Dunlop and Nelson (Child support)

[2022] AATA 3056

Dunlop and Nelson (Child support) [2022] AATA 3056 (27 July 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/MC020086

APPLICANT:  Mr Dunlop

OTHER PARTIES:  Child Support Registrar

Ms Nelson

TRIBUNAL:Senior Member J Longo

DECISION DATE:  27 July 2022

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that the objection is allowed so as to determine:

·From 1 May 2020 to 8 July 2020, to vary Mr Dunlop’s adjusted taxable income to $214,000 per annum;

·From 9 July 2020 to 30 June 2023, Mr Dunlop’s adjusted taxable income is varied to $36,348 per annum.

CATCHWORDS

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

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been 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.    The issue to be determined in this application is whether there is a reason to change the administrative assessment of child support and whether it is just and equitable and otherwise proper to do so.

2.    Mr Dunlop and Ms Nelson are the parents of [Child 1] and [Child 2]. Mr Dunlop is the parent liable to pay child support. The application for child support was registered with Services Australia – Child Support (the Agency) and has been subject to Agency collection since 23 January 2014. Ms Nelson has 100% care of [Child 1] and [Child 2] according to the Agency information provided.

3.    Prior to the current application for a departure determination, the administrative assessment of child support was as follows:

·For the period 1 November 2019 to 11 December 2020, the annual rate was $478 based on Mr Dunlop’s 2018/2019 adjusted taxable income of $27,469 and Ms Nelson’s 2018/2019 provisional income of $14,276.

4.    On 26 March 2020, the Agency initiated a change to the assessment on the basis that, in the special circumstances of the case, the administrative assessment of child support was not reflective of his income, property and financial resources (Reason 8A) in relation to Mr Dunlop’s income and financial resources. Mr Dunlop disagreed with the proposed change to the administrative assessment and cross-applied on the same basis in relation to his own income. Ms Nelson did not respond to the initial application nor to Mr Dunlop’s cross-application.

5.    On 9 May 2020, the Agency found Reason 8A established and departed from the administrative assessment as follows:

·For the period 1 May 2020 until both children ([Child 1] and [Child 2]) cease to be eligible children of the assessment, Mr Dunlop’s adjusted taxable income is set at $100,000.

6.    On 27 May 2020, Mr Dunlop objected to the decision of the Agency. Ms Nelson responded to the objection verbally and stated that she was concerned that her family tax benefit had been cut due to the decision and that she was in financial hardship because of the significant reduction to her family tax benefit payments. She also stated that Mr Dunlop’s income was not her concern and her only concern is her family tax benefit payments, which she wanted reinstated. She stated that she did not communicate with Mr Dunlop and she is unaware of his financial circumstances. On 16 October 2020, the Agency partly allowed the objection as follows:

·For the period 1 May 2020 to 31 December 2022, Mr Dunlop’s adjusted taxable income is set at $214,000.

7.    On 21 October 2020, Mr Dunlop lodged an application to this Tribunal for an independent review of the objections officer’s decision. The application proceeded to a telephone directions hearing on 30 November 2020 and a substantive hearing of the application was commenced on 9 February 2021. Unfortunately, the member that was constituted to hear and determine the application was no longer available and the matter was constituted to another member of the Tribunal.

8.    The Tribunal, as newly constituted, attempted to schedule another hearing for this matter on a number of separate occasions. However, due to ongoing lockdowns experienced in Victoria throughout 2021 due to the COVID-19 pandemic, the matter was further delayed. An attempt to have the matter heard on 10 November 2021 did not proceed and the matter was rescheduled for 9 December 2021. Further circumstances relating to the COVID-19 pandemic, including further lockdowns, prevented the matter proceeding to hearing until 22 March 2022.

9.    This case was further complicated by the existence of another departure determination made by the Agency, which is unrelated to the present matter, but for which Mr Dunlop was also the applicant. While the second application does not in any way relate to the present application, the second matter was constituted to be heard contemporaneously with the present matter so that Mr Dunlop’s evidence, which directly related to both applications, could be heard and considered in the context of both applications.

