Elford and Eidson (Child support)

Elford and Eidson (Child support) [2024] AATA 2771 (16 May 2024)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2023/BC026942
APPLICANT:  Mr Elford
OTHER PARTIES:  Child Support Registrar
Ms Eidson

TRIBUNAL:Senior Member K Dordevic
DECISION DATE: 16 May 2024
DECISION:

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

Mr Elford’s adjusted taxable income is varied to:
§$71,900 from 1 January to 30 June 2023; and
§$75,892 from 1 July 2023 to 31 August 2024.
Mr Elford’s annual rate of child support is increased by:
§$6,446 for the period 1 January to 31 December 2023; and
§$6,600 from 1 January 2024 to 27 January 2026.

CATCHWORDS
CHILD SUPPORT – change of assessment – whether it is otherwise proper to make a particular
departure determination – the determination is otherwise proper – father’s adjusted taxable
income is varied – 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 theChild Support (Registration and Collection) Act 1988

REASONS FOR DECISION

BACKGROUND

The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of the child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care of the children. The Act also provides for a departure from the administrative assessment in certain circumstances.
Mr Elford (the father) and Ms Eidson (the mother) are the parents of two children, [Child 1] (born [date] 2020) and [Child 2] (born [date] 2022). This case was first registered with Services Australia – Child Support (Child Support) on 23 December 2021 and has been collected by Child Support from that date. For the purposes of the Child Support assessment [Child 1] and [Child 2] are in the 100% care of the mother.
On 21 February 2023 the mother lodged a departure application, seeking a departure on the basis of the father’s income and financial resources and the children’s child care costs. On 5 July 2023 a senior care officer determined that for the period 1 March 2023 to 31 December 2024 the mother’s and father’s adjusted taxable incomes were varied to $84,000 and $75,000 respectively and for the same period the father’s annual rate of child support was increased by $5,200.
The father lodged an objection to that decision on 9 August 2023 and the objection was partly allowed on 29 September 2023. The objections officer determined that for the period:
·1 March 2023 to 31 December 2024 the mother’s self-support amount was increased by $22,500;
·1 March 2023 to 30 June 2023 the father’s adjusted taxable income was varied to $72,127;
·1 July 2023 to 31 December 2024 the father’s adjusted taxable income was varied to $75,000; and
·1 March 2023 to 31 August 2023 the mother’s adjusted taxable income was varied to $85,000.
On 23 October 2023 the father sought further review of the objection decision with the Social Services and Child Support Division of the Administrative Appeals Tribunal (the Tribunal). Directions were issued on 19 March 2024 requiring compliance by 17 April 2024.
The Tribunal heard the matter on 13 May 2024. The father and mother appeared by MS Teams audio. The Child Support Registrar was not represented at the hearing. The Tribunal also considered the documentation provided by Child Support (folios 1 to 742), the father (marked folios A1 to A119) and the mother (marked folios B1 to B161).
The matter was deferred in order to allow the mother to provide evidence of a child care subsidy debt. The mother provided additional evidence on 15 May 2024 (marked folios B162 to B169), a copy of which was provided to the father.
The Tribunal reached its decision on 16 May 2024.

ISSUES

The statutory provisions relevant to this review are outlined in section 98C of the Act, which states that a decision to depart from the administrative assessment may be made if the following three requirements are met:
(i)that one, or more than one, of the grounds for departure referred to in subsection 117(2) exists; and
(ii)that it would be:
(A)just and equitable as regards the child, the liable parent, and the carer entitled to child support; and
(B)otherwise proper;
to make a particular determination under this Part …
Therefore, the issues which arise in this case are:
· Does a ground exist for departure from the administrative assessment of child support? And, if so
· Would it be just and equitable and otherwise proper to make a particular determination?

