Essendon and Foley (Child support)

[2018] AATA 4653

Essendon and Foley (Child support) [2018] AATA 4653 (20 November 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/SC014539

APPLICANT:  Miss Essendon

OTHER PARTIES:  Child Support Registrar

Mr Foley

TRIBUNAL:Member W Kennedy

DECISION DATE:  20 November 2018

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides to set Mr Foley’s adjusted taxable income at $162,579.00 for the period from 12 December 2017 until a terminating event.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of parents – no earning capacity – ground for departure established – 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 decision concerns an application for a departure from the formula assessment of child support.  Miss Essendon and Mr Foley are the parents of [Child 1] who was born in June 2003.  There has been a child support assessment in place for [Child 1] made by the Child Support Agency of the Department of Human Services (the Department) since 9 May 2005.  The assessment is based on Miss Essendon having a care percentage of 100%.

2. When Miss Essendon applied to the Department, the annual rate of child support payable by Mr Foley to Miss Essendon was $5,751.00.  This was for the period from 1 February 2017 to 8 March 2018 and was based on Mr Foley’s adjusted taxable income (ATI) of $49,159.00 and Miss Essendon’s ATI of $22,766.00.

3. On 12 December 2017 Miss Essendon applied to the Department for a departure from the assessment based on Reason 8A, being the income, property and financial resources of one or both of the parents, and Reason 8B, being the earning capacity of one or both of the parents.  In her application Miss Essendon stated her belief that Mr Foley’s income was greater than he had disclosed.

4. On 16 March 2018 a delegate of the Child Support Registrar considered the departure application and decided that Reason 8A had been established but that Reason 8B had not been established.  The delegate decided to set Mr Foley’s ATI at:

   ·       $65,820.00 for 12 Dec 2017 to 11 Dec 2018;

   ·       $67,202.00 for 12 Dec 2018 to 11 Dec 2019;

   ·       $68,613.00 for 12 Dec 2019 to 11 Dec 2020;

   ·       $70,054.00 for 12 Dec 2020 to a terminating event.

5. On 22 April 2018 Miss Essendon lodged an objection to that decision, claiming that a number of errors of fact had been made in the delegate’s decision.  On 21 June 2018 a Department objections officer considered Miss Essendon’s objection and found that Reason 8A had been established but that Reason 8B had not been established.  The objections officer decided to disallow Miss Essendon’s objection and to affirm the decision of the delegate made on 16 March 2018.

6. On 10 July 2018 Miss Essendon lodged an application for a review of the decision with this Tribunal.  The Tribunal had access to the statement and documents provided by the Department.  The documents are at folios 1 to 284 of the hearing papers and were provided to the parents in advance of the hearing. 

7. Before the hearing the Tribunal directed Miss Essendon and Mr Foley to provide further documentation.  Miss Essendon’s documents are at folios A1 to A52 of the hearing papers.  Mr Foley’s documents are at folios B1 to B181 of the hearing papers.  At the hearing the parents acknowledged that they had received copies of the additional documents.  The matter was heard and determined in Sydney on 20 November 2018.  Mr Foley and Miss Essendon both attended the hearing by telephone and gave their oral evidence under affirmations.  The Child Support Registrar was not represented at the hearing.

CONSIDERATION

The legislative framework and issues for the Tribunal to determine

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).  This requires the application of a statutory formula which takes into account factors such as the number and ages of the children, the level of care provided and the income of each parent.

2. 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 of the Act provides that the Registrar may make a determination to depart from the formula assessment and establishes a three step process for considering applications to do so.  The Registrar, and the Tribunal standing in place of the Registrar, must be satisfied:

   ·       that one, or more than one, of the grounds for departure referred to in subsection 117(2) of the Act exists; and

   ·       that it would be just and equitable as regards the child, the liable parent, and the carer entitled to child support; and

   ·       that it would be otherwise proper to make a particular determination.

3. The grounds for departure from the administrative assessment are set out in subsection 117(2) of the Act.  Each of the grounds, which for administrative purposes are referred to as reasons, require that special circumstances be established.  The term ‘special circumstances’ is not defined in the Act.  In Gyselman and Gyselman [1991] FamCA 93, the Full Court of the 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.

4. 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 must make one of the determinations prescribed in section 98S of the Act.  These include varying the annual rate of child support payable or a parent’s adjusted taxable income.

Issue one – Does a ground exist to depart from the administrative assessment?

