Elwes and Entwistle (Child support)

[2021] AATA 466

Elwes and Entwistle (Child support) [2021] AATA 466 (18 January 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/PC019477

APPLICANT:  Mr Elwes

OTHER PARTIES:  Child Support Registrar

Ms Entwistle

TRIBUNAL:Member S Letch

DECISION DATE:  18 January 2021

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that Mr Elwes’ adjusted taxable for the period 1 October 2020 to 31 October 2021 is varied to $60,000.

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. Mr Elwes and Ms Entwistle are the parents of [Child 1], born 2005. [Child 1] is recorded by the Child Support Agency (CSA) as being in the 100% care of Ms Entwistle. Mr Elwes has been assessed by the CSA as liable to pay child support to Ms Entwistle.

2. It is convenient to set out some extracts from the objections officer decision dated 25 June 2020 by way of background:

   Mr Elwes is assessed to pay child support to Ms Entwistle as follows:

   - For the period 1 October 2017 to 11 June 2018, Mr Elwes is assessed to pay an annual
   rate of $2,985 based on his 2017-18 income estimate of $41,714 and Ms Entwistle`s 2016-17 adjusted taxable income of $9,853.

   - For the period 12 June 2018 to 30 June 2018, Mr Elwes is assessed to pay an annual rate of $4,039 based on his 2017-18 income estimate of $41,714 and Ms Entwistle`s 2016-17 adjusted taxable income of $9,853. The increase is due to [Child 1] obtaining the age of 13.

   - For the period 1 July 2018 to 31 December 2018, Mr Elwes is assessed to pay an annual rate of $11,541 based on his 2016-17 derived income of $74,969 and Ms Entwistle`s
   2016-17 adjusted taxable income of $9,853.

   - For the period 1 January 2019 to 5 September 2019, Mr Elwes is assessed to pay an annual rate of $11,605 based on his 2017-18 deemed income of $76,081 and Ms Entwistle`s
   2017-18 deemed income of $10,080.

   - For the period 6 September 2019 to 31 March 2020, Mr Elwes is assessed to pay the Minimum Annual Rate (MAR) of $435 based on his 2017-18 derived income of $18,109
   and Ms Entwistle`s 2017-18 deemed income of $10,080.

   - For the period 1 April 2020 to 1 April 2020, Mr Elwes is assessed to pay an annual rate of $11,969 based on his 2018-19 indexed default income of $78,237 and Ms Entwistle`s
   2018-19 adjusted taxable income of $6,437.

   - For the period 2 April 2020 to 5 May 2020, Mr Elwes is assessed to pay the MAR of $443 based on his 2019-20 estimate of $18,250 and Ms Entwistle`s 2018-19 adjusted taxable
   income of $6,437.

   - For the period 5 May 2020 to 2 June 2020, Mr Elwes is assessed to pay the MAR of $443 based on his 2019-20 estimate of $32,589 and Ms Entwistle`s 2018-19 adjusted taxable
   income of $6,437. This is due to the 28 day extention of the MAR.

   - For the period 3 June 2020 to 30 June 2020, Mr Elwes is assessed to pay an annual rate of $1,613 based on his 2019-20 estimate of $32,589 and Ms Entwistle`s 2018-19 adjusted

   taxable income of $6,437.

   The case was registered on 15 January 2010. Ms Entwistle has requested that child support payments be collected by Services Australia (the agency) on her behalf. Mr Elwes currently owes $8,385.41 in child support arrears.

   DECISION UNDER REVIEW

   On 21 October 2019, Mr Elwes applied for a change to the assessment on the basis of Reason 8.

   Ms Entwistle disagreed with the proposed change and cross-applied on the basis of Reason 2, Reason 8A and Reason 8B.

   On 5 March 2020, [Decision Maker A] refused to change the assessment as a Reason was not established

   GROUNDS FOR REVIEW

   Mr Elwes has written to object to this decision on the following grounds:
   - He does not work in [Country 1] - his work and Superannuation is in Australia.
   - Before traveling in 2016, he transferred a total of $28,500USD to his [Country 1] accounts.
   - He transferred more before travelling in 2018/19
   - He then received transfers from his Australian and [Country 2] bank accounts into his [Country 1] account to pay for living.
   - He has a medical condition
   - He pays $730 per month in rent.
   - When we was working in 2020 he was transferring money to [Country 1] but he has lost his job due to COVID.
   - He has been in hardship since 2016.
   - He has received Centrelink payments for four years.
   - He has no income overseas.
   - His [craft] does not make money, it is a hobby.
   - Why would he come back to Australia to work away from his wife and with his medical
   conditions if he had income overseas?
   - His income was only high because he withdrew $55,000 from his superannuation.

