Doaity and Afeland (Child support)

Doaity and Afeland (Child support) [2024] AATA 3582 (26 July 2024)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2023/PC027095
APPLICANT:  Ms Doaity
OTHER PARTIES:  Child Support Registrar
Mr Afeland

TRIBUNAL:Senior Member R Ellis
DECISION DATE: 26 July 2024
DECISION:

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

for the period from 1 July 2022 to 30 June 2023 the adjusted taxable income of Mr Afeland is varied to $58,672;
for the period from 1 July 2023 to 31 October 2025 the adjusted taxable income of Mr Afeland is varied to $77,984;
for the period from 1 July 2022 to 30 June 2023 the annual rate of child support payable by Mr Afeland is increased by $1,959; and
for the period from 1 July 2023 to 30 June 2024 the annual rate of child support payable by Mr Afeland is increased by $147.

CATCHWORDS

CHILD SUPPORT – departure from the administrative assessment – parent’s income, property and financial resources or earning capacity – special needs of the child – cost of maintaining the child – ground for departure – 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

This review is about whether or not there should be a departure from the administrative assessment of child support.
Ms Doaity and Mr Afeland are the parents of [Child 1] (born November 2015). There has been a child support assessment in place since 6 April 2022.
The following administrative assessment of child support is under consideration:
·     for the period from 6 April 2022 to 30 September 2022 Mr Afeland was assessed to pay an annual rate of $3,783 based on a 2020–21 adjusted taxable income of $49,315 for Mr Afeland and a 2020–21 adjusted taxable income for Ms Doaity of $30,845;
·     for the period from 1 October 2022 to 30 June 2023 Mr Afeland was assessed to pay an annual rate of $3,931 based on a 2021–22 adjusted taxable income of $50,187 for Mr Afeland and a 2021–22 provisional adjusted taxable income for Ms Doaity of $31,740;
·     for the period from 1 July 2023 to 31 July 2023 Mr Afeland was assessed to pay an annual rate of $3,931 based on a 2021–22 adjusted taxable income of $50,187 for Mr Afeland and a 2021–22 adjusted taxable income for Ms Doaity of $34,092; and
·     for the period from 1 August 2023 to 31 October 2024 Mr Afeland is assessed to pay an annual rate of $4,448 based on a 2022–23 adjusted taxable income of $53,672 for Mr Afeland and a 2022–23 provisional adjusted taxable income for Ms Doaity of $35,319.
On 7 August 2022 Ms Doaity applied to Services Australia – Child Support (Child Support) for a change to the assessment on the basis of the special needs of the child (the ground more commonly known as Reason 2) and a parent’s income, property and financial resources or earning capacity (Reasons 8A and 8B).
On 1 November 2022 Child Support made the decision to change the assessment (the original decision) so that:
· for the period from 1 July 2022 to 30 June 2023 the annual rate of child support payable by Mr Afeland is increased by $1,000; and
· for the period from 1 July 2022 to 30 June 2023 the adjusted taxable income of Mr Afeland is set at $61,300.
On 18 August 2023 Ms Doaity objected to this decision and on 1 November 2023 Child Support allowed the objection in part and made the decision to change the assessment (the objection decision) so that:
·     for the period from 1 July 2022 to 30 June 2023 the annual rate of child support payable by Mr Afeland is increased by $1,000;
·     for the period from 1 July 2022 to 13 April 2023 the adjusted taxable income of Mr Afeland is set at $61,300; and
·     for the period from 14 April 2023 to 13 April 2024 the adjusted taxable income of Mr Afeland is set at $75,000.
On 22 November 2023 Ms Doaity applied for a review of the objection decision by the Administrative Appeals Tribunal (the Tribunal).
A directions hearing was held on 16 May 2024. Ms Doaity and Mr Afeland attended by Microsoft Teams audio. Prior to the directions hearing Child Support provided the Tribunal and the parties with a bundle of documents in accordance with section 37 of the Administrative Appeals Tribunal Act 1975 (558 pages).
Ms Doaity and Mr Afeland were directed to provide further information and both complied to the satisfaction of the Tribunal.
A hearing was held on 26 July 2024. Ms Doaity and Mr Afeland gave evidence on affirmation by Microsoft Teams audio. Prior to the hearing the Tribunal received documents folioed A1 to A171 from Ms Doaity and B1 to B184 from Mr Afeland and these were distributed to the parties. Additional documents were also received from Child Support (pages 559–591).
At the directions hearing and at the commencement of the hearing the Tribunal sought clarification from Ms Doaity and Mr Afeland as to the reasons for their concerns.
Ms Doaity told the Tribunal that Child Support had failed to reflect the true income available to Mr Afeland and not properly considered his earning capacity. Ms Doaity said there were also costs associated with [Child 1’s] special needs that had not been taken into account. Mr Afeland said although he did not agree with the way Child Support had determined his income he accepted the outcome and did not contest the decision.
During the hearing Ms Doaity informed the Tribunal she had attempted to provide additional evidence in the form of bank statements prior to the hearing but was unable to do so. Ms Doaity said the bank statements showed Mr Afeland was spending far more than he claimed to be earning. The Tribunal agreed to allow Ms Doaity to provide the bank statements and relevant statements were received on 30 July 2024 (A172–A234). A copy of this additional evidence was sent to Mr Afeland for his consideration. No response was received from Mr Afeland by the stipulated date.

