Flint and Palfrey (Child support) - [2023] AATA 3299

Flint and Palfrey (Child support) [2023] AATA 3299 (8 August 2023)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2022/AC024943
APPLICANT:  Ms Flint
OTHER PARTIES:  Child Support Registrar
Mr Palfrey

TRIBUNAL:Senior Member M Kennedy
DECISION DATE: 8 August 2023
DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that the objection is allowed so as to make the following departure determinations:

Mr Palfrey’s adjusted taxable income is varied to $220,093 for the period 22 February 2022 to 30 June 2022.
Mr Palfrey’s adjusted taxable income is varied to $195,000 for the period 1 July 2022 to 31 October 2023.
1. Ms Flint’s adjusted taxable income is varied to $80,368 from 22 February 2022 to 31 October 2023.
The costs of the child component of the formula for [Child 1] is varied by increasing it by $2800 for the period 22 February 2022 to 31 December 2025.
The costs of the child component of the formula for [Child 1] is varied by increasing it by $3916 for the period 1 October 2022 to 1 October 2023.

Services Australia must calculate the effect of determination (5) for the purpose of identifying any disability expense maintenance amount for the purpose of family assistance entitlements.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of both parents – cost of educating child – special needs of child – 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

Ms Flint and Mr Palfrey are the parents of [Child 2] (13) and [Child 1] (10), in respect of whom a child support assessment is in place. As at 22 February 2022, under that assessment, Mr Palfrey had a liability to pay child support to Ms Flint of $6904 based on his adjusted taxable income for 2019/2020 of $93,980 and Ms Flint’s adjusted taxable income of $70,579 for 2019/2020. At that time Ms Flint had 61% care of the children and Mr Palfrey had 39% care of the children.
On 22 February 2022, Ms Flint applied for a departure from the administrative assessment (a ‘change of assessment’) raising the grounds known as Reason 7 and Reason 8A.
A decision maker in Services Australia – Child Support (hereafter Child Support) decided to allow the application, finding the ground known as Reason 8A was established, but the ground known as Reason 7 was not.
Specifically, Child Support noted that Ms Flint had raised Reason 7 on the basis that she was finding the cost of servicing the extended mortgage she now had in relation to the former family home after property settlement to be very difficult. Child Support found that meeting the costs of a mortgage was not relevantly a special circumstance. In relation to Reason 8A however, Child Support found that Mr Palfrey’s income from his new employment and the financial resources available to him from his business were substantially greater than the adjusted taxable income used in the administrative assessment, and rendered that assessment unjust and inequitable. In reviewing the evidence, Child Support also found that relying on an adjusted taxable income for Ms Flint also failed to properly take into account her financial capacity to maintain the children as she also had a business and access to financial resources in excess of her taxable income.
Child Support set Mr Palfrey’s adjusted taxable income at $240,000pa for the period 22 February 2022 to 31 October 2023, based on income from employment, the profit of his company and the benefit of a motor vehicle. Child Support also set Ms Flint’s adjusted taxable income at $125,000pa for the same period, based on taxable income, profit from her company and a loan taken from her business.
Ms Flint objected to that decision on 22 July 2022, identifying her grievance as the way in which the loans from her company had been included in her income.
The objection was disallowed by an objections officer on 29 September 2022. The objections officer reached similar findings as to the income and financial resources available to the parents from their salaries and interests in their businesses, although placed less reliance on the treatment of loans.
Ms Flint applied to the Tribunal for review on 30 October 2022.
A conference process conducted within the Tribunal did not resolve the matter. In preparation for the hearing, the parties participated in a telephone directions hearing on 29 May 2023. At that directions hearing, Ms Flint confirmed that she was not pressing Reason 7.
Directions were made to the parties to produce updated financial information and other documentary evidence. Ms Flint contacted the Tribunal in advance of the deadline and provided reasons why she was unable to comply. Further directions were issued and the hearing was rescheduled. The parties have complied with the directions and amended directions.
The documentary evidence before the Tribunal consists of the Tribunal papers and Supplementary Tribunal papers, T1 to T477. Ms Flint has provided documents now marked A1 to A171. Mr Palfrey has provided documents now marked B1 to B98.