1. The Tribunal’s first task is to determine whether a ground for departure from the administrative assessment can be established.  In her application to the Department Miss Essendon asserted that there are two grounds (or reasons) for a departure from the administrative assessment.  The Tribunal considered each of these in turn.

Does a ground exist to depart from the administrative assessment under Reason 8A?

1. Miss Essendon sought a departure from the administrative assessment on the ground that Mr Foley’s income, property and financial resources are greater than is reflected in the adjusted taxable income (ATI) used for him in the child support assessment in effect at the time of her application.  This ground for departure, which is known as reason 8A for administrative purposes, is set out at subparagraph 117(2)(c)(ia) of the Act:

   (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. Miss Essendon has previously said that she believes that Mr Foley’s income is greater than he has declared.  She has stated that Mr Foley could not live on the income that he has declared, asserting that Mr Foley’s property and lifestyle showed that he must have more income than he claims.

3. Mr Foley has provided a statement of financial circumstances (SOFC).  In his SOFC Mr Foley states that his sole income is $1,304.00 per week which he receives as compensation for a workplace injury he suffered in 2017.  He states that his expenses total $1,818.00 per week, with the result that his claimed expenditure exceeds his income by $514.00 per week, or $26,728.00 per annum.  However the Tribunal believes that the SOFC considerably understates Mr Foley’s actual expenditure.  For instance he claims to have no expenditure on insurance, however he pays $161.68 and $103.94 every month to [Insurance company 1] from his [Bank 1] account …5260 (folios B162 to B169).  He also claims to have no expenditure on transport, holidays, repairs, cleaning and other normal day to day items.  At the hearing Mr Foley acknowledged that the expenses not shown on his SOFC are met by his business.  In his SOFC Mr Foley claims that his annual expenditure is $94,536.00 but the Tribunal concludes that it is considerably greater.  That it is higher than the $94,536.00 figure is confirmed by Mr Foley’s acknowledgement that many expenses beyond that figure are met directly by his business. 

4. At the hearing Mr Foley said that he meets the difference between his income and his expenditure by using “some money from the company.”  In his statutory declaration of 24 August 2018 (folios B11 to B13) Mr Foley said that he draws on compensation of “around $200,000.00” that he received for a car accident “about three years ago”.  At the hearing the Tribunal questioned Mr Foley about this car accident.  He initially said that it had happened two years ago, but when he was told that in his statutory declaration he had said it was three years ago, he agreed that it was in 2015.  He said that he was not certain exactly when the accident had taken place or the name of the road it was on.  He was not sure how much compensation he had received (but thought that it was “about $220,000.00”) or the name of the insurer who had paid it.  He could not recall the name of any medical specialists he had seen or the name of the solicitor who had acted for him.  He said that he went to a hospital the day after the accident but could not recall the name of the hospital or the suburb it was in.  There is no documentary evidence of this accident before the Tribunal and the single medical report provided by Mr Foley does not refer to it.

5. In response to the directions of the Tribunal Mr Foley has also provided his personal income tax return (ITR) for 2016/17 (folios B18 to B25).  Unfortunately all of the relevant figures have been redacted, making the ITR mostly valueless as evidence.  At the hearing Mr Foley said that he did not know that the figures had been redacted and assumed that his accountant had done it. 

6. In response to the directions of the Tribunal Mr Foley has provided:

   ·       Statements for a [Bank 1] account …5260 for the period from 21 August 2017 to 20 May 2018 (folios B162 to B169);

   ·       Statements for a [Bank 1] credit card account for the period from 7 September 2017 to 8 April 2018 (folios B170 to B181);

   ·       Statements for a [Bank 2] Visa credit card account for the period from 12 September 2017 to 11 April 2018 (folios B63 to B77).

7. The [Bank 1] account …5260 (folios B162 to B169) shows an opening balance of $95,563.55, a closing balance of $49,083.44, and effectively no deposits (there being a single transfer out and then in of $70,000.00 on 4 and 5 December 2017).  The account is used to make monthly insurance payments and to make monthly transfers of a little more than $3,000.00 to an unidentified account which appears to be the mortgage account for his property in [the suburbs].

8. The [Bank 1] credit card (folios B170 to B181) is used only to make monthly health insurance payments of $252.65.  Repayments are sourced from Mr Foley’s [Bank 1]  account …5260 or, on one occasion, by a transfer from his [Bank 2] Visa credit card account.