ISSUES

The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act).
The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act.
Under Part 6A of the Act, the liable parent or the carer of the child or children may apply to the Child Support Registrar for a determination to depart from the administrative assessment (section 98B).
Section 98C provides that the Registrar may make a determination to depart from the administrative assessment and establishes a three-step process, such that the issues for determination by this Tribunal are:
·     whether or not a ground is established to depart from the administrative assessment of child support; and if so,
·     whether or not it is just and equitable to make a particular departure determination; and if so,
·     whether or not it is otherwise proper to make a particular departure determination.
The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.
Each ground is prefaced by the words “in the special circumstances of the case”. The meaning of this expression is not defined in the Act, but the Family Court in Gyselman and Gyselman [1991] FamCA 93 has held that:
as a generality it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the Legislature is that the court will not interfere with the administrative formula result in the ordinary run of cases.
In Philippe and Philippe (1978) FLC 90-433 the court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”.
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 prescribed in section 98S of the Act.
The range of determinations which can be made includes variations to the annual rate of child support payable; or to the adjusted taxable incomes of the parents and/or carer; or to other components of the statutory formula used to calculate child support.

CONSIDERATION

In circumstances where more than one ground for departure is put forward, the Tribunal needs only to be satisfied that one ground is established before going on to determine whether or not a particular determination is just and equitable and otherwise proper.

Issue 1 – Is there a ground for departure?

