Eidson and Brunton (Child support)

[2021] AATA 4227

Eidson and Brunton (Child support) [2021] AATA 4227 (29 July 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/BC020318

APPLICANT:  Ms Eidson

OTHER PARTIES:  Child Support Registrar

Mr Brunton

TRIBUNAL:Member Y Webb

DECISION DATE:  29 July 2021

DECISION:

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

• For the period 1 October 2019 to 30 June 2020 Ms Eidson’s adjusted taxable income is varied to $122,615 per annum; and

• For the period 1 July 2020 to 31 October 2023 Ms Eidson’s adjusted taxable income is varied to $182,650 per annum; and

• For the period 1 July 2020 to 31 October 2021 Mr Brunton’s adjusted taxable income is varied to $67,308 per annum.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent - benefits derived from business – income from family trust – 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

1. This review relates to the issue of child support regarding the two children of Ms Eidson and Mr Brunton.  The children are now aged 13 and 10.  Services Australia (“Child Support Agency”) records the children are in the 100% care of Mr Brunton.

2. The child support case was first registered by the Child Support Agency on 27 November 2012 and has been collectable by the Agency since that date.

3. On 8 October 2019, Mr Brunton applied to the Child Support Agency for a change to the administrative assessment originally on the basis of Reasons 8A and 8B.  However, subsequently (and confirmed at the hearing) Mr Brunton advised that he was no longer pursuing Reason 8B and the review has proceeded on the basis that only Reason 8A was being pursued.

4. At the time of Mr Brunton’s application for a change to the assessment (and in the period 26 October 2019 to 31 December 2020) the child support payable by Ms Eidson was $1,738 per annum.  This liability was based on Ms Eidson’s provisional 2018/2019 income of $32,282 and Mr Brunton’s 2018/2019 taxable income of $43,891 (as determined by the Australian Taxation Office).

5. On 27 February 2020 a delegate of the Registrar decided that Reason 8A had been established.  The delegate decided that for the period 26 October 2019 until 30 October 2023 Ms Eidson’s adjusted taxable income should be varied to $108,000 per annum.

6. On 25 May 2020 Ms Eidson objected to that decision.  She was granted an extension of time to object.

7. On 12 August 2020 her objection was partly allowed.  The objections officer decided to set aside the original decision determining that from 1 October 2019 to 31 October 2023 Ms Eidson’s adjusted taxable income should be varied to $135,228 per annum and that Mr Brunton’s income should be reflected in his taxable income as assessed by the Australian Taxation Office.  This objections officer’s decision resulted in an annual rate of child support of approximately $24,000 per annum.

8. On 23 September 2020 Ms Eidson requested a review by the Administrative Appeals Tribunal (“the Tribunal”).  A telephone directions hearing was conducted with both parents on 1 June 2021.

9. Ms Eidson and Mr Brunton attended the hearing by way of a telephone conference on 29 July 2021.  Ms Eidson gave sworn evidence and Mr Brunton gave evidence on affirmation.

ISSUES

1. The central issues for the Tribunal to determine in this case are:

   · Whether one or more of the grounds for departure referred to in subsection 117(2) of the Child Support (Assessment) Act 1989 (the Assessment Act) exist; and if so,

   ·      Whether it would be:

   (a)   just and equitable as regards the children, the liable parent, and the carer entitled to child support; and

   (b)   otherwise proper

   to make a particular determination to depart from the administrative assessment of child support.

DOCUMENTARY EVIDENCE

1. The Tribunal had before it a number of documents, organised into exhibits as set out in the attached Schedule.  The Tribunal had regard to all of this evidence, and refers specifically to particular items in this Statement of Reasons.

CONSIDERATION

The child support law

1. The legislation relevant to this review is contained in the Assessment Act and the Child Support (Registration and Collection) Act 1988.

2. The rate of child support payable by the liable parent is usually based on an administrative formula assessment under Part 5 of the Assessment Act. This requires the application of a statutory formula which takes into account factors such as the number of children, the level of care provided and the income of each parent.

3. A parent may apply to the Child Support Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Assessment Act (section 98B). Section 98C provides that the Registrar may make a determination to depart from the formula assessment and establishes a three-step process as described in paragraph 10 above.

4. The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Assessment Act. Each ground for a departure from the administrative formula is prefaced by the words “in the special circumstances of the case”. Therefore, when considering whether the ground exists in this case, the Tribunal must be satisfied that there are “special circumstances” in the case. If satisfied that there are “special circumstances” and 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 Assessment Act. Section 98S sets out a range of determinations that may be made under the departure provisions.

