Doyle and Doyle (Child support)

[2019] AATA 565

Doyle and Doyle (Child support) [2019] AATA 565 (18 February 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/SC015110

APPLICANT:  Mr Doyle

OTHER PARTIES:  Ms Doyle

Child Support Registrar

TRIBUNAL:  Member P Jensen

DECISION DATE:  18 February 2019

DECISION:

The decision under review is set aside and, in substitution:

• from 22 January 2018 to 30 June 2018, Mr Doyle’s adjusted taxable income is varied to $80,500 per annum; and

• from 1 July 2018 to 31 December 2020, Mr Doyle’s adjusted taxable income is varied to $92,500 per annum.

CATCHWORDS

CHILD SUPPORT – departure determination – financial resources of both parents - 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

Introduction

1. Mr Doyle and Ms Doyle are the parents of [Child 1] who was born in 2011 and [Child 2] who was born in 2013. Mr Doyle has been recorded as providing 14% care and Ms Doyle has been recorded as providing 86% care to the children since the child support case was registered with the Department of Human Services - Child Support (“the CSA”) in 2016.

2. The Child Support (Assessment) Act 1989 (“the Act”) provides for an administrative assessment of 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 allows a parent to provide an estimate of their income and, if accepted, the estimate is used in the administrative assessment formula, subject to a reconciliation once the parent’s actual adjusted taxable income becomes known. The Act also provides for a departure from the administrative assessment in certain circumstances.

3. From 1 October 2017 the administrative assessment was based on Mr Doyle’s 2016-17 adjusted taxable income of $113,179 and Ms Doyle’s 2016-17 adjusted taxable income of $34,235. Mr Doyle was required to pay $14,718 per annum in child support.

4. On 22 January 2018, Mr Doyle provided, and the CSA accepted, an estimate of income of $46,928 per annum. Mr Doyle was required to pay $3,574 per annum in child support. Ms Doyle objected to the CSA’s decision to accept Mr Doyle’s estimate of income. An objections officer disallowed her objection.

5. On 21 May 2018, Ms Doyle lodged a departure application. An original decision-maker granted her application and made a departure decision which effectively stated:

   ·    Mr Doyle’s adjusted taxable income is varied to $96,122 per annum from 22 January 2018, to be increased annually on 1 January by the consumer price index national weighted average for the preceding September quarter, and his adjusted taxable income is varied until 31 October 2020; and

   ·    Ms Doyle’s adjusted taxable income is varied to $41,834 per annum from 22 January 2018, to be increased on 1 January 2019 by the consumer price index national weight average for the preceding September quarter, and her adjusted taxable income is varied until 31 October 2019.

6. Mr Doyle objected to that decision and his objection was disallowed. He applied for further review by the Tribunal. I conducted a directions hearing on 11 January 2019 and a full hearing on 18 February 2019. Mr Doyle and Ms Doyle gave sworn evidence by conference phone.

7. Paragraph 98C(1)(b) of the Act relevantly provides that a departure decision may be made in respect of a departure application if:

   (i)... one, or more than one, of the grounds for departure referred to in [subsection 117(2)] exists; and

   (ii)... 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; …

A ground for departure

1. Subparagraphs 117(2)(c)(ia) and (ib) of the Act, commonly referred to as Reason 8, provide as grounds for departure:

   that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:

   …

   (ia)because of the income, property and financial resources of either parent; or

   (ib)because of the earning capacity of either parent; …

2. The Tribunal can only find that a parent’s earning capacity is greater than their actual income if the requirements of subsection 117(7B) are satisfied. That subsection states:

   In having regard to the earning capacity of a parent of the child, the court may determine that the parent's earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:

   (a)one or more of the following applies:

   (i)the parent does not work despite ample opportunity to do so;

   (ii)the parent has reduced the number of hours per week of his or her 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;

   (iii)the parent has changed his or her occupation, industry or working pattern; and

   (b)the parent's decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:

   (i)the parent's caring responsibilities; or

   (ii)  the parent's state of health; 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.