9. The [Bank 2] Visa credit card (folios B63 to B77) is little used except for the payment to the [Bank 1] credit card noted above.  Repayments of the outstanding balance on the Visa credit card are sourced from a [Bank 2] business account in the name of [Company 1].

10. Mr Foley has also provided statements for the [Bank 2] business account of [Company 1] for the period from 29 September 2017 to 29 June 2018 (folios B79 to B131).  This account receives regular deposits from [Insurance company 1], which are obviously Mr Foley’s workplace injury compensation payments, as well as numerous deposits which are titled “PYMT [Company 1]”.  Other than a cash deposit of $4,000.00 there are only three other small deposits.  The compensation payments total $55,188.85 (an annual rate of $73,585.13), while the payments from [Company 1] total $62,000.00 (an annual rate of $82,666.67).  The [Bank 2] business account appears to be used to pay all of Mr Foley’s day to day personal expenses, including repayments of his [Bank 2] Visa credit card and what appear to be monthly mortgage repayments to [Bank 3].

11. Although the bank account is in the name of [Company 1] (a company of which Mr Foley is the sole shareholder) the deposits and withdrawals demonstrate that Mr Foley treats it as his personal account.  The compensation payments belong to Mr Foley, the credit card payments are directed at Mr Foley’s personal credit card account and the expenditure is mostly identifiably personal.  A major expenditure item is the monthly mortgage repayments but [Company 1] owns no property and has no borrowings (folio 138).  The mortgage payments appear to be for a property owned by the Foley Family Trust, which is under the control of Mr Foley.  At the hearing Mr Foley acknowledged that he uses the [Company 1] business account to meet his personal expenses. In the absence of any other account from which Mr Foley meets personal expenditure the Tribunal considers that the account belongs entirely to Mr Foley and that the deposits are a financial resource available to him.  The statements covering the nine month period disclose deposits of $121,934.32, which may be annualised to $162,579.09.

12. Mr Foley also controls [Company 2] , which is the trustee for the Foley Family Trust.  Mr Foley provided the ITR for the company for 2016/17 however it has been so heavily redacted that it is of no value in determining Mr Foley’s income.  The financial statements for the Foley Family Trust show that it owns a property and vehicles.  Although it appears that Mr Foley receives distributions from the Trust Mr Foley has failed to provide sufficient documentation to allow the Tribunal to determine the extent to which Mr Foley is able to derive a financial benefit from the Trust.

13. Relying on documented income the Tribunal has found that the financial resources available to Mr Foley are at least $162,579.09 per annum.  On the basis of expenditure and grossing up for taxation the figure is higher and possibly significantly higher.  The actual ATI used in the assessment at the time that Miss Essendon applied for the departure from the assessment was $49,159.00.  As the higher figure would produce a significantly greater child support assessment the Tribunal finds that there is a special circumstance that would allow a departure from the formula assessment of child support under subparagraph 117(2)(c)(ia) of the Act.

Does a ground exist to depart from the administrative assessment under Reason 8B?

1. Miss Essendon sought a departure from the administrative assessment on the ground that Mr Foley’s earning capacity is not reflected in the formula assessment.  This ground, known as Reason 8B for administrative purposes, is set out in subparagraph 117(2)(c)(ib) of the Act:

   (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:

   …

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

…

1. Subsection 117(7B) of the Act provides:

   (7B) In having regard to the earning capacity of a parent of the child, the court may determine that the parent's earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is 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.

2. At the hearing Mr Foley said that he is unable to undertake physical tasks due to a back injury.  He has provided medical evidence which supports his claim in this regard.  It appears that Mr Foley is continuing to operate his construction business to the extent that it is possible for him to do so.  As the documentary evidence supports his oral evidence in this regard and as there is no contrary documentary evidence, the Tribunal finds that paragraphs 117(7B)(a) and (b) of the Act are not satisfied and it is not open to the Tribunal to make a finding as to Mr Foley’s earning capacity.

3. The Tribunal finds that there are no special circumstances that would allow a departure from the formula assessment of child support under subparagraph 117(2)(c)(ib) of the Act.

Issue two – Would departure from the administrative assessment be just and equitable?

