Everett and Everett (Child support)

Everett and Everett (Child support) [2023] AATA 1661 (24 April 2023)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2022/MC024320
APPLICANT:  Ms A Everett
OTHER PARTIES:  Child Support Registrar
Ms B Everett

TRIBUNAL:Member T Hamilton-Noy
DECISION DATE: 24 April 2023
DECISION:

The Tribunal sets aside the decision under review and substitutes its decision that, for the period 11 February 2022 to 30 September 2023, Ms A Everett’s adjusted taxable income is varied to $129,427 per annum.

CATCHWORDS

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

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been omitted from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

Ms A Everett and Ms B Everett are the separated parents of [the child]. A case has been registered with Services Australia – Child Support (Child Support) since 24 May 2021 and child support has been collectable by Child Support since that date. Ms A Everett is the payer of child support in this matter and Ms B Everett the payee.
The administrative assessment of child support in place at the relevant time provided for Ms A Everett to pay $1,099 per annum for the period 1 September 2021 to 30 November 2022, based on her 2020/2021 adjusted taxable income of $32,893 and Ms B Everett’s 2020/2021 adjusted taxable income of $65,515.
On 11 February 2022, Ms B Everett made a departure application on the basis of the parents’ income, property and financial resources (called “Reason 8A” by Child Support) and on the basis of Ms A Everett’s earning capacity (called “Reason 8B” by Child Support).
On 2 May 2022, an employee of Child Support found a ground was established to depart from the administrative assessment of child support and made a departure determination that, for the period 11 February 2022 to 30 June 2023, Ms A Everett’s adjusted taxable income was varied to $95,000 per annum.
On 6 May 2022, Ms A Everett objected to this decision. Ms A Everett requested that Child Support also consider her high level of expenses (called “Reason 7” by Child Support).
On 8 July 2022, an objections officer of Child Support allowed the objection and made a decision to vary Ms A Everett’s adjusted taxable income to $112,213 per annum for the period 11 February 2022 to 30 June 2023.
On 25 July 2022, Ms A Everett made an application to the Administrative Appeals Tribunal for an independent review of Child Support’s decision.
A directions hearing was conducted with the parties on 17 November 2022, in which both parties participated by MS Teams audio. Following the directions hearing the Tribunal issued directions to the parties for the provision of further documents. Both parties provided further documents to the Tribunal in response to the directions issued.
The hearing was originally scheduled for 11 January 2023, was rescheduled at the request of the applicant to 23 February 2023, and was held by MS Teams audio. At the hearing the Tribunal had before it documents provided by Child Support (1 to 386), documents provided by Ms A Everett (A1 to A109) and documents provided by Ms B Everett (B1 to B64). Copies of all documents were provided to the parties prior to the hearing and they confirmed receipt of the documents with the Tribunal.
Following the hearing, the Tribunal found additional documents provided by Ms A Everett to the Tribunal in response to the directions, which had not been brough to the Member’s attention. Given these documents related to detailed financial arrangements for Ms A Everett’s business, which was relevant to the legal issues before the Tribunal, the Tribunal decided to hold a resumed hearing to discuss these documents. The resumed hearing was held with the parties on 9 March 2023 to discuss the additional material provided by Ms A Everett to the Tribunal (A110 to A294). Following the resumed hearing, Ms A Everett provided additional documents to the Tribunal (A295 to A308) which were sent to Ms B Everett for her comment. Ms B Everett provided further documents (B65 to B85) which were sent to Ms B Everett for comment. Ms B Everett’s response (A309 to A311) did not raise new matters and was sent to Ms B Everett for her information only.
The Tribunal proceeded to make a decision on all of the information before it on 24 April 2023.

