Fulbeck and Duneford (Child support)

Fulbeck and Duneford (Child support) [2024] AATA 2535 (26 June 2024)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2023/BC026937
APPLICANT:  Mr Fulbeck
OTHER PARTIES:  Child Support Registrar
Ms Duneford

TRIBUNAL:Senior Member S De Bono
DECISION DATE: 26 June 2024
DECISION:

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

For the period 1 April 2023 to 30 June 2025, Mr Fulbeck’s adjusted taxable income is set at $111,000;
For the period 1 April 2023 to 30 September 2024, the child support assessment is increased by $3,840 to cover Ms Duneford’s contribution to half the costs of [Child 2]’s orthodontic treatment.

CATCHWORDS

CHILD SUPPORT – departure from administrative assessment – special needs of child – orthodontic treatment – father’s private health insurance reimbursement deducted from total costs of treatment – fees and ancillary costs for non-government school – father’s 100% care and decision to enrol children without mother’s consent – ‘educated in the manner expected’ – income, property and financial resources – father’s access to business finances – mother’s change from casual to permanent employment decreased income – 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

The issue to be considered in this application is whether there is a reason to change the administrative assessment of child support and, if so, whether it is just and equitable and otherwise proper to do so.
Ms Duneford and Mr Fulbeck are the parents of [Children 1 and 2]. Following a decision by the Administrative Appeals Tribunal (the Tribunal) on 4 January 2024 the care recorded for [Child 1] was 68% care to Mr Fulbeck and 32% to Ms Duneford, which is applied to the assessment of child support from 2 April 2023. [Child 2] is recorded as being in Mr Fulbeck’s 100% care from 6 October 2013. Child support has been collected from Services Australia (Child Support) from the start of the administrative assessment. Ms Duneford is the parent liable to pay child support.
The administrative assessments in place prior to the change of assessment applications were as follows:
·For the period 1 December 2022 to 16 January 2023 the annual rate of child support payable by Ms Duneford is $36,072. This is based on Ms Duneford’s adjusted taxable income (ATI) of $162,764 and Mr Fulbeck’s ATI for the same period of $0.
·For the period 17 January 2022 to 1 April 2022 the annual rate of child support payable by Ms Duneford is $26,748. This is based on the 2021/2022 estimate of income of $122,692 for Ms Duneford and an ATI of $0 for Mr Fulbeck.
·For the period 2 April 2023 to 30 June 2023, the annual rate of child support payable by Ms Duneford is $20,061. This is based on a 2021/22 estimate of income of $122,692 for Ms Duneford and a 2021/22 ATI of $0 for Mr Fulbeck.
·For the period 1 July 2023 until 26 July 2023, the annual rate of child support payable by Ms Duneford is $20,124. This assessment is based on an estimated 2023/24 ATI amount of $123,028 for Mr Fulbeck and a 2021/22 ATI amount of $0 for Ms Duneford.
·For the period 27 July 2023 until 29 February 2024, the annual rate of child support payable by Ms Duneford is $11,895. This assessment is based on the incomes detailed above however reflects the change in care of [Child 1].
Ms Duneford currently owes outstanding child support of $6,158.98.
On 2 March 2023 Mr Fulbeck lodged a change of assessment on the basis of Reason 2 – the special needs of the child, Reason 3 – the high costs of caring for, training or educating the child, and Reason 8A – the income, property and financial resources of Ms Duneford. On 13 April 2023 Ms Duneford cross applied on the basis of Reason 4 – the income of the child, Reason 8A and Reason 8B – the earning capacity of Mr Fulbeck.
On 29 June 2023 a delegate of the Registrar found Reason 2 established in relation to Mr Fulbeck’s application and Reason 8A established in relation to Ms Duneford’s application. The delegate departed from the administrative assessment as follows:
·For the period 1 April 2023 to 30 June 2025, Mr Fulbeck’s adjusted taxable income is set at $74,000;
·For the period 1 April 2023 to 30 September 2024, the child support assessment is increased by $3,875 for half the costs of [Child 2]’s orthodontic costs;
The impact on the assessment was as follows:
·For the period 1 April 2023 to 30 June 2023, the annual rate payable by Ms Duneford decreases from $20,061 to $15,757.
·For the period 1 July 2023 to 29 February 2024, the annual rate payable by Ms Duneford decreases from $20,124 to $15,812.
On 4 August 2023 Mr Fulbeck objected to the decision of the delegate. On 21 December 2023 an objections officer allowed Mr Fulbeck’s objection, establishing Reason 2 and 8B in relation to Mr Fulbeck’s application and Reason 8A in relation to Ms Duneford’s application. The objections officer made the following changes to the administrative assessment of child support:
·For the period of 1 April 2023 to 31 March 2024, the annual rate of child support otherwise payable is increased by $3,875.
·For the period 1 April 2023 to 30 June 2025 Mr Fulbeck’s income is set at $74,000 (this part of the delegate’s decision remained the same).
On 20 October 2023 Mr Fulbeck sought further review with the Social Services and Child Support Division of the Tribunal. Directions were issued to both parties on 16 April 2024. During the telephone directions hearing held on 29 February 2024, both parties confirmed that should a departure from the administrative assessment of child support be established it would be on the grounds in relation to Reason 2 and Reason 8A. On 11 April 2024 a telephone hearing was held in which Ms Duneford gave evidence under affirmation and Mr Fulbeck gave evidence under oath. The Tribunal considered the documents and information from Child Support as well as the submissions from Mr Fulbeck and Ms Duneford.[1] The Tribunal deferred its decision to allow further submissions from Ms Duneford. Of these submissions the Tribunal exchanged documents numbered B44–B58 with Mr Fulbeck for comment. Mr Fulbeck provided further information which the Tribunal made the decision not to exchange with Ms Duneford. The Tribunal reconvened to make its decision on 26 June 2024. Relevant aspects of the material and evidence will be referred to in the Tribunal’s Reasons for Decision.