10.  On 22 March 2022, Mr Dunlop appeared in person before the Tribunal to give oral evidence together with his legal representative, [Representative A]. Ms Nelson participated by telephone to give oral evidence. Ms Nelson was not represented in these proceedings.

11.  The Tribunal considered the documents and information, including the oral evidence of Mr Dunlop and Ms Nelson, which were provided to all the parties prior to the hearing.[1] After the hearing, further directions were made for the provision of additional information and submissions.[2] Additional information was provided by both parties. Relevant aspects of the evidence and material before the Tribunal will be referred to in the Tribunal’s decision.

CONSIDERATION

The legislative framework and issues for the Tribunal to determine

[1] Subsection 37(1) and section 38AA statement and documents provided by the Agency numbered 1 to 850; Mr Dunlop’s documents numbered A1 to A384; Ms Nelson’s documents numbered B1 to B10.

[2] Mr Dunlop’s documents numbered A385 to A595; Ms Nelson’s documents numbered B11 to B75.

12.The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act1989 (the Act). The liable parent or a carer may apply to the Child Support Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Act. Section 98C provides that the Registrar may make a determination to depart from the formula assessment and establishes a three-step process. The Registrar, and the Tribunal standing in place of the Registrar, must be satisfied: there is a ground for a departure from the administrative assessment; that it is just and equitable to depart; and that it is otherwise proper. The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Act.

13.If satisfied that a ground or grounds exist 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.

Issue 1 – Is there a ground to depart from the administrative assessment of child support?

Reason 8: Mr Dunlop’s income, property, financial resources and earning capacity – relevant law, evidence and contentions

14.The primary focus of proceeding, both before the Agency and the Tribunal, has been on Mr Dunlop’s income, property and financial resources and earning capacity (collectively referred to as ‘Reason 8’). For the following reasons, the Tribunal considered the ground known as Reason 8 is established on the evidence.

15.Subparagraph 117(2)(c)(ia) of the Act provides for a ground for departure from an administrative assessment on the basis of a parent’s income, property or financial resources, as raised in Mr Dunlop’s application. The Act states as follows:

(c) 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.

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

16.The term “special circumstances” is not defined in the Act. In Gyselman v Gyselman (1992) FLC 92-279 the Full Family Court indicated that for there to be special circumstances, the facts of the case must establish something which is special or out of the ordinary.

17.In considering the above, the Tribunal is mindful of the requirement of satisfying subsection 117(7A) of the Act (in relation to a parent’s income, property and financial resources) and having regard to the capacity of the parent to derive an income but disregarding the capacity of anyone who does not have a legal duty to maintain the child.

18.Mr Dunlop’s submission to the Tribunal, and previously to the Agency, was that the assessment of his income under the administrative assessment was no longer reflective of his actual circumstances. He stated at the hearing, consistent with previous statements to the Agency, that his circumstances had changed such that he should not be assessed on this basis any longer and that his circumstances changed from May 2020.

19.Mr Dunlop told the Tribunal that he accepted the decision made by the Agency but that from May 2020 his circumstances changed such that his income was no longer correct. He stated that his companies closed down in May 2020 and were deregistered on 8 July 2020. He stated that the reason for this was due to increased competition in the market and health issues.

20.The Tribunal notes that Mr Dunlop was operating three private companies, until these were deregistered on 8 July 2020 – [Business 1], [Business 2] and [Business 3]. Mr Dunlop confirmed that he was the sole shareholder and director of these private companies. The Tribunal is satisfied, based on the company records provided, that Mr Dunlop was the sole shareholder and director of [Business 1], [Business 2], and [Business 3].

21.He told the Tribunal that he was manufacturing [products 1 and 2]. He had set up his business structure through the three private companies which had different roles – [Business 3] imported stock and material from [Country 1], [Business 2] was the manufacturer of [products 1 and 2] and [Business 1] installed the [products 1 and 2]. Mr Dunlop stated that due to his health issues, as well as ongoing issues with competition, these businesses, operating through these private companies, were no longer viable and competitive and so he stopped trading in May 2020 and deregistered the companies on 8 July 2020.

