Dowding and Dowding (Child support)

Dowding and Dowding (Child support) [2024] AATA 484 (8 February 2024)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2023/SC026651
APPLICANT:  Ms Dowding
OTHER PARTIES:  Child Support Registrar
MrDowding

TRIBUNAL:Senior Member R Ellis
DECISION DATE: 08 February 2024
DECISION:

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

for the period from 2 November 2022 to 30 June 2023 the adjusted taxable income of Mr Dowding is varied to $88,519; and

for the period from 1 July 2023 to 31 March 2025 the adjusted taxable income of Mr Dowding is varied to $80,000.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – ground for departure established - hardship - 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

This review is about whether or not there should be a departure from the administrative assessment of child support.
Ms Dowding and Mr Dowding are the parents of [Child 1] (born May 2007) and [Child 2] (born September 2011). There has been a child support assessment in place since 22 August 2022 and Mr Dowding is currently the liable parent under the assessment.
The following administrative assessments of child support are under consideration:
· for the period from 2 October 2022 to 5 November 2022 Mr Dowding was assessed to pay an annual rate of $9,088 based on a 2021-22 adjusted taxable income of $63,303 for Mr Dowding and a 2021-22 adjusted taxable income for Ms Dowding of $101,219; and
· for the period from 6 November 2022 to 21 November 2023 Mr Dowding was assessed to pay an annual rate of $2,168 based on a 2021-22 adjusted taxable income of $63,303 for Mr Dowding and a 2021-22 adjusted taxable income for Ms Dowding of $101,219 (the change in the annual rate was due to a change in care for [Child 1]).
On 2 November 2022 Ms Dowding 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), the high cost of caring for, educating or training the child (Reason 3) and a parent’s income, property and financial resources (Reason 8A).
On 8 May 2023 Child Support made the decision to change the assessment so that for the period from 1 May 2023 to 30 April 2025 the annual rate of child support payable by Mr Dowding is increased by $2,248 (the original decision).
On 11 May 2023 Mr Dowding objected to this decision and on 3 August 2023 Child Support allowed the objection and made the decision to set aside the original decision and refuse to change the administrative assessment (the objection decision).
On 23 August 2023 Ms Dowding applied for a review of the objection decision by the Administrative Appeals Tribunal (the Tribunal).
A directions hearing was held on 12 December 2023. Ms Dowding attended by Microsoft Teams audio. Mr Dowding informed the Tribunal he did not wish to participate in the directions hearing. 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 (465 pages).
Ms Dowding and Mr Dowding were directed by the Tribunal to provide further information. Ms Dowding complied to the satisfaction of the Tribunal. Mr Dowding did not comply and informed the Tribunal he did not want any personal information exchanged with Ms Dowding due to domestic violence concerns.
A hearing was held on 30 January 2024. Ms Dowding and Mr Dowding gave evidence on affirmation by Microsoft Teams audio. Mr Dowding was represented by Ms [A] from law firm [name]. Prior to the hearing the Tribunal received documents folioed A1 to A46 from Ms Dowding and B1 to B22 from Mr Dowding and these were distributed to the parties. Additional documents were also received from Child Support (pages 466–511).
At the commencement of the hearing the Tribunal sought clarification from Ms Dowding and Mr Dowding as to the reasons for their concerns. Ms Dowding told the Tribunal she disagreed with the income determined by Child Support for Mr Dowding. Ms Dowding said she was also seeking a fair contribution from Mr Dowding towards various expenses for the children including school fees and other education-related costs as well as the cost of extra-curricular activities such as dance classes for [Child 2]. [Ms A] said her client was broadly satisfied with the objection decision made by Child Support.
During the hearing [Ms A] informed the Tribunal her client agreed to the exchange of his most recent individual tax return. This was received on 30 January 2024 and a copy sent to Ms Dowding (B23–B45). A further hearing was held on 8 February 2024 to address this additional financial information provided by Mr Dowding.