CONSIDERATION

[1] Administrative Appeals Tribunal Act 1975, subsection 37(1) Statement and Documents and section 38AA Documents provided by Child Support numbered 1 to 715, Mr Fulbeck’s documents numbered A1–A119 and Ms Duneford’s submissions numbered B-B43 and received after the hearing B44–B58.

The legislative framework

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 Assessment Act). The liable parent or a carer may apply for a determination departing from the administrative assessment under Part 6A of the Assessment Act.
Section 98C of the Assessment Act establishes a three-step process to be satisfied: that there is a ground for departure; that it is just and equitable to depart; and that it is otherwise proper to make a departure determination. Once satisfied, the Tribunal may make one of the determinations prescribed in section 98S of the Assessment Act.

Is there a reason to depart from the administrative assessment of child support?

Reason 2 – Does [Child 2] have special needs?

The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Assessment Act. Subparagraph 117(2)(b)(ia) of the Assessment Act – commonly referred to as “Reason 2”– states as follows: “(b) that, in the special circumstances of the case, the costs of maintaining the child are significantly affected: … (ia) because of special needs of the child”.
The term “special circumstances” is not defined in the Assessment Act. In Gyselman and Gyselman [1991] FamCA 93 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. Ms Drummond’s submission to the Tribunal, and to Child Support, was that surgery was a special need for the child.
The term “special needs” is not defined in the Assessment Act. In Lightfoot v Hampson [1996] FLC 92-663 it was found that the special needs can be because of a physical, mental or learning disability or because of a special talent of a child. The condition or disability must be out of the ordinary.
Mr Fulbeck told the Tribunal that [Child 2]’s orthodontic treatment was necessary. In relation to the need for [Child 2]’s orthodontic treatment the treatment summary explains: “Due to the severe nature of [Child 2]’s malocclusion his orthodontic management will be to primarily improve his oral function, improve his ability to clean his teeth along with an improvement in aesthetics”.[2]
[2] Page 144 of the subsection 37(1) documents.
Ms Duneford said in relation to the orthodontic treatment she did not disagree with [Child 2] having the treatment and did not have any issues in paying for half the costs. But Ms Duneford thought [Child 2] was too young for this treatment because he was not of an age where he was managing his oral hygiene well. Ms Duneford said it is her understanding that Mr Fulbeck has private health insurance and she wanted to ensure that any costs reimbursed by the private health insurance for the orthodontic treatment was deducted from the total costs prior to her 50 per cent share of the costs being calculated. Ms Duneford said she was not consulted by Mr Fulbeck about the need for [Child 2] to have braces and only knew of this when Mr Fulbeck told her she needed to share the costs. Overall Ms Duneford is happy about the outcome of the treatment for [Child 2].
Mr Fulbeck provided a statement from [Orthodontics] about the costs of the orthodontic treatment for [Child 2]. Evidence before the Tribunal shows that the initial contract for orthodontic treatment for [Child 2] was $7,750.[3] The payments by Mr Fulbeck’s health insurance totalled $190.30.[4] There were additional costs for study models and photographs which were $120.[5] The total out of pocket costs for [Child 2]’s orthodontic treatment was $7,679.70.[6]
[3] Page 195 of the subsection 37(1) documents.
[4] A27 of Mr Fulbeck’s submissions.
[5] Page 195 of the subsection 37(1) documents.
[6] $7,750 initial contract cost, plus additional costs $120, minus health insurance rebate $190.30 = $7,697.70.
The Tribunal is satisfied that [Child 2]’s orthodontic treatment is necessary and that the costs are significant, and these are special circumstances that significantly affect the costs of maintaining him. Accordingly, Reason 2 is established.

Would departure from the administrative assessment be just and equitable?

Having found that special circumstances exist such that the administrative assessment resulted in an unjust and inequitable result, so a ground for departure is established in relation to subparagraph 117(2)(b)(ia) (Reason 2) of the Assessment Act, the next step for the Tribunal is to consider whether it is just and equitable to depart from the administrative assessment.
In deciding whether it is just and equitable, the Tribunal had regard to the matters set out in subsection 117(4) of the Assessment Act. Section 3 of the Assessment Act makes it clear that the parents of a child have the primary duty to maintain the child over all commitments of the parents other than commitments necessary for self-support or the support of another person to which they have a duty.

The proper needs of [Children 1 and 2]