5. The phrase “special circumstances of the case” is not defined in the Assessment Act. In the case of Gyselman and Gyselman (Gyselman),[1] the Full Court of the Family Court of Australia held that:

   Section 117(2) sets out the grounds for departure from administrative assessment. Each of those grounds is prefaced by the words “in the special circumstances of the case”.

   Whilst it is not possible to define with precision the meaning of that term, 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.

   [1] (1992) FLC 92-279

6. Subsection 98C(3) of the Assessment Act provides that subsections 117(4) to (9) of the Assessment Act apply to the Registrar and therefore the Tribunal must consider those provisions when deciding whether, if a ground is established, it would be just and equitable or otherwise proper to make the departure decision.

Does a ground or grounds exist to depart from the administrative formula assessment?

1. In considering whether a ground or grounds exist which justify departing from the administrative formula assessment, the Tribunal considered the evidence and submissions provided by the parents at the hearing in addition to the extensive information contained within the documentation provided by the Child Support Agency as well as the documentation provided by the parents prior to the hearing.

Reason 8A

1. The legislative grounds corresponding to Mr Brunton’s application in relation to Reason 8A are set out in subparagraph 117(2)(c)(ia) of the Assessment Act. The test is whether:

   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: [paragraph 117(2)(c)]

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

2. To establish this ground it is necessary to show that either Ms Eidson’s or Mr Brunton’s income, property or financial resources used in the assessment make the child support assessment unfair.

Ms Eidson’s income, property and financial resources

1. Ms Eidson is one of two directors of the company [Company 1 new name] (previously named [Company 1 old name]) “[Company 1]”.  The company provides allied health services.  In addition, Ms Eidson is one of two directors of the company [Company 2].  She is the sole shareholder of [Company 2]. 

2. Ms Eidson’s income is difficult to determine with precision.  There are multiple bank accounts, some in Ms Eidson’s name but a large number in the name of [Company 1] to which she and the other director are signatories.  In addition, there are bank accounts in the name of [Company 2] to which Ms Eidson is the sole signatory.  There is one trust account in the name of “[Ms Eidson and Mr A] ATF [Family Trust 1]” (“the Family Trust account”) and Ms Eidson confirmed that distributions to her are deposited into this account (ending in 094) from the main business account of [Company 1] which is the [Bank 1]  account ending in 260.  In total, there are currently 18 bank accounts associated with [Company 1] and [Company 2] and including the Family Trust account.

3. Ms Eidson confirmed that her distribution from the Family Trust account was $69,965 (ignoring cents) for the 2019/2020 year.  She provided a copy of the financial statements for [Family Trust 1] for the 2019/2020 financial year.[2]  This showed that both she and the other director received a distribution of $69,965 (ignoring cents).  This amount was then reflected in Ms Eidson’s income tax return for the 2019/2020 financial year, a copy of which was provided to the Tribunal.[3]  Ms Eidson contended that the Tribunal should determine that her income is $69,965.  However, the Tribunal was not persuaded that a distribution of $69,965 encompassed all of Ms Eidson’s income.  The Tribunal considered the main business account of [Company 1] (the account ending in 260) and it finds that in the period January 2021 to 8 April 2021 amounts of $5,000 per week have been transferred into the Family Trust account[4] described as “directors funds”.  Ms Eidson asserted that she only received a share of the deposits into the Family Trust account and that the other director received a larger share and that her share of the Family Trust amounts was $1,340 per week (which equates to the distribution of $69,965).  However, no evidence was provided to substantiate the claim that she received a smaller than 50% share of the deposits into the Family Trust account and given that the financial statements for the 2019/2020 financial year show that Ms Eidson and the other director received identical distributions from the Family Trust account the Tribunal finds that Ms Eidson’s share of payments into the Family Trust account from [Company 1] are currently $2,500 per week which annualises to $130,000 per year. 