LEGISLATIVE FRAMEWORK

The legislation relevant to this review is contained in the Child Support (Assessment) Act 1989 (the Act) and in 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 Act. This requires the application of a statutory formula which takes into account factors such as the number and age of children, the level of care provided and the taxable income of each parent.
Under section 98B of the Act, if special circumstances exist, a liable parent or a carer entitled to child support may apply to the Child Support Registrar (the Registrar) in writing, requesting a departure from the administrative assessment in relation to a child.
Under section 98C of the Act, before making a departure determination on an application made under section 98B of the Act, the Registrar must be satisfied that in the special circumstances of the case, one or more grounds under subsection 117(2) of the Act exist, and that it would be just, equitable and otherwise proper to make a particular determination.
The issues for me to determine in this case are therefore:
· Whether one or more of the grounds for departure referred to in subsection 117(2) of the Act exists; and, if so
· Whether it would be just and equitable as regards the child, the liable parent and the carer entitled to child support, and otherwise proper, to make a particular determination to depart from the administrative assessment of child support.

CONSIDERATION

There is a ground to depart from the administrative assessment of child support

As to Reason 8A, subparagraph 117(2)(c)(ia) of the Act provides that, in the special circumstances of the case, a ground for a departure determination may be established if application of the legislative provisions relating to administrative assessment ‘result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent’ due to the income, property and financial resources of either parent.

