Druidd and Ivens (Child support)

[2021] AATA 1535

Druidd and Ivens (Child support) [2021] AATA 1535 (13 April 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/MC020230

APPLICANT:  Ms Druidd

OTHER PARTIES:  Child Support Registrar

Mr Ivens

TRIBUNAL:Member M Douglas

DECISION DATE:  13 April 2021

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that for the period 27 May 2020 to 30 September 2020 the annual rate of child support payable by Ms Druidd be varied to $3,600.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the carer entitled to receive – a ground for departure established – decision to depart - decision under review set aside and substituted

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been 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

1. Ms Druidd and Mr Ivens are the separated parents of [Child 1] and [Child 2].  The care of their children is shared equally by Ms Druidd and Mr Ivens.

2. The Child Support Registrar issued assessments of child support for both children from 1 October 2014 until [Child 2’s] eighteenth birthday on 18 October 2020.  Thereafter, the assessment of child support relates only to [Child 1].  With respect to the assessments that are relevant to the decision being reviewed, Ms Druidd has been assessed as the parent liable to pay child support to Mr Ivens for the children.  From 27 May 2020, her liability has been registered with the Registrar for collection and hence, from that date she has been obligated to pay the child support to the Registrar.

3. The Tribunal notes that the Registrar acts through a Government instrumentality known as Services Australia – Child Support and hereafter references to Child Support are to be taken as a reference to the Registrar.

4. On 5 June 2020 Ms Druidd made what Child Support refers to as a “change of assessment application”, which is an application under subsection 98B(1) of the Child Support (Assessment) Act1989 (the Act) for a determination to be made to depart from the provisions of the Act with respect to the assessment of child support.  She specified in her change of assessment application that she sought the change be made from 27 May 2020.  She detailed the reason why she sought a departure was that Mr Ivens had the ability to earn greater income than the income amount used for him in the assessment of child support.

5. As at the time Ms Druidd made her change of assessment application the assessment obligated her to pay child support until 30 September 2020 at an annual rate of $8,592.  That assessment was calculated on adjusted taxable incomes of $101,290 for Ms Druidd and $39,683 for Mr Ivens.  Ms Druidd’s adjusted taxable income comprised her taxable income for the 2018/19 year plus a reportable fringe benefit she received in that year.  Mr Ivens’ adjusted taxable income comprised his taxable income for the 2018/19 year.

6. On 26 August 2020 Child Support refused to make a departure determination.  It was not satisfied that the reason Ms Druidd advanced for a departure established one of the grounds specified in the Act that must exist before a departure determination can be made.

7. The Tribunal notes that following Ms Druidd making her change of assessment application, but before Child Support made its decision on 26 August 2020, Child Support had issued the assessment for the child support period commencing on 1 October 2020.  As at 26 August 2020, that assessment obligated Ms Druidd to pay child support at an annual rate of $10,184 for both children until 18 October 2020 and then at an annual rate of $7,290 for [Child 1] only.  That assessment was calculated on an adjusted taxable income for Ms Druidd of $114,509, which comprised her 2019/20 taxable income and reportable fringe benefit she received in the 2019/20 year, and an adjusted taxable income that Child Support had determined for Mr Ivens under subsection 58(3) of the Act of $40,675.

8. The income amount used for Mr Ivens was calculated by Child Support by increasing Mr Ivens’ taxable income for the 2018/19 year by an indexation factor.  Child Support used that method because at the time the assessment was issued Mr Ivens’ taxable income for the 2019/20 year was not known.  The Tribunal further observes that on 28 January 2021 Mr Ivens’ taxable income for the 2019/20 year became known to Child Support. It was $86,370. In accordance with section 58A of the Act, Child Support then amended the assessment for the child support period commencing 1 October 2020 so as to calculate it based upon Mr Ivens’ taxable income for the 2019/20 year.  That resulted in the annual rate of child support payable by Ms Druidd reducing to $3,608 for both children until 18 October 2020 and then to $2,381 for [Child 1] from 19 October 2020.

9. On 8 September 2020 Ms Druidd lodged an objection to Child Support’s decision of 26 August 2020.  On 7 November 2020 Child Support disallowed her objection and affirmed its decision of 26 August 2020.

10. On 12 November 2020 Ms Druidd applied to the Tribunal for a review of Child Support’s decision to disallow her objection.