22.Mr Dunlop stated that as a consequence of the businesses failing and no longer operating, he received jobseeker payments from 15 July 2020 until 14 March 2021 when he commenced part-time employment. Mr Dunlop stated that he started working in [an occupation 1] role at [Employer 1] from 14 March 2021. It is on the basis of these changes in his circumstances that Mr Dunlop relies in stating that the administrative assessment of his adjusted taxable income of $214,000 per annum from May 2020 should no longer apply.

23.The Tribunal has before it a medical report provided by [Doctor A], dated 7 October 2021, which outlined Mr Dunlop’s ongoing health issues. Of note in this report is that Mr Dunlop underwent surgery in February 2020 to [procedure specified]. The Tribunal has before it the [report] of [a named specialist] which confirms that [the procedure occurred] [in] February 2020. [Doctor A] further writes in the report dated 7 October 2021 that he was fit for part-time or full-time work which involved light duties – no lifting, pushing, no excessive fast pacing and minimal stress at work. [Doctor A] further lists that Mr Dunlop has been diagnosed and treated for depression/anxiety and is seeing a psychologist and also taking medication, as well as being diagnosed with [another condition] and taking [a medication]. Mr Dunlop confirmed at the hearing that he continues to take antidepressant medication and is seeing a psychologist every two months. He also stated that he continues to see his [specialist].

24.The Tribunal considered Mr Dunlop’s income and financial resources. Mr Dunlop conceded, and the Tribunal accepts, that the income assessed of $214,000 per annum was appropriate until May 2020. However, since this date it is no longer reflective of his circumstances. Mr Dunlop provided bank account information and his income tax return for 2019/2020 which shows that he was in receipt of jobseeker from on or about July 2020. Mr Dunlop also provided documents to show that he was employed, on a part-time basis, in [occupation 1] and administration for [Employer 1] and has been since 14 March 2021. He provided evidence to the Tribunal which shows he is working 30 hours per week on an annual salary of $36,348 and his bank account information also shows salary deposits from [Employer 1].

25.Ms Nelson did not make any submissions regarding Mr Dunlop’s evidence and circumstances, apart from reiterating that the decision has affected her family tax benefit entitlement. Mr Dunlop had the benefit of the business structures which gave him the ability to determine his taxable income at a much lower level with the financial resources available in these private companies than would otherwise be the case. Mr Dunlop has conceded that this was the case for some of the period but claims this is no longer the case since the private companies were deregistered. The Tribunal finds that while this may have been acceptable for taxation purposes, it did provide financial resources to Mr Dunlop which would otherwise not be taken into account for child support purposes. The Tribunal finds that these arrangements existed until July 2020 and Mr Dunlop has benefitted from these arrangements. These circumstances, in the Tribunal’s determination, have changed since July 2020.

26.The Tribunal determines that the subsequent changes in circumstances, in particular the deregistration of the private companies Mr Dunlop controlled, Mr Dunlop’s period of reliance on jobseeker and his subsequent change in employment in March 2021, are circumstances which are out of the ordinary and uncommon sufficiently to make it unjust or inequitable to determine the level of financial support to be provided on the basis of the administrative assessment of child support in place prior to the application for departure made on 9 May 2020. Accordingly, a ground for departure in subparagraph 117(2)(c)(ia) of the Act does exist and this ground is established on the basis that reliance on the adjusted taxable income of $214,000 for the period from 1 May 2020 to 31 December 2022 would not provide a just and equitable assessment of Mr Dunlop’s financial support of [Child 1] and [Child 2].

Issue 2 – Is it fair or ‘just and equitable’ in relation to Mr Dunlop, Ms Nelson and [Child 1] and [Child 2] to make a particular departure determination?

27.As the Tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is fair as regards the parents and the children 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 have regard to a range of factors, including but not limited to those set out in subsections 117(4) and (6) to (8) of the Act, such as the needs of the children, the parents’ assets, liabilities, income and commitments and any hardship that would be caused by departing or not departing from the formula. The Tribunal does not propose to explore every matter in detail but will discuss those it regards as pertinent to this application (Gyselman).