ISSUES

The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Assessment Act) and the Child Support (Registration and Collection) Act 1988.
The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Assessment Act. The liable parent or carer 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 98C of the Assessment Act provides that the Registrar may make a determination to depart from the formula assessment and establishes a three-step process. The Registrar, and the Tribunal standing in the place of the Registrar, must be satisfied that:
(i)there is a ground to depart from the administrative assessment of child support;
(ii)it is just and equitable to depart; and
(iii)it is otherwise proper to depart.
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 is prefaced by the term “in the special circumstances of the case”. The term “special circumstances” is not defined in the Assessment Act. In Gyselman and Gyselman (1992) FLC 92-279, the Full Family Court indicated that for there to be special circumstances, the facts of the case must establish something which is special or out of the ordinary.
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 Assessment Act.

CONSIDERATION

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

Subparagraph 117(2)(c)(ia) of the Assessment Act provides that a ground for departure exists where, in the special circumstances of the case, application in relation to the child of the provisions of the Act relating to the 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, because of the income, property and financial resources of either parent.
In determining whether this ground exists, the Tribunal must look at the relative levels of income, property and financial resources of both parents.

Ms A Everett’s income, property and financial resources

The courts have recognised that in some circumstances, reference to an individual’s tax return does not provide an appropriate qualification of the individual’s capacity to provide financial support and that this most commonly occurs in circumstances where the individual is self-employed (Voss & Child Support Registrar & Anor (SSAT Appeal) [2009] FMCAfam 1296). The courts have held that, in such circumstances, it is appropriate to lift the “corporate veil” in determining the parent’s level of income for child support purposes (Shearer & Benson & Anor (SSAT Appeal) [2011] FMCAfam 623). Similarly, in Costa & Fairbank (SSAT Appeal) [2010] FMCAfam 39, the then Federal Magistrates’ Court recognised that a financial resource:
refers to something which is not property but from which financial benefit is or may be gained. In light of the objects of the Act, the term should be broadly defined and would refer to any financial benefit that would enhance the capacity of parents to provide a proper level of financial support for their children.
The Tribunal’s role is to determine each parent’s level of income, property and financial resources under this ground for departure. The court has held that this does not require the Tribunal to undertake a “forensic audit” or major investigation, but rather to be satisfied on the balance of probabilities as to the parent’s income, property and financial resources (Morse & Potts (SSAT Appeal) [2010] FMCAfam 1305). The Tribunal has been guided by the commentary in these cases when assessing the level of income and financial resources flowing to Ms A Everett from her self-employment arrangements.
Ms A Everett gave evidence to the Tribunal, which the Tribunal accepted, that she runs a business importing [Products], [Business name], and that the various aspects to the business include wholesale, selling direct to the public and working with [Specified people]. She has been in this role for some six to seven years, previously in partnership with her sister and more recently as a sole trader. The Tribunal was provided a 2021/2022 statement of profit and loss for Ms A Everett’s sole trading business which stated that total income from sales was $7,698 and, following expenses, net profit was $815. The Tribunal noted that this profit was different to the figures cited in Ms A Everett’s personal income tax return, which stated that business income was $7,698 but that expenses had totalled $17,933.
Figures in the sole trading business for the previous financial year in the profit and loss statement indicated that the sole trader business had earned income of $439,582 and, following expenses, had a net profit of $124,088. The Tribunal accepted from this document that in the 2021/2022 financial year, Ms A Everett commenced earning business income through [Company name]. The Tribunal accepted from the evidence given by Ms A Everett at the hearing that she is the sole director and shareholder of the company, that she is running the company day-to-day and that she pays contractors to assist with the business.