11. The Tribunal conducted an audio hearing on 13 April 2021 of Ms Druidd’s application for review using Microsoft Teams.  Both Ms Druidd and Mr Ivens participated and both gave affirmed oral evidence.  Child Support did not make an appearance, which is customary. 

12. Prior to the hearing Child Support provided the Tribunal and Ms Druidd and Mr Ivens with all of the documents it had that related to its objection decision.  These are numbered 1–‍235. Ms Druidd also provided a bundle of documents that are marked A1–A189 and Mr Ivens provided a bundle of documents that are marked B1–B126.

13. The Tribunal has had regard to these documents and to the oral evidence of Ms Druidd and Mr Ivens. 

RELEVANT LAW AND ISSUES

1. Part 5 of the Act contains the provisions by which Child Support assesses the annual rate at which a liable parent is to pay child support to the carer entitled to child support. Broadly speaking, a formula is used that takes into account variables including each parent’s adjusted taxable income, the number of children and the level of care provided by each parent.

2. A parent liable to pay child support or the carer entitled to receive child support may, if special circumstances exist, apply to Child Support under subsection 98B(1) of the Act for a determination to depart from the provisions of the Act relating to an assessment of child support. As mentioned, Child Support refers to such an application as a change of assessment application.

3. If the criteria of subsection 98C(1) are met, then one or more of the determinations listed in subsection 98S(1) to depart from the provisions of the Act relating to an administrative assessment of child support can be made. The criteria specified in subsection 98C(1) are, in substance, that one or more of the grounds for departure listed in subsection 117(2) of the Act is established and that it is both just and equitable as regards the child, the liable parent, and the carer entitled to child support and it is otherwise proper to make a determination to depart from the provisions of the Act with respect to an assessment of child support.

CONSIDERATION

Is a ground for departure established?

1. In her change of assessment application Ms Druidd relied on the ground for departure provided in subparagraph 117(2)(c)(ib), which reads:

   “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:

   (ib) because of the earning capacity of either parent.”

2. By virtue of subsection 117(7B) of the Act, the Tribunal can only determine that Mr Ivens has a capacity to earn more than his actual income if it is satisfied that:

   (a) one or more of the following applies: 

   (i) [he] does not work despite ample opportunity to do so; or

   (ii) [he] has reduced the number of hours per week of his employment or other work below the normal number of hours per week that constitutes full-time work for the occupation or industry in which he is employed or otherwise engaged;

   (iii) [he] has changed his occupation, industry or working pattern;

   and

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

   (i) [his] caring responsibilities; or

(ii) [his] state of health;

and

(c) [he] 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. It is common ground between Ms Druidd and Mr Ivens that in the 2016/17 year Mr Ivens ceased his then employment as [an occupation 1].  His reason for doing so was that he felt fatigued after having worked with his employer for 12 years.  After ceasing this employment, he accepted a one year contract [for similar] work [for a different employer].  He found the working environment within that [place] not to be to his liking for several reasons.  Upon the expiration of his contract he did not seek to renew it and went on a trip to [Country 1].  On his return, he undertook casual employment at [an agency] and also part time employment as [an occupation 1].  This led to a reduction in his income from that which he earned when employed full time as [an occupation 1]. 

2. In those circumstances, and as Child Support found when both considering Ms Druidd’s change of assessment application and her objection to its decision on her change of assessment application, the first two criteria of section 117(B) of the Act are satisfied.  However, the third is not.  Ms Druidd did not contend to the contrary at the hearing of her application for review.

3. Consequently, the Tribunal cannot determine that Mr Ivens has the capacity to earn more than the income he has been earning.

4. However, the evidence before the Tribunal revealed that in the period to 30 September 2019, during which Ms Druidd’s child support liability was assessed by reference to an adjusted taxable income amount for her of $101,290 and for Mr Ivens of $39,683, there was a great variance between Mr Ivens’ actual income and his adjusted taxable income. 

5. As mentioned earlier, Mr Ivens’ taxable income for the 2020 financial year was assessed as $86,370.  Further, in the period from 1 July 2020 to 30 September 2020 he had casual employment with [an agency] in Victoria and also a “0.5” permanent part time position as [an occupation 1].  Whilst holding employment with the [agency], he did not actually work shifts, due to restrictions related to the pandemic, but he did receive a payment of $750 a week which, according to Mr Ivens, was not a jobkeeper payment but rather something akin to it that his union and the Federal Government had negotiated. 