In relation to the proper needs of the child, regard must be had 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 (subsection 117(6) of the Assessment Act).
The Tribunal has already considered the special needs of [Child 2]. Neither parent identified any special needs for [Child 1].
Mr Fulbeck said that the change of assessment should include Christine paying half of the school fees for [non-Government School], including ancillary education costs such as textbooks and uniforms. By way of background Mr Fulbeck said he has raised the children since late 2011 with very little contribution from Ms Duneford, and he has been responsible for all of the costs of the children.
In 2020 Mr Fulbeck enrolled [Child 1] to commence Year 10 and [Child 2] to commence Year 7 at [non-Government School] for the 2021 school year at the [Town] Campus. Prior to this [Child 1] attended [State High School] and [Child 2] was at a government primary school.
Mr Fulbeck said he chose to remove [Child 1] from [State High School] because she was “slipping through the cracks” at the school and as [Child 2] was finishing primary school, he had to make a decision about where [Child 2] would go to secondary school. Mr Fulbeck said he did not have a discussion with Ms Duneford about changing schools for [Child 1] nor what school [Child 2] would attend from Year 7. Mr Fulbeck said that he and Ms Duneford don’t have any joint parenting responsibilities nor do they communicate with each other about the children and have not done so since about 2010. Mr Fulbeck said up until last year he has had 100% care of both children and the decisions regarding their day to day care, welfare and development have been his alone.
Mr Fulbeck said the decision for [Child 1] and [Child 2] to attend [non-Government School] was made by him because up until recently, Ms Duneford has had “nothing to do with the children” and no conversations were had with Ms Duneford about the children’s schooling. Mr Fulbeck said that even though he did not have a discussion with Ms Duneford about the schooling for [Child 1], she did go and view the school and did a walk around with the Principal’s assistant and with her son (Mr Fulbeck’s adult stepson). Mr Fulbeck said Ms Duneford had contact with the school and also received correspondence from the school. An email from [Ms A] from Enrolments confirms that Ms Duneford visited [non-Government School] on 26 February 2021, and she was given access to the ‘Parent Lounge’ “to view all [school] events and activities applicable to the students”.[7] Mr Fulbeck said in his view Ms Duneford supported his decision to send [Child 1] to [non-Government School] and this means she in effect “signed off” on [Child 1] and [Child 2] attending [non-Government School]. Mr Fulbeck said following Ms Duneford’s visit she had called him about the fact that she was not a contact for the school and complained about this and “demanded that I put her down on the enrolment forms”. That’s when Ms Duneford went to the school and provided her details to the school.
[7] Page 217 of the subsection 37(1) statement and documents.
The Tribunal asked Mr Fulbeck if he had a conversation with Ms Duneford about who would be responsible for the fees but he said there was no discussion between himself and Ms Duneford about who would be responsible for the fees, and whether the fees would be shared between himself and Ms Duneford. Mr Fulbeck said Ms Duneford has never taken an interest in the children’s schooling. Mr Fulbeck said he thought he would be able to pay the school fees himself, but it has transpired that he can no longer afford to do this.
Mr Fulbeck said in his view as Ms Duneford had taken a tour of the school and wanted to be listed as a contact for [Child 1] and [Child 2] that this meant she was agreeing for the children to attend the school and this in turn meant in principle, she was agreeing to contribute to the school fees.
Mr Fulbeck said once Ms Duneford went to visit the school, he had asked her to contribute to the school fees but she said she would not do this. Mr Fulbeck said he got to the point where he said to Ms Duneford that he might have to take the children out of [non-Government School], but he said Ms Duneford was still not prepared to contribute to the school fees.