The Tribunal accepted that Ms A Everett runs the business from her home and that she also leases a warehouse space since January 2022. The Tribunal accepted that Ms A Everett has a personal car that she uses for work purposes and that the company owns a van and [Vehicle] for delivery of items.
Ms A Everett told the Tribunal, consistent with what she claimed to Child Support, that she has incurred significantly higher freight and material costs since 2021. She provided an email to Child Support indicating that, since 2019, transport costs have increased almost four-fold, due to changes to shipping availability. The Tribunal is prepared to accept this as correct. The Tribunal found that, despite increases in costs of transport, the business has sufficient income to cover two international business trips in 2022, the costs of which were covered by the company’s [Credit] card.
As noted above, the case law providing guidance to the Tribunal reflects that, in some circumstances including where an individual operates under a company structure, their adjusted taxable income does not necessarily reflect the level of income, property and financial resources available to them from the company. The objections officer decided that, in assessing the financial resources available to Ms A Everett from the company, consideration of her bank statements was a reasonable approach in the absence of any clearer evidence. The Tribunal noted that the objections officer calculated that Ms A Everett had transactions totalling $27,669 into her personal bank account between 11 February 2022 and 11 May 2022, which equates to $112,213 per annum.
The Tribunal noted that it also had before it an affidavit prepared by Ms A Everett for family law proceedings, dated 28 April 2021, in which she stated that her salary was $95,000 plus superannuation. While not commensurate with the period the Tribunal is considering, the Tribunal noted that the information provided in the affidavit indicates a consistent level of income with that calculated by the objections officer, and a level of income that is significantly higher than the adjusted taxable income used in the administrative assessment of child support.
Contained in the Child Support documents were financial statements for [Company name] for the 2021/2022 financial year. Ms A Everett provided further financial statements for the company for 2021/2022, which declared significantly different figures to the figures in the financial statements that had been provided to Child Support. Both financial statements, further, provided different amounts for salary and wages to the amounts described in the company income tax return for 2021/2022.
The preparation of two sets of financial statements with such different figures, and discrepancies in the amounts declared in the company income tax return, causes some doubt for the Tribunal about the accuracy of the information presented to the Tribunal. However, the Tribunal accepted from the evidence given by Ms A Everett at the hearing that the financial statements provided to the Tribunal for these proceedings were a more recent and more accurate representation of the financial position of the company in the 2021/2022 financial year. The Tribunal has therefore considered the figures in the most recent financial statements as representing the financial position of the company in the 2021/2022 financial year.
These financial statements represent that the company earned income from sales of $647,837. Following cost of sales, gross profit for the company was $253,616. The Tribunal observed during the hearing that, even taking into account the previous income earned through the ABN structure for the previous financial year, total business income had increased in the 2021/2022 financial year.
The Tribunal accepted from the statement of profit and loss that wages were paid to Ms A Everett totalling $42,641. In addition, the notes to the financial statement indicate that a loan to Ms A Everett was made in the amount of $84,783. The loan had been in the amount of -$2,003 in the previous financial year, and the Tribunal accepted that this represented further benefits of $86,786 available to Ms A Everett from the business in the 2021/2022 financial year. The Tribunal asked Ms A Everett about the borrowings indicated of $84,783 and observed that this was a financial benefit to her from the business in addition to the wages she was being paid, to which she stated that she definitely did not borrow $84,000 from the business.