Mr Palfrey’s income, property and financial resources

As at the date of the application for a change of assessment, under the administrative formula, Mr Palfrey’s financial capacity to maintain his children was measured by reference to his adjusted taxable income for 2019/2020 of $93,980.
Mr Palfrey confirmed his understanding that generally speaking, all his taxable income at this time was drawn from his company, [Company 1] Pty Ltd.
The evidence before the Tribunal however establishes that from 12 October 2020 Mr Palfrey commenced new employment as the Chief Executive Officer of an industry association with an annual salary of $180,000pa.
Mr Palfrey’s taxation returns for 2020/2021 and 2021/2022 are before the Tribunal. In 2020/2021, income from this employer was $130,153, and income from [Company 1] Pty Ltd was $43,576.
Mr Palfrey’s salary from 12 October 2020, of itself, raises a real question as to whether the calculation of the child support liability on the basis of his previous adjusted taxable income produces a result that is unjust and inequitable. Under the administrative formula, where the formula necessarily relies on adjusted taxable income from a previous period, a difference between a person’s adjusted taxable income and their ‘current’ rate of income will not necessarily establish the ground. It is a matter of fact and degree. In Mr Palfrey’s case, the difference is very substantial and the product of a significant change to Mr Palfrey’s working life. These factors combined, in my view, demonstrate that the legislative provisions relating to administrative assessment of child support produce an unjust and inequitable determination of the level of financial support to be provided by Mr Palfrey due to his income. To demonstrate, had Mr Palfrey’s income from employment under his employment contract been used instead of his adjusted taxable income from 2019/2020 in the child support formula as at the date of the application for a change of assessment, the liability produced is $16,742 instead of $6904 with all other components of the formula unchanged.
In discussing this point at hearing, Mr Palfrey understood and agreed that use of his adjusted taxable income from the time he commenced salaried employment would under-assess his capacity to pay child support.
I am satisfied based on Mr Palfrey’s new employment arrangements alone that the ground is established. I consider the difference in the annual rate produced substantial so as to constitute special circumstances.
Further as to Mr Palfrey’s income, Mr Palfrey confirmed that he had initially been on a two-year contract with his new employer, but that contract had been extended. From 1 July 2023 his annual salary had increased to $220,000pa. In financial year 2022/2023, his annual salary had been $200,000.
Further as to Mr Palfrey’s financial resources, his interest in the private company he controls, [Company 1] Pty Ltd, remained relevant in 2021 and 2022, and further consideration is required as to whether it continues to be relevant.
Mr Palfrey described the nature of [Company 1] Pty Ltd as a firm providing [specified advice]. Mr Palfrey explained that much of his work was in [details deleted].
The business was much larger between 2015 and 2017, and had become involved in a major project in the southern suburbs of Adelaide. By 2020 however, the business had reduced in size and scope and only had one employee in addition to Mr Palfrey. At that time, the major project was in difficulty insofar as it related to [Company 1] Pty Ltd, but the business retained two smaller private clients. It was in this context that Mr Palfrey sought and obtained salaried employment.
After Mr Palfrey obtained salaried employment, [Company 1] Pty Ltd began to wind down its operations, although some limited work was undertaken for the remaining private clients in accordance with an understanding Mr Palfrey had reached with his new employer. By the end of the 2021/2022 financial year the business had ceased all substantive work and had effectively ceased trading. As mentioned below, the business continues to hold substantial cash which Mr Palfrey plans to use to invest in property development in the future. In response to my observation that it appears that [Company 1] Pty Ltd had ceased to be relevant as a financial resource for him beyond the cash reserves it held, Mr Palfrey agreed that was an accurate observation.
Mr Palfrey has provided the Tribunal with financial statements for the company, prepared by his accountant, covering the 2020/2021 financial year and the 2021/2022 financial year. Income from consulting fees reduced from $175,542 in 2020/2021 to $102,000 in 2021/2022.