6. Mr Ivens provided his payslip for his [occupation 1] position for the pay fortnight ending 12 February 2021. That revealed that his gross wages from that job in the financial year to that date were $28,934.  Noting that that pay period would have been the seventeenth fortnightly pay period in the current financial year, that amount extrapolates to an annual figure of $44,252. 

7. Hence, given the payments he was receiving from the [agency] and from his employment as [an occupation 1], the annual rate at which he was paid in the current financial year to 30 September 2020 correlated with his taxable income for the 2020 year.

8. The Tribunal observes that if the assessment for the period to 30 September 2020 had been calculated using an adjusted taxable income for Ms Druidd that comprised her 2020 taxable income and her reportable fringe benefit in that year and Mr Ivens’ taxable income for the 2020 year, then, similar to what ultimately occurred with respect to the assessment for the period after 1 October 2020, Ms Druidd would have been assessed as liable to pay child support at an annual rate of around $3,600 for [Child 1] and [Child 2].  That is much less than her obligation under the extant assessment for that period. 

9. As will be discussed in slightly more detail below when considering whether it is just and equitable to make a determination to change the assessment of child support, the parties’ circumstances with respect to their assets and outgoings are broadly similar.  Given that, and noting the discrepancy between the income amount that was used for Mr Ivens in the assessment until 30 September 2020 and his actual income, the Tribunal is satisfied that a special circumstance exists in this case and that, as a consequence of that, the assessment of child support for the period to 30 September 2020 did result in an unfair determination of the level of financial support to be provided by Ms Druidd for their children.

10. Accordingly, the Tribunal finds that a ground for departure has been established, that being the ground provided in subparagraph 117(2)(c)(ia), which reads:

    “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 because of the income, property and financial resources of either parent.

Is it just and equitable to make a determination?

1. The matters the Tribunal must consider when considering whether it is just and equitable to depart from the provisions of the Act with respect to an assessment of child support are listed in subsection 117(4) of the Act. There are several matters that may be considered, but the Tribunal is not required to go slavishly through each of those matters but rather must have regard to those that are relevant to the particular circumstances of this case. Rather than dealing separately with each matter that is relevant, insofar as the matters have relevance it is convenient for the Tribunal to group the matters and consider them by a reference to the following headings.

The children’s circumstances

1. The children have all the usual needs.  There is no evidence that the children have any assets or income of significance.

2. [Child 1] presently attends [a named] College, for which the fees are around $4,000 a year.  The Tribunal understands that [Child 2] also attended that college until the end of the academic year in 2020. 

3. Both children have had orthodontic appliances fitted to their teeth.  [Child 1] continues to receive treatment for that.  This results in a relatively large expense above that normally expected with respect to the dental hygiene of children. 

4. Prior to Ms Druidd’s child support liability being registered on 27 May 2020 for collection with Child Support, the practice of Ms Druidd and Mr Ivens was, as the Tribunal understood their oral evidence, to share the expenses associated with the children’s schooling and with the children’s orthodontic treatment in proportion to their respective incomes and for neither to pay child support to the other.   

5. That arrangement broke down in May of 2020, at which time, and as mentioned, Ms Druidd’s assessed child support liability was registered with Child Support for Child Support to collect.  From that time Ms Druidd and Mr Ivens have shared the children’s expenses with respect to their schooling and orthodontic treatment equally, but of course Ms Druidd has also been obligated to pay Mr Ivens the assessed amount of child support.  As also mentioned repeatedly, in the period to 30 September 2020 she was liable to pay an annual rate of $8,592.

Ms Druidd’s circumstances

1. Ms Druidd has employment as [an occupation 2].  As mentioned previously, her taxable income in the 2020 year plus the value of a reportable fringe benefit she received in the form of a car lease payment, amounted to $114,509.  She provided a copy of her payslip for the pay fortnight ending 29 January 2021.  That revealed that her gross wages plus the reportable fringe benefit, amounted to $59,997.47 in the current financial year.  This represents her gross remuneration for sixteen fortnightly pay periods, which extrapolates to an annual figure of around $98,000.