The needs of the children

28.Section 3 of the Act makes it clear that the parents of a child have the primary duty to maintain the child, and that this duty has priority over all commitments of the parents other than commitments necessary for self-support or the support of another person the parent has a duty to maintain (Ashcroft and Ashcroft (SSAT Appeal) [2008] FMCAfam 1250). In this case Mr Dunlop and Ms Nelson have the primary duty to financially support [Child 1] and [Child 2] and contributing to their costs should take priority over all other costs other than their “necessary” costs of self-support. Mr Dunlop also has a legal duty to contribute to the needs of another child from another relationship.

29.In determining the proper needs of the child, subsection 117(6) of the Act also requires the Tribunal to have regard to the manner in which the parents expected the child to be cared for, educated and trained as well as a consideration of any special needs of the child.

30.Ms Nelson told the Tribunal that [Child 1] and [Child 2] do not have any special needs. They are educated in the public school system. [Representative A] told the Tribunal that Mr Dunlop pays for attendance at [a tutoring service] and [a community] school for [Child 2] and contributes to their school expenses such as uniform costs. The Tribunal notes that [Child 1] is no longer part of the administrative assessment and is living with Mr Dunlop.

31.Ms Nelson did not estimate the weekly costs she incurs in respect of [Child 1] and [Child 2]. Mr Dunlop did not provide any costs in regard to [Child 1] and [Child 2] but [Representative A] submitted, based on her instructions, that he has some overnight care of [Child 2] and therefore has some sundry expenses at this time such as entertainment and school lunches.

32.Similarly, as to the direct and indirect costs incurred by Ms Nelson in providing care for [Child 1] and [Child 2], no matters were raised to suggest that the direct or indirect costs of providing care required any further specific analysis. The Tribunal has examined the statements of financial circumstances provided by both parties in this regard and identified nothing to justify further analysis of this factor.

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

Mr Dunlop’s earning capacity, income, property and financial resources

33.While the Tribunal has determined that the ground for departure is established, based on Mr Dunlop’s changed circumstances from July 2020, the Tribunal must still consider whether it is just and equitable, based on the parents’ assets, liabilities, income and commitments, to depart from the administrative assessment.

34.Relevant to the considerations of Mr Dunlop’s earning capacity, income, property and financial resources, the Tribunal has considered Mr Dunlop’s general financial circumstances, including his circumstances subsequent to the deregistration of his private companies. The Agency-initiated departure determination considered that Mr Dunlop had alienated his business income and assets through his mother, [Mother A], to avoid his child support liability. The Tribunal finds, which was not disputed by either party in these proceedings, that Mr Dunlop’s mother registered three private companies in 2019, [Business 4], [Business 5] and [Business 6], before Mr Dunlop’s private companies ceased trading and were deregistered.

35.The Agency considered that Mr Dunlop had alienated his income through his mother’s private companies, after his own private companies were deregistered and continued to operate his previous businesses through his mother’s private companies. Ms Nelson did not make submissions on these matters.

36.Mr Dunlop stated that his private companies had operated for approximately five to six years prior to ceasing trading and the companies being deregistered. The Tribunal notes that Mr Dunlop’s application for a business loan at [Bank 1] in 2018 shows [Business 1] had been trading since 2011.[3] The Tribunal also notes that there is also evidence in the Agency documents that shows that one of the private companies had a name change in 2016.[4] The Tribunal is satisfied, based on the documents provided by the Agency, that [Business 2] was registered in 2016.[5]

[3] Page 536 of subsection 37(1) statement and documents provided by the Agency.

[4] Pages 53 and 62 of subsection 37(1) statement and documents provided by the Agency.

[5] Page 60 of subsection 37(1) statement and documents provided by the Agency.

Income

37.At the time of the hearing Mr Dunlop’s evidence was that he was employed, on a part-time basis, in [an occupation 1] and admin role with [Employer 1]. Mr Dunlop’s evidence was that he commenced in this role in March 2021. The Tribunal has before it payslips[6] provided by Mr Dunlop which show an annual salary of $36,348. These are consistent with the contract of employment[7] provided to the Tribunal.

[6] Pages A378, A382 to A384 of Mr Dunlop’s documents.

[7] Pages A374 to A376 of Mr Dunlop’s documents.

38.In his oral evidence, Mr Dunlop described only brief and intermittent work since he ceased work through his previous private companies, for example undertaking installation work for his mother’s private companies.