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 need only 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 Dowding told the Tribunal she was employed in a full-time capacity at [a workplace] and had been for more than 20 years.
In response to directions Ms Dowding provided the Tribunal with a copy of her individual tax return for 2022-23. It shows a total income of $112,873 from one employer. After allowing for work-related deductions, Ms Dowding had an adjusted taxable income of $111,170 in 2022-23. The Tribunal notes Ms Dowding had an adjusted taxable income of $101,219 in 2021-22.
Ms Dowding explained that in 2022-23 she took on more overtime in order to help her support [Child 1] and [Child 2], which accounted for the increase in her adjusted taxable income compared to the previous financial year. Ms Dowding said to date there had not been the same opportunity for additional work and she did not expect her adjusted taxable income to be as high in 2023-24.
Ms Dowding also provided the Tribunal with a Statement of Financial Circumstances received on 13 September 2023.
Ms Dowding lists total weekly household expenditure of approximately $2,724 including mortgage payments of $514, food of $288, education expenses of $242 and total motor vehicle expenses of $90. Ms Dowding said she was meeting the full costs of educating [Child 1] and [Child 2]. Ms Dowding added that she also had ongoing legal costs. Her total personal expenditure is approximately $695 per week, including income tax of $544 and private health insurance premiums of $22. Ms Dowding declares total assets valued at $2,492,070 including the family home valued at $2,450,000, a motor vehicle valued at $17,500, household contents and a small amount of funds in banks. She has total liabilities of $280,236 being the mortgage on her home of $157,310, a loan from her sister of $118,500 and credit card debt. Ms Dowding said the loan from her sister was used to offset the amount owed on her home loan. Ms Dowding has superannuation of $132,631.
The Tribunal finds that Ms Dowding had an adjusted taxable income of $111,170 in 2022-23. Although Ms Dowding did earn additional income in 2022-23 by working overtime, the Tribunal notes this was the subject of a post-separation income decision made by Child Support and will address this further when making a just and equitable determination. The Tribunal is otherwise satisfied Ms Dowding is fairly assessed under the usual administrative process.
The Tribunal also considered the income, property and financial resources of Mr Dowding.
[Ms A] told the Tribunal that her client was self-employed and operated his own [business] as a sole trader. [Ms A] said the business was called [name] and focussed on [details deleted]. [Ms A] said the business struggled during the COVID-19 pandemic but had since improved. [Ms A] pointed out that [the work] was weather dependent and there were times when Mr Dowding was unable to generate income. [Ms A] also said her client had a health condition which meant he needed to be careful when undertaking onerous physical labour. She said Mr Dowding was taking medication for his condition.
Following the hearing on 30 January 2024 Mr Dowding provided the Tribunal with a copy of his individual tax return for 2022-23. It shows a taxable income of $64,165 comprised of net income from his business of $58,582, gross interest of $3,155 and dividends totalling $2,428. The tax return also shows that [the company] generated total business income of $220,082 and incurred total expenses of $161,500 in 2022-23. The Tribunal notes that total expenses included contractor expenses of $47,678, bad debts of $15, depreciation expenses of $46,708, motor vehicle expenses of $8,391 and all other expenses of $58,708. Additional information in the tax return shows that all other expenses include such major costs as materials and supplies of $41,482, home office expenses of $4,555, replacement tools of $4,134, office equipment of $2,243 and telephone expenses of $1,254. The depreciation schedule reveals that depreciation was motor vehicle related.
[Ms A] told the Tribunal Mr Dowding did not draw a salary but relied on the profits of the business to meet his costs. [Ms A] said the business used contractors to undertake work of a more physical nature as Mr Dowding found this difficult due to his age and health condition. [Ms A] added that her client expected he would continue to rely on contractors going forward. [Ms A] explained that depreciation expenses related primarily to a new work vehicle purchased on 5 August 2022, which had been financed through savings. [Ms A] said motor vehicle and telephone expenses were business-related although Mr Dowding agreed a small portion, around 10 per cent, was for private use. [Ms A] submitted that given the nature of the business and the age of her client Mr Dowding had little long-term income security. [Ms A] said her client anticipated the business might generate a profit of approximately $70,000 in the current financial year based upon turnover in the first half of 2023-24. [Ms A] pointed out that her client had yet to have a vacation and when he did this would impact on business earnings in 2023-24.
