Darwin and Ledger (Child support)
[2022] AATA 3970
•27 September 2022
Darwin and Ledger (Child support) [2022] AATA 3970 (27 September 2022)
DIVISION:Social Services & Child Support Division
REVIEW NUMBERS: 2020/PC020396 and 2020/PC020474
APPLICANTS: Ms Darwin and Mr Ledger
OTHER PARTIES: Child Support Registrar
Mr Ledger and Ms Darwin
TRIBUNAL:Senior Member K Dordevic, Presiding
Senior Member J Longo
DECISION DATE: 27 September 2022
DECISION:
The tribunal sets aside the decision under review and, in substitution, decides that for the period:
· 7 March 2020 to 31 March 2021 Mr Ledger’s annual rate of child support is varied to $14,300 per annum; and
· 1 April 2021 to 31 August 2022 Mr Ledger’s adjusted taxable income is varied to $146,176.
CATCHWORDS
CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – a 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
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.
Ms Darwin (the mother) and Mr Ledger (the father) are the parents of two children. This case was first registered with Services Australia – Child Support (the Agency) on 17 September 2010 and was collectable from 6 September 2012. From 27 October 2012 the Agency’s record indicates that the children were in the mother’s 79% care and the father’s 21% care. This arrangement remained unchanged until 24 September 2021, where the Agency’s care record was amended to reflect that the older child went into the father’s sole care on that date. The care register was again amended to reflect that the younger child was in the mother’s sole care from 24 November 2021. The older child’s care change was notified to the Agency on 24 November 2021 and the younger child’s care change was notified on 16 December 2021.
Relevant to this application, the mother lodged a departure application on 7 March 2020.
On 14 August 2020 a senior case officer varied the father’s adjusted taxable income to $154,000 for the period 7 March 2020 to 30 November 2021. On 20 October 2020 the father lodged an objection to that decision. On 4 December 2020 his objection was allowed in part, whereby the father’s adjusted taxable income was varied to $165,000 for the period 1 July 2020 to 30 November 2021.
On 7 December 2020 the mother sought further review with the Social Services and Child Support Division of the Administrative Appeals Tribunal (the tribunal). The father lodged a cross-application on 15 December 2020. Following a directions hearing, the matter was heard on 8 July 2021. On 13 August 2021 the tribunal (differently constituted) set aside the decision under review and varied the father’s adjusted taxable income to $138,000 for the period 7 March 2020 to 30 June 2022 (hereafter referred to as the first tribunal decision).
The father lodged an appeal with the Federal Circuit and Family Court. [In] April 2022 the Court ordered, by consent, that the tribunal’s decision of 13 August 2021 be set aside and that the matter be remitted to the tribunal for redetermination according to the law.
A directions hearing was held on 20 June 2022. Directions were issued on the same day requiring compliance by 27 July 2022, with the hearing scheduled to take place on 10 August 2022.
On 22 June 2022, in accordance with subsection 95J(1) of the Act, the tribunal asked the Child Support Registrar to exercise its powers to request that the Australian Securities and Investments Commission (ASIC) conduct a search of all entities of which the father is an office holder and provide current and historical information including shareholders and company office holders and a company search of [Company 1], [Company 2], [Company 3], [Company 4], [Company 5] and [Company 6] and provide current and historical information including shareholders and company office holders. The tribunal also requested that the Child Support Registrar ask that the Australian Taxation Office provide the 2020 and 2021 financial year income tax returns for [Company 1], [Company 2], [Company 3], [Company 4], [Company 5], [Company 6] and [SMSF 1].
The mother provided her response to the directions by 27 July 2022. The father provided his response, and legal submissions on 29 July 2022. Due to the father’s failure to comply within the requisite period, the hearing was rescheduled to 27 September 2022. Directions to that effect were issued on 8 August 2022.
The hearing took place on 27 September 2022. The mother appeared by MS Teams audio (due to video issues) and the father appeared by MS Teams video conference. The father was represented by [Mr A], solicitor, [Law Firm 1]. The tribunal also considered the documentation provided by the Agency (folios 1 to 1063), the mother (folios A1 to A115) and the father (folios B1 to B1023) and a response from the Child Support Registrar (folios C1 to C27).