Relevant law and evidence

1. As the Tribunal is satisfied that there is a ground to depart from the administrative assessment of child support under Reason 8A, the next step is to consider whether it is just and equitable to depart from the assessment.  In deciding whether it is just and equitable the Tribunal had regard to the following matters set out in subsection 117(4) of the Act:

   (4)  In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:

   (a)  the nature of the duty of a parent to maintain a child (as stated in section 3); and

   (b)  the proper needs of the child; and

   (c)  the income, earning capacity, property and financial resources of the child; and

   (d)  the income, property and financial resources of each parent who is a party to the proceeding; and

   (da)  the earning capacity of each parent who is a party to the proceeding; and

   (e)  the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:

   (i)     himself or herself; or

   (ii)    any other child or another person that the person has a duty to maintain; and

   (f)  the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and

   (g)  any hardship that would be caused:

   (i)  to:

   (A)  the child; or

   (B)  the carer entitled to child support;

   by the making of, or the refusal to make, the order; and

   (ii)  to:

   (A)  the liable parent; or

   (B)  any other child or another person that the liable parent has a duty to support;

   by the making of, or the refusal to make, the order; and

   (iii)  to any resident child of the parent (see subsection (10)) by the making of, or the refusal to make, the order.

2. The Tribunal considered the evidence provided by both parents, including the documents and SOFC form that each party provided to the Tribunal, as well as the documents provided by the Department.

Assessment of evidence, findings of fact and application of the law

1. Section 3 of the Assessment Act states that it is the duty of both parents to financially support their children. [Child 1] should receive a proper amount of financial support from her parents in accordance with their capacity to contribute.

The children’s needs

1. Paragraph 117(4)(b) of the Act requires the Tribunal to consider the proper needs of the children.  The Tribunal has done this in accordance with the legislation under which this determination is made.  At the hearing Miss Essendon said that [Child 1] had some special needs, however there is no documentary evidence of special needs before the Tribunal.  Miss Essendon said that the special needs did not have a significant financial impact.  Under the circumstances the Tribunal has decided that [Child 1] has no special needs or extraordinary costs that need to be taken into account in the assessment.

The children’s incomes and earning capacities

1. [Child 1] is a full-time student and has no independent income or earning capacity.

The income, property and financial resources and earning capacity of Mr Foley and his necessary commitments

1. Mr Foley’s financial circumstances were closely examined by the Tribunal. Mr Foley has provided a statutory declaration (folios B11 to B13) in which he states that he is struggling to earn a living [in his role].  At the hearing Mr Foley said that he is unable to do much work because of his injuries and that he is struggling financially.  He said that he personally has a mortgage of $1.0 million and that [Company 2] has a further mortgage of $1.3 million.  The Tribunal finds it improbable that Mr Foley could have obtained these mortgages without a cashflow considerably in excess of the amount declared by him.  

2. The Tribunal found Mr Foley to be a relatively poor witness.  This is partly because English is not Mr Foley’s first language.  But the Tribunal also found him to be somewhat evasive, regularly saying he could not recall the answer to particular questions.  The original decision maker went to considerable trouble to try to obtain a substantive response from Mr Foley or his accountant.  The delegate ultimately relied on an unaudited financial statement for [Company 1]  and oral evidence from Mr Foley’s accountant.  The objections officer noted that Mr Foley did not provide financial details but then relied on the same poor and partial evidence used by the delegate. 

3. It appears that Mr Foley has been very tardy in lodging ITRs, his 2014/15 return only becoming available to the Department in January 2018 and his 2015/16 return only becoming available in March 2018 (folio 265).  Although Mr Foley was directed by the Tribunal to provide his 2016/17 ITR the document he provided is an un-lodged draft and is so heavily redacted as to provide little useful information.  He also provided the 2016/17 ITR for [Company 2], but it also has been so heavily redacted that it is of no real value to the Tribunal. 

4. The Tribunal considers that Mr Foley failed to fully respond to the Tribunal’s directions.  In considering how to deal with Mr Foley’s failure in this regard the Tribunal took into account the decision in Humphries & Berry [2008] FMCAfam 409 (Humphries) where Federal Magistrate Slack dealt with the issue of the disclosure of financial information in matters before administrative tribunals. His Honour stated that the principle of full and frank disclosure applicable to proceedings in the Family Court was also applicable to proceedings before the former Social Security Appeals Tribunal. His Honour stated at paragraph 26 of the decision:

   Although the SSAT has the power to obtain information (s.103K) and the power to require the Child Support Registrar to exercise powers under the Assessment Act and the Child Support Registration and Collection Act for the purposes of gaining information relevant to a review (s.103L), there nevertheless remains a primary duty and obligation on the parties to the review to make a full and complete disclosure of their financial affairs relevant to the matter before the hearing and a duty to assist the Tribunal to come to its determination in the application. The obligation to disclose information and documents extends to the presentation of that material in a way that the true nature of their financial affairs can be readily understood. The obligation extends not just to providing financial records but also includes presenting the information in a way that can be reasonably and readily understood and examined.