   [2] A48-A56

   [3] A192-A197

   [4] C2 pages 854-872

4. However, the Tribunal is mindful that the bank statements pertaining to an earlier period from March 2020 to July 2020[5] show that withdrawals were made on a less regular basis and were described as “drawings”.  It appears that the Family Trust account had not been opened or was not operative in the 2019/2020 financial year. The amounts of the “drawings” also varied from $15,000 (described as “[Ms Eidson] drawings”) on 26 June 2020, $5,000 (also described as “[Ms Eidson] drawings”) on 12 June 2020, $2,000 (also described as “[Ms Eidson] drawings”) on 20 May 2020, $2,000 on 11 May 2020, $1,000 on 15 April 2020, $1,594 on 17 April 2020, and $2,000 on 30 April 2020.  It is not possible to know with certainty whether the other director withdrew some of the above drawings.  The Tribunal considers it unlikely that he was responsible for the drawings described as “[Ms Eidson] drawings” which comprised most of the drawings.  Considering the drawings overall the Tribunal is satisfied that in the 2019/2020 financial year Ms Eidson’s income from the Family Trust account was at least $69,965.  However, in view of the regular pattern of payments into the Family Trust account of $5,000 per week (of which half is attributable to the other director) the Tribunal finds that in the 2020/2021 financial year Ms Eidson’s income from the Family Trust account was $130,000 per annum.

   [5] C1 pages 419-570

5. In relation to Ms Eidson’s income the Tribunal also considered that Ms Eidson is the sole shareholder of [Company 2].  She provided the financial statements for the 2019/2020 year.  The detailed profit and loss statement showed that the retained profit for the company (after tax and subtraction of previous losses) was $52,650.30.[6]  While Ms Eidson informed the Tribunal that the profits were retained in the company, this does not alter the fact that these were moneys available to Ms Eidson if she had chosen to access them.  In the Tribunal’s view the profit of $52,650 is a modest figure because it is difficult to understand why the expenses of [Company 2] were as high as they were.  Ms Eidson could not satisfactorily explain, for instance, why [Company 2]’s expenses include an amount of $400,023.76 described as “Management Fees” plus $140,000 described as “Management Fees – [Family Trust 1]”.  It is difficult to understand the magnitude of the management fees which are in addition to the wages expenses of [Company 2] of more than $82,000.

   [6] A40

6. The healthy financial state of [Company 2] is at odds with the profit and loss statement provided for the nine months ending 31 March 2021.  This shows a decrease in income of approximately $83,000 compared with the gross profit in the 2019/2020 year.  However, despite the downturn in revenue the expenses are very significantly higher than in the 2019/2020 year.  The “management fees” have increased to $463,155 and the wages have increased to $290,067.55.[7]  Both of these amounts seem excessive in the circumstances and Ms Eidson could not satisfactorily explain how the management fees are incurred.  The Tribunal is not persuaded that all of the expenses are accurate and taking a very conservative approach the Tribunal finds that Ms Eidson had access to profits from [Company 2] not only in the 2019/2020 year where the net profit was $52,650 (ignoring cents) but also going forward from that time of the same amount. 

   [7] A211

7. Hence, the Tribunal finds that in the 2019/2020 financial year Ms Eidson’s income was approximately $122,615 (trust distribution of $69,965 from the Family Trust account and profit from [Company 2] of $52,650).  Thereafter the Tribunal finds that Ms Eidson’s income was $182,650 per annum (trust distribution of $130,000 from the Family Trust account based on payments of $2,500 per week + $52,650 net profit from [Company 2]).

8. In relation to Ms Eidson’s expenses she declared that she has a credit card debt of approximately $14,000 which she shares with the other director.  She stated that she also has a debt (with the other director) to [Company 1] of approximately $350,000.[8] However, the balance sheet of [Company 1] for the 2019/2020 financial year shows that the other director’s loan from [Company 1] is $290,478 and Ms Eidson’s loan from [Company 1] is $39,541.[9] Ms Eidson confirmed that the loan arrangements are informal.  She estimated her income tax to be approximately $97 per week ($5,044 per annum).  In relation to her household expenses Ms Eidson declared that these totalled approximately $1,406 per week (approximately $73,112 per annum); the most expensive cost being her rent of $675 per week.  She has minimal motor vehicle expenses because [Company 1] provides her with a leased vehicle and the only cost to her personally is the fuel (as Ms Eidson indicated).

   [8] A6

   [9] A63

9. In relation to property Ms Eidson owns no real estate, minimal superannuation and household contents valued at approximately $10,000.

10. The income used in the assessment for Ms Eidson at the time of Mr Brunton’s application was $32,282.  However, the Tribunal has found that in the 2019/2020 financial year Ms Eidson’s income was approximately $122,615 and that thereafter her income was approximately $182,650.  There exists such a significant disparity between the income used in the assessment and Ms Eidson’s actual income that it creates a special circumstance.  The Tribunal is also satisfied that it renders the child support assessment unfair.