CONSIDERATION

A ground for departure

Subparagraph 117(2)(b)(ib) of the Act provides a ground for departure:
(b) that, in the special circumstances of the case, the costs of maintaining the child are significantly affected: …
(ib) because of high child care costs in relation to the child; …
Subsection 117(3B) of the Act says that costs can only be considered high if, during the child support period, they total more than 5% of the parent’s adjusted taxable income.
The Tribunal makes the following findings in respect of the children’s child care arrangements. The children are enrolled in child care each weekday. The children are under 12 years of age. The mother works full time from Tuesdays to Saturdays, as evidenced by her payslips.[1] The mother provided evidence that she was incurring this cost some months prior to the parties’ separation and registration of the child support liability.[2]
[1] Folios B138 to B140
[2] Folio 138
Whilst the Tribunal accepts the mother’s evidence that she is required to undertake regular professional development, including one course per month from [a college][3] it is not persuaded that this requires additional child care of over seven hours per week. Thus, for the purposes of assessing whether her child care costs are high, the Tribunal will disregard the costs associated with the children attending child care each Monday. This will have a modest impact on the assessment of the child care costs.[4]
[3] Folio B70
[4] By way of example the gap for the period 2 to 29 January 2023 (which included three Mondays) the daily fee was less than $36, totalling $576.61 during that period. For the period 11 December 2023 to 21 April 2024 there were 16 Mondays (excluding two public holidays that fell on a Monday) the combined daily fee of the children was less than $22, totalling $369.60 during that period
The Tribunal finds on the basis of the child care payment summaries in evidence that the mother’s out of pocket child care costs associated with her work from Tuesdays to Fridays from 2 January to 18 June 2023 were $3,524.20 and $1,608.89 during the period 11 December 2023 to 21 April 2024.
The Tribunal accepts that the mother requires child care on a Saturday but must employ a private nanny as children’s child care providers do not operate on weekends. The mother has provided various pieces of evidence to demonstrate this cost. This includes bank statements indicating direct payments made from her savings account with descriptor “babysitter” and the name “[name]” during the period 2 October 2021 to 7 March 2022 totalling $2,080.[5] The father confirmed that this was the arrangement in place prior to separation, though he could not recall the nanny fee, stating that this was all handled by the mother.
[5] Folios 119 to 120
The mother has also provided handwritten receipts indicating that she incurred nannying costs of $150 per week from 19 February 2022 to 18 February 2023 totalling $7,650 in addition to an additional day of nannying costing $135 required when the younger child was sick on a Wednesday.[6] The father alleges that these receipts do not evidence the mother’s actual costs, as they are signed by the maternal grandmother who in fact provided care for the children on these days.
[6] Folio 136
In response the mother testified that the maternal grandmother’s health is too poor to permit her to care for the infant children. She explained that the receipts signed by the maternal grandmother cover the period immediately following the breakdown of the marriage. She was in crisis and did not know then that she was able to seek a contribution from the father towards the children’s child care costs and so did not keep records. She conceded that the receipts signed by the maternal grandmother were created for the purposes of her departure application. This explains why some of the receipt numbers in evidence are not in chronological order and have been amended by her. She stressed that these costs were actually incurred and that the father was aware of the nanny used, as a nanny was employed prior to separation. She was not sure that her bank transactions would demonstrate that she made withdrawals or transfers consistent with the claimed payments during the period 19 February 2022 to 18 February 2023.
The mother stated that the nanny “[Ms A]” was secured through a local [social media] group and is not a friend or family member. [Ms A] provided care for the children until late 2023. The care is now provided by “[Ms B]”. The father did not contest the mother’s testimony regarding these nannies, except to say that it was the mother’s choice to work on Saturdays and therefore the cost of child care on these days should be disregarded.
On balance the Tribunal does not accept, in the absence of other corroborating evidence such as bank statements, that the receipts signed by the maternal grandmother evidence actual child care costs incurred by the mother. However, the Tribunal does accept that the receipts in evidence signed by third parties “[Ms A]” and “[Ms B]” do evidence the nannying costs required for her to work on Saturdays. The receipts in evidence indicate that the mother’s out of pocket costs for nannying from 4 March to 27 May 2023 were $2,250[7] (based on $150 per Saturday in addition to the care provided on 16 and 17 May 2023 when one of the children was sick).[8] From 6 January to 30 March 2024 the mother’s out of pocket nannying costs were $2,080.[9] Further, the mother was able to indicate on her bank statements withdrawals that corresponded with some of the nanny payments to the Tribunal’s satisfaction.[10]
[7] Folios B77 to B79
[8] Folios 309 to 310
[9] Folios B80 to B82
[10] Folios B35, B38 to B40
Following the hearing the mother provided evidence that she was overpaid $815.60 in child care subsidy in the 2023 financial year.[11]
[11] Folio B167
The relevant child support periods are 1 October 2022 to 31 August 2023 (335 days) and
1 September 2023 to 30 November 2024 (457 days).
Analysis of the child care costs in evidence, and taking into account the overpayment in child care subsidy and allowing for four weeks’ holiday per annum in respect of the nanny costs, the Tribunal finds that the mother’s child care costs in the first child support period are about $11,694 and $16,527 in the second child support period.
To ascertain the 5% threshold, the law requires the Tribunal to calculate the mother’s administratively assessed adjusted taxable income for the relevant child support periods, being $36,661 for the first child support period and $106,417 for the second. This equation produces annualised figures of $33,648 in the first child support period and $133,240 in the second. Application of 5% of those annualised figures is used to determine the threshold. In this case, the 5% thresholds are $1,682 and $6,662 respectively.
The Tribunal is satisfied that the child care costs incurred by the mother exceed the threshold and so constitute special circumstances as her costs of maintaining the children are significantly affected by her high child care costs. The Tribunal concludes that the ground provided for in subparagraph 117(2)(b)(ib) of the Act is established.