The Tribunal notes in evidence from Child Support a copy of Mr Dowding’s individual tax return for 2021-22. It shows total income of $63,303 comprised of income from his business of $61,109 and other income totalling $2,194. [The company] generated total income of $121,531 and incurred total expenses of $60,422 in 2021-22.
Ms Dowding told the Tribunal that Mr Dowding appeared to be earning less each year from his business and if this continued it would be difficult for her to meet the needs of the children. Ms Dowding said she did not question the legitimacy of the business expenses outlined in the financial information provided but pointed out the amount claimed for depreciation was far greater than the usual annual rate allowed for motor vehicle depreciation. Ms Dowding said this reduced the profit of the [business].
Mr Dowding did not provide the Tribunal with a Statement of Financial Circumstances. [Ms A] told the Tribunal that, in accordance with his tax return, Mr Dowding had a gross weekly income of $1,200 and weekly expenses totalling approximately $1,693.
The Tribunal finds that Mr Dowding had a taxable income of $64,165 in 2022-23.
The Tribunal is not satisfied, however, that Mr Dowding’s true income and financial resources are accurately reflected by his taxable income alone. There are certain advantages in being self-employed which are not generally available to salary and wage earners. Such advantages may include being able to write off personal expenses against the business, reducing personal tax liability as a result of the way the business is structured and being able to claim business expenses which offer a parent some personal gain.
While this may be quite legitimate for tax purposes, the Family Court has found that such practices may not properly reflect the true financial resources or capacity of a person to contribute to the financial support of their children and may therefore be ignored. For example, in Voss & Child Support Registrar & Anor (SSAT Appeal) [2009] FMCAfam 1296, the Court commented on the common situation of a self-employed person’s taxable income not corresponding with his or her income or financial resources for child support purposes:
There is a body of cases where simple reference to a person's tax return does not provide an appropriate quantification of their capacity to provide financial support. Most commonly this occurs in cases involving the self-employed, where it is well accepted that legal structures and arrangements may generate taxable income that doesn't properly reflect the realistic capacity of the person to provide financial support for their children.
In such cases, assessing child support on the basis of taxable income only can result in an unjust and inequitable level of child support.
The Tribunal is satisfied Mr Dowding meets some of his personal costs through his business. In addition, although depreciation is a legitimate expense for taxation purposes, it is not an actual expense incurred until such time as the equipment depreciated is replaced. It is for this reason that depreciation can be considered a resource available to business owners. That is not to suggest in any way that Mr Dowding has incorrectly claimed depreciation as an expense in his taxation return. The Tribunal believes, however, that such personal benefits available to Mr Dowding through his business are a financial resource that should be regarded as income for the purposes of child support.
The Tribunal finds that Mr Dowding had access to income, property and financial resources equivalent to a person with an adjusted taxable income of approximately $88,519 in 2022-23. The Tribunal has calculated this figure by adding to his taxable income of $64,165 the amount of $1,000 for personal expenses, such as motor vehicle and telephone expenses, met through his business, plus an amount of $23,354 for depreciation expenses. The Tribunal notes the majority of the depreciation expense in 2022-23 relates to a [utility] which is used predominantly for work purposes. It is for this reason the Tribunal has apportioned half the total motor vehicle depreciation expense as a financial resource available to Mr Dowding. The Tribunal considers this to be a fair approach.
[Ms A] has told the Tribunal that Mr Dowding is unable to undertake the more physical aspects of his work and will continue to rely on contractors to help keep the business operating. [Ms A] argues that [work] is weather dependent and it is difficult to predict revenue going forward. [Ms A] has said, based on current turnover, her client expects he could generate a profit of approximately $70,000 in 2023-24.