   Ms Entwistle has responded to the objection and states that she disagrees with Mr Elwes` comments. She states that he has not provided evidence to detail his capacity to pay child support, or to demonstrate how he is supporting himself whilst in Australia.

   …

3. According to the CSA materials (folio 348), the assessment from 1 July 2020 to 30 June 2021 is based on a provisional 2018/19 adjusted taxable income of $29,981 for Mr Elwes.

4. The objections officer ultimately determined the following:

   …

   Under Reason 8A, I am able to depart from the standard formula provisions if, in the special circumstances of the case, a parents actual income or financial resources render the child support assessment unfair. Mr Elwes has not provided evidence to demonstrate why his tax returns were not lodged a timely fashion or that there was any special circumstances which prevented him for doing so.

   Additionally, based on the information provided to me, I am unable to ascertain Mr Elwes`s income whilst overseas. Based on the multiple international transfers and cash deposits, I am not satisfied that whilst overseas, Mr Elwes`s income is $0 as he states.

   Mr Elwes is currently assessed on his 2019-20 amended estimate of $32,859. Based on the above evidence, I am not satisfied that special circumstances exist in this case, nor am I satisfied that Mr Elwes`s income renders the assessment unfair.

   …

   It is noted that Mr Elwes spends a significant amount of time overseas with his family. Mr  Elwes submits that he does not need to work overseas as his current wife is wealthy. It is also noted that Mr Elwes has not had consistent employment or income for many years. I am satisfied that major reason for Mr Elwes`s unemployment is not his desire to affect the child
   support assessment, but rather the significant amount of time that he spends outside of the country.
   The third criterion is not satisfied.

   Reason 8B is not established.

   DECISION

   As no Reason has been established, the application must be refused under Section 98F of the Child Support (Assessment) Act 1989. As a result, no changes will be made to the child support assessment.

   I must now compare my decision to that of [Decision Maker A]. On 4 March 2020, [Decision Maker A] refused to make a change to the assessment as no Reason was established.
   Through this full merit review, I have come to the same conclusion.

   The objection is disallowed.

   …

5. On 16 July 2020, Mr Elwes applied to the Tribunal for review of the objections officer decision of 25 June 2020.

6. The Tribunal conducted a hearing by conference telephone on two separate days. An interpreter was present throughout most of the proceedings; however, the hearing was conducted in the English language as Mr Elwes’ English was of a high standard. Ms Entwistle was assisted by her lawyer, [named], from [agency name].

CONSIDERATION

The legislative framework

1. 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) Act 1989 (the Act). A formula is used. It takes into account variables including each parent’s adjusted taxable income for the last relevant year of income, the number of children and the level of care provided by each parent.

2. Part 6A of the Act allows for a departure from an administrative assessment (a process commonly known as a “change of assessment”). Under subsection 98C(1), the Registrar may make such a departure determination if three matters are established:

   ·     one, or more than one, of the grounds for departure referred to in subsection 98C(2) exists (subparagraph 98C(1)(b)(i));

   ·     a departure is just and equitable as regards the children and each parent (sub-subparagraph 98C(1)(b)(ii)(A)); and

   ·     it is otherwise proper to make a departure decision (sub-subparagraph 98C(1)(b)(ii)(B)). 

3. Subsection 98C(2) provides that the grounds for departure are the same as the grounds set out in subsection 117(2).

10.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. It permits a range of determinations, including varying the rate of child support payable, the adjusted taxable income or the cost percentage for a child.

Issue 1 – Is there a ground to depart?

1. Subparagraph 117(2)(c)(ia) of the Act, commonly referred to by the CSA as reason 8A, provides as a ground for departure:

   (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; or

2. The starting proposition is that the child support formula should apply. Only in special circumstances should a departure be made. The words “in the special circumstances of the case” are not defined in the legislation. Whilst it is not possible to define with precision the meaning of that term, 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 Tribunal will not interfere with the administrative formula result in the ordinary run of cases. In Gyselman v Gyselman (1992) FLC 92-279, it was held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”. The Tribunal’s approach to the interpretation and application of the particular grounds in subsection 117(2) must be guided by that qualification.

13.Mr Elwes told the Tribunal that his sole source income from October 2019 – until he recently returned to working as [an occupation] – has been jobseeker payment from Centrelink. The amount of work he gets is uncertain and it fluctuates. He commenced around three months ago; during the past three months, he estimates he has earned around $13,000, in addition to $4,000 or $5,000 in jobseeker payments. He declares his fortnightly income to Centrelink.

14.The assessment from 1 July 2020 was based on an income for Mr Elwes of some $29,000; annualising his income for the past three months results in a much higher level of income and a much higher assessment for his annual child support liability. In the special circumstances of the case, the child support assessment is rendered unfair. There is a ground to depart from the formula.