ISSUES
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 …
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?
RELEVANT HISTORY
The first tribunal decision
As outlined above, by decision dated 13 August 2021, the first tribunal varied the father’s adjusted taxable income to $138,000. The tribunal concluded that the father had, in the 2020 financial year, access to income and financial resources in the vicinity of $138,000 and considered that it was just and equitable in the circumstances of the case that a departure from the assessment reflect that. In reaching its decision, the tribunal noted that the decision would result in a weekly child support liability of about $400 per week and was satisfied on the basis of the father’s income, property and financial resources, he had the capacity to meet this level of liability.
At the first tribunal’s hearing the father testified that he funds his necessary and discretionary expenditure by drawings from the redraw facility on his home mortgage. Included in this expenditure are repayments to [Company 2] (of which the father is sole director and shareholder) in respect of loans he owed the company as evidenced in the [Company 2] balance sheet. At hearing the father spoke to the redraw facility he has on his home mortgage (at paragraph 25):
Mr Ledger also argued that in making the decision to retrain he decided that he would utilise the redraw facility on the mortgage to fund and cover expenses for the time he was studying. He said that he has drawn down about $300,000, he made this decision because he is not a young student and was not going to ‘live off baked beans’. His decisions should not be micro-managed by Child Support. Mr Ledger says that his access to the redraw is not relevant income or financial resources for child support purposes.
The tribunal went on to state (at paragraph 31):
A review of the various bank statements shows that Mr Ledger has met his expenses by drawing down on the redraw facility attached to his mortgage to either pay off his credit card as well as to make direct deposits into his personal account. On average Mr Ledger is incurring monthly credit card expenditure of about $9,000. This is consistent with his evidence at hearing that over the three years of studying he has accessed about $300,000 from the redraw facility.
The first tribunal also noted that at hearing the father also confirmed that his business, [Company 2], paid superannuation into his superannuation fund in excess of the superannuation guarantee, explaining that it is tax effective and financially advantageous to do so.
The tribunal concluded (at paragraph 41) that:
In this matter the tribunal considers that in considering the grounds for departure pursuant to reason 8A, relevant income, financial resources and property in Mr Ledger’s case would include his taxable income as well as the access he has to the redraw facility which has allowed him to continue to fund his personal, household and other lifestyle costs as well as the personal benefit he derives from deriving his income through the structure of a private company. This results in the following relevant components:
Source 2018/19
$2019/20
$Wages 6,579 5,424 Personal benefit of superannuation payments in excess of the guarantee 9,376 24,985 Redraw financial resource 108,000 108,000 Total 123,955 138,409
The tribunal then concluded that application of the above findings to the administrative assessment would result in a significant increase in the father’s child support liability and so found a ground for departure based on the father’s income, property and financial resources.
As outlined above, [in] April 2022 the Federal Circuit and Family Court ordered that the tribunal’s decision of 13 August 2021 be set aside and that the matter be remitted to the tribunal for redetermination according to the law. The Court noted that in considering whether the proposed departure determination was just and equitable, the tribunal did not have regard to a mandatory relevant consideration under paragraph 117(4)(e) of the Act as the tribunal considered the parents’ necessary commitments must be extraordinary before they can be relevant.
CONSIDERATION
A ground for departure
Subparagraph 117(2)(c)(ia) of the Act provides a ground for departure of 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, property or financial resources.
At the time that the mother lodged her departure application the father was liable to contribute $0 in respect of the children for the period 1 October 2019 to 30 June 2020 based on his income estimate of $24,000 and the mother’s income estimate of $34,770. The father’s actual adjusted taxable income for the 2020 financial year was $56,449.
The parents have been in a protracted litigation in respect of the property and their children’s care and have lodged frequent departure applications in respect of the child support arrangements. After having the benefit of their oral testimony and written submissions it is apparent there is little on which the parents can agree. Nevertheless, both agree with the tribunal’s assessment that the central issue in this matter is whether the administrative assessment accurately reflects the father’s financial resources.