I observed that the financial statements may indicate that the business continued to be active in the 2021/2022 financial year, well after Mr Palfrey had commenced salaried employment. Mr Palfrey explained that the revenue in that financial year pertained to a form of settlement arrived at with the major development in which he and the company were forced out of the project. According to Mr Palfrey, equity he held in the project was surrendered upon other parties paying an invoice for services of approximately $60,000. As mentioned above, I understand also that Mr Palfrey was completing some work for a private client of the firm.
A balance sheet prepared by Mr Palfrey at 30 June 2023 records that there is cash in the bank of $105,385. Retained earnings are recorded in the balance sheet on 30 June 2022 and 30 June 2023 of $57,991.
In the course of the hearing, I questioned Mr Palfrey about a number of expenses appearing in the profit and loss statement for 2021/2022 (B61). Generally speaking, the movement in expenses between the 2020/2021 financial year and the 2021/2022 financial year is consistent with Mr Palfrey’s evidence that the business was winding down. The few exceptions to this (marketing and rent) were explained to my satisfaction.
Mr Palfrey did not take issue with the objections officer’s treatment of the financial statements, essentially adding back a number of expenses. Mr Palfrey however was concerned that the company’s profit was added to the quantification of his income and financial resources and applied to future periods when there will be no such profit.
I agree that [Company 1] Pty Ltd has ceased to be relevant as a source of income for Mr Palfrey from the conclusion of the 2021/2022 financial year, while recognising that its cash holdings remain as a financial resource. Adding the profit of the company to Mr Palfrey’s income in 2021/2022 as was done by the objections officer makes adequate provision for this financial resource and I do not consider any ongoing provision for the cash holdings would be just and equitable, and would tend to double count what are essentially the retained profits.
Mr Palfrey explained that the company had arm’s-length rental arrangements and the rental payments in 2021/2022 were missed payments from earlier periods. The other expenses appear to me to be legitimate and appropriate expenses for the business as it wound down. I do not propose to add those expenses back.
Therefore, for the financial year 2021/2022 I would quantify Mr Palfrey’s income and financial resources as including his adjusted taxable income of $168,039 (incorporating his wages from the industry association minus unremarkable taxation deductions). To this I would add the gross profit of [Company 1] Pty Ltd for that financial year taken from the financial statements prepared by the company’s accountant (at B62) and as reported in the company’s taxation return (at B73) of $52,054. In this regard I note the objections officer relied on provisional figures of $64,048 at T348, but I prefer the former sources which were unavailable at the time of the objection decision.
For the 2021/2022 financial year therefore, I quantify Mr Palfrey’s income and financial resources at $220,093.
Mr Palfrey has not yet lodged his income taxation return for 2022/2023. Based on his evidence that his salary had increased to $200,000 and my conclusion that [Company 1] Pty Ltd has ceased to be a relevant source of income, I would reasonably estimate Mr Palfrey’s adjusted taxable income for 2022/2023 would be in the order of $195,000 after allowing for similar routine taxation deductions to 2020/2021 and 2021/2022.
I foresee that unless Mr Palfrey’s circumstances change, as a salary earner, his adjusted taxable income will be an adequate measure of his financial capacity to maintain his children for the purpose of the child support assessment. While I understand he intends to return to property development activities in the future, whether these activities will generate any relevant financial resources is entirely speculative.
Subject to considerations addressed below, I would not depart from the administrative assessment to address Mr Palfrey’s income and financial resources beyond a reasonable timeframe for him to lodge his 2022/2023 income taxation return, which Mr Palfrey assured me was imminent.
As to property, I note that Mr Palfrey owns the home in which he resides, heavily mortgaged. Mr Palfrey has a superannuation account which I do not consider relevant to the child support assessment.