Just and equitable

The requirement to consider whether a departure would be just and equitable directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the parties’ respective earning capacities, the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula assessment. The Tribunal has considered each of the factors in subsection 117(4) of the Act and does not propose to provide detailed reasons about each of the considerations. Instead, it will refer to those it regards as pertinent to this review.
The Tribunal first turned its attention to the mother’s income and financial resources. The Tribunal finds that the mother’s 2021 to 2023 adjusted taxable incomes are $11,544, $36,661 and $106,417 respectively. The mother reports that she is seeking to have post-separation income excluded from the administrative assessment and that application is currently being reviewed by Child Support. The mother testified that she lodged a 2025 income estimate of $92,500 about three weeks prior to hearing. The mother states that she suffers from a work-related health problem,[12] but to date has managed to continue to work on a full-time basis.
[12] Folios B160 to B161
The mother provided a Statement of Financial Circumstances form dated 13 November 2023.[13] She declares that she is a [occupation] and works on a full-time basis. She reports weekly income of $1,826, and family tax benefit, nil savings and household contents, a motor vehicle valued at $6,000 and failed to report her interest in superannuation. Her liabilities include an unpaid tax debt of $3,054, credit card liability of $3,000 and a HECS debt of $38,000. Her personal expenditure is $1,253, which includes income tax of $555, superannuation of $200, minimum credit card repayments of $150 and health insurance of $348. Examination of her payslips in evidence indicate that she does not make an additional superannuation payment; instead, the payment she reported is the superannuation guarantee paid by her employer. She estimates weekly household expenses of $1,860, of which about $840 relates to her care of the children including their child care costs.
[13] Folios B1 to B10
The mother confirmed that she lives with her parents. She denies the father’s allegation that she is not liable to contribute $600 per week in rent to her parents. The bank statements provided by the mother indicate that she does make fortnightly payments to her parents that correspond with her statements regarding the rent charged. The Tribunal accepts that this is an accommodation expense incurred by the mother.
The Tribunal is of the view that it is appropriate not to amend the administrative assessment on the basis of the mother’s adjusted taxable incomes, noting that the mother’s 2023 adjusted taxable income was applied to the administrative assessment from 1 September 2023. Whilst the mother’s 2023 adjusted taxable income was nearly double that of the previous year, in the circumstances where she is also seeking to exclude post-separation income from the administrative assessment, the Tribunal was not satisfied that it was just and equitable in this particular case to apply her 2023 adjusted taxable income to the assessment at an earlier date.
The Tribunal finds that the children are generally in good health. Apart from the children’s care costs, there is no evidence that the children have special needs or other costs (apart from their child care costs) that would render the assessment unfair or unjust. There is no dispute that the children do not have access to income, property, financial resources or unused earning capacities. The Tribunal finds that the mother does not have a duty to maintain another child.