The Tribunal accepts that determining an ongoing income for Mr Dowding from his business is difficult in light of these various factors. The Tribunal notes the business generated total revenue of $248,862 in 2020-21. Total revenue fell to $121,531 in 2021-22 before bouncing back to $220,082 in 2022-23. Balancing this improvement in business revenue and the other income Mr Dowding generates against the variable nature of the [business], the Tribunal is satisfied that $80,000 is a fair representation of the income, property and financial resources available to Mr Dowding going forward.
The administrative assessment in place at the time Ms Dowding made her application for a change of assessment on 2 November 2022 was based on a 2021-22 adjusted taxable income for Mr Dowding of $63,303. The Tribunal has found, however, that Mr Dowding has access to income, property and financial resources equivalent to a person with an adjusted taxable income of approximately $88,519 in 2022-23. When this amount is applied in the child support formula, the annual rate of child support payable by Mr Dowding would be approximately $14,896 from 2 November 2022 and approximately $6,679 from 6 November 2022 due to the change in care for [Child 1] (the parents having shared care from this date).
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 Dowding. 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] and [Child 2]. 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 Dowding told the Tribunal that prior to separation the parents had agreed [Child 1] and [Child 2] should be educated in the Catholic school system. Ms Dowding said in 2023 [Child 1] was attending [School 1] and [Child 2] was attending [School 2]. Ms Dowding said [Child 2] was starting high school at [School 3] this year, which meant increased fees and additional costs for new school uniforms, a laptop and books.
Ms Dowding argued that although she had agreed during property settlement to meet these costs, she could no longer afford to as she was now incurring additional legal costs because Mr Dowding was challenging care of the children. Ms Dowding said she was seeking an equal contribution from Mr Dowding towards the school fees and other school-related costs she was meeting.
[Ms A] said her client did not dispute that the parents had intended for [Child 1] and [Child 2] to receive a private education at fee-paying Catholic schools. [Ms A] pointed out that as part of negotiations for final property orders Ms Dowding had agreed to meet all costs associated with the children’s education up until they completed high school. [Ms A] submitted that Mr Dowding should not be required to meet any of these costs.
The Tribunal notes in evidence from Child Support a copy of sealed consent orders issued by the Federal Circuit and Family Court of Australia on 16 March 2023. The Recital to the consent orders states, relevantly:
The wife will pay 100% of the school fees, school expenses and school extra-curricular activities expenses for [Child 2] and [Child 1] for the duration of their primary and high school education at such school that they currently attend or such other school that the parties agree on from time to time or is ordered by a Court.
The Tribunal accepts Ms Dowding is meeting the full cost of private school fees for [Child 1] and [Child 2] and associated costs including school uniforms, devices and books. It is clear from the consent orders these costs formed part of the property settlement agreed between the parents. It would be inappropriate for the Tribunal to alter the child support assessment in any way to account for the education costs incurred by Ms Dowding as this would undermine the terms of the court orders. The Tribunal will not consider this matter further.
Ms Dowding told the Tribunal that [Child 2] had special needs and was attending a psychiatrist in the public health system every six weeks and receiving regular counselling. Ms Dowding said [Child 2] had been diagnosed with depression and more recently with attention-deficit hyperactivity disorder (ADHD). Ms Dowding explained that [Child 2] was attending dance and acting classes which had helped with her therapy. Ms Dowding said although [Child 2] had been attending such classes from around two and a half years of age she had stopped in 2022. Ms Dowding said her counsellor recommended that [Child 2] start again and she had attended two sessions a week during 2023, which had improved her mental health. Ms Dowding said [Child 2] would also be attending in 2024 and the cost would likely increase. She asked that Mr Dowding share equally in the cost.