A just, equitable and otherwise proper departure

As I am satisfied that there is at least one ground to depart from the administrative assessment of child support, the next step is to consider whether it is just, equitable and otherwise proper to depart from the assessment. The other matters raised in relation to Ms Flint’s income, and other matters raised can be addressed in this context.
In deciding whether it is just and equitable, the Tribunal must have regard to the following matters set out in subsection 117(4) of the Act:
(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.
As I explained to the parents at the hearing, I am to approach this task on the basis that the duty that a parent has to maintain their children has priority over all other commitments of the parent other than commitments necessary to support other children and themselves: section 3 of the Act.

Ms Flint’s income and financial resources

Ms Flint’s income taxation returns identify only one relevant source of income in the form of wages from [Company 2]. In 2020/2021 this amount was $70,776 and in 2021/2022 this amount was $80,368. After the hearing, Ms Flint provided information demonstrating that this amount constituted a proportion of a full-time salary of $100,000pa.
Ms Flint is a [Occupation 1]. She is the sole owner and director of [Company 2] Pty Ltd which exists as a vehicle for her practice. The revenue of the company is on a fee for service basis. She employs an administrative assistant (paid $26,500 in 2021/2022) and in previous years employed an engineer (paid a full-time salary of $84,999.97 in 2021/2022). She works school hours in her business and described facing limitations in the capacity of the business to grow. Ms Flint has operated the business in this way since returning to the workforce after having children.
Ms Flint has provided financial statements for the business. Exploring the financial statements with Ms Flint revealed a number of unusual aspects to the way the accounts of the business are prepared, but I accept Ms Flint’s explanations in this regard.