It is the father’s contention that it is his adjusted taxable income that should determine his capacity to contribute to the costs of the children whilst in their mother’s care during a period when he was largely not engaged in paid work whilst undertaking full-time studies and was living from funds held in a redraw facility attached to his home mortgage. It is the mother’s position that the father has a greater capacity to meet the children’s costs than his adjusted taxable income would suggest.
The tribunal makes the following findings. Amongst his other business interests, the father is the sole owner and shareholder of [Company 2]. The 2020 financial statements and the father’s income tax return for the same period indicate that [Company 2] provided the father a wage of $5,424 and superannuation payments (in excess of the superannuation guarantee) of $24,485. The father also received a fully franked dividend of $33,650 from the [Company 4] in the same period. His net rental loss of $8,625 was added back.
The [Company 2] financial statements also suggest that he received the benefit of the provision of a telephone from the business ($1,579 in the 2020 financial year) which suggests that at least part of this expense provided the father with a financial benefit not reflected in his adjusted taxable income. Furthermore, it is noted that in the 2019 and 2020 financial years the company made modest net profits (after income tax) of $3,614 and $2,614 respectively. It is well settled that the Registrar, and this tribunal standing in its place, may consider any entitlement to net profits as an available financial benefit when analysing a parent’s financial resources.
The father’s testimony and submissions are such that upon undertaking a full-time Master’s program during the 2018 to 2020 calendar years he supported himself from the redraw facility of his home loan; he continued to do so (aside from some modest income from short-term work) until at least March 2021. The tribunal finds accordingly.
The mother contends that the funds redrawn from the father’s redraw facility represent a financial resource available to him for the support of the children. This too was the view of the first tribunal, which determined that the father drew on about $108,000 in both the 2019 and 2020 financial years to meet his necessary and significant discretionary spending. The father does not contest the first tribunal’s calculation; instead, he submits that it is irrelevant to determining his capacity to contribute to the children’s costs, as they are funded through debt.
The term financial resource is not defined in the Act. However, it has received judicial consideration. In Costa & Fairbank(SSAT Appeal) [2010] FMCAfam 39, the Court said:
"Financial resource" refers to something which is not property but from which financial benefit is or may be gained. In light of the objects of the Act, the term should be broadly defined and would refer to any financial benefit that would enhance the capacity of parents to provide a proper level of financial support for their children. [Tribunal’s emphasis]
The term was considered further in the matter of Walker & Fielding(SSAT Appeal) [2010] FMCAfam 320 (18 June 2010), where it was held:
71. A financial resource, in my consideration, refers to something which is not property but from which a financial benefit is or may be gained [see Kennon v Spry (2008) FLC93-388, Gummow and Hayne JJ (@ 83035)].
72. The principle object of the Assessment Act (ss.4) is to ensure the children receive a proper level of financial support from their parents.
73. A particular object of the Assessment Act includes ensuring:
· a. That the level of financial support to be provided by parents for their children is determined according to their capacity to provide financial support and in particular, the parents with a like capacity to provide financial support for their children should provide like amounts of financial support.
74. The term financial resource in the light of the objects of the Assessment Act should be broadly defined and would, in my consideration, refer to any financial benefit that would enhance the capacity of parents to provide a proper level of financial support for their children.
75. In this matter there was ample evidence upon which the SSAT was entitled to reach a conclusion that the applicant was receiving a financial benefit from the monies received from the sale of the business.
76. It was accepted, for example, that those monies were applied to the general living expenses of the Walker household and the regular outgoings including the mortgage expenses. In other words, those monies were being applied to the applicant’s living expenses and outgoings.
…
79. The issue for the SSAT was not to determine what if any proprietary right he had in those funds. The SSAT were simply obliged to consider whether those monies represented a financial resource and if so what would be a just and equitable determination of the level of his child support having regard to the fact that he had that resource available to him.