1. Mr Doyle is a [Occupation 1]. Prior to his current employment which commenced in January 2018, he had believed that he had been employed by [Company 1] for approximately two years. However, when he resigned from that employment he was given an Employment Separation Certificate which stated that he had commenced employment with [Company 2] on 2 January 2017 and ceased employment on 3 December 2017. He had been unaware of the change in his employer. In any event, he stated, and Ms Doyle confirmed, that he had worked very long hours - 70 to 80 hours per week - while employed by [Company 1] and [Company 2].

2. Mr Doyle stated that in late 2018, he and his parents became aware through family friends that a [vehicle] with a work contract was for sale. Mr Doyle’s parents registered [Company name deleted](“[Company 3]”). Mr Doyle’s parents are the directors of [Company 3]. Mr Doyle’s mother is the sole shareholder of [Company 3]. [Company 3] purchased the [vehicle] with the work contract and it employed Mr Doyle as its sole [Occupation 1]. [Company 3] borrowed money to purchase the [vehicle] and the loan is secured, at least in part, by a chattel mortgage. Mr Doyle said he did not buy the [vehicle] with the work contract, directly or indirectly, because he was not in a financial position to do so.

3. Those bare facts raise the question as to whether Mr Doyle and his parents have arranged their affairs in a way that understates the extent of the income and financial resources that are available to Mr Doyle by virtue of the work that he does for [Company 3]. For that reason, I issued written directions that:

   1.4Mr Doyle ensure that his mother, [Ms A], is available to give oral evidence during the hearing by conference telephone. If he is unable to do so, then he is to immediately notify the AAT registry so that I can consider whether to issue a notice to her compelling her to give oral evidence during the hearing.

   1.5Mr Doyle provide the following evidence to the AAT by the close of business on 1 February 2019:

   -his most recent payslip from [Company 3];

   -[Company 3]’s 2017-18 financial statements and company tax return; and

   -[Company 3]’s Business Activity Statements for the 2^nd, 3^rd and 4^th quarters of 2017-18, and the 1^st and 2^nd quarters of 2018-19.

   1.6If Mr Doyle is unable to provide [Company 3]’s 2017-18 financial statements and company tax return and its Business Activity Statements for the 2^nd, 3^rd and 4^th quarters of 2017-18 and the 1^st and 2^nd quarters of 2018‑19, then he is to immediately notify the AAT registry to that I can consider whether to issue a notice to the public officer of that company, i.e.[Ms A], compelling her to provide that documentation.

4. Mr Doyle provided the documentation referred to above. [Company 3] made a small loss during 2017-18. It did not pay directors’ fees. It did not issue dividends to its shareholder. It did not lend money to Mr Doyle’s parents. The evidence suggests, and I find, that to the extent that [Company 3] has generated income and financial resources for anyone, it has done so for the benefit of Mr Doyle. In those circumstances, I did not consider it necessary to hear oral evidence from [Ms A]. Further, with respect to paragraph 117(7B)(a) of the Act, I am satisfied that Mr Doyle continues to work, and he has not reduced his hours of work below a full-time workload, and he has not changed his occupation, industry or working pattern. I cannot have regard to his earning capacity.

5. On Monday, 22 January 2018, Mr Doyle informed the CSA that he commenced employment with [Company 3] “last week”, which would suggest that he commenced employment on or about 15 January 2018. According to Mr Doyle’s payslip for the week ending 6 June 2018, his year to date earnings and meal allowances totalled $31,627.93. (Approximately one third of that sum was meal allowances.) There are 143 days from 15 January 2018 to 6 June 2018. His earnings and meals allowances equated to $31,627.93 / 143 x 365 = $80,729 per annum

6. According to Mr Doyle’s payslip for the week ending 23 January 2019, his year to date earnings and allowances totalled $44,632.26. The first day of his first pay run was 5 July 2018, and there are 203 days from 5 July 2018 to 23 January 2019. $44,632.26 / 203 x 365 = $80,250 per annum.