Specifically, the income for the business is divided between Sales and Service lines. Ms Flint explained that Service pertains to the fees for her services, while the Sales are akin to payments received from clients to be disbursed to [others]. In this regard, Ms Flint explained that [Occupation 1]s do not operate trust [accounts]. She must meet the fees [and] then seek payment in arrears from her clients, accounted for in the manner described.
The corresponding expense lines are very substantial: [Expenses] (Foreign) and Government Fees Expenses (IP Offices). The objections officer added back the IP Offices expense for 2021/2022, and it can be seen that with Ms Flint’s explanation in this regard that the expense is undoubtedly a legitimate business expense that should not be added back.
As to other expenses, I noted that the business leased a [motor] vehicle and incurred substantial depreciation expenses in the 2021/2022 financial year. Ms Flint explained that the vehicle is primarily used for business purposes as she must travel to meet clients. The vehicle is stored at the business’ premises and not at her home, as she is able to walk to work. She says she primarily uses her partner’s motor vehicle for private use.
The provisional profit and loss statement to 31 March 2023 (A111) recorded substantial legal expenses. Ms Flint gave evidence that those expenses do not pertain to her private legal expenses in family law matters as those expenses are met by her partner. Ms Flint expressly assured me that the legal expenses (and smaller legal expenses in earlier years) relate to the business’ activities, and in particular a dispute with a commercial landlord.
The objections officer added back expenses pertaining to rent, miscellaneous office expenses, light and power and computer expenses, presumably on an unstated assumption that Ms Flint operates her business from home. Ms Flint’s evidence is that the business operates from commercial premises, [in] the CBD in 2020/2021 and then at business premises in [suburb] in 2021/2022.
Mr Palfrey raised concerns as to the legitimacy of certain expenses on an understanding that Ms Flint used serviced office accommodation, and expenses such as electricity were extraordinarily high. In response, Ms Flint provided me with a chronology of her business’ accommodation arrangements and provided an assurance in her evidence that utility expenses, for example, were all incurred in respect of the business’ premises.
Mr Palfrey also drew attention to international travel expenses. These expenses were modest in my view, and Ms Flint explained that if she travels privately to Europe for example, she will divert from her travel to meet with the foreign agents she uses, and in that way only a legitimate proportion of expenses appear in the accounts.
There is inevitably scope for private expenses and benefits to find their way into the expenses of a privately controlled business. With the further evidence available to me about the operations of the business, I consider the objections officer’s adding back of expenses to be largely in error, as I accept that the identified expenses are legitimate and can be cogently understood to relate to the operation of the business. Most significant in this regard is Ms Flint’s evidence that the business operates from commercial premises, and further information about what the Government Fees Expense (IP Offices) expense relates to.
I have calculated various permutations of adding back the depreciation of the motor vehicle and the international travel expenses on the assessment, also incorporating my findings as to Mr Palfrey’s income for 2021/2022. The impact on the final liability is in the order of $1500 per annum. However, on further reflection I have noted that Mr Palfrey is provided an allowance by his employer for a motor vehicle as part of his package, and so for the sake of simplicity and equity I am not inclined to make an adjustment in that regard. In any event, Ms Flint’s evidence was that the vehicle is used primarily for business purposes and there is no evidence before me to contradict that. The international travel expenses were cogently explained, and of themselves would not substantially affect the child support assessment.
I otherwise do not identify any expenses in the profit and loss statement for [Company 2] Pty Ltd for 2021/2022 that conceal items of personal benefit such that they should be assessed as a financial resource for Ms Flint.
I note that the business has operated at a loss for the periods in respect of which I have financial evidence. Ms Flint explained that this is managed through cash flow and she also explained that she had provided some funds to the business when funds became available as a result of refinancing her home after property settlement (see T180), a deposit in her personal bank account identified by Mr Palfrey in the course of the hearing.
I am satisfied that the salary Ms Flint has allocated to herself is an adequate quantification of the income and financial resources available to her from the business she controls, particularly once the provision of a motor vehicle is disregarded on the grounds of equity with Mr Palfrey’s employment arrangements. While I recognise there is inevitably scope for personal benefit from business expenses, I am not satisfied to identify any particular business expenses as having that characteristic after receiving evidence from Ms Flint about the business and its operations.
Specifically as to the movement of loan balances in relation to both Mr Palfrey and Ms Flint, I am conscious that both parties have endured a difficult property settlement process and their affairs are, generally speaking, in the process of stabilising. While the capacity of a business to forward a director a loan can amount to a financial resource in many circumstances, I am not satisfied on the evidence before me that such a capacity amounts to a relevant financial resource in this matter.
I consider that in the 2021/2022 financial year, Ms Flint’s adjusted taxable income remains an adequate measure of her financial capacity to maintain the children.
I have considered Ms Flint’s statement of financial circumstances, including the evidence that she owns her home (mortgaged) and a modest superannuation account. No further issues arise in respect of Ms Flint’s property.