A ground for departure exists where, in the special circumstances of the case, application of the administrative assessment of child support would result in an unjust and inequitable determination of child support to be provided by the liable parent in respect of the child because of the income, property and financial resources of either parent (subparagraph 117(2)(c)(ia) of the Act).
Ms Doaity told the Tribunal that up until April 2024 she had been working on a casual basis at [an agency] called [Employer 1]. Ms Doaity explained that due to the long hours and the cost of care for [Child 1] it was not financially beneficial for her to continue in the role. Ms Doaity said she was currently searching for new employment.
Ms Doaity said she also ran her own [business 1] as a sole trader. Ms Doaity said the business was now entirely online as she lived in transitional housing which made it difficult to see clients and expand any further. Ms Doaity added that she had established the business with Mr Afeland and was now considering closing it down as she did not have the financial expertise to continue operating. Ms Doaity said the business was more of a headache than it was worth given declining sales.
Mr Afeland told the Tribunal it was his view Ms Doaity would continue running her business as it generated cash income which was not declared. Mr Afeland said given [Child 1] was now nearly [age] years old he could not understand why Ms Doaity had stopped working. Mr Afeland added there were many employment opportunities in the current market.
Ms Doaity said all sales from her [business 1] were declared. She said her income had fallen in 2023–24 as a result of declining revenue from the business and leaving [Employer 1]. Ms Doaity pointed out that she was not entitled to government benefits due to her visa status and was surviving with the help of community aid.
The Tribunal notes in evidence from Child Support that Ms Doaity had an adjusted taxable income of $44,587 in 2022–23 and an adjusted taxable income of $29,596 in 2023–24.
Ms Doaity provided the Tribunal with a Statement of Financial Circumstances received on 4 July 2024. Ms Doaity lists total weekly household expenditure of approximately $851 including food of $200 and rent of $100. Ms Doaity said her accommodation was provided by [Agency 1] and she had no motor vehicle costs as she did not own a motor vehicle. Ms Doaity lists no personal expenditure. She declares assets totalling approximately $19,545 including shares valued at $6,106 and cash of $11,439. Ms Doaity has total liabilities of $4,644 and superannuation of $5,680.
The Tribunal finds that Ms Doaity had an adjusted taxable income of $44,587 in 2022–23 and an adjusted taxable income of $29,596 in 2023–24. The Tribunal is satisfied these amounts are an accurate representation of the income, property and financial resources available to her for the purposes of child support and she is fairly assessed under the usual administrative process.
The Tribunal also considered the income, property and financial resources of Mr Afeland.
Mr Afeland told the Tribunal he was [an occupation 1] and had worked for the same employer, [Employer 2], for around seven years. Mr Afeland said he was a director and shareholder of the holding company, [Business 2], but this ceased in 2017 as he preferred the certainty of earning an income as an employee. Mr Afeland said apart from his salary he received no other benefits from the business although he did have access to a work van which he could use after work.
The Tribunal notes in evidence from Child Support an extract from the Australian Securities and Investments Commission (ASIC) database showing Mr Afeland ceased being a director of [Business 2] on 2 May 2017 and is no longer a shareholder.
Mr Afeland said he was a signatory to the business bank account along with the business owner, [Mr A], as this enabled him to purchase [supplies] and equipment. Mr Afeland added he had only used the account for business purposes.
The Tribunal notes in evidence from Child Support a letter from [Mr A] dated 21 October 2022 in relation to his employment. The letter states, relevantly:
Mr Afeland has been working full time in my company since 2018. He is authorised to use the company’s [specified suppliers] and [Bank 1] business accounts; transactions made from these accounts are under my control and with my permission. His 2022 taxable income is $50,187.
Mr Afeland told the Tribunal his salary had risen to approximately $75,000 per annum from 14 April 2023 as his employer wanted him to stay at the business. Mr Afeland said his employer had later been required to issue a new contract of employment to ensure he retained his visa. Mr Afeland said he had stayed with [Employer 2] on his previously lower salary due to his immigration status.
In response to directions Mr Afeland provided the Tribunal with an offer of employment from [Employer 2] dated 1 December 2023. The offer sets out the terms and conditions of his employment as [an occupation 1] on a salary of $74,984 per annum with the contract commencing on the granting of his [temporary] visa. No start date is mentioned in the letter.
Ms Doaity submitted that Mr Afeland was not merely an employee of [Employer 2] as it was actually his business even though [Mr A] was the legal owner. Ms Doaity said Mr Afeland was in control of the business and it was Mr Afeland who promoted the business not [Mr A]. Ms Doaity added that Mr Afeland had previously transferred large sums of money to [Country 1] which she believed had been derived from the [occupation 1] business. Ms Doaity said, furthermore, the low salaries Mr Afeland had been earning at [Employer 2] were simply to manipulate the system and ensure he paid minimal child support for [Child 1].
Mr Afeland acknowledged that in the 2020–21 and 2021–22 financial years he had transferred money to his bank account in [Country 1]. Mr Afeland said the transfers were made to repay loans from friends in [Country 1] which he had borrowed to help Ms Doaity establish her business when they were still together. Mr Afeland said he had sold shares held in [Bank 1] to help repay the loans as well as borrowed money from friends in Australia. He said he stopped the transfers to [Country 1] by the end of 2022 but still had outstanding debts in [Country 1].
In response to directions Mr Afeland provided a list of 10 transactions totalling $24,200 and bank statements showing these transfers were made from an [Bank 1] account in his name between 14 January 2022 and 4 July 2022.
Mr Afeland reiterated that his only source of income was from his employment at [Employer 2]. He said he was not expecting any further increase in his salary in the near future.
In response to directions Mr Afeland provided the Tribunal with a payslip from [Business 2] for the fortnightly pay period ending 23 June 2024. It shows Mr Afeland received a gross year to date salary of $74,984. Mr Afeland also provided Australian Taxation Office (ATO) notices of assessment showing he had a taxable income of $53,672 for the year ended 30 June 2023, a taxable income of $50,187 for the year ended 30 June 2022, a taxable income of $49,315 for the year ended 30 June 2021, a taxable income of $49,754 for the year ended 30 June 2020 and a taxable income of $50,402 for the year ended 30 June 2019.
Ms Doaity said it was her view that Mr Afeland was spending far more than he was earning and had a lavish lifestyle which included travel and frequent visits to nightclubs and bars. Ms Doaity said Mr Afeland also had use of a [Vehicle 1] and was able to afford an expensive lawyer during their ongoing family law matters. Ms Doaity said this was all indicative of someone who was earning far more than his taxable income.
Following the hearing Ms Doaity provided the Tribunal with a large number of bank statements dating back to as early as 2016. The Tribunal accepted the more current bank statements as evidence which Ms Doaity said at hearing confirmed Mr Afeland was spending more than he earned. Ms Doaity said she did not understand how Mr Afeland, who insisted he was struggling financially, was able to afford such a lifestyle. Ms Doaity said this money could be better used to support [Child 1].
Mr Afeland said he agreed his expenses exceeded his income and he was borrowing money to survive. Mr Afeland said he did not own a [Vehicle 1] but it belonged to his employer who let him use it occasionally to take [Child 1] for a ride.
Mr Afeland told the Tribunal he had one account with [Bank 2] [in Country 1] and the balance was [Country 1 balance amount] (approximately A$6.60). Mr Afeland said he also had a credit card debt with the same bank in [Country 1] of [amount] (approximately A$2,809.45). Mr Afeland said, furthermore, he had a credit card debt with the [Bank 1] which he had to repay in 2023 using funds from other Australian credit cards as well as loans from friends. He said he still owed money to friends which he could not repay.
The Tribunal notes in evidence from Mr Afeland a letter from [Bank 2] stating that as at 5 December 2023 the balance of his account is [Country 1 amount]. A further letter from the bank confirms a credit card debt as at 5 December 2023 of [Country 1 amount]. Mr Afeland also provided:
·     a default notice from [finance business 1] dated 20 January 2023 stating an amount due to [Bank 1] as the original creditor of $81,513.40;
·     a statement for a [Bank 3] Mastercard in his name for the period from 30 April 2024 to 29 May 2024 showing an amount owing of $8,862.75;
·     a statement for a [Bank 4] Visa card in his name for the period from 23 May 2024 to 21 June 2024 showing an amount owing of $12,800.82; and
·     a statement for a [finance business 2] Mastercard in his name for the period from 26 April 2024 to 25 May 2024 showing an amount owing of $6,018.17.
The Tribunal further notes in evidence from Mr Afeland a letter from his employer, [Mr A], dated 20 June 2024. It states, relevantly, he had once owned a [Vehicle 1] which he sold. [Mr A] states the car was not associated with any tradesmen in the company. [Mr A] also states that all assets of the firm, loans, equipment and debts belong to him.
Mr Afeland also provided the Tribunal with a Statement of Financial Circumstances received on 8 July 2024. Mr Afeland lists total weekly household expenditure of $820 including rent of $300, food of $250 and $110 for supervised visits with [Child 1]. Mr Afeland clarified the cost of the supervised visits was $110 per week for three weeks each month. Mr Afeland declares total personal expenditure of $923 per week including minimum credit card payments of $250 and child support of $156. Mr Afeland has no assets and liabilities comprised of credit card debts totalling $27,680. He has superannuation of $22,206.
The Tribunal finds that Mr Afeland had an adjusted taxable income of $53,672 in 2022–23. While Ms Doaity believes Mr Afeland is the beneficial owner of [Employer 2] and not simply an employee the evidence does not support this contention. Mr Afeland does have access to the [Employer 2] bank account but it is used for work-related purposes and the Tribunal does not consider this to be unusual. Although the Tribunal is not completely satisfied with the explanation provided by Mr Afeland for the transfers of funds to [Country 1] in 2020–21 and 2021–22 he has argued these transfers have ended. Mr Afeland has provided bank statements to show the last of these transfers was on 4 July 2022. Ms Doaity submits that Mr Afeland is clearly spending more than he earns, however, this is not necessarily an indication of hidden income. The evidence points to his spending being funded primarily by credit card debt and the Tribunal is satisfied this is the case.