2. She completed a statement of financial circumstances on 27 November 2020 declaring the information therein to be complete and correct.  In that she disclosed that she had cash held on deposit with banks amounting to around $17,000.  She also had a shareholding worth around $40,000.  She receives a small distribution from those shares. 

3. Her other assets, as declared in her statement of financial circumstances, comprise a vehicle of which she estimates the value to be $5,500 and household contents of a value of $20,000.

4. She does not have any liabilities of significance, other than her commitment to a car lease, but the Tribunal understands that her payments for that are met directly by her employer and those payments comprise her reportable fringe benefit.

5. She disclosed in her statement of financial circumstances having personal and domestic expenses for her household, which include the children when they are in her care, that amounted to around $1,500 a week.  None of what she listed was out of the ordinary or indulgent.

Mr Ivens’ circumstances

1. Mr Ivens’ income has been discussed above.  His evidence is that since the end of March 2021 he has not received wages or payments from the [agency] because he has not been rostered to work any shifts.  This is a consequence of the ongoing pandemic restrictions.  As the Tribunal understood Mr Ivens’ evidence, with some restrictions recently being lifted, there is potential that this employer will require him to work some shifts.

2. Mr Ivens also completed a statement of financial circumstances, although he did not sign it so as to declare its accuracy.  He did however, by his oral evidence at the hearing confirm the detail of it.  He listed that he has cash held on deposit with banks amounting to $68,601.  He listed a motor vehicle of which he estimates the value to be $12,000 and he listed household contents of which he estimates the value to be $30,000. 

3. He does not have any liabilities. 

4. He listed fairly modest expenses for his household, which comprises himself, his wife and the children when they are in his care.  His evidence was that until recently his wife could make only a very modest contribution towards their household expenditure as she was without income due to the pandemic.  However, recently she has been able to secure employment and is now able to contribute to their household expenses.  As was the case with Ms Druidd, there is nothing within Mr Ivens’ domestic and personal expenditures that are out of the ordinary or that could be considered indulgent.

Conclusion regarding just and equitable

1. Noting that the parties shared the school fees and the cost of orthodontic treatment for both children equally after 27 May 2020, and otherwise have equal care of the children, and noting too that their financial situation, other than their income, is broadly similar, the Tribunal considers that the assessments of child support as ultimately issued for the child support period commencing 1 October 2020 represents a fair assessment of child support.  In other words, given that Ms Druidd has slightly greater income than Mr Ivens, and their situations are otherwise roughly similar, the amount of child support she is required to pay Mr Ivens under the extant assessment of child support for the period from 1 October 2020 is just and equitable.

2. However, with respect to the period from 27 May 2020, from which date she seeks there be an adjustment to her assessed child support obligation, to 30 September 2020, the Tribunal considers that it would be just and equitable to make a determination departing from the provisions of the Act with respect to the assessment of child support.  This is because the extant assessment for that period was calculated on an income for Mr Ivens that was well below his actual income and the contribution required under the extant assessment from Ms Druidd to Mr Ivens for the cost he incurred when the children were with him is unfair in the circumstances.

1. The Tribunal considers that it would be just and equitable to make a determination for this particular period to vary the annual rate at which Ms Druidd was required to pay child support payable to $3,600.

Is it otherwise proper to change the assessment?

1. In deciding whether it is otherwise proper to depart from the administrative assessment, the Tribunal must have regard to the fact that the primary obligation to support the children rests with Ms Druidd and Mr Ivens, and also have regard to whether, and if so how, any determination it makes would affect the entitlement of Mr Ivens or the children to an income tested pension, allowance or benefit. 

2. The Tribunal understands that neither child in the relevant period to 30 September 2020 received an income tested pension, allowance or benefit and, also, that circumstance will not change whatever determination the Tribunal makes. 

3. Mr Ivens revealed in his statement of financial circumstances that he did not and does not receive family tax benefit from the Commonwealth Government.  The Tribunal understands that the effect of the determination it considers it is just and equitable to make would not make a difference to that.

4. The Tribunal observes that Ms Druidd and Mr Ivens have the primary obligation to support the children.

5. The Tribunal considers, having regard to those matters, that the determination it considers it is just and equitable to make is also otherwise proper to make.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that for the period 27 May 2020 to 30 September 2020 the annual rate of child support payable by Ms Druidd be varied to $3,600.