The proper needs of the children – private schooling

In considering the proper needs of the children in relation to private school tuition, it is relevant in my view to have regard to the terms of the equivalent ground at subparagraph 117(2)(b)(ii) of the Act. That ground (referred to by Child Support as Reason 3) poses the question whether, in the special circumstances of the case, the costs of maintaining the children are significantly affected because the children are being educated in the manner that was expected by their parents.
This issue arises in respect of [Child 1], who attends a Catholic primary school. Exhibit A139 is a copy of consent orders of the Federal Circuit Court of 17 February 2022 dealing with the education of the children and confirming that [Child 1] is to attend the private school for his primary schooling, but both children are to attend a public school for secondary education. The orders are silent as to meeting the costs of tuition.
The dispute between the parties arises in the context of an earlier email exchange (B55) of 20 June 2021 where a change to [Child 1]’s schooling arrangements were being discussed. Mr Palfrey’s contention is that the emails should be construed as him proposing that he will contribute the public school fee equivalent of $420, and that Ms Flint expressly agreed to this.
Ms Flint provided further context, explaining that [Child 1] was being educated at a different private school, and while she had agreed at that point to the proposal that Mr Palfrey pay $420, when he subsequently indicated he would only pay 50% of that amount she no longer agreed and therefore no final agreement was struck.
I note also the papers contain a copy of the application for enrolment at the relevant school with Mr Palfrey’s signature (A132).
In Oliver v Oliver [2021] FCCA 965, the father signed the enrolment form but did not make a commitment to pay school fees. The Court agreed with the Tribunal’s approach in that matter that the father’s agreement to pay school fees was not a requirement for the ground of departure. I consider this authority of assistance in this matter to the extent that in order to establish the ground (albeit I am considering the issue in the context of the proper needs of the child) I must focus on the evidence going to the expectation of the manner of education which does not necessarily include an agreement or expectation as to who would be meeting the costs.
On that point I find the consent order to be conclusive. Mr Palfrey explained he felt forced into making an order with those terms in order to settle a range of matters, but as I explained at the hearing it would be inappropriate for me to go behind the terms of the order in the way contended for. My view that [Child 1] is attending the relevant school in accordance with Mr Palfrey’s expectations is further reinforced by Mr Palfrey signing the relevant enrolment form.
I find that the tuition fees for the school are relatively modest at $2800pa (A146 and A148), but nonetheless significantly affect the cost of maintaining [Child 1].
The question of whether there was an agreement between the parents as to how the costs would be met is relevant to the question of who should bear the associated cost. It is not the conclusive factor however. The child support law requires me to make a determination that is just and equitable, and I do not consider that making either no provision or nominal provision by incorporating only 50% of the equivalent public school fees ($210) would be either just or equitable in all the circumstances. I consider that a just and equitable child support assessment to meet the costs of education mutually expected by the parents will be to share the cost either equally or in proportion of the parents’ capacity to pay.

The proper needs of the children – special needs

An occupational therapy assessment report of 27 October 2022 identified issues of concern in respect of [Child 1]’s vestibular and proprioceptive functioning, and recommends sensory integration therapy. Ms Flint mentioned that [Child 1] also had dyspraxia but I have identified no diagnosis in that regard in the medical material before me.
Mr Palfrey indicated he had not been involved in the assessment report process, and disagreed with aspects of the history contained in that report, pointing out that [Child 1] plays soccer. Mr Palfrey was concerned that he was being asked to contribute to treatment that he was not engaged in. Mr Palfrey explained that he has no way of knowing whether the treatment is required.
Ms Flint has provided invoices and receipts demonstrating she incurred the cost of the assessment ($81.97) on 27 October 2022 and weekly occupational therapy sessions of one hour’s duration with an out-of-pocket cost of $158.75 per week. I note Ms Flint’s indication that this will be for 26 weeks of the year. The assessment report indicates that the therapy usually involves a 10-week block, but the receipts indicate an 11-week block was undertaken in late 2022 and early 2023 and a second block of treatment commenced on 5 June. I accept that the costs of meeting the identified occupational therapy needs are substantial. From 27 October 2020 to 27 October 2022, assuming one block of 11 treatments and one block of 10 treatments, I calculate the costs to be $3333.75 and add also the cost of the assessment report of $581.97 to total $3,915.72.
Ms Flint has also raised other medical and related costs including specialist urologist, physiotherapy, chiropractic, podiatry and psychology. In relation to the specialist urologist, physiotherapy, chiropractic and podiatry I do not consider the costs to be out of the ordinary to the extent that further adjustment to the child support assessment is warranted. The expenses are relatively low and intermittent.
Ms Flint has also claimed costs of psychology. Mr Palfrey took issue with those expenses as they appeared to pertain to services provided by the Adelaide Resolutions Centre, and Ms Flint had been ordered by the court to meet those costs in an order of 15 March 2023 (not before me). Ms Flint confirmed that the order existed. In these circumstances, it would be inappropriate for me to undermine the court order by making provision for Mr Palfrey to contribute to these costs through the child support assessment. I understand also that Ms Flint considers that further psychology costs are likely to be incurred in the future, but I have no evidence before me in that regard and cannot make contingent provision for such treatment in the absence of evidence demonstrating the treatment is required or what the costs may be.
No further matters were raised pertaining to the special needs of the children, other than Mr Palfrey making the point that he provides care for [Child 2]. The administrative assessment will make provision for the costs of maintaining [Child 2] in this regard. I understand other proceedings are in the Tribunal relating to the care percentage determination in respect of [Child 2].
No matters arise in relation to the income, earning capacity, property and financial resources of the children, the commitments of each parent necessary to enable the parent to support themselves or other person they have a duty to maintain, or direct or indirect costs incurred by Ms Flint.
I have taken into account that Ms Flint has disclosed receiving a small amount of family assistance.