The Tribunal is not satisfied, however, that Mr Afeland’s true income and financial resources are accurately reflected by his taxable income alone. Mr Afeland has access to a company van which he acknowledges he is able to use outside work hours. The Tribunal considers this to be a benefit available to Mr Afeland which is not available to an ordinary taxpayer. In reaching this view the Tribunal is conscious that Mr Afeland does not own a motor vehicle but lists no transport costs in his Statement of Financial Circumstances.
The Tribunal finds Mr Afeland would be more fairly assessed as if he had an adjusted taxable income of $58,672 in 2022–23. The Tribunal has calculated this amount by adding to his actual adjusted taxable income the sum of $5,000 representing the benefit he receives from the private use of his work van. The Tribunal considers this to be fair.
Mr Afeland received a salary increase and was being paid $74,984 per annum from 14 April 2023. The full amount will be reflected in the 2023–24 financial year. Mr Afeland provided the Tribunal with a copy of his most recent notice of assessment rather than his individual tax return which makes it difficult to determine the exact nature of any relevant deductions. Nonetheless, after taking into account a reasonable level of work-related deductions, the Tribunal is satisfied his taxable income will be approximately $72,984 in 2023–24. The Tribunal is satisfied Mr Afeland would be more fairly assessed as if he had an adjusted taxable income of $77,984 in 2023–24 and going forward (his taxable income plus the benefit associated with private use of his work van).
The administrative assessment in place at the time Ms Doaity made her application for a change on 7 August 2022 was based on 2020–21 adjusted taxable income of $49,315 for Mr Afeland. The Tribunal has found, however, that Mr Afeland would be more fairly assessed as if he had an adjusted taxable income of $58,672 in 2022–23. When this amount is applied in the child support formula, the annual rate of child support payable by Mr Afeland would be approximately $5,373.
The Tribunal finds this to be significantly more than his liability under the administrative assessment. The Tribunal is satisfied that special circumstances exist and the application of the administrative assessment of child support would result in an unjust and inequitable determination of child support to be provided by Mr Afeland. On this basis the Tribunal finds there is a ground for departure from the administrative assessment.

Issue 2 – Is it just or equitable to make a particular determination?

As the Tribunal finds 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 as regards the child, the liable parent and the carer entitled to child support 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 discussed below,[1] which are as set out in subsection 117(4) of the Act:
[1] The Tribunal is required to give “overt consideration” to relevant factors listed in subsection 117(4) of the Act: Tyagi & Meares(SSAT Appeal) [2008] FMCAfam 886.
(4)In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:
(a)the nature of the duty of a parent to maintain a child (as stated in section 3); and
(b)the proper needs of the child; and
(c)the income, earning capacity, property and financial resources of the child; and
(d)the income, property and financial resources of each parent who is a party to the proceeding; and
(da) the earning capacity of each parent who is a party to the proceeding; and
(e)the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:
(i)himself or herself; or
(ii)any other child or another person that the person has a duty to maintain; and
(f)the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and
(g)any hardship that would be caused:
(i)to:
(A)the child; or
(B)the carer entitled to child support;
by the making of, or the refusal to make, the order; and
(ii)to:
(A)the liable parent; or
(B)any other child or another person that the liable parent has a duty to support;
by the making of, or the refusal to make, the order; and
(iii)to any resident child of the parent (see subsection (10)) by the making of, or the refusal to make, the order.