39.Mr Dunlop’s 2019/2020 taxable income was $11,310[8] and his 2020/2021 taxable income was $32,749[9] with income sourced from salary allowances from [Employer 1] of $14,693 and from income support payments of $17,979 – with nominal deductions.

[8] Pages A316 to A321 of Mr Dunlop’s documents.

[9] Pages A309 to A315 of Mr Dunlop’s documents.

40.Given the evidence regarding the substantial change to Mr Dunlop’s circumstances recounted above concerning the cessation of his private companies, the Tribunal is satisfied that in terms of his direct income from the date of that event, his annual salary from [Employer 1] of $36,348 is essentially an accurate measure of his personal direct income.

Property and financial resources

41.Turning to consider Mr Dunlop’s interest in his mother’s private companies, [Business 4], [Business 5] and [Business 6], as a financial resource for Mr Dunlop, on the basis that he has alienated personal income and assets through private companies held by his mother, this consideration, initiated by the Agency in this application, is that Mr Dunlop’s mother was not the person directing her private companies of which she was director and shareholder but rather they were directed by Mr Dunlop who retained the benefit from these private companies. The Tribunal also notes the oral evidence of Mr Dunlop which confirmed that the private companies that his mother was sole shareholder and director of leased the same premises that Mr Dunlop’s private companies were leasing prior to deregistration. In addition, Mr Dunlop was signatory to his mother’s private companies’ bank accounts.[10]

[10] Page 376 of subsection 37(1) statement and documents provided by the Agency.

42.For reasons that follow, the Tribunal has formed the view that Mr Dunlop has historically alienated income, property and financial resources through the structures of his private companies [Business 1], [Business 2] and [Business 3]. This was not disputed by Mr Dunlop, in that he was not contesting the decision of the Agency prior to May 2020. The Tribunal has not formed such a view in regard to [Business 4], [Business 5] and [Business 6] for the following reasons.

43.The Tribunal notes that [Mother A] was the sole director and secretary of [Business 4], [Business 5] and [Business 6], and was the sole shareholder until 2 December 2020 when the shares in these private companies were sold to a third party.

44.The Tribunal notes that these private companies operated from the same premises as Mr Dunlop’s private companies. Mr Dunlop was a signatory to all of the accounts for his mother’s private companies. Mr Dunlop told the Tribunal that the private companies of which he was director and shareholder manufactured and installed [products 1 and 2]. He stated that his mother’s private companies manufactured and installed [related products]. Notwithstanding this distinction, Mr Dunlop also told the Tribunal that he did, on occasion, do installation work for customers of his mother’s private companies and also sold stock to his mother’s private companies.[11] To complicate matters further in terms of identifying what financial resources within [Business 4], [Business 5] and [Business 6] ought to be considered to be Mr Dunlop’s financial resources, the documents before the Tribunal, as stated above, show that the private companies were sold by Mr Dunlop’s mother in December 2020 to a third party. Furthermore, these private companies have now been deregistered.[12]

[11] Pages A200 to A204 of Mr Dunlop’s documents.

[12] Pages A196 to A198 of Mr Dunlop’s documents.

45.It is clear from an analysis of the limited financial information and evidence before the Tribunal that the financial operation of [Business 4], [Business 5] and [Business 6] was irregular, in the sense that they were by no means arm’s length from Mr Dunlop and members of his family.

46.However, the Tribunal is unable to conclude that all wealth and financial resources for [Business 4], [Business 5] and [Business 6] came from Mr Dunlop’s personal services. Even if the Tribunal was able to form such a view for child support purposes, it is impossible to identify what, if any, ‘wealth’ was in these companies at any material time, and what, if any, benefit Mr Dunlop has received. There is no evidence of transfer of funds from the private companies of which Mr Dunlop’s mother was director and shareholder to Mr Dunlop. These private companies, as far as evidenced in the documents before the Tribunal, have not made payments on Mr Dunlop’s behalf towards his various outstanding liabilities, which include mortgages over his home and various credit cards.