11. The Tribunal finds that Reason 8A is established in relation to Ms Eidson’s income.

Would it be just and equitable to depart from the administrative assessment?

1. Section 3 of the Assessment Act states that parents have the primary duty to maintain their children and that this duty takes priority over all commitments of the parents other than commitments necessary to enable the parent to support themselves or any other child or another person that the parent has a legal duty to maintain. The Assessment Act contemplates not only that both parents contribute to the support of their children but that the parents’ capacity to contribute must be taken into account.

2. Having found a reason for departure, the Tribunal must consider whether it is just and equitable to depart from the administrative formula assessment. The Tribunal must have regard to a range of matters set out in subsection 117(4) of the Assessment Act. This requires an assessment of the duty of the parents towards their children; the needs of the children; any income, earning capacity and financial resources of the children; the income, earning capacity and financial resources of the parents; self-support commitments; and an evaluation of hardship on the parties (and/or the children) if the Tribunal increased or decreased the amount of child support payable.

3. In considering these issues, the Full Family Court, in the case of Gyselman, stated that:

   However, some of the matters listed in sub-section [117](4) may overlap with matters already considered under sub-section (2) and some of the paragraphs in sub-section (4) may be more significant in one case than they would be in another or of little relevance in a particular case. It is an essential part of the s.117 exercise to carry out the obligation under sub-section (4). However, that does not mean that it is necessary in each case to slavishly go through each of the paragraphs. The extent to which it is necessary to do so will depend upon the facts and conduct of the individual case and the analysis already performed under sub-section (2).

4. Of particular relevance in this matter are the following aspects of subsection 117(4) of the Assessment Act.

The proper needs of the children

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

2. The parents agreed that the children did not have any special needs or any other proper needs which the Tribunal needed to specifically consider.  The children attend a government school.  The Tribunal does not consider that there are any special costs associated with the proper needs of the children that it needs to take into account in the child support assessment.

The income, property and financial resources of the children

1. Both parents agreed that the children did not have any income, property and financial resources of their own.  The Tribunal is satisfied that the children have no income, property or financial resources of any significance of their own and are dependent on their parents for financial support.

Mr Brunton’s income, property, financial resources and expenses

1. Mr Brunton provided a Statement of Financial Circumstances.[10]  He declared that at the time that he completed this form his income was steadily increasing.  He advised that until the end of August 2020 he was working as a [Occupation 1] for [Company 3] on a part-time basis.  He also was working as a sole practitioner in his own [practice].  Since 28 August 2020 and now that he has finished his [Occupation 1] registration process he has been self-employed working exclusively as a sole [Occupation 1].  He advised that his hours of work are flexible and generally around three days a week of consulting and a couple of days a week on administrative tasks.  His hours of work are flexible to accommodate his clients’ availability and his own availability given that he has 100% care of the children.  Mr Brunton provided a copy of his income tax return for the 2019/2020 financial year[11] which confirmed that he had received gross payments of $16,196 from [Company 3].  In addition it showed that he had received gross payments of $53,230.48 from his sole practice; that he had business deductions of $19,216 and therefore that the profit from his sole practice was $34,014.47.  Together with the income from [Company 3] and with deductions of $6,392 his taxable income in the 2019/2020 year was $44,113.  Mr Brunton provided his Notice of Assessment for the 2019/2020 year which confirmed this figure.[12]

   [10] B1-B10

   [11] B224-B232

   [12] B233

1. Mr Brunton also provided information relating to his current income.  He provided a spreadsheet detailing his income and expenses on a monthly basis from July 2020 to May 2021.[13]  This showed that his average monthly gross income is approximately $7,932.78 and that his average monthly expenses are approximately $2,323.75.  Mr Brunton has therefore calculated that in the 11-month period his gross income was $87,260.63; his expenses were $25,561.22 and his net profit was $61,699 (ignoring cents).  On an annualised basis his net profit was $67,308 for the 2020/2021 financial year.