The father submits that his liability is unfair given his costs in spending time with the children. The current court orders, entered into by consent on 14 February 2024, dictate that the father is to only have supervised contact with the children at a contact centre and the father is liable for all costs associated with those visits.[14] The Tribunal finds that the weekly supervised contact cost is $200.[15] At hearing the father confirmed that he has not yet had supervised contact with the children. As the father has not incurred supervision costs, the Tribunal was not persuaded that this possible future cost rendered the administrative assessment inequitable or unjust. For completeness, even if the father were incurring this cost, the Tribunal is of the view that any adjustment to his liability to take this into account may undermine the orders which dictate that the father is solely liable for this cost. In any event, it is not necessary for the Tribunal to consider whether this is the case in this matter.
[14] Folio A113
[15] Folio A114
The father does have a duty to maintain another child from a previous relationship who resides in [Country 1]. The father submits that any determination to depart from the administrative assessment must also take into account his child support liability for his older daughter. His submissions indicate that he is liable to contribute $98 per month towards her costs, though he acknowledged that he was not actually making these payments. Instead, he stressed that his liability is accumulating and he will be required to meet the cost some time in the future. He went on to explain that the [Country 1] courts require his previous partner to go to court and seek an order regarding his unpaid liability, as she did in 2018 and 2021. The father confirmed that she has not sought an order to his knowledge since 2021.
The parents agree that the father has not paid any child support to the mother in respect of any [Country 1] maintenance orders. The Tribunal finds accordingly, noting that the parents gave inconsistent testimony about whether there existed orders making the father liable to child support for the child in [Country 1].
The father’s position is that the decision under review is correct as it accurately reflects his current financial position. As he earns more income his capacity to support the child will improve. He is now in receipt of $450 in wages per week, stressing that this barely pays his bills, but does allows him not to owe money to anyone nor require him to borrow money to meet his costs.
The Tribunal finds that the father’s 2021 to 2023 adjusted taxable incomes were $23,226, $57,627 and $43,055 respectively. The Australian Taxation Office records accessed by Child Support indicate that he secured full-time employment from 12 October 2021 with an annual income of $65,000.[16]
[16] Folios 337 to 338
The father provided a Statement of Financial Circumstances dated 6 November 2023.[17] He reported that he has been employed as a [occupation] on a full-time basis for the last two years, with an average weekly income of $1,125. The Tribunal notes that his payslips indicate that the father has underestimated his weekly income by $317 per week. He secured employment on a salary of $65,000 per annum and received a raise of $10,000 in his second year. The payslips in evidence from 25 December 2023 confirm that the father’s annual salary is $75,000.
[17] Folios A1 to A10
He reported no real property, nil savings, a motor vehicle valued at $15,000, household contents valued at $0 and $12,760 in superannuation. His liabilities included motor vehicle finance of $13,204, outstanding child support liability of $4,353, outstanding motor vehicle fines of $480 and a personal loan from a friend of $3,060. He reported weekly personal expenditure of $208, which was solely made up of his child support liability. The father declared household expenditure of $1,314 per week, which included $350 per week in food, rent of $450, telephone expense of $59, clothing of $50, medical expenses of $45, entertainment of $50, his overseas child support liability of $19.20 and motor vehicle costs of $180 per week, amongst other minor expenses. His outstanding motor vehicle fines are being repaid at $60 per month; this is his only outstanding liability.