80. Lindenmayer J in Dwyer and McGuire (1993) FLC92-420 said (@ 80319):
· In any event, having thus identified the availability of substantial property and financial resources, and having taken account of the income versus asset base of the partnership, it is, in my opinion, unnecessary for the court to seek to identify any specific source from which an obligation of the father to pay child support can be met (see the analogous position in relation to an order for lump sum child maintenance under the Family Law Act commented upon in the course of the decision of the Full Court of the Family Court in Collins and Collins (1993) FLC 92-343 at 79,638; (1993) 16 Fam LR 261 at 268; per Fogarty and Renaud, JJ). It is obvious, on the evidence, that the father has both sufficient real property, and a financial resource in the form of a capacity to borrow against the value of that real property, to meet any reasonable order for child support. It is up to him to organise his own affairs in order to devise the means to meet his proper level of child support obligations.
81. Having identified that the applicant had a financial resource available to him that allowed him to meet his child support obligations, in my view, it was then unnecessary for the SSAT to go on and make findings about his particular interest in the resource. Ultimately the SSAT, after having reached the conclusion that this was an appropriate matter to depart from the child support assessment, the SSAT was then charged to come to a determination that was just and equitable between the parents and the child and otherwise proper. I do not consider that it was necessary for the SSAT to identify what property interests that applicant may have had in the financial resource. [Tribunal’s emphasis]
The father’s position (with particular reference to paragraphs 62 to 71 of his written submissions at folios B1019 to B1022) is that the intention of the legislation is to include funds in the assessment of a parent’s capacity to support a child that were not captured as income under the formula. It is submitted that the father’s accessing of funds from his redraw facility was likened to a “borrowing capacity” as considered in Wright & Wright & Anor(SSAT Appeal) [2009] FMCAfam 979 where it was reasoned (at paragraph 21):
The artifice of finding that a person can pay child support at a far greater level on the assumption that they could borrow money, when they have no assets for security, nor any other financial resources, was simply not open to the Tribunal in this case. The rejection of such a reasoning process occurred long ago in the Family Court where the Court made clear that ‘a capacity to borrow is not property’: per Lindemayer H in Walters & Walters [1986] FamCA 8… [Tribunal’s emphasis]
The tribunal accepts that the general proposition to be gleaned from Wright is that an order cannot direct that a payment be made from an asset that does not exist. However, the facts of this case can be clearly distinguished from the reasoning in Wright. There is no assumption in this matter; the father has in fact accessed his redraw facility to meet his personal and household expenses, where his financial provider has an asset for security. The matter before this tribunal is not about the father’s future capacity to borrow. Further, in Wright the Court was referring to a different issue, being where the tribunal had erred in considering the father’s day-to-day expenses as a necessary commitment under subsection 117(4) of the Act.
The father planned to fund his studies by accessing his redraw facility. His own evidence is that he had no intention of living frugally whilst undertaking his studies. Of his own volition he drew down on his mortgage to ensure that he maintained a particular lifestyle. He accessed these funds by transferring money from that redraw facility (with $123,324.86 available as at 1 May 2021) to his other personal accounts to repay his Division 7A loan to [Company 2] as well as to meet his necessary and (significant) discretionary expenditure. By way of example in the 15 days from 5 to 19 March 2020 (the period during which the mother lodged her departure application) the father’s Mastercard statement (at folios 208 to 209) demonstrates that he spent over $700 on eating out and $619 on alcohol. Further examination of the father’s spending by the tribunal indicates that such discretionary spending was consistent up until at least March 2021.
The tribunal does not accept the father’s contention that the funds accessed by him from his home loan redraw facility during the period March 2020 until at least March 2021 and applied to his significant discretionary spending are not a financial benefit available to him to provide a proper level of financial support to the children. The tribunal is satisfied that the funds withdrawn from the home loan by way of the redraw facility and applied to the father’s discretionary expenditure are a “financial benefit that would enhance the capacity of parents to provide a proper level of financial support for their children” as envisaged in Costa. The tribunal reached this conclusion with greater certainty after having the benefit of the father’s evidence that he always intended to support himself in this way whilst studying, as he did not want to live an impecunious student lifestyle. In the tribunal’s view such a conclusion is consistent with the objects of the Act and with the broad definition of the term “financial resource”.