The nature of the duty of a parent to maintain a child

Section 3 of the Act states that it is the primary duty of a parent to maintain the child and this has priority over nearly all other commitments.
In this case the parents have a duty to support [Child 1]. The Tribunal was not made aware that either parent has a legal responsibility to any other child or person.

The proper needs of the child

In relation to the proper needs of the child, regard must be had to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained, and any special needs of the child (subsection 117(6) of the Act).
Ms Doaity told the Tribunal that [Child 1] had special needs. Ms Doaity said [Child 1] had been diagnosed with hypermobility and was required to attend a physiotherapist, occupational therapist and podiatrist. Ms Doaity added that [Child 1] had also recently seen a urologist and would likely do so on an annual basis.
The Tribunal notes in evidence a letter from paediatrician and paediatric rheumatologist [Doctor A] addressed to the GP who referred [Child 1]. The letter, dated 31 March 2022, states that “[Child 1] is a happy, healthy hypermobile boy with common biomechanical variants seen in hypermobile kids”. It also states [Child 1] “would benefit from physiotherapy management” and “would also benefit from seeing a paediatric OT”. The specialist sets out a management plan for [Child 1] which includes, relevantly, physiotherapy and OT at [Health Service 1] as well as wearing orthotics and trialling compression garments. The letter also states that [Child 1] should keep active.
Ms Doaity told the Tribunal that [Child 1] had been seeing the physiotherapist regularly and thought he had attended around eight times in 2022–23 but she could not find the invoices. Ms Doaity said [Child 1] was now only attending physiotherapy if the need presented itself. Ms Doaity added [Child 1] had visited the occupational therapist on four occasions in 2022–23 but was no longer attending.
The Tribunal notes in evidence a second letter from paediatrician and paediatric rheumatologist [Doctor A] addressed to the GP who referred [Child 1]. The letter, dated 1 September 2022, states that [Child 1] returned for a follow-up and “continues to progress well”. The specialist sets out a management plan including intermittent physiotherapy and OT at [Health Service 1] as well as keeping active. Ms Doaity provided the Tribunal with a similar letter dated 7 September 2023 in which the specialist states [Child 1] has made good progress over time and recommending physiotherapy and OT “if/when necessary”.
In response to directions Ms Doaity supplied the Tribunal with the following evidence of medical expenses met for [Child 1]:
·     [Health Insurance 1] claim for physiotherapy services provided on 25 July 2022 showing a fee charged of $180 and a benefit of $36 leaving an out of pocket cost of $144;
·     [Health Insurance 1] claim for OT services provided on 29 September 2022, 20 October 2022, 22 November 2022 and 31 January 2023 each showing a fee charged of $185 and a benefit paid of $65.85 leaving a total out of pocket cost of $476.60;
·     Invoice from podiatrist [named] dated 1 March 2023 for $170 (there is no rebate for podiatry);
·     [Health Insurance 1] claim for a general consultation provided on 15 November 2022 showing a fee charged of $73 and a benefit paid of $39.75 leaving an out of pocket cost of $33.25;
·     Invoices from [Doctor A] dated 1 September 2022 for $270 and 7 September 2023 for $270;[2]
[2] This second invoice relates to a separate [Health Insurance 1] claim on 7 September 2023 also provided by Ms Doaity.
·     [Health Insurance 1] claim for professional attendance on 29 March 2023 showing a fee charged of $140 and a benefit paid of $76.95 leaving an out of pocket cost of $63.05;
·     [Health Insurance 1] claim for a long consultation on 13 April 2023 showing a fee charged of $142.50 and a benefit paid of $85.50 leaving an out of pocket cost of $57;
·     [Health Insurance 1] claim for professional attendance on 4 May 2023 showing a fee charged of $48 and a benefit paid of $18.20 leaving an out of pocket cost of $29.80;
·     [Health Insurance 1] claim for professional attendance on 17 May 2023 showing a fee charged of $86 and a benefit paid of $39.75 leaving an out of pocket cost of $46.25;
·     [Health Insurance 1] claim for professional attendance on 2 June 2023 showing a fee charged of $73 and a benefit paid of $39.75 leaving an out of pocket cost of $33.25;
·     [Health Insurance 1] claim for professional attendance on 16 June 2023 showing a fee charged of $86 and a benefit paid of $39.75 leaving an out of pocket cost of $46.25;
·     [Health Insurance 1] claim for professional attendance on 7 September 2023 showing a fee charged of $270 and a benefit paid of $167.75 leaving an out of pocket cost of $102.25 (this relates to the invoice from [Doctor A]);
·     Invoice from urologist [Doctor B] dated 15 November 2023 for $110;
·     [Health Insurance 1] claim for professional attendance on 12 January 2024 showing a fee charged of $90 and a benefit paid of $70.40 leaving an out of pocket cost of $19.60; and
·     [Health Insurance 1] claim for a specialist consultation on 10 January 2024 showing a fee charged of $110 and a benefit paid of $48.05 leaving an out of pocket cost of $61.95.
The Tribunal notes in evidence from Child Support an invoice for [brand] sensory clothing dated 12 July 2022 for a total of $108.81. There are also numerous medical invoices for services associated with paediatrics, physiotherapy and occupational therapy from 14 October 2021 to 30 June 2022.