The profit and loss statement indicates that expenses claimed for the 2021/2022 financial year included freight and cartage totalling $118,816, motor vehicle expenses totalling $5,550 and rent totalling $37,609. Ms A Everett told the Tribunal that of the rent expenses claimed, an amount of $21,000 and outgoings represented costs incurred in respect of the warehouse space. She gave evidence that rent at her home accommodation is $840 per week and that she has an office space at home where she conducts one to two meetings per week on average. She gave evidence that a third of rent was claimed for business purposes and that the home is a four-bedroom home with a kitchen and living area. As to how a third of the rent was justified as a business-related expense, Ms A Everett stated that the lounge and dining area are used for meetings, not just her office space.
The Tribunal asked about the $12,000 being claimed as depreciation in the 2021/2022 financial year and Ms A Everett told the Tribunal that this is for the work van and that it is not money that is actually being put aside anywhere. She did, however, give evidence of the work van having broken down shortly after purchase and of funds being required to fix the van.
The Tribunal finds that the best evidence before it is that Ms A Everett was paid wages by the company totalling $42,641 and in addition received benefits from the business in the amount of $86,786, described as a loan to Ms A Everett in the company’s financial statements. Taking into account these findings, Ms A Everett’s financial benefit from the business for 2021/2022 was at least $129,427.
While having some doubts, the Tribunal is prepared to accept that the proportion of rent claimed for business purposes is reasonable, taking into account Ms A Everett’s description of the use of the property, and that any motor vehicle benefits may be included in the loan from the business arising from the use of the company bank account for personal expenditure. While the amount being claimed as depreciation is not representative of an amount being saved by the business for anticipated expenses, given the company declared a loss in the financial year, the Tribunal did not consider it appropriate to add this on as a financial resource to Ms A Everett. The Tribunal finds that there is likely a small financial benefit to Ms A Everett from the company covering internet and phone expenses.
The Tribunal finds that in the 2021/2022 financial year, the benefit to Ms A Everett from the company structure was at least $129,427.
The Tribunal was provided a BAS for July to September 2022, which states that sales totalled $195,247. The Tribunal finds from this that the total business income is likely to be at least as much as for 2021/2022 and may be higher.
The Tribunal had regard to the [Bank] business bank account statements provided by Ms Everett, and particularly the statements for the first five months of the 2022/2023 financial year. These statements indicate that Ms A Everett is continuing to receive a financial benefit from the business over and above wages being paid to her on the basis that the business is paying child support, private rent, internet and phone, and payments for “A Everett personal”. In addition to these amounts, payments for “A wages” were made between 1 July 2022 and 28 November 2022 which totalled $21,510. When annualised, this amount equates to $61,625.
Given the likely increased income for the business in the current financial year, and given the business bank account has continued to pay both wages to Ms A Everett and personal expenditure, in the absence of any evidence to the contrary, the Tribunal is satisfied that Ms A Everett’s level of income, property and financial resources from the company will continue to be at least $129,427 for the 2022/2023 financial year and is likely to be higher.
Ms A Everett’s Statement of Financial Circumstances states that she has minor savings, a car valued at $11,000, household contents totalling $17,000 and superannuation of $11,323. The Tribunal accepts that none of these provide a financial resource from which to support [the child]. The Tribunal finds that Ms A Everett’s level of income, property and financial resources for child support purposes is most appropriately reflected by the level of wages and drawings available to her through the company structure.
The Tribunal warned Ms A Everett during the hearing that, based on the financial documents provided to the Tribunal, the Tribunal may consider that the level of income and financial resources available to her from the business was higher than that calculated by the objections officer, and that the Tribunal may not reduce her adjusted taxable income as she was seeking, and may make a departure determination going for a longer period of time than that considered by the objections officer. Ms A Everett stated in response that she is soon to commence maternity leave and has debts she is carrying, and doesn’t believe this would be fair as she is working and Ms B Everett is not. She stated that she does not earn over $100,000 and will not be working from the end of July 2023.