5. His Honour went on to state at paragraphs 30 and 31 of the decision:

   In circumstances where a party (in this case the appellant) places before the SSAT inconsistent, confusing and incomplete financial information, the fact that the SSAT can and may exercise its powers to obtain further information that might clarify the financial circumstances of a party does not relieve a party of their primary obligation to disclose their financial affairs in a manner that can readily be understood. The extent to which the SSAT should exercise its powers of information gathering and testing of evidence in each case will depend on the circumstances of the matter but the exercise of such power or the failure to exercise such power does not in any way derogate from the immutable obligation and duty of both parties throughout the proceedings before the SSAT to make full, frank and cogent disclosure of all relevant information pertaining to their financial affairs in order that the Tribunal can make a proper assessment of their respective capacities to provide for the needs of their children.
   
   In financial proceedings under the Family Law Act, the authorities make it clear that a Court should not be unduly cautious about making findings in favour of the other party if it is not satisfied that proper disclosure has been made (see Chang & Su (2002) FLC93-117). Such principles, in my consideration, have similar application to these matters before the SSAT.

6. The evidence before the Tribunal is that Mr Foley owns at least two valuable properties and that he drives luxury cars.  His income is substantial and his expenses are met through two private companies and a private trust.  The Tribunal is satisfied that Mr Foley has sufficient financial resources to meet his necessary commitments.

The income, property and financial resources and earning capacity of Miss Essendon and her necessary commitments

1. Miss Essendon’s financial circumstances were closely examined by the Tribunal.  The Tribunal examined the SOFC (folios A1 to A10) and the other documentation provided by Miss Essendon.  In accordance with the directions of the Tribunal Miss Essendon has provided the following financial documentation:

   ·       Personal income tax returns (ITR) for 2016/17 (folios A43 to A51);

   ·       Statements for [Bank 4]  account …0837 for the period from 30 September 2017 to 31 March 2018 (folios A18 to A28);

   ·       Statements for [Bank 4]  account …4015 for the period from 30 September 2017 to 31 March 2018 (folios A34 to A39);

   ·       Statements for [Bank 4]  account …2376 for the period from 30 September 2017 to 28 February 2018 (folios A41 to A42);

   ·       Statements for [Bank 4]  account …0845 for the period from 31 August 2017 to 31 March 2018 (folio A30);

   ·       Statements for [Bank 4] credit card account …6652 for the period from 30 September 2017 to 31 March 2018 (folios A31 to A33).

2. The documentation provided by Miss Essendon confirms the information contained in her SOFC, which shows that there are no unexplained deposits and no expenditure for which no source of funds is identified.  At the hearing Mr Foley drew the Tribunal’s attention to some small deposits and expenditure (one of $80.00 and another of $35.00).  Although Miss Essendon offered an explanation the Tribunal does not consider that these transactions are significant.

3. At the hearing Miss Essendon said that she works part-time, about 20 hours per week, as [an occupation] under contract to a company which provides services to [an agency].  She said that her earning capacity is affected by [Child 1]’s medical circumstances.  She said that [Child 1] has been diagnosed with [a condition].  Although she requires some assistance, which has an impact on Miss Essendon’s earning capacity, the cost of the condition is not significant.

4. The Tribunal found Miss Essendon to be a credible witness in relation to her own circumstances and it concludes that the documents provided to the Tribunal together with Miss Essendon’s oral evidence presents an accurate picture of the financial resources available to her.  The Tribunal concludes that it is appropriate for Miss Essendon’s ATI to be established through the normal methodology and that no further provision needs to be made.  The Tribunal finds that Miss Essendon does not have any unused earning capacity that needs to be taken into account in the assessment.  Although her savings are minimal and her financial circumstances are somewhat precarious the Tribunal is satisfied that Miss Essendon has sufficient financial resources to meet her necessary commitments.