At the time the mother lodged her departure application the father was not liable to contribute towards any of the children’s costs whilst in their mother’s 79% care, based on his income estimate of $24,000. His actual adjusted taxable income during the same period was more than double that which he had estimated. Application of the father’s 2020 income to the administrative assessment would result in his liability increasing to about $5,000 per annum. The father also received the benefit of the provision of a telephone and was able to draw upon the net profits of $2,614 in the 2020 financial year that, if taken into account, would enhance his capacity to provide for the children. The tribunal has already determined that the funds that the father accessed by way of the redraw facility attached to his mortgage account are a financial resource available for the benefit of the children.
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
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 assessment.
The tribunal finds that the mother’s 2020 and 2021 adjusted taxable incomes were $35,655, and $57,147 respectively. The payslips in evidence indicate that she was employed on a full-time basis earning $55,000 per annum until late March 2022 and that from 1 May 2022 she secured alternate full-time work with an annual salary of $70,000. The tribunal concludes that the mother’s 2022 adjusted taxable income will be generally consistent with her 2021 adjusted taxable income.
The mother provided the first tribunal with an undated Statement of Financial Circumstances declaring that she is in receipt of gross employment income of $996 per week from her full-time employment. She lives with her partner and lists her assets as including a 60% share in an unencumbered home valued at $430,000, savings of $42,201, a motor vehicle valued at $10,000, household contents valued at $3,000 and superannuation of $199,953. She reports no liabilities, personal expenditure of $86.50 per week and household expenses of either $880 or $910 per week. It is not apparent whether these household expenses include her partner’s or the children’s costs, with the exception of her declaration of $50 per week for the children’s activities. Further, no allowance is made for food, utilities, council rates or household supplies, which suggests that these costs are met from another source. The mother also testified that she is dependent on financial assistance from her parents to meet the costs of the children. The father is of the view that the shortfall is met by the mother’s partner, in addition to the provision of holidays. What is clear is that neither the children’s maternal grandparents nor the mother’s partner have a legal duty to maintain the children.
The tribunal had regard to the proper needs of the children. The parents’ consistent testimony is that the children attend public schools and are generally in good health, apart from a skin condition suffered by the younger child that requires regular specialist review costing about $200 per quarter, which the mother meets. There is no evidence to suggest that either child has access to income or financial resources that would render the administrative assessment unjust or unfair. Notwithstanding the fact that the younger child will soon commence part-time after-school work neither parent testified that this would necessitate or warrant an adjustment to the assessment of child support. There is also no evidence tendered by either parent to suggest that either parent has received money, goods or property for the benefit of the children that would render the administrative assessment unfair or unjust.
In his Statement of Financial Circumstances form dated 18 January 2021 the father reports that he is a self-employed [Occupation 1], working in [Company 2] on a part-time basis. He reports nil salary or wage, $580 per week in rental income and $776 in income from [Company 2] (based on an annual income of $4,360). He declared sole ownership of property worth $900,000, savings of $350, a motor vehicle valued at $4,000, a $20,000 interest in [Company 5], household contents valued at $10,000 and superannuation of $565,000. His liabilities include a mortgage on his property of $250,000, unpaid capital gains tax of $90,000 and Mastercard debt of $3,500. He did not declare the Division 7A liability which he apparently repays at about $20,000 per year, though it is likely that he is referring to this when he declares (at B7) that he pays $20,000 in superannuation each year with funds from his redraw facility. He reports weekly personal expenses of $41 and declared household expenditure of $1,130 per week but did not specify how much of these costs relate to his care of the children with the exception of $10 per week relating to their activities in January 2021 and $50 per week in July 2022.