The administrative assessment of child support used Ms A Everett’s 2020/2021 adjusted taxable income of $32,893 for the period 1 September 2021 to 30 November 2022. The Tribunal has found that, in the 2021/2022 financial year, Ms A Everett’s level of income and financial resources from the business has been at least $129,427 and is likely to be at least as high as this in the 2022/2023 financial year. The Tribunal finds that the adjusted taxable income used in the administrative assessment significantly understates Ms A Everett’s level of income in the relevant period.

Ms B Everett’s income, property and financial resources

The Tribunal accepts that Ms B Everett has been with her current employer for some three years and that she is a PAYG employee. The Tribunal accepted that Ms B Everett’s adjusted taxable income for 2019/2020 was $59,927 and for 2020/2021 was $65,515. She provided a summary of her 2021/2022 income tax return, which declared total income of $41,768, deductions of $165 and a taxable income of $41,603. The Tribunal accepted that this represented Ms B Everett’s level of income from employment in the 2021/2022 financial year.
The Tribunal noted that, as of August 2022 when Ms B Everett completed a Statement of Financial Circumstances for the Tribunal, she stated that she had no income from her employer, and was receiving parenting payment, family tax benefit and child support. At the Tribunal hearing, Ms B Everett told the Tribunal that she has been on maternity leave for two years, which is due to end in February or March 2023. She gave evidence that she received maternity leave at half-pay for a 24-week period and then commenced receiving paid parental leave through Centrelink. Her oral evidence to the Tribunal at hearing was consistent with the information provided in her Statement of Financial Circumstances that she is reliant on parenting payment, family tax benefit and child support payments. This evidence was also consistent with the personal bank account statements she provided to the Tribunal.
As to any other income, property or financial resources available to Ms B Everett, her Statement of Financial Circumstances stated that she is not involved in a business, does not own real estate, has an amount of $5,952 in savings, owns a car with an estimated value of $10,000 and has household contents totalling $2,000. The Statement of Financial Circumstances also stated that she has superannuation totalling $69,089. The Tribunal did not consider that adding the amount of savings onto Ms B Everett’s adjusted taxable income was appropriate, given that any taxable amounts forming the basis of these savings are already considered in her adjusted taxable income. The Tribunal finds that the household contents, car and superannuation do not make the use of Ms B Everett’s taxable income unfair, as they do not provide a financial resource from which she is able to support [the child].
The administrative assessment of child support used Ms B Everett’s 2020/2021 adjusted taxable income of $65,515 for the period 1 September 2021 to 30 November 2022. Ms B Everett’s taxable income for the 2021/2022 financial year was less than this and was $41,603. The Tribunal accepted that the administrative assessment of child support overstates Ms B Everett’s level of income in the relevant period, although notes that as Ms B Everett is the payee in this matter, the use of a higher adjusted taxable income for her does not have a large impact on the amount of child support payable.
The Tribunal finds that the administrative assessment of child support does not reflect either parent’s level of income, property and financial resources for that period. The Tribunal finds that the discrepancy between Ms A Everett’s level of income and that used in the assessment, in particular, creates special circumstances in this case such that the use of her adjusted taxable income creates an unjust and inequitable determination of the level of financial support she is able to provide for [the child]. The Tribunal finds that this ground for departure is established.

Issue 2 – Is it just and equitable to make a departure determination?

As the Tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable as regards the child, the liable parent and the carer entitled to child support to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Assessment Act. This in turn requires the Tribunal to consider a range of factors, set out in subsection 117(4) of the Assessment Act. In addition to the income, property and financial resources of the parents, already considered above in some detail above, the Tribunal also took the following matters into consideration:

The nature of the duty of a parent to maintain a child and the income, earning capacity, property and financial resources of the child

There was no evidence before the Tribunal that [the child] has access to any other income, property or financial resources from which to support himself and the Tribunal finds accordingly. [The child] is still of a very young age and is entirely reliant on his parents to meet all of his needs.

The proper needs of [the child]

Subsection 117(6) of the Assessment Act states that in having regard to the proper needs of the child, the court must have regard to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained; and any special needs of the child. The Tribunal finds on the evidence before it that [the child] does not have any proper needs outside of the range of needs that are usual for a child of his age.

The earning capacity of Ms A Everett

Subsection 117(7B) of the Assessment Act requires the Tribunal to consider the following matters in determining that a parent’s earning capacity is greater than is reflected in their income used in the administrative assessment:
·   Whether the parent:
oIs not working despite ample opportunity to do so (subparagraph 117(7B)(a)(i)); and/or
oHas reduced their weekly hours of work to below full-time work (subparagraph 117(7B)(a)(ii)); and/or
oHas changed their occupation, industry or working pattern (subparagraph 117(7B)(a)(iii)); and
·   If the parent’s decision about their work arrangements is not justified by either their caring responsibilities (subparagraph 117(7B)(b)(i)) or their state of health (subparagraph 117(7B)(b)(ii)); and
·   If the parent has not demonstrated that it was not a major purpose of their decision not to work despite ample opportunity to do so or to stop working, reduce their hours of work or change their occupation, industry or working pattern to affect the administrative assessment of child support (paragraph 117(7B)(c)).
The Tribunal accepted that Ms A Everett has reduced her hours of work since [the child] was born and that there are Court Orders in place which provide for her to have care of [the child]. Given this, the Tribunal finds that Ms A Everett’s decision to reduce her hours of work are justified by her caring responsibilities. The Tribunal finds that it is not open to make an earning capacity determination in respect of Ms A Everett’s circumstances.