In response Ms Duneford said that Mr Fulbeck has withheld the children from her, when the children were speaking with her they let her know that they were going to attend [non-Government School]. Ms Duneford was of the view that [State High School] is a very good school and she did not support the move to enrol the children at [non-Government School]. She also did not support the children attending a private school nor a religious school.
Once Ms Duneford became aware that [Child 1] and [Child 2] were going to be attending [non-Government School] in 2021 she contacted that school and was told Mr Fulbeck had enrolled them in the school. Ms Duneford said she then had to prove she was the mother of the children and there exists court orders that stipulate that both parents are required to sign the enrolment forms (these orders were not before the Tribunal). Ms Duneford said she was told by the school that as Mr Fulbeck has 100% care of the children he is able to enrol the children without her consent. Ms Duneford wanted to receive correspondence about the children but this did not mean she consented to the children attending the school or contributing to the school fees.
Ms Duneford said that in her view there was nothing wrong with [State High School] and that the school’s academic record for Year 12 was very good. Ms Duneford also said her current partner’s children attended [State High School] and had good outcomes at this school. Ms Duneford said she does not agree to sending the children to a religious school and she would never have agreed to a private school education because she cannot afford this. Ms Duneford said that the change of schools did not make much sense to her because [High School] is five minutes from Mr Fulbeck’s house, while [non-Government School] is about a 30–45 minute drive.
Mr Fulbeck said he was not happy with the feedback from [Child 1] about [State High School] and did not think she was receiving a quality education at [State High School] nor did he think it was providing [Child 1] with the education she needed. Mr Fulbeck said [Child 1] played soccer [in the local area] and some of her teammates went to [non-Government School] and the feedback was that this school was a good school and would be better at meeting [Child 1]’s needs.
Ms Duneford said that [Child 1]’s grades did not improve at [non-Government School] and Mr Fulbeck had made the decision to remove her. Ms Duneford said as this occurred part way through Year 12 she agreed to pay the remainder of the school fees for [Child 1] so she could finish Year 12 at [non-Government School]. Ms Duneford said this was not an indication that she had agreed for the children to be educated at the school but rather so that [Child 1] could finish her schooling at [non-Government School] and not leave part way through the year.
In determining whether the children are being educated in the “manner expected” is not defined in the Assessment Act. In Mee v Ferguson [1986] FamCA 3, the Full Court of the Family Court considering a similar provision in the Family Law Act 1975 said (at [37]):
It refers to the manner in which the child "is being", and which the parties to the marriage "expected" the child to be educated. That provision appears to have direct relevance to the issue of private school education, particularly its reference to the manner in which the parties "expected" the child to be educated. The word "expected" in the past tense presumably relates to some expectation of the parties at a point in time earlier than the hearing.
The Court then went on to say (at [75]):
Where the non-custodian has agreed to the child attending such a school that person is liable to contribute to the fees involved so long as and to the extent that he or she has a reasonable financial capacity to continue to do so.' and 'However, the mere fact that the non-custodian can afford to pay the fees, or indeed if he or she is a wealthy person, is not in itself a reason for imposing that liability.