The uncontested evidence received from the father is that in August 2020 he established, with business partners, [Company 5] with a number of subsidiary companies. The father’s 2021 adjusted taxable income was $60,599 based on his [Company 5] income, a trust distribution of $19,668 from the [Company 4] (which holds shares in [Company 2], of which the father is trustee), reportable superannuation contributions of $20,000 and net capital gain of $4,527 and total claimed deductions. Since 1 April 2021 he has received income from [Company 5]; a payslip in evidence indicates that he received $25,000 for the period 1 April to 30 June 2021 (at folio B668) and $45,000 for the first quarter of the 2022 financial year. It was declared on behalf of the father that in its first full year of operation [Company 5] will pay a wage of about $140,000 to each director (at folio B1022). The payslip provided by the father indicates that from 1 April 2022 his annual salary is $180,000 (at folio B672). The father’s 2022 taxable income was made up of $140,000 in income from [Company 5] and a distribution of $11,168 from the [Company 4], with deductions of $4,992. This represents about a 18% reduction in income that the father expected to receive based on a completed a Statement of Financial Circumstances form dated 31 December 2021 completed for other proceedings whereby he deposed that he would earn about $179,000 per annum (at A92).
In compliance with the tribunal’s directions the father provided an updated Statement of Financial Circumstances form dated 26 July 2022. The father declared that he has been employed on a full-time basis by [Company 5] for nearly two years. He declares weekly income of $2,692, property valued at $815,000, savings of $350, that his motor vehicle has decreased in value by $1,000 from the amount declared in his first statement and that his superannuation balance is now $574,000. He declares liabilities of a mortgage of $380,000, $80,000 in unpaid income tax and Mastercard liability of $3,500. His weekly personal expenditure increased to $1,623 and his weekly household expenditure to $1,240. The tribunal notes that the father had all but exhausted the redraw facility attached to his mortgage by at least June 2021, putting aside quarterly payments from [Company 5] deposited into the account which were then usually immediately withdrawn. The balance available from the mortgage redraw account as at 13 June 2022 was $251.89 (at folio B715).
The tribunal had regard to the father’s necessary commitments to support himself. The father’s own declarations of his necessary self-support costs outlined in his Statements of Financial Circumstances indicate that his income exceeds his necessary self-support costs by about $180 per week in January 2021 and by about $430 per week in July 2022. The tribunal notes that, after careful examination of the father’s Mastercard statements and personal accounts, his actual weekly household expenditure is considerably more than he declared in his Statements of Financial Circumstances, which is consistent with the tribunal finding that he funds most of his discretionary spending from his mortgage redraw facility. The tribunal also had regard to the father’s earning capacity and is satisfied that it does not render the administrative assessment unjust or inequitable.
The father’s 2020 and 2021 adjusted taxable incomes were $56,449 and $60,599 respectively and the mother’s were $35,655 and $57,147 in the same periods. Application of the father’s 2020 and 2021 adjusted taxable incomes would require him to contribute just over $5,000 and $4,870 per annum respectively in child support. The tribunal is satisfied that in the circumstances it is appropriate to depart from the administrative assessment on the basis that the father’s financial resources were not reflected in the administrative assessment from at least March 2020 to 30 June 2021. The tribunal is of the view that the father has a greater capacity to contribute to the children’s costs than his adjusted taxable incomes indicate.