The earning capacity of Ms B Everett

The Tribunal accepted that Ms B Everett has been on maternity leave for two years in order to provide care for [the child]. Ms B Everett gave evidence that she is currently studying a master’s degree online which, during 2022 and 2023, has been and will be a 20 to 25 hour per week commitment for a part-time study load. While the Tribunal accepts Ms B Everett is currently studying, the Tribunal finds that her decision to cease work was due to the birth of [the child], not due to her studies, and is therefore justified by her caring responsibilities. The Tribunal finds that it is not open to make an earning capacity determination in respect of Ms B Everett’s circumstances.

The necessary commitments of Ms A Everett

Ms A Everett provided a Statement of Financial Circumstances to the Tribunal, in which she estimated her weekly household expenses for herself and [the child] are $890 per week. In addition, she stated that she has outstanding pregnancy, birth and IVF-related costs of $45,545 which add $500 per week to her household expenses.
The Tribunal noted that Ms A Everett asked Child Support to also consider the level of expenses she has incurred for pregnancy-related costs and significant legal costs. The Tribunal notes that it is required to consider only essential expenses. The Tribunal finds that legal expenses incurred by both parents in this matter, and pregnancy-related expenses incurred by Ms A Everett, should not form the basis for the Tribunal either increasing or decreasing child support payable, because they have been incurred on a discretionary basis and do not precede the importance of the parties providing for [the child]’s needs. They were also incurred largely prior to the period being considered by the Tribunal. Therefore, while accepting that Ms A Everett has incurred the costs claimed, it does not intend to decrease any child support payable by her because of these costs.
The Tribunal finds that, aside from the $500 per week estimated towards the pregnancy-related costs, Ms A Everett is able to cover her necessary self-support expenses from the wages and drawings available to her from the company. The Tribunal further notes that the documents suggest that Ms A Everett has been able to repay significant amounts towards her legal fees and IVF costs since the matter was first considered by Child Support.

The necessary commitments of Ms B Everett

Ms B Everett also provided to the Tribunal a Statement of Financial Circumstances, in which she estimates that regular household expenses for herself and [the child] total $632.50 per week. The Tribunal finds that, as Ms B Everett currently has no income, she is entirely reliant on Centrelink payments and child support to meet her costs.

The direct and indirect costs incurred by Ms B Everett in providing care for [the child]

The legislation requires the Tribunal to consider any direct and indirect costs incurred by the carer entitled to child support in providing care for the child. The Tribunal accepts that, as Ms B Everett is not currently employed, she is foregoing her income from employment at present to provide care to [the child].

Hardship

Paragraph 117(4)(g) of the Assessment Act requires the Tribunal to consider any hardship that would be caused to Ms A Everett, Ms B Everett, to [the child] and to any child or other person that the parties have a duty to support, by the making of, or the refusal to make, a departure determination.
Ms A Everett stated to the Tribunal that she feels as though she is in financial hardship and if child support were increased, she would find this hard. She stated that she is anticipating the birth of her second child in late July or August 2023. She stated that she will continue to work as much as she can.
Ms B Everett stated to the Tribunal that if her child support payments increase, her Centrelink payments reduce.
The Tribunal accepted that, given the prolonged period Ms B Everett has spent on maternity leave and her current reliance on child support to meet her necessary self-support expenses, she and [the child] would experience a considerable level of financial hardship if the Tribunal refused to make a departure determination in this case.

What is the proposed departure determination in this case?