47.The Tribunal notes, in particular, that the mortgages held by [Bank 1] over Mr Dunlop’s home have remained unpaid since at least March 2020. Mr Dunlop provided evidence that the mortgagor ([Bank 1]) has initiated legal proceedings for foreclosure and sale of the property which is security for these loans. Mr Dunlop’s statement of financial circumstances also indicated various credit card debts remain outstanding and he has provided bank statements which confirm these debts remain unpaid. There is no evidence before the Tribunal that substantiates the transfer of assets overseas. None of Mr Dunlop’s personal accounts show such transfers. While Mr Dunlop’s private companies, and indeed the private companies of his mother, did make overseas payments, Mr Dunlop stated that these were in relation to materials purchased overseas.

48.From 8 July 2020, the Tribunal is satisfied, based on the available evidence, that both Mr Dunlop’s private companies and his mother’s private companies represent a meaningful or significant additional financial resource for child support purposes for Mr Dunlop prior to 1 July 2020. However, by 8 July 2020, [Business 1], [Business 2] and [Business 3] were deregistered. The physical assets of the company in 2019/2020, while on the balance sheet were significant, Mr Dunlop stated that these were manufacturing materials only and has provided evidence that they were disposed of for far less than the amounts indicated in the balance sheet. The Tribunal concludes that these, based on the evidence before it, cannot be reasonably viewed as property or financial resources that can be taken into account for child support purposes. In addition, given Mr Dunlop’s financial circumstances and that he has not made repayments to his mortgages and credit cards for some time and now faces legal action by his creditors in relation to these outstanding liabilities, there is nothing before the Tribunal which indicates he has benefitted personally or transferred wealth or financial resources for his personal benefit. In the absence of evidence which substantiates such an allegation, it is not open to the Tribunal to reach such a conclusion.

Earning capacity

49.As to earning capacity, much of Mr Dunlop’s evidence and arguments to the Tribunal were directed at demonstrating medical barriers to work.

50.A determination based on earning capacity may only be made if the relevant requirements of the legislation are satisfied. In that regard, subsection 117(7B) of the Act provides that I may determine that Mr Dunlop’s earning capacity is greater than is reflected in his income only if 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.

51.In Mr Dunlop’s circumstances, the change to his occupation, industry and working pattern, the reduction in the number of hours he has worked and the factors impacting on his opportunity to work are all comprehensively explained by the failure of his private companies in 2020 and his medical issues at the time. The Tribunal also accepts that his current part-time work is also explained by his ongoing health issues as outlined in the medical information provided.  In these circumstances, the Tribunal is satisfied that it was not a major purpose in any decision made by Mr Dunlop to change his working arrangements to affect the administrative assessment of child support. As such, no determination the Tribunal makes may be based on the proposition that Mr Dunlop’s earning capacity is greater than is reflected in his income.

Ms Nelson’s income, property, financial resources and earning capacity

52.Ms Nelson’s income is partly from Centrelink payments. She also relies on some family assistance payments. She has disclosed no interest in a property, business or trust. Ms Nelson stated that she has commenced employment as [an occupation 2] on a part-time basis (approximately $279 gross per week).[13] The Tribunal is satisfied that reliance on her adjusted taxable income is an accurate and appropriate measure of Ms Nelson’s financial capacity to support the children. No issue arises on the evidence in relation to Ms Nelson’s earning capacity. While Ms Nelson has commenced some part-time work as stated above, the Tribunal is not minded to depart from the administrative assessment as it is likely to be taken into account in the administrative assessment once Ms Nelson lodges her income tax return for the previous financial year.

[13] Page B21 of Ms Nelson’s documents.

53.The Tribunal notes that Ms Nelson’s statement of financial circumstances reveals limited available funds in the bank ($1,500 in total) but does not consider these amounts to be such as to affect the assessment of child support payable.

Commitments of the parents

54.As to the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support themselves, the Tribunal has relied upon the statement of financial circumstances lodged by and on behalf of each parent.

55.Ms Nelson’s estimated household expenditure for herself and [Child 2], at present, is largely unremarkable, other than to note her expenses are consistent with her modest income and also that her overall household expenses exceed her income. No personal expenses that are out of the ordinary are identified. Ms Nelson does not carry any personal debt.