With both parents failing to make a fulsome disclosure of their actual costs in caring for the children, the tribunal had regard to the Costs of the Children Table (located at clause 1 of the Schedule 1 to the Act and which can be found at
The 2020 Costs of the Children Table indicates that for two children under 13 years of age (as the children were for most of the 2020 financial year) their costs would be about $9,549 per annum when applying the parents’ adjusted taxable incomes and taking into account the relevant self-support amount:
| Parents' combined child support income (2.4.4) | |||
| Fraction of MTAWE | 0.5 | 1 | 1.5 |
| No. of children | $0 to $38,363 | $38,364 to $76,726 | $76,727 to $115,089 |
| Costs of the children (to be apportioned between parents) | |||
| Children aged 0-12 years | |||
| 2 children | 24c for each $1 | $9,207 plus 23c for each $1 over $38,363 | $18,030 plus 20c for each $1 over $76,726 |
The 2021 Costs of the Children Table (noting that the older child turned 13 years of age in November 2020) indicates that the costs of the children were about $16,997 for this calendar year, again after application of the parents’ adjusted taxable incomes and relevant self-support amounts:
| Parents' combined child support income (2.4.4) | |||
| Fraction of MTAWE | 0.5 | 1 | 1.5 |
| No. of children | $0 to $39,479 | $39,480 to $78,957 | $78,958 to $118,436 |
| Costs of the children (to be apportioned between parents) | |||
| Children of mixed age | |||
| 2 children | 26.5c for each $1 | $10,462 plus 25.5c for each $1 over $39,479 | $20,529 plus 22.5c for each $1 over $78,957 |
The tribunal is of the view that the father’s financial resources, which do not form part of his adjusted taxable income, increased his capacity to provide for the children during the period that he was studying full-time. Whilst it is difficult to quantify this financial resource, the tribunal is of the view that it is appropriate to reflect this capacity by determining the costs of the children by reference to the next base level MTAWE fraction from the Costs of the Children Table (moving from 1 to 1.5). This may well be a conservative fraction, given the father’s significant discretionary spending during the same period. Accordingly, the costs of the children would increase to the base level of $18,030 in the 2020 calendar year and $20,529 in the 2021 calendar year. In such circumstances whereby the mother had the greater burden in meeting the children’s costs given the care arrangements in place at that time, the tribunal is satisfied that it is appropriate that the father contributes a total of $275 per week ($14,300 per annum) towards the children’s costs whilst in their mother’s care from 7 March 2020 (the date on which the mother lodged her departure application) until 31 March 2021, an increase of about $175 per week (a mere 8% of his annual discretionary spending) when compared with the formula assessment.
In the tribunal’s view varying the father’s annual rate on this basis reflects the most reasonable conclusion to be drawn on the available evidence. This aspect of the tribunal’s determination will decrease the father’s current arrears by about $8,500. The tribunal is satisfied that this aspect of the determination will not place the mother nor the father in a position of undue hardship given their respective incomes and the father’s financial resources. To find otherwise would result in a disproportionate amount of the children’s costs being borne by the mother.
It is evident that from 1 April 2021 the father’s income improved significantly. The father’s 2022 adjusted taxable income was $146,176. The tribunal is satisfied that from 1 April 2021 the father’s 2022 adjusted taxable income should apply to the administrative assessment. Whilst this includes a quarter of the 2021 financial year, it is from this period that the father received a salary from [Company 5] and so the tribunal is satisfied that it is both just and equitable to depart from the administrative assessment on this basis. This aspect of the decision will reduce the father’s arrears by about $3,000.
The tribunal gave careful consideration to the mother’s submission that the administrative assessment be departed from until a terminating event occurs in relation to the younger child. In the tribunal’s view this would not be prudent, given that the father’s testimony is that his studies and work arrangements were undertaken with a view to increasing his income and financial resources which is borne out by the financial evidence before the tribunal. The tribunal concludes that it is appropriate that the father’s 2022 adjusted taxable income is applied to the administrative assessment from 1 April 2021 until 31 August 2022. From 1 September 2022 the parents’ 2022 adjusted taxable incomes apply to the administrative assessment, resulting in an annual liability of $11,497 payable by the father. Of course, if in the future there is a significant decrease in the father’s adjusted taxable income, the mother is at liberty to lodge a new application.
The tribunal is satisfied that the administrative assessment is unfair given the father’s income and his financial resources. This results in an unjust and inequitable level of child support given the circumstances of each parent. For all these reasons it is just and equitable to depart from the administrative assessment.
Otherwise proper
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. Neither the mother nor the father are in receipt of income-tested benefits. Departing from the administrative assessment will have no impact on the apportionment of financial responsibility between the parents and the community.
The determination is otherwise proper.
DECISION
The tribunal sets aside the decision under review and, in substitution, decides that for the period:
· 7 March 2020 to 31 March 2021 Mr Ledger’s annual rate of child support is varied to $14,300 per annum; and
· 1 April 2021 to 31 August 2022 Mr Ledger’s adjusted taxable income is varied to $146,176.
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