The Tribunal notes in evidence from Child Support a letter dated 21 August 2023 from Ms [B], a senior social worker at [a health service]. [Ms B] is the primary clinician treating [Child 2] at [a health service], which she describes as a community paediatric mental health service for primary school-aged children attached to [a] Hospital. [Ms B] states that [Child 2] was referred to [a health service] in 2022 and she supports “a child support assessment that takes into account [Child 2]’s individual needs, including structured physical activities for [Child 2]”.
In response to directions Ms Dowding also provided the Tribunal with an invoice from [a school] for 2023. It states that [Child 2] attended singing, dancing and acting classes in Terms 1, 2, 3 and 4 in 2023 at a total cost of $2,960.
[Ms A] informed the Tribunal that her client was very aware of [Child 2]’s condition and regularly in touch with her treating practitioners including her psychiatrist. [Ms A] said that Mr Dowding considered [Child 2]’s dance classes to be more an extra-curricular sporting activity than something necessary for her mental health. [Ms A] said her client also paid for various sporting activities for [Child 1] such as his surfboard and running shoes.
The term ‘special needs’ is not defined in the legislation. Generally, the Tribunal must be satisfied that the needs of the child relate to a condition or disability that is out of the ordinary. These special needs can be because of a physical, mental or learning disability or because of a special talent or ability of the child.[2]
[2] Lightfoot v Hampson (1996) FLC 92-663.
There is no dispute between the parents that [Child 2] has a mental health condition and is currently being treated in the public health system. The Tribunal accepts that [Child 2] may benefit in a variety of ways from attending dance and acting classes but is not satisfied such activities are directly related to her condition or a formal part of her treatment plan. As Ms Dowding has pointed out, [Child 2] has been engaging in dance and acting classes from a very early age, well before she was diagnosed with depression. The Tribunal is of the view that costs associated with dance and acting classes for [Child 2] are not out of the ordinary or unusual and should be met through the child support assessment. These costs will not be considered further.
In her initial application to Child Support for a change of assessment, Ms Dowding also raised the cost of orthodontics for [Child 2]. Ms Dowding told the Tribunal that [Child 2] had required braces, which were fitted on 23 May 2023. Ms Dowding said as Mr Dowding had already met a half share of the cost and the orthodontist had now been paid in full she no longer wanted this matter considered by the Tribunal. [Ms A] confirmed her client had made payments direct to the orthodontist and the account had been paid in full. [Ms A] said her client agreed there was no need to consider the cost of orthodontics further.
Ms Dowding also raised the cost of private health insurance. Ms Dowding said Mr Dowding was proposing that she pay for private health cover for [Child 2] and he pay for private health cover for [Child 1]. Ms Dowding explained it was her preference to have family cover for both children and the parents share in this cost. As private health insurance is considered a discretionary expense, the Tribunal will not make a determination relating to this cost. The Tribunal is of the view this is a matter for the parents to resolve.
The Tribunal is satisfied it is appropriate to calculate the costs of the children’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] and [Child 2] have no income, earning capacity, property and financial resources which should be taken into account for the purpose 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.
Ms Dowding told the Tribunal that Mr Dowding was regularly taking time off work and believed he had the capacity to earn a higher income. In order to establish that Mr Dowding’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)).
Mr Dowding is self-employed and operates his own [business]. The Tribunal accepts that [work] is a physical role that is also subject to the weather conditions from time-to-time. There will be occasions when Mr Dowding is unable to work for these reasons. Mr Dowding continues to run his business and there is no evidence before the Tribunal to indicate he has reduced the hours he works per week to below full-time work. The Tribunal is also conscious that his business turnover has increased in 2022-23.
The Tribunal is satisfied the first criterion is not met in relation to Mr Dowding. 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 Mr Dowding in this case.
The Tribunal is also satisfied the earning capacity criteria are not met in relation to Ms Dowding.