56.Mr Dunlop’s expenses for his own self-support are also contained in his statement of financial circumstances. While Mr Dunlop discloses only very limited household expenditure, it is still in excess of his income. This expenditure, however, includes mortgage payments which have not been paid for some time. If this amount is excluded, the household expenditure is commensurate with his current income.

57.As to the children or other people that each parent has a duty to maintain, the Tribunal notes that Mr Dunlop is afforded a multi-case allowance in respect of another child the subject of a child support assessment not involving Ms Nelson. The Tribunal also notes that in the assessment notices issued that Mr Dunlop is recorded as not having care of [Child 1] and [Child 2], but Ms Nelson stated that Mr Dunlop does have the care of [Child 2] on occasion. There is nothing in the evidence before the Tribunal to indicate that the provision already made in the formula to take into account Mr Dunlop’s duty to maintain another child is insufficient.

58.The Tribunal is required to consider any hardship that would be caused to the children or the carer entitled to child support by the making of or the refusal to make a particular departure determination. The Tribunal considers that maintaining the previous administrative assessment did not adequately reflect his actual circumstances. In addition, to maintain such a decision when Mr Dunlop is no longer earning income through his private companies and no longer has access to income and financial resources through these private companies would result in substantial hardship. For the reasons elaborated upon above, the Tribunal considers that 8 July 2020 would therefore be an appropriate point to give effect to a different departure determination to the one put in place previously by the Registrar. In this regard, the Tribunal departs from the administrative assessment on the basis of Mr Dunlop’s substantial change of circumstances.

59.The current financial circumstances of the parents indicated to the Tribunal that the balance of hardship however remains with Ms Nelson. She does not earn a substantial income apart from income support payments. Her household expenses, while lower than those of Mr Dunlop, show no assets or financial resources of note. The Tribunal is satisfied that Ms Nelson has provided an accurate account of her financial circumstances and accepts that she has difficulty making ends meet.

60.As to the particular departure determination the Tribunal considers would be just and equitable, having regard to all the factors provided for in section 117 of the Act, the Tribunal considers the following determination will give effect to my findings and reasons:

61.  From 1 May 2020 to 8 July 2020, to vary Mr Dunlop’s adjusted taxable income to $214,000 per annum;

62.  From 9 July 2020 to 30 June 2023, Mr Dunlop’s adjusted taxable income is varied to $36,348 per annum.

63.The purpose of the first determination is to preserve within any departure determination made in this application the initial assessment by the Agency on 16 October 2020, which Mr Dunlop did not dispute and accepted as correct. Even though the Act allows for a departure determination to commence earlier than the date of application, the Tribunal has not done so in this application. This is because Ms Nelson did not initiate the departure determination application but rather it was initiated by the Agency and the Agency did not consider backdating prior to 1 May 2020.

64.The purpose of the second determination is to reflect the circumstances as discussed above relating to Mr Dunlop’s change in circumstances, having regard to the financial resources at Mr Dunlop’s disposal since the private companies he controlled were deregistered and he had income from Centrelink payments and then, subsequently, employment. The Tribunal is satisfied that while this continues to create some arrears and meeting this assessment will cause some hardship, any such hardship would not be greater than that caused to Ms Nelson if no departure determination were to be made in this matter. The Tribunal also notes that Mr Dunlop has not paid child support on a regular basis, according to the information provided by the Agency. Having regard to all the factors in subsection 117(4) of the Act, the Tribunal is satisfied that the determinations outlined above are just and equitable.

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

65.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.

66.At the time of writing, Ms Nelson was in receipt of family tax benefit throughout the relevant period. As such, the Tribunal’s decision will have some impact on the public purse, by reducing her reliance on these payments for part of the period. Therefore, the Tribunal considers that it is otherwise proper to make the particular proposed determination.

67.The Tribunal notes that it is open to either party to lodge further change of assessment applications should future circumstances of either party change significantly from the circumstances upon which this decision is based.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that the objection is allowed so as to determine:

·From 1 May 2020 to 8 July 2020, to vary Mr Dunlop’s adjusted taxable income to $214,000 per annum;

·From 9 July 2020 to 30 June 2023, Mr Dunlop’s adjusted taxable income is varied to $36,348 per annum.