Issue 2 – Is it just and equitable to depart from the administrative assessment?

15.The next relevant consideration for the Tribunal is whether a departure from the administrative assessment is just and equitable. This enquiry directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.

1. The crux of Mr Elwes’ case is that in the years leading up to when he made his change of assessment application, and following the lodgement of income tax returns for prior years, his actual income was lower than the sums applied to the assessment. The Tribunal explained to Mr Elwes that there are specific provisions which deal with applying lower incomes to prior tax years for which separate applications to CSA could be made. The Tribunal advised Mr Elwes there would need to be very compelling circumstances for it to make a departure decision which would impact the period to his application on 21 October 2019.

2. The Tribunal ultimately concluded there to be no proper basis to make a retrospective departure; Mr Elwes may take up separately with the CSA his request for his lower adjusted taxable incomes to be given retrospective provisions which specifically deal with such matters.

3. Mr Elwes’ evidence was that his only source of income (aside from his recent recommencement of work) from October 2019 (when he made his departure application) is his jobseeker payment. The case for Ms Entwistle suggests that Mr Elwes is [a craftsman] and author of some renown and must have income. She supplied materials to the Tribunal revealing some of Mr Elwes’ exhibitions and media in [Country 1]. Mr Elwes’ evidence is that he derives no income from those endeavours; he says his motivation is to establish a name and reputation in [Country 1] so that at some time in the future, he can open [a craft] school to teach others. Ms Entwistle confirmed she was not pursuing “Reason 2” ([Child 1’s] medical costs) in this application; nevertheless, she observed that she incurs additional expenses which are difficult to meet without a more material contribution from Mr Elwes.

4. There is no direct evidence available to the Tribunal that Mr Elwes has profited from [craft] sales or his writing endeavours. The Tribunal found Mr Elwes a straightforward and credible witness and accepted that his primary source of income from October 2019 has been jobseeker payment. For most of that period, he has been assessed to pay the minimum annual rate, and a slightly higher annual rate (around $1,000 per annum) from around June 2020.  On the basis that he was reliant on jobseeker payment, the Tribunal does not consider an adjustment to the formula assessment would be just and equitable.

5. However, Mr Elwes’ financial position has materially changed with his return to work; from 1 October 2020, the Tribunal considers it equitable to increase Mr Elwes’ adjusted taxable income, and increase his corresponding child support liability. Mr Elwes’ income is uncertain, and it is a difficult task to project his income going forward; nevertheless, the child support scheme is directed towards the needs of the child as the highest priority, and it would be just and equitable for [Child 1] to benefit from Mr Elwes’ financial capacity.

6. Mr Elwes receives a combination of employment income and jobseeker “top-up” payments which “smooth out” variations in his income. Mr Elwes’ estimate of his total income over the last three months was some $17,000. The Tribunal observes jobseeker payment has been paid at a higher rate due to COVID-19, and has gradually been “scaled down”. The Tribunal considers an acceptable, “rounded” estimate of Mr Elwes’ annualised income to be applied from 1 October 2020 should be the sum of $60,000; this results in an annual liability of some $8,000. The Tribunal considers that with appropriate budgeting, Mr Elwes should be able to meet that ongoing liability, in addition to reducing his arrears. It would be just and equitable to do so.

7. There is no basis to make an adjustment to Ms Entwistle’s income under the formula arrangements, which is reflective of her financial capacity. Regardless, given she has 100% care of [Child 1], her income would need to be much higher (approaching $60,000) to have any material impact on the child support assessment. No particularly unusual expenses (apart from [Child 1’s] medical expenses) were raised by either party.

8. In terms of going forward, it is desirable to give the parties some certainty. This must be balanced against setting an assessment too far into the future which may not be reflective of changing circumstances.

9. In the Tribunal’s assessment, it would be appropriate to vary Mr Elwes’ adjusted taxable income until 31 October 2021; at such time, there should be information available about Mr Elwes’ 2020/21 adjusted taxable income which could inform the assessment. Both parties will, of course, be at liberty to make a fresh change of assessment at the expiry of this departure determination (or indeed earlier if there has been a material change in circumstances).

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

25.The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community. It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances and benefits. Parents rather than the community have the primary duty to maintain a child.

26.The rate of child support should reflect the obligation of both parents to take financial responsibility for the children and, where increased, may decrease any income-tested benefits payable. A departure is therefore proper.

27.As the Tribunal has reached a different conclusion to the objections officer, the decision under review will be set aside.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that Mr Elwes’ adjusted taxable for the period 1 October 2020 to 31 October 2021 is varied to $60,000.