7. Mr Doyle calculated that his earnings and allowances totalled approximately $82,200 per annum, and he submitted that it would be fair to vary his adjusted taxable income to that amount for child support purposes. In doing so, he effectively submitted that his allowances should be included in his income for child support purposes, and I agree with that submission. His only allowances are meal allowances. To the extent that his allowances are spent on meals, they cover one of the ordinary costs of living that would otherwise have to be met from earnings. To the extent that his allowances exceed the costs of his meals, the difference is effectively income, albeit not taxable income.

8. I consider Mr Doyle’s payslips to be the best evidence of his earnings and allowances. His income and allowances from [Company 3] average approximately $80,500 per annum.

9. Mr Doyle said [Company 3] has provided him with [Vehicle 1] since July 2018, and he has sold his personal vehicle which was[Vehicle 2]. He said [Company 3] pays for all the costs associated with the [Vehicle 1]. When he completed a Statement of Financial Circumstances in October 2018 he still owned his [Vehicle 2] and he estimated that it cost him $105 per week. He agreed that he was predominantly using the [Vehicle 1] at that time. The value of his personal use of the [Vehicle 1] is therefore more than $105 net per week. I will proceed on the basis that the value of his personal use of the [Vehicle 1] is approximately $150 net per week, or $7,800 net per annum. A person who earns $80,500 gross per annum normally receives approximately $61,550 net per annum. To receive an additional $7,800 net per annum, they would normally have to earn approximately $92,500 gross per annum. Mr Doyle’s income and financial resources since July 2018 are fairly reflected for child support purposes in an adjusted taxable income of $92,500 per annum.

10. From 22 January 2018 the administrative assessment was based, in part, on Mr Doyle’s estimate of income of $46,928 per annum, subject to a reconciliation once his actual 2017‑18 adjusted taxable income became known. That adjusted taxable income did not fairly reflect the extent of Mr Doyle’s income and financial resources for child support purposes from January 2018 because it did not include the significant allowances that he was receiving from his current employer. Those circumstances as a whole constitute special circumstances such that the application of the administrative assessment would result in an unjust and inequitable determination of child support payable. Reason 8 is established.

Just and equitable

1. 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 children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.

2. Until recently, Mr Doyle was living in his home which he owns. He has an associated home loan. He is now living with his partner and he has rented his home to tenants. He gave details of his rental income and home loan repayments. The effect of his evidence was that he was unlikely to make a profit from his rental property. Ms Doyle did not dispute that evidence and I accept it as correct.

3. Ms Doyle is employed [in a part-time role]. She also receives parenting payment and family tax benefit. She lives in rented accommodation. Both parents acknowledged that Ms Doyle’s income and financial resources are fairly reflected for child support purposes in her adjusted taxable income as assessed by the Australian Taxation Office from time to time. They also acknowledged that the children’s costs are unremarkable for children their ages. In my opinion, based on the available evidence, those acknowledgements were properly made.

4. For the reasons stated above, it is appropriate to vary Mr Doyle’s adjusted taxable income from 22 January 2018. Varying his adjusted taxable income to $80,500 per annum from 22 January 2018, and to $92,500 per annum from 1 July 2018, will reduce his child support arrears but will not place him in credit. The evidence suggests that his financial circumstances are unlikely to change significantly in the foreseeable future. It is appropriate to vary his adjusted taxable income until 31 December 2020. The proposed decision will be just and equitable.

Otherwise proper

1. 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.

2. Ms Doyle receives family tax benefit in respect of the children of the assessment. Changing the child support payable by Mr Doyle will result in a more appropriate apportionment of financial responsibility between the parents and the community. Such a result will be otherwise proper.

DECISION

The decision under review is set aside and, in substitution:

• from 22 January 2018 to 30 June 2018, Mr Doyle’s adjusted taxable income is varied to $80,500 per annum; and

• from 1 July 2018 to 31 December 2020, Mr Doyle’s adjusted taxable income is varied to $92,500 per annum.