   [13] B250

2. Ms Eidson took issue with some of the business expenses claimed by Mr Brunton.  She contended that some of the expenses were not genuine and that others were exaggerated but in the Tribunal’s view the expenses claimed are quite limited and modest and Mr Brunton was able to satisfactorily explain his claims.  In relation to Ms Eidson’s query of a claim for home office expenses ($96 per month) and room rent expenses (varying amounts averaging $577.91 per month) Mr Brunton explained that the room rent expenses relate to the room he rents to conduct his [practice].  He also undertakes administrative work at home.  The Tribunal accepts Mr Brunton’s statements regarding his income and the costs of running his sole practice.

3. Ms Eidson asserted that Mr Brunton’s actual income was higher than he had stated.  She referred to average salaries payable to [Occupation 1]s as being between $100,000 and $120,000 per annum.  However, Mr Brunton responded that he has only recently completed the registration requirements to practise as a [Occupation 1] and in any event he is not working full-time due to his parenting responsibilities.  In relation to the claim by Ms Eidson in her written submission that Mr Brunton was employed by [Company 4] Mr Brunton denied that he had ever worked for this company but he explained that his sole practice is located at that location (which the Tribunal accepts).  In addition, Ms Eidson claimed that Mr Brunton does not have a motor vehicle and queried the basis upon which he had claimed motor vehicle expenses.  Mr Brunton agreed that he did not own a motor vehicle but he advised that he has the use of a motor vehicle and that he makes a contribution to the running costs of that vehicle in accordance with Australian Taxation Office guidelines.  The Tribunal accepts Mr Brunton’s statements regarding his income and business costs.

4. Mr Brunton declared savings of approximately $15,000.  He owns no real estate and declared the value of household contents to be $20,000.  In relation to debt Mr Brunton stated that he owes his mother $28,000 for the loan she provided in relation to his family law proceedings.  He stated that he is making intermittent repayments to his mother.  He has a HECS debt.  He declared tax on his income of approximately $83 per week ($4,316 per annum), superannuation contributions of $150 per week and health insurance premiums of $100 per week.  In relation to household expenses he stated that these totalled approximately $920 per week ($47,840 per annum) with the largest expense being rent of $305 and food of $250 per week for himself and the children. His expenses were unremarkable for himself and the children.

The earning capacity of the parents

1. The Tribunal considered the earning capacity of both parents.  Ms Eidson works full-time and her income is increasing.  Mr Brunton works flexibly, taking into account his caring responsibilities for the children, but his income is also increasing.  In these circumstances the Tribunal is satisfied that earning capacity is not an issue for either parent in this case.

Necessary commitments to support themselves

1. The Tribunal notes that the Family Court of Australia has been prescriptive about the types of expenses that can be considered “necessary” expenses and that there are only a few expenses that can be considered to take priority over a parent’s primary duty to support their children.  This includes expenses such as a reasonable amount for payment of rent or mortgage, food, utilities and some loans.  In Mee and Ferguson[14] the Full Court of the Family Court stated at paragraph 128:

   Some of the items obviously have to be taken into account before maintenance is arrived at; for example, the cost of reasonable transport, food and clothing, and other like expenses are necessary to the continued reasonable existence of a parent, and, barring legislative direction to the contrary, it would not accord with the understanding in this jurisdiction to suggest that those items should be put out of consideration before child maintenance is determined. On the other hand there is no doubt that one of the primary responsibilities of a parent is the continued support of children to the extent to which the parent continues to be able to do so and that may in appropriate circumstance mean making financial sacrifices or cutting one's cloth to meet that commitment during the years when it applies.

   [14] (1986) FLC 91-716; [1986] FamCA 3

2. Both parents advised that they did not have any out of the ordinary self-support expenses and the Tribunal finds accordingly.

Any hardship to either parent or the children by the making of, or refusal to make, an order

1. Mr Brunton stated that he and the children would suffer hardship if the Tribunal refused to change the assessment.  He stated that the amount of child support payable makes a very significant difference to the resources available for the children.  He stated that it affects the quality of life for the children and in particular his capacity to fund the children’s extracurricular activities in addition to paying for the children’s everyday needs such as clothing and shoes.  He denied that Ms Eidson buys clothes and shoes for the children to any significant extent.

2. Ms Eidson stated that if she was required to pay more child support than was calculated on her taxable income as assessed by the Australian Taxation Office she would not be able to afford it.  She stated that she was unable to afford to pay the child support amount calculated by the objections officer.  She stated that she buys clothing and shoes for the children.