The Tribunal has found, for the reasons set out above, that Ms A Everett’s level of income is significantly higher than that used in the administrative assessment of child support. The Tribunal notes that the objects of the Assessment Act, as set out in section 4 of the Assessment Act, include that the children receive a proper level of financial support from their parents, and that the level of financial support to be provided is determined according to the parents’ capacity to provide financial support.
Given the objects of the Assessment Act which underpin decisions made by the Tribunal, and given the findings of the Tribunal, above, regarding the parents’ respective financial positions, the Tribunal considers it is appropriate to depart from the administrative assessment of child support in this case. In particular, the Tribunal considers it appropriate to make a decision reflecting that Ms A Everett has a higher capacity to contribute to [the child]’s needs than what was reflected in the administrative assessment of child support. As varying Ms B Everett’s adjusted taxable income does not have a large impact on the amount of child support payable, and given it is usual for a parent’s level of income to change somewhat from year to year, the Tribunal does not consider it appropriate to also vary Ms B Everett’s adjusted taxable income.
The Tribunal has found that Ms A Everett is receiving at least $129,427 in financial resources from the business, in the form of wages and drawings. If Ms A Everett’s adjusted taxable income is set at this amount and Ms B Everett’s adjusted taxable income remains at that used in the administrative assessment of child support, Ms A Everett is to pay $14,366 per annum in child support. The Tribunal finds that setting Ms A Everett on this level of income reflects her increased capacity to contribute to [the child]’s needs and does not cause her a significant level of financial hardship given the level of financial resources flowing to her from the company.
The Tribunal noted that the application for a departure determination was made on 11 February 2022 and Ms A Everett was on notice from the time that her level of income was in dispute. The Tribunal finds that 11 February 2022 is an appropriate date from which to commence a departure determination.
As to the end date of any departure determination, the Tribunal heard from Ms A Everett at the hearing that she is currently pregnant and is due to give birth later in 2023 and does not expect to be running her business in the same way she is currently running the business from July or August 2023 onwards. The Tribunal accepted this evidence, given the impact a newborn will reasonably have on the hours Ms A Everett will be able to continue to contribute to the business. Both parties made written submissions following the hearing about a suitable end date of any departure, and Ms B Everett in particular was concerned that any departure determination should go forward for some period of time. However, having weighed up the views of the parties, the Tribunal decided to place significant weight on Ms A Everett’s current pregnancy in considering when any departure period should end. In addition, Ms B Everett told the Tribunal that she is due to return from maternity leave soon but has still not decided when and in what capacity she will be returning to work.
The Tribunal’s preference, wherever possible, is to make a departure determination going forward for some period of time. This gives parents certainty about their respective obligations and payments, and avoids the need for a further change of assessment application, which the Tribunal appreciates is a lengthy and intrusive process for both parties. However, the Tribunal finds that in this case both parents’ employment and financial arrangements remain highly uncertain. The Tribunal is particularly concerned about the uncertainty around Ms A Everett’s ability to continue running the business as she has been doing, given she is the paying parent, and a potential unfairness in continuing to set her income at a higher level when she may not be able to sustain this once her newborn arrives. Because of these concerns, the Tribunal finds that it is appropriate to end the departure determination from 30 September 2023. The Tribunal finds that this is a short period of time after Ms A Everett is due to give birth, provides the parties a level of certainty for a period going forward, but also allows for a reconsideration of both of their circumstances given the financial position of both parties is so uncertain at the time of the Tribunal’s decision. The Tribunal therefore proposes to make a departure determination that, for the period 11 February 2022 to 30 September 2023, Ms A Everett’s adjusted taxable income is varied to $129,427 per annum.

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

The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Assessment Act. Ms B Everett receives an amount of family tax benefit and the Tribunal decided that any departure determination made by the Tribunal may have a beneficial impact on the public purse. The Tribunal therefore concluded that it is also otherwise proper to make the proposed departure determination and has affirmed the decision under review.

DECISION

[2023] AATA 1661

24 April 2023

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Jurisdiction

Judicial Review

Statutory Construction

Remedies