The start date of 4 August 2022 is earlier than the date used by both previous
decision-makers. This is the date of the care percentage decision discussed earlier. Ms Dalton objected to that decision. While the objection process was in train, she attempted to engage in mediation with Mr Norwood about how best to meet [Child 1]’s out-of-the-ordinary athletics costs. The Tribunal accepted that these processes delayed Ms Dalton’s lodgement of a change of assessment application.The end date of 31 December 2025 is around one year after the end dates used by previous decision-makers. The Tribunal found that a determination for a longer period would provide both parents with certainty going forward. It will also be clearer by December 2025 whether [Child 1] will be continuing to participate in higher level athletics.
The increase amount of $16,942 over the first year of the proposed departure determination is the sum of 80% of [Child 1]’s $11,876 orthodontic costs ($9,500) and 80% of [Child 1]’s $9,280 out-of-the-ordinary athletics costs ($7,424). For the remainder of the determination period, the $7,424 increase amount is solely 80% of [Child 1]’s $9,280 out-of-the-ordinary athletics costs.
Any hardship resulting from the departure determination
The proposed determination balances Ms Dalton’s wish that the change to the assessment be further backdated with the negative impact of generating arrears for Mr Norwood. The Tribunal found on Mr Norwood’s evidence at hearing that he has the capacity to pay the likely arrears created by this decision, given that he is able to make extra mortgage and superannuation payments.
Issue 3: Is it otherwise proper to depart from the administrative assessment?
The Tribunal considered the impact of its proposed determination on the balance of financial support provided by the parents on one hand and the taxpayer on the other. It is necessary to decide whether this is a proper outcome given that parents have the primary responsibility to support their children.
Ms Dalton receives family tax benefit and carer allowance for [Child 1]. The proposed determination may reduce the amount of family tax benefit. Whatever the impact, the Tribunal was satisfied that the proposed determination fairly shares the costs of [Child 1]’s orthodontic treatment and out-of-the-ordinary athletics costs between the parents, taking into account the financial and other circumstances of each. The Tribunal therefore found that the proposed determination is otherwise proper.
DECISION
The Tribunal sets aside the decision under review and, in substitution, decides that:
For the period 4 August 2022 to 3 August 2023, Mr Norwood’s annual child support liability is increased by $16,942; and
For the period 4 August 2023 to 31 December 2025, Mr Norwood’s annual child support liability is increased by $7,424.
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