Proposed determination

1. The Tribunal has carefully considered the available evidence and the statements and contentions of both parents.

2. The Tribunal is satisfied that [Company 1]’s revenue and profitability have markedly improved since the 2018/2019 year.  The company tax return for the 2018/2019 year showed that the income of [Company 1] was $353,853; its expenses were $357,275 and it incurred a loss of $3,422.[15]  In the 2019/2020 year the financial statements show that the income of [Company 1] was $2,683,733; its expenses were $2,551,597 and its profit was $132,136.[16]  Ms Eidson also provided a profit and loss statement for the period 1 July 2020 to 31 March 2021.  This showed that (for that period) the total income of [Company 1] was $3,237,558; expenses were $3,526,121 and [Company 1] made a net profit of $76,888.[17]

   [15] C1-page 666

   [16] A59

   [17] A209-A210

3. In addition [Company 2]’s financial statements for the 2019/2020 year show that its income was $779,607; its expenses were $706,467 and its profit was $73,140.  Although the profit and loss statement for [Company 2] for the period 1 July 2020 to 31 March 2021 showed a loss of $131,727 the Tribunal has found that a number of the expenses – in particular the management fees – were inflated.

4. Hence, the Tribunal has found that in the 2019/2020 financial year Ms Eidson’s income was approximately $122,615 (trust distribution of $69,965 from the Family Trust account and net profit from [Company 2] of $52,650).  Thereafter the Tribunal has found that Ms Eidson’s income was $182,650 per annum (trust distribution of $130,000 from the Family Trust account based on payments of $2,500 per week + $52,650 net profit from [Company 2]).

5. The Tribunal is satisfied that Ms Eidson is accessing or has access to distributions or profits of at least these amounts and the Tribunal proposes that these amounts be factored into her child support liability. 

6. The Tribunal is satisfied that Ms Eidson can afford this level of child support as calculated above.  If Ms Eidson considers that it is unaffordable for her she has significant scope to adjust the business expenses of either [Company 1] or [Company 2] to ensure that her child support payments take priority in her budgeting.

7. In relation to the relevant date to commence the change to the assessment, the Tribunal considers that this should coincide approximately with the date when Mr Brunton lodged his application.  To provide some certainty and predictability for both parents and in view of the financial position of [Company 1] and [Company 2] the Tribunal proposes to put its Decision in place until 31 October 2023.  Hence the Tribunal proposes to vary Ms Eidson’s income to $122,615 for the period 1 October 2019 to 30 June 2020 and thereafter to vary Ms Eidson’s income to $182,650 for the period 1 July 2020 to 31 October 2023.

8. In relation to Mr Brunton’s income the Tribunal proposes to vary his income to $67,308 for the period 1 July 2020 to 31 October 2021 to reflect his predicted income for the 2020/2021 year.  However, thereafter, and being mindful that if Mr Brunton’s income increases this should be reflected in the assessment, the Tribunal does not propose to vary his income for a longer period. His income therefore will revert to his taxable income as assessed by the Australian Taxation Office from 1 November 2021.

9. This proposed determination will, in approximate terms, result in child support payable by Ms Eidson of approximately $21,600 per annum for the period 1 October 2019 to 30 June 2020; an amount of child support payable of approximately $28,000 per annum from 1 July 2020 increasing to approximately $31,000 per annum when the eldest child turns 13 years old.  However, after 31 October 2021 Mr Brunton’s income is unknown and so the child support payable is less certain.  For example, if Mr Brunton’s income increased to $80,000 this would reduce the child support payable from approximately $31,000 per annum to approximately $29,000. 

10. The Tribunal considers this proposed determination is fair, just and equitable and that it balances the needs and financial capacities of both parents.

Is it otherwise proper to depart from the administrative assessment?

1. The final step for the Tribunal to undertake is to determine whether it is “otherwise proper” to make the particular determination to depart from the administrative assessment. Subsection 117(5) of the Assessment Act requires the Tribunal to take into consideration the following matters:

   (a) the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and

   (b)   the effect that the making of the order would have on:

   (i) any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or

   (ii) the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.

2. The Tribunal must consider whether the proposed departure is “proper” within the context of the public interest and welfare expenditure by the community (see Gyselman). It is a prime objective of the child support legislation that parents should be obliged to support their own children to the extent of their real capacity, and that that obligation should not be unnecessarily left to the public welfare system when the parents themselves have the capacity to maintain their children.

3. The Tribunal is satisfied that Mr Brunton needs financial assistance to support the children and that it is proper that when Ms Eidson’s income increased that she pays a higher rate of child support.