The Tribunal is satisfied that [Child 1] has special needs in relation to his diagnosis of hypermobility and is required to see a paediatrician, physiotherapist and occupational therapist. The letter from his treating specialist dated 31 March 2022 sets out a management plan for [Child 1] which includes physiotherapy and occupational therapy as well as wearing orthotics and trialling compression garments. The letter from the same specialist dated 7 September 2023 states [Child 1] has made good progress and physiotherapy and occupational therapy is now only required if necessary. The Tribunal considers, based upon this evidence, that regular ongoing sessions are no longer required.
Although Ms Doaity has stated that [Child 1] attended the physiotherapist more than once in 2022–23 the Tribunal cannot take into account costs without evidence to support these costs have actually been incurred. Ms Doaity also provided the Tribunal with a health care plan for occupational therapy dated 19 October 2023, however, there is no evidence of regular attendance from this date. Ms Doaity has told the Tribunal that [Child 1] is not currently seeing an occupational therapist. The Tribunal will not consider this further.
The total out of pocket cost to Ms Doaity in 2022–23 was $1,310.51 and in 2023–24 it was $293.80. In reaching this conclusion the Tribunal considers it reasonable to assume Ms Doaity received a [Health Insurance 1] rebate for all visits to [Doctor A]. The Tribunal has not taken into account costs prior to the start date of the assessment. One-off minor pharmacy costs have not been included. Ordinary visits to a general practitioner for regular check-ups are not considered special or unusual. If Ms Doaity is to make a future application for a change of assessment in relation to the costs associated with any special needs [Child 1] may have, she will need to provide invoices which make it clear the costs are directly related to those special needs rather than the usual visits to a general practitioner.
The Tribunal will consider the cost of meeting these special needs when determining a just and equitable outcome.
Ms Doaity told the Tribunal that [Child 1] had also broken his arm in January 2023 and was required to go to hospital. Ms Doaity pointed out that [Child 1] was not covered under Medicare and so she had met the costs of treatment then claimed rebates through [Health Insurance 1].
The Tribunal notes in evidence a discharge summary from [Hospital 1] stating that [Child 1] was admitted [in] January 2023 with a fracture of his left forearm. In response to directions Ms Doaity provided the Tribunal with invoices and [Health Insurance 1] claims associated with the treatment:
·     Invoice from the Department of Health dated [in] January 2023 for emergency triage of an overseas visitor at a cost of $940 and a [Health Insurance 1] claim showing a rebate of $317.80 leaving an out of pocket cost of $622.20;
·     Invoice from the Department of Health dated [in] January 2023 for fluoroscopy at a cost of $245 and a [Health Insurance 1] claim showing a rebate of $66.35 leaving an out of pocket cost of $178.65;
·     Invoice from the Department of Health dated 17 January 2023 for overseas visitor outpatient services (radiology) at a cost of $351 and a [Health Insurance 1] claim showing a rebate of $41.35 leaving an out of pocket cost of $309.65;
·     Invoice from the Department of Health dated 17 January 2023 for overseas visitor outpatient services (fracture clinic) at a cost of $351 and a handwritten note for a [Health Insurance 1] rebate of $91.80 leaving an out of pocket cost of $259.20;
·     Invoice from the Department of Health dated 25 January 2023 for overseas visitor outpatient services (radiology) at a cost of $351 and a [Health Insurance 1] claim showing a rebate of $41.35 leaving an out of pocket cost of $309.65;
·     Invoice from the Department of Health dated 25 January 2023 for overseas visitor outpatient services (fracture clinic) at a cost of $351 and a [Health Insurance 1] claim showing a rebate of $41.35 leaving an out of pocket cost of $309.65;
·     Invoice from the Department of Health dated 22 February 2023 for overseas visitor outpatient services (radiology) at a cost of $351 and a [Health Insurance 1] claim showing a rebate of $41.35 leaving an out of pocket cost of $309.65; and
·     Invoice from the Department of Health dated 22 February 2023 for overseas visitor outpatient services (fracture clinic) at a cost of $351 and a [Health Insurance 1] claim showing a rebate of $41.35 leaving an out of pocket cost of $309.65.
The Tribunal is satisfied that [Child 1] has special needs in relation to the requirement for treatment associated with his broken arm. The total out of pocket cost to Ms Doaity was $2,608.30. The Tribunal will consider the cost of meeting these special needs when determining a just and equitable outcome.
Ms Doaity told the Tribunal that [Child 1] had also been involved in swimming and karate and was now doing parkour. Ms Doaity argued these activities were also related to [Child 1’s] special needs.
It is the view of the Tribunal that most children undertake some form of extracurricular sporting activity and the costs associated with this are covered in the ordinary child support formula. In his various assessments the specialist, [Doctor A], refers to the need for [Child 1] to remain active. There is no specific mention that [Child 1] should attend such structured physical activities or that these are a strictly necessary part of his treatment. It is not unusual for children to take swimming lessons or partake in other activities like karate. As such the Tribunal will not consider these costs further.
The Tribunal finds that, apart from the extra costs identified, it is appropriate to otherwise calculate the costs of the child’s needs by reference to the Costs of the Children Table (provided for in Schedule 1 to the Act).