Assessment

Having regard to the analysis set out above, I consider a just, equitable and otherwise proper departure will take into account findings I have made in respect of each parent’s income and financial resources, with additional provision made for private school expenses and the costs of [Child 1]’s special needs.
Noting that the care arrangements for the children are not stable (although they appear to be stable in respect of [Child 1]), I consider it appropriate for the private school costs and the occupational therapy costs to be incorporated into the costs of the children component of the formula.
In relation to private school costs, I note that [Child 1] is in Year 4, and so I will make provision for a contribution to his private school fees to continue to the end of calendar year 2025 on the basis that the costs are $2800pa.
In relation to occupational therapy, I will make provision for the costs to be included from October 2022 to October 2023 for the assessment and the two blocks of treatment underway. I am unable to make provision beyond that where it is not clear if the treatment will continue.
In relation to income, I consider it just and equitable for my findings as to income to commence from 22 February 2022 and reflect my findings until such time as Mr Palfrey and Ms Flint will have the opportunity to lodge taxation returns, as I consider that in each case on an ongoing basis the use of adjusted taxable income is an adequate measure of financial capacity to contribute to the maintenance of the children.
In relation to the start date of any departure, Ms Flint contends that I should backdate any changes to Mr Palfrey’s income to the maximum extent possible on the basis that there was an anomaly in Mr Palfrey’s change of salary not being taken into account. In this regard, Ms Flint refers to a previous review in the Tribunal (differently constituted) where the member concluded that the application for a change of assessment was too complex to be dealt with under the administrative provisions of the Act. Ms Flint contends that the failure to take into account Mr Palfrey’s income from his new employment at that time was an unintended consequence.
The difficulty with Ms Flint’s submission in that regard is that it would require me to contradict the previous Tribunal in its assessment that the matter was too complex at that time, and it would also require me to engage with the circumstances found to be too complex at that time. I am disinclined to make a decision that has the effect of instantly creating potentially very large arrears or overpayments of child support for either party, and while I have followed the logic of Ms Flint’s submissions, I do not think it is appropriate for me to backdate the changes beyond the date that the application was made.
I have considered varying Mr Palfrey’s adjusted taxable income to $220,093 for the period 22 February 2022 to 30 June 2022, and then to $195,000 for the period 1 July 2022 to 31 October 2023.
I have also considered varying Ms Flint’s adjusted taxable income to $80,368 from 22 February 2022 to 31 October 2023.
In each case, I have selected 31 October 2023 as the end date for the departure in relation to income to allow the parents to finalise and lodge their respective income taxation returns so the adjusted taxable income from that process may inform the child support calculation in accordance with the ordinary administrative provisions of the Act.
I have also considered adding an amount of $2800 to the costs of the child component of the formula for [Child 1] reflective of his private school tuition expenses, for the period 22 February 2022 to 31 December 2025 and a further $3916 for the period 1 October 2022 to 1 October 2023.
The care arrangements in respect of the children are not stable, and so identifying and reflecting on the impact of these changes on the rate of child support is complex. I have identified the following calculations reflecting these proposed determinations based on the current care records available to me, and noting that aspects of care are also subject to review before a different member of the Tribunal.
The care percentages used for these calculations are as follows:
[Child 1]
61% to mother and 39% to father from 17 February 2022
72% to mother from 16 November 2022 and 28% to father from 23 August 2022
[Child 2]
61% to mother and 39% to father from 17 February 2022
0% to mother and 100% to father from 23 August 2022
My calculations are as follows:
·      Using a varied adjusted taxable income for Mr Palfrey of $220,093 and for Ms Flint of $80,368 from 22 February 2022 to 30 June 2022 when Mr Palfrey had 39% care and Ms Flint had 61% of the children plus the costs of the child [Child 1] of $2800 gives an annual rate of around $18,214 payable by Mr Palfrey, but I note this will only have effect for just over four months.
·      Using a varied adjusted taxable income of $195,000 for Mr Palfrey and $80,368 for Ms Flint from 1 July 2022 to 22 August 2022, with the same care percentage determinations in place plus the costs of the child [Child 1] of $2800 gives an annual rate of around $17,750 payable by Mr Palfrey.
·      Using a varied adjusted taxable income of $195,000 for Mr Palfrey and a varied adjusted taxable income of $80,368 for Ms Flint from 23 August 2022 to 30 September 2022 when Mr Palfrey had 100% care of [Child 2] and 28% care of [Child 1], and Ms Flint had 0% care of [Child 2] and 61% care of [Child 1], plus the costs of the child [Child 1] increased by $2800, gives an annual rate of around $6818 payable by the father.
·      Using a varied adjusted taxable income of $195,000 for Mr Palfrey and a varied adjusted taxable income of $80,368 for Ms Flint from 1 October 2022 to 15 November 2022 with the same care percentage determinations in effect plus the costs of the child [Child 1] increased by $2800 and by $3916 gives an annual rate of around $8851 payable by the father.
·      Using a varied adjusted taxable income of $195,000 for Mr Palfrey and a varied adjusted taxable income of $80,368 for Ms Flint from 16 November 2022 to 1 October 2023 following an increase in the care percentage for Ms Flint in respect of [Child 1] and including an increase in the costs of the child [Child 1] by $2800 and $3916 gives an annual rate of around $8851 payable by Mr Palfrey.
·      Using a varied adjusted taxable income of $195,000 for Mr Palfrey and a varied adjusted taxable income of $80,368 for Ms Flint from 2 October 2023 to 31 October 2023 where Mr Palfrey has 100% care of [Child 2] and 28% care of [Child 1], and Ms Flint has 0% care of [Child 2] and 72% care of [Child 1] where the costs of the child [Child 1] are increased by $2800 gives an annual rate of around $6948 payable by Mr Palfrey.

Having reflected on these calculations in the context of all the information known to me about each parent’s income and financial resources, and the details of household expenditure as documented in the statements of financial circumstances, I am satisfied that the proposed departure determinations are just and equitable. Similarly, as the determinations are based on my best assessment as to the income and financial resources of each parent, I am satisfied the determinations are otherwise proper. It will be necessary for Services Australia to calculate the proportion of maintenance that falls within the definition of disability expenses maintenance for the purposes of any family assistance entitlement.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that the objection is allowed so as to make the following departure determinations:

Mr Palfrey’s adjusted taxable income is varied to $220,093 for the period 22 February 2022 to 30 June 2022.
Mr Palfrey’s adjusted taxable income is varied to $195,000 for the period 1 July 2022 to 31 October 2023.
1. Ms Flint’s adjusted taxable income is varied to $80,368 from 22 February 2022 to 31 October 2023.
The costs of the child component of the formula for [Child 1] is varied by increasing it by $2800 for the period 22 February 2022 to 31 December 2025.
The costs of the child component of the formula for [Child 1] is varied by increasing it by $3916 for the period 1 October 2022 to 1 October 2023.

Services Australia must calculate the effect of determination (5) for the purpose of identifying any disability expense maintenance amount for the purpose of family assistance entitlements.