4. Paragraph 117(5)(b) of the Assessment Act directs the Tribunal to have regard to the effect that the making of the order would have upon the rate of entitlement to any income tested pension, allowance or benefit.

5. Mr Brunton is receiving family tax benefit and he confirmed that he is aware of the impact of child support payments on that benefit.

6. The Tribunal is satisfied that the proposed determination is “otherwise proper” and that the determination should be made.

DECISION

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

• For the period 1 October 2019 to 30 June 2020 Ms Eidson’s adjusted taxable income is varied to $122,615 per annum; and

• For the period 1 July 2020 to 31 October 2023 Ms Eidson’s adjusted taxable income is varied to $182,650 per annum; and

• For the period 1 July 2020 to 31 October 2021 Mr Brunton’s adjusted taxable income is varied to $67,308 per annum.

SCHEDULE

List of Exhibits

1. Services Australia – Child Support Agency marked as C exhibits:

   ·     CSA’s large bundle of 731 pages marked as exhibit – C1

   ·     CSA’s “missing documents bundle” pages 732-796 marked as exhibit C1-A

   ·     CSA’s section 38AA documents pages 797-843 marked as exhibit C2

   ·     CSA’s section 38AA documents pages 844-1009 marked as exhibit C3

2. Ms Eidson has provided the following documents marked as A exhibits:

   ·     A1-A10                Statement of Financial Circumstances

   ·     A11-A12               Cover email

   ·     A13-A22               Written submissions

   ·     A23-A24               Business Activity Statement – [Company 2] Sep 2020

   ·     A25-A26               Business Activity Statement – [Company 2] Dec 2020

   ·     A27-A28               Business Activity Statement – [Company 1] Sep 2020

   ·     A29-A30               Business Activity Statement – [Company 1] Dec 2020

   ·     A31-A32               [Family Trust 1] – Beneficiaries profit distribution 30 June 2020

   ·     A33   Payroll employee summary – [Company 2]

   ·     A34-A35               Payroll employee summary – [Company 1]

   ·     A36-A47               [Company 2] financial statements as at 30 June 2020

   ·     A48-56                [Family Trust 1] financial statements as at 30 June 2020

   ·     A57-A70               [Company 1] financial statements as at 30 June 2020

   ·     A71-A80               [Company 2] financial statements as at 30 June 2019

   ·     A81-A146             Affidavit of [Ms B] and [Mr A] re credit card expenditure

   ·     A147-A160           Objection and submissions

   ·     A161-A162           Real estate advertisements

   ·     A163                   Mr Brunton’s professional details

   ·     A164-A174           Information from “Seek” regarding the profession of [Occupation 1]

   ·     A175-A176           ABN details for [Company 3]

   ·     A177-A181           Advertisement from [Company 4]

   ·     A182                   ABN details for Mr Brunton

   ·     A183-A191           Federal Circuit Court of Australia decision 28/7/2020

   ·     A192-A200           Ms Eidson’s income tax return 2019/2020 financial year

   ·     A201-A204           AAT directions – 1 June 2021

   ·     A205-A206           Business Activity Statement – [Company 1] March 2021

   ·     A207-A208           Business Activity Statement – [Company 2] March 2021

   ·     A209-A210           Profit and Loss for period 1 July 2020  –  31 March 2021 – [Company 1]

   ·     A211                   Profit and Loss for period 1 July 2020 - 31 March 2021 – [Company 2]

3. Mr Brunton has provided the following documents marked as B exhibits:

   ·     B1-B10                Statement of Financial Circumstances

   ·     B11 -B14              Written submission

   ·     B15-B82               [Bank 2] statements Sep 2019 – Feb 2021

   ·     B83-B87              [Bank 3] statements Apr 2019 – July 2019

   ·     B88-B176             [Bank 4] statements Oct 2019 – Dec 2020

   ·     B177-B217            [Bank 4] statements July 2019  –  Mar 2021

   ·     B218-B223           [Bank 4] statements (A/c 5192) July 2019 - June 2020

   ·     B224-B232           Mr Brunton’s income tax return 2019/2020

   ·     B233-B234           Notice of Assessment as at 30 June 2020

   ·     B235                   Email exchange

   ·     B236-B245           [Bank 2] statements Dec 2020-Mar 2021

   ·     B246-B247           Employment Separation Certificate

   ·     B248-B250           Income and expenses for practice July 2020  –  May 2021