In his Statement of Financial Circumstances the father also declared that he is self-employed, operating as a sole trader providing a [service], with a nil weekly income as he has not earned a “profit yet”.[18] At hearing the father confirmed that he sold his motor vehicle for $11,800 on the open market and repaid the finance owing on the car in full. He explained that he no longer has a motor vehicle as he cannot meet this cost in addition to his necessary financial commitments, including his child support liability. Consequently, he is no longer undertaking [specifed] work. He denied that this decision to discontinue this work was motivated by a desire to affect the administrative assessment. Instead, he reports that his health prevented him from continuing on with the work. In support of his contention, he provided a medical certificate dated 23 March 2024 which states that he suffers from “lower back disc lesions and finds it difficult to work as an [occupation] from sitting for long periods”.[19] There is also in evidence a report of a CT of the lumbosacral spine performed on 16 December 2021 which indicates focal disc protrusion at L5/S1 but no high grade neurological compromise, with possible irritation of the left S1 nerve root.[20] The Tribunal is not persuaded on the basis of this medical certificate alone that the father’s spinal condition prevents him from undertaking work as a [occupation]. The Tribunal also notes a medical certificate in evidence dated 11 July 2023 which states that the father was unfit for work from 10 to 14 July 2023 inclusive on the basis of “stress related symptoms”.[21]
[18] Folio A2
[19] Folio A109
[20] Folios 403 to 404
[21] Folio 399
The father provided, in compliance with the Tribunal’s directions, his personal and business accounts. Unhelpfully, he redacted information regarding the source of transfers into his account, which was not in compliance with the Tribunal’s directions. His testimony is that he has not undertaken any [work] since December 2023 and relies on the deposit into his business account on 11 December 2023 as evidencing the last payment received from the [operator] that he worked for. He testified that there are no statements for the period 12 December 2023[22] to 11 March 2024[23] as there were no transactions during that period as he has ceased all [specified] work.
[22] Folio A85
[23] Folio A87
It is difficult to quantify the father’s income from his [work] given the financial evidence before the Tribunal. The father’s 2023 income tax return indicates that he received gross income from this work of $20,398[24] with contractor expenses of $3,500, other expenses of $3,739 and motor vehicle expenses of $6,487, resulting in net income of $6,672. Deferred prior losses of $29,072 were then applied, resulting in net loss from his business activities. At hearing the father suggested that these losses were associated with car trading. On balance, the Tribunal is persuaded that the father had access to an additional income of $6,672 available to him to provide for the children in the 2023 financial year. In the Tribunal’s view this strikes a balance between accepting the father’s declaration as to his expenses without the benefit of corroborating evidence (noting that in particular it is unlikely that his telephone expense of $2,658 was solely related to his [business] usage) whilst disregarding his deferred prior year losses where there is also no evidence of these.
[24] Folio A18
The Tribunal concludes that the father’s 2023 adjusted taxable income was in the vicinity of $71,900, made up of his gross salary and work-related deductions[25] and application of his net [income]. It is appropriate to reflect this in the administrative assessment from 1 January 2023, which predates the mother’s application by some six weeks. This aspect of the decision will create arrears of about $1,500. Given the evidence of the father’s income and his level of discretionary spending, the Tribunal is satisfied that this will not cause him undue hardship.
[25] Folio A15
The father provided further evidence of his [income] from July to December 2023, which indicate that he received net income of $5,155.[26] Application of the same expense percentage of 67% from the 2023 financial year indicates that the father’s net profit from [the business] during this period would be about $1,700. Allowing for similar work-related expenses, his adjusted taxable income from 1 July 2023 is about $75,892. The Tribunal is satisfied that it is appropriate to vary the father’s adjusted taxable income to $75,892 from 1 July 2023 to 31 August 2024. This aspect of the decision will create arrears in the vicinity of $5,000. Again, for the reasons outlined above, the Tribunal is satisfied that this reflects the father’s actual income and financial resources and will not place him in a position of hardship given his necessary and discretionary expenditure.
[26] Folios A37 to A42
The Tribunal accepts that the father no longer is in receipt of [specified work] income. However, it is important to note that in reaching this conclusion, the Tribunal is not persuaded that the medical evidence indicates that it is the father’s health that prevents him from undertaking this work. Instead, the Tribunal is satisfied that the father is already working full time. Therefore, the Tribunal is not satisfied that the father does not have an unused earning capacity, within the meaning of subsection 117(7B) of the Act. Specifically, having worked full time, there is no requirement for the father to also engage in [additional] work, even though he had capacity to do so previously.