Any hardship that would be caused

The Tribunal has found that Ms Dowding had an adjusted taxable income of $111,170 in 2022-23.
Ms Dowding told the Tribunal that towards the end of 2023, Child Support had accepted her application to exclude additional post-separation income when calculating her child support for [Child 1] and [Child 2]. Ms Dowding has also said the opportunities for overtime in the current financial year have been limited.
The Tribunal notes in evidence that on 23 November 2023 Child Support made a decision to exclude post-separation income and reduce the adjusted taxable income of Ms Dowding to $99,056 for the period from 22 November 2023 to 22 October 2024.
This post-separation income provision is not part of the change of assessment process. As an amount has already been excluded from Ms Dowding’s income for child support purposes the Tribunal is satisfied it would not be just and equitable to consider this further.
Ms Dowding lists total estimated household expenditure of $141,648 per annum although this includes legal expenses of $49,497, which would not be ongoing. Her annual personal expenditure totals $36,140. Ms Dowding said she was struggling to meet her expenses and considering dropping a number of activities for the children. Ms Dowding said when she took out the loan with [a bank] to finance the family home the initial sum was $360,000 but she did not draw down on the full amount. Ms Dowding said she was now using this facility to help meet her living costs.
Mr Dowding is self-employed and the Tribunal has found he has access to income, property and financial resources for the purposes of child support of approximately $88,519 in 2022-23. Mr Dowding did not provide a Statement of Financial Circumstances outlining his expenses but [Ms A] has told the Tribunal his expenses amounted to approximately $1,693 per week ($88,036 per annum).
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.
Ms Dowding applied for a change of assessment on 2 November 2022 and requested a change from 1 July 2022. This is before the child support assessment commenced.
The Tribunal is of the broad view that retrospectively changing entitlements should be avoided without compelling reasons. The parents have a right to rely upon the assessment in place at the time. As there was nothing preventing Ms Dowding from applying sooner, the Tribunal finds it just and equitable to commence the departure determination from 2 November 2022, being the date of her application, rather than an earlier date.
Having considered the interests of both parents, the Tribunal proposes to make the following determination:
· for the period from 2 November 2022 to 30 June 2023 the adjusted taxable income of Mr Dowding is varied to $88,519; and
· for the period from 1 July 2023 to 31 March 2025 the adjusted taxable income of Mr Dowding is varied to $80,000.
The administrative assessment in place at the time Ms Dowding initiated the change of assessment was based on an adjusted taxable income for Mr Dowding of $63,303. Mr Dowding was assessed to pay an annual rate of $9,088, falling to $2,168 from 6 November 2022 due to a change in care for [Child 1]. In keeping with the decision of the Tribunal, as previously calculated, the annual rate of child support Mr Dowding is liable to pay is approximately $14,896 from 2 November 2022, falling to approximately $6,679 from 6 November 2022. From 1 July 2023, when using the income of $80,000 for Mr Dowding as determined by the Tribunal, the annual rate payable will be approximately $5,203.
As a result of the post-separation income decision made by Child Support, the annual rate payable by Mr Dowding will increase to approximately $5,356 from 22 November 2023[3] but fall to approximately $4,517 from 23 October 2024 when the 2022-23 adjusted taxable income for Ms Dowding of $111,170 is used in the assessment.
[3] Using her post-separation income of $99,056 as determined by Child Support.
The annual rates of child support referred to above arising from the decision of the Tribunal should be regarded as estimates only due to the complexity of the child support formula.
The Tribunal has varied the income of Mr Dowding until 31 March 2025. This provides the parents with some certainty about the level of child support for [Child 1] and [Child 2] without being so far into the future as to render the decision out of touch with Mr Dowding’s financial circumstances as a self-employed sole trader.
While the decision of the Tribunal will result in additional child support payable by Mr Dowding when compared to the administrative assessment, the Tribunal is satisfied he has the financial resources available through his business to meet this obligation.
The Tribunal finds the proposed determination will not cause hardship to Ms Dowding, Mr Dowding or the children and is just and equitable.

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

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 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.
Ms Dowding is in receipt of family assistance. The increase in child support entitlements as set out in this decision when compared to the administrative assessment may decrease the extent to which the community will be supporting the children. The Tribunal is satisfied this is otherwise proper as its determination will result in an appropriate apportionment of financial responsibility between the parents and the taxpayer.

DECISION

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

for the period from 2 November 2022 to 30 June 2023 the adjusted taxable income of Mr Dowding is varied to $88,519; and

for the period from 1 July 2023 to 31 March 2025 the adjusted taxable income of Mr Dowding is varied to $80,000.

[2024] AATA 484

8 February 2024

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Appeal

Jurisdiction

Statutory Construction

Remedies