The income, earning capacity, property and financial resources of the child

The Tribunal is satisfied that [Child 1] has no income, earning capacity, property and financial resources which should be taken into account for the purposes of child support.

The income, property, financial resources and earning capacity of each parent

The Tribunal has already considered in detail the income, property and financial resources of both parents.
In her application to Child Support for a change of assessment, Ms Doaity raised the earning capacity of Mr Afeland. Ms Doaity told the Tribunal that as Mr Afeland was an experienced [occupation 1] she could not understand why it was accepted he was earning such a low income.
In order to establish that Mr Afeland’s earning capacity might be greater than that reflected in the child support assessment and render the assessment unfair, all three compulsory criteria set out in subsection 117(7B) of the Act must be satisfied. Those three criteria are:
(a)    one or more of the following applies:
·the parent does not work despite ample opportunity to do so (subparagraph 117(7B)(a)(i));
·the parent has reduced the number of hours per week of their employment or other work below the normal number of hours per week that constitutes full-time work for the occupation or industry in which the parent is employed or otherwise engaged (subparagraph 117(7B)(a)(ii));
·the parent has changed their occupation, industry or working pattern (subparagraph 117(7B)(a)(iii)); and
(b)    the parent’s decision not to work, to reduce the number of hours, or to change their occupation, industry or working pattern is not justified on the basis of:
·the parent’s caring responsibilities (subparagraph 117(7B)(b)(i)); or
·the parent’s state of health (subparagraph 117(7B)(b)(ii)); and
(c)    the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child (paragraph 117(7B)(c)).
The intent of the legislation in relation to earning capacity is primarily to guard against a situation where a parent has deliberately reduced their income and this has had a significant effect on the child support assessment. It is not designed to assess a parent on what they might be able to do or prevent them from making choices about their careers.
Mr Afeland commenced employment with his current employer in 2017 and continues to work full time for that employer. He has not reduced his hours of work and remains in the same occupation. The Tribunal is satisfied the first criterion is not met in relation to Mr Afeland. As all three criteria must be satisfied, it follows that if one is not satisfied, then this ground cannot be considered. The Tribunal finds that the earning capacity criteria (set out in subsection 117(7B) of the Act) are not met for Ms Doaity in this case given her current circumstances and her caring responsibilities.

Any hardship that would be caused

At the time Ms Doaity made her application to Child Support for a change of assessment on 7 August 2022 Mr Afeland was being assessed on his 2020–21 adjusted taxable income of $49,315. Ms Doaity was being assessed on her 2020–21 adjusted taxable income of $30,845. From 1 October 2022 to 30 June 2023 Ms Doaity was being assessed on a 2021–22 provisional adjusted taxable income of $31,740.[3] The Tribunal has found that Ms Doaity had an adjusted taxable income of $44,587 in 2022–23 and an adjusted taxable income of $29,596 in 2023–24 and is adequately assessed under the usual administrative method.
[3] A provisional adjusted taxable income is updated once an actual adjusted taxable income is received.

Ms Doaity has total average household expenses of approximately $44,278. The Tribunal notes this includes some discretionary expenditure on entertainment and gifts of $5,720 per annum. Ms Doaity declares no personal expenditure.
Ms Doaity told the Tribunal she led a very basic life and was fortunate to have assisted accommodation. Ms Doaity said she did not spend much and focussed on the needs of [Child 1].
The Tribunal has found that Mr Afeland would be more fairly assessed as if he had an adjusted taxable income of $58,672 in 2022–23. Mr Afeland received a salary increase from 14 April 2023 with the full amount of $74,984 per annum being reflected in the 2023–24 financial year. The Tribunal determined that Mr Afeland would be more fairly assessed as if he had an adjusted taxable income of $77,984 in 2023–24 and going forward.
Mr Afeland has total average household expenditure of approximately $42,640 per annum. The Tribunal notes this does not include expenditure on entertainment, holidays or gifts although his credit card debts and bank statements suggest otherwise. His total personal expenditure equals approximately $48,041 per annum which includes child support of $8,125.
Mr Afeland told the Tribunal that his expenditure exceeded his income and he was hoping his tax return would assist in meeting some of his expenses. Mr Afeland said he was meeting his bills in turn as they came in and was struggling financially.
Ms Doaity applied to Child Support for a change of assessment on 7 August 2022. In her application Ms Doaity requested that any decision be backdated to 13 September 2021 which is prior to the commencement of the child support assessment.
The Tribunal is limited to making a determination in respect of a day in a period that is not more than 18 months prior to the date the change of assessment application was made (paragraph 98S(3B)(a) of the Act). The Tribunal must decide whether or not it is just and equitable to backdate the determination.
The Tribunal is of the broad view that retrospectively changing entitlements should be avoided without compelling reasons. Parents have a right to rely upon the assessment in place at the time and the general scheme of law puts the onus on the parents to initiate changes to the assessment. The Tribunal notes that, according to Child Support, Ms Doaity was sent a change of assessment application on 13 June 2022 but her application was not received until 7 August 2022. It is apparent Mr Afeland was aware of the medical costs related to [Child 1’s] special needs and that Ms Doaity was meeting these costs.
The Tribunal finds it just and equitable, in the circumstances of this case, to commence its determination from 1 July 2022 and not an earlier date.
Having considered the interests of both parents the Tribunal proposes to make the following determination:
·     for the period from 1 July 2022 to 30 June 2023 the adjusted taxable income of Mr Afeland is varied to $58,672;
·     for the period from 1 July 2023 to 31 October 2025 the adjusted taxable income of Mr Afeland is varied to $77,984;
·     for the period from 1 July 2022 to 30 June 2023 the annual rate of child support payable by Mr Afeland is increased by $1,959; and
·     for the period from 1 July 2023 to 30 June 2024 the annual rate of child support payable by Mr Afeland is increased by $147.