Examination of the father’s bank statements indicate that he receives financial support from unknown sources; as outlined above the father has redacted his bank statements despite being directed not to. The father stated that certain deposits into his account are loans from friends to support him in times of crisis. He gave an example of receiving $3,000 as he needed to book an airfare urgently. He has since repaid the loan. The father explained that his mother arrived in Australia in September 2023 and has resided with him since. She does not share any expenses but neither does she increase his expenses. He denied the mother’s allegation that he has access to his mother’s bank cards as was apparently the case when they were in a relationship. Whilst it is evident that the father’s mother has made deposits into his account, given the father’s uncontested evidence about his living arrangements, the Tribunal is not persuaded that these deposits demonstrate an undeclared income source.
The father vehemently denied the mother’s allegation that he is working as a [Occupation 1]. He states that if he had been observed why did no one take a photograph of him. He stated that he does not have a current [licence] and so is prohibited from working as a [Occupation 1]. Again, without any evidence to corroborate this allegation, the Tribunal is not persuaded that the father has undeclared income from [Occupation 1] work. The father also refutes the mother’s allegation that he is a car dealer. He stated that he has not sold a motor vehicle since 2023. With no evidence to support a contrary finding, the Tribunal accepts that the father is not currently engaged in car trading.
The Tribunal has already had regard to the costs associated with the child’s child care and has determined that they impose a significant fincial burden on the mother and so impact on her capacity to provide for the children. The father’s position in this regard is that he does not have capacity to contribute to this cost, in addition to his arguments already outlined that not all of these costs are necessary nor have actually been incurred. The mother seeks a contribution from the father towards the child care costs from the date of registration until the older child commences school in January 2026.
The Tribunal is satisfied that the father was cognisant of the child care costs given the care arrangements pre separation and was put on notice that the mother sought a contribution towards the care costs from 23 February 2023. The Tribunal is satisfied that it is appropriate that the father contribute to the child care costs from 1 January 2023 and not before. Given the variation to the assessment on the basis of the father’s adjusted taxable income and the jump in the mother’s income from the 2022 to 2023 financial years, the Tribunal is of the view that it is appropriate that the father meet 50% of the formal child care costs from 1 January 2023.
The Tribunal has already calculated that the mother’s total out of pocket costs from 1 October 2022 to 31 August 2023 were $11,694 ($34.90 per day) and from 1 September 2023 to 30 November 2024 were $16,527 ($36.16 per day). Therefore, it is appropriate to increase the father’s annual costs by $6,446 for the period 1 January to 31 December 2023 and to $6,600 from 1 January 2024 to 27 January 2026, the date prior to when the older child will likely commence primary school.
This aspect of the decision will increase the father’s arrears by $9,031. Given his income and discretionary expenditure the Tribunal is not persuaded that he can meet his necessary expenses and this cost over time. In reaching this conclusion the Tribunal notes that section 3 of the Act stipulates that a parent’s duty to maintain a child has priority over all commitments, other than their necessary commitments to support themself.
The Tribunal is satisfied that the administrative assessment is unfair given the mother’s high child care costs and the father’s income and financial resources and this all results in an unjust and inequitable level of child support given the circumstances of each parent. For all the reasons above, the Tribunal finds it just and equitable to depart from the administrative assessment.

Otherwise proper

The final step is for the Tribunal to determine whether it is otherwise proper to make a particular departure determination. Subsection 117(5) of the Act requires the Tribunal to take into account whether the proposed departure is proper in the context of public interest and welfare expenditure of the community. A prime objective of the legislation is that parents are obliged to support their own children to the extent of their real capacity and such obligation should not be unnecessarily left to the public welfare system.
The mother is in receipt of income-tested benefits. Departing from the administrative assessment by increasing the child support payable by the father will result in a more appropriate apportionment of financial responsibility between the parents and the community.
The determination is otherwise proper.

DECISION

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

Mr Elford’s adjusted taxable income is varied to:
§$71,900 from 1 January to 30 June 2023; and
§$75,892 from 1 July 2023 to 31 August 2024.
Mr Elford’s annual rate of child support is increased by:
§$6,446 for the period 1 January to 31 December 2023; and
§$6,600 from 1 January 2024 to 27 January 2026.

[2024] AATA 2771

16 May 2024

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Jurisdiction

Statutory Construction

Judicial Review

Remedies