The parents’ duty to support others

1. At the hearing Miss Essendon said that she does not have the legal duty to support any child other than [Child 1].

2. At the hearing Mr Foley said that he has another child who was born ten months ago (subsequent to Miss Essendon’s original application).  This is already taken into account by the Department (folio 277) and it is not necessary that further provision be made for Mr Foley’s additional responsibility.

Hardship

1. The Tribunal has found that both parents have incomes that are sufficient to meet their necessary commitments.  The Tribunal is contemplating a decision that would increase Mr Foley’s annual child support liability from the $5,751.00 that it was at the time that Miss Essendon lodged her original application with the Department, and from the $9,529.00 that resulted from the delegate’s decision, to $23,742.00.  That amount will decrease somewhat when Mr Foley’s new child is included in the assessment.  Although this is a very significant increase the Tribunal finds that Mr Foley has the financial resources to meet the liability.  Taking into account Mr Foley’s primary obligation to support his children the Tribunal finds that the decision contemplated by it will not cause hardship to Mr Foley. 

2. The decision contemplated by the Tribunal will result in Miss Essendon having sufficient resources to ensure that she is able to meet [Child 1]’s necessary needs.  The Tribunal finds that the decision contemplated by it will not cause hardship to Miss Essendon. 

Terms and period of departure

1. The Tribunal has decided to depart from the formula assessment by increasing Mr Foley’s ATI to $162,579.00.  This is the lower of the figures determined by examining the documented financial resources available to Mr Foley and the resources necessary for him to meet the expenditure he has declared.  The Tribunal considers that the figure is fair to Mr Foley and to Miss Essendon, while ensuring that [Child 1] shares equitably in the financial resources available to both of her parents.

2. The child support assessment started on 9 May 2005.  The application for departure that is currently before the Tribunal was lodged by Miss Essendon on 12 December 2017.  At the hearing Miss Essendon said that she had not applied earlier because she did not realise the extent to which Mr Foley had been misleading her as to his circumstances.  She said that she had been busy and stressed with the responsibilities of being a single mother.  Miss Essendon has asked that the Tribunal backdate the departure from the formula assessment as far as possible.  The Tribunal has some sympathy with Miss Essendon’s position.  Mr Foley has repeatedly failed to provide to the Department and to the Tribunal accurate information as to his financial circumstances.  No doubt Miss Essendon has had the same experience.  However the child support system depends on the parties being honest about their circumstances and if one fails to behave honestly it is always open to the other party to apply to the Department.  While Mr Foley must bear responsibility for his failure to be open about his circumstances Miss Essendon must bear some responsibility for her failure to apply to the Department earlier.  If the Tribunal were to backdate the assessment to the maximum permitted extent it would increase Mr Foley’s arrears by some $27,000.00.  As the decision of the Tribunal will already result in substantial arrears, the Tribunal finds that backdating the departure further would not be entirely fair to Mr Foley, nor would it reflect the degree of responsibility that Miss Essendon must bear.  Having regard to the matters in subsection 117(4) of the Act, the Tribunal finds that it would be just and equitable for the departure to commence from the lodgement of the application.

3. At the hearing Miss Essendon said that she would like the departure to extend as far as possible into the future and to a terminating event if possible.  Mr Foley said that he would like a favourable decision to be extended as long as possible into the future but that an unfavourable decision should not be extended.  The Tribunal is conscious that Mr Foley has arranged his affairs in such a way that his taxable income does not reflect the financial resources available to him.  Thus any reversion to the formula will likely result in the creation of grounds for a departure from the formula and involve the parents in a process similar to the present one.  As [Child 1] will be 18 in 2021 the Tribunal has decided to set Mr Foley’s ATI until a terminating event.  As the increase in the child support assessment is substantial, and in recognition of the fact the Mr Foley is not employed on a salary (as a result of which increases to his income are not predictable) the Tribunal has decided that it will not be necessary or fair to increase the ATI any further over that period.  The Tribunal has decided that the period of departure from the formula assessment will be from 12 December 2017 until a terminating event.

Issue three – 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 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 child support law recognises that each parent has a primary duty to maintain their children.  In this case Miss Essendon receives family tax benefit (FTB) and a modest amount of newstart allowance (NSA).  As a result of the Tribunal’s decision Miss Essendon’s FTB may change marginally and she may lose her NSA entirely.  The Tribunal finds that this is appropriate and is satisfied that it is otherwise proper to depart from the administrative assessment in this matter.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides to set Mr Foley’s adjusted taxable income at $162,579.00 for the period from 12 December 2017 until a terminating event.