The Tribunal has varied the income of Mr Afeland until 31 October 2025 which is the end date of the current child support period and provides the parents with some certainty about the level of child support for [Child 1]. The child support assessment will then revert to the usual administrative formula.
As previously calculated when using the income determined by the Tribunal for Mr Afeland of $58,672 the annual rate of child support he is liable to pay increases to approximately $5,373 from 1 July 2022. This will increase to approximately $8,351 from 1 July 2023 when using the higher income of $77,984 for Mr Afeland as determined by the Tribunal. The annual rate of child support will fall slightly to approximately $8,243 when Ms Doaity is assessed on her 2022–23 adjusted taxable income of $44,587 from 1 August 2023.
The Tribunal has also varied the income of Mr Afeland to take account of the costs associated with [Child 1’s] special needs. The total out of pocket cost in 2022–23 was $3,918.81 (covering physiotherapy, occupational therapy and other medical services as well as the hospital visits associated with his fractured arm) and for 2023–24 it was $293.80. The Tribunal is satisfied it is just and equitable for the parents to meet an equal share of this expense being approximately $1,959 for the period from 1 July 2022 to 30 June 2023 and approximately $147 for the period from 1 July 2023 to 30 June 2024.
The Tribunal has not taken into account any medical costs prior to 1 July 2022 as to do so would create further arrears for Mr Afeland during a period when his income was lower. While Ms Doaity may decide to continue sending [Child 1] to occupational therapy in the future the Tribunal considers it would be unreasonable to expect Mr Afeland to meet any ongoing costs without further detailed assessment of the treatment plan and expected outcomes.
Under the decision of the Tribunal the combined annual amount of child support and the costs associated with [Child 1’s] special needs will be approximately $7,332 from 1 July 2022 to 30 June 2023. This will increase to $8,498 from 1 July 2023.
The Tribunal notes that a further change of assessment decision relating to the income, property and financial resources of the parents and [Child 1’s] special needs was made by Child Support on 1 December 2023. The decision of the Tribunal will override the change of assessment decision made by Child Support on 1 December 2023.

100.While the decision of the Tribunal will mean an increased child support obligation for Mr Afeland when compared to the administrative assessment the Tribunal is satisfied he has the financial resources available to meet this requirement particularly with adjustments to his discretionary expenditure.
101.The Tribunal finds the proposed determination will not cause hardship to Ms Doaity, Mr Afeland or [Child 1] and is just and equitable.

Issue 3 – Is it otherwise proper to make a particular determination?

102.The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Act. Subsection 117(5) sets out the matters that must be considered when deciding whether it would be otherwise proper to make a departure determination. It focuses on the balance of support carried between the parents on one hand and the taxpayer on the other. It is appropriate for the children to be primarily supported by their parents rather than by government assistance. The Tribunal must consider whether the level of a benefit, in particular family tax benefit, received by the party caring for the children may be affected by the level of child support.
103.Ms Doaity is not in receipt of family tax benefit. The Tribunal is satisfied that its determination will result in an appropriate apportionment of financial responsibility between the parents and the community and would be otherwise proper.
DECISION

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

for the period from 1 July 2022 to 30 June 2023 the adjusted taxable income of Mr Afeland is varied to $58,672;
for the period from 1 July 2023 to 31 October 2025 the adjusted taxable income of Mr Afeland is varied to $77,984;
for the period from 1 July 2022 to 30 June 2023 the annual rate of child support payable by Mr Afeland is increased by $1,959; and
for the period from 1 July 2023 to 30 June 2024 the annual rate of child support payable by Mr Afeland is increased by $147.

[2024] AATA 3582

26 July 2024

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Jurisdiction

Judicial Review

Remedies

Statutory Construction