The Tribunal is satisfied that there was no agreement between Ms Duneford and Mr Fulbeck about the manner in which the children were to be educated. The decision to send the children to [non-Government School] was a decision made by Mr Fulbeck and at the time he made this decision he did not discuss this with Ms Duneford. This was partly because he and Ms Duneford did not discuss the children’s education because he had been the parent responsible for this throughout their schooling, and partly because Mr Fulbeck thought he would be able to manage the school fees alone.
Mr Fulbeck said he has been responsible for all of the costs of the children, this has included food, clothing, accommodation and activities, including their sporting activities. There were no costs which were out of the ordinary apart from the children’s education costs when determining the proper needs of the children. Additionally, both Ms Duneford and Mr Fulbeck said neither child has income, property of financial resources of their own.

The income, property and financial resources of Mr Fulbeck

Mr Fulbeck told the Tribunal he operates two businesses, [Business name 1] which he operates as a sole trader and [Business name 2] which the trading name of [Trust name]. Mr Fulbeck said he also has [Business name 3] which runs through the Australian Business Number of [Business name 1].
Mr Fulbeck said that [Business name 1] is a [job task 1] business that has expanded into [job task 2]. [Business name 1] currently employs three full-time staff members that have been employed for the whole of the 2022/2023 financial year. Mr Fulbeck said he currently employs subcontractors for [Business name 2] because he has injured his back.
Mr Fulbeck said he has two properties, one which he was renting up until at least part of 2020, which is situated on 100 acres and his own house which he lives in. The Tribunal asked Mr Fulbeck about the livestock trading account. Mr Fulbeck said he had [livestock] on the 100 acres for the meat and to keep the grass down but he said he has not had [livestock] on the property since 2015.[8] This seems unlikely given the primary production costs listed on Mr Fulbeck’s 2021/2022 tax return. Mr Fulbeck could not explain why the profit of [Business name 1] was reduced by the Primary Production losses of $19,699.[9] The total income for [Business name 1] for the financial year ending 2022 was $129,020.[10]
[8] Page 385 of the subsection 37(1) statement and documents.
[9] Page 378 of the subsection 37(1) statement and documents.
[10] Page 378 of the subsection 37(1) statement and documents.
Mr Fulbeck’s other business [Business name 2] is a [job task 2] business. When comparing the Profit and Loss (P and L) Statements for the financial year ending 30 June 20222 and 30 June 2023 for [Business name 2], for the 2022/2023 financial year the P and L Statement shows gross income of $113,463 which is a slight decrease when compared with the financial year ending 30 June 2022 of $114,851.[11] The P and L Statement shows total expenses of $102,831 with increased expenses for subtractors from the 2022/2023 financial years. Material costs remained similar in 2022 when compared with 2023 of $41,517. The Trust retained a net profit of $10,631 for the 2022/2023 financial year.[12] For the 2021/2022 financial year according to the P and L Statement for [Business name 2] the business made a gross profit of $27,993, Mr Fulbeck received this as a trust distribution.[13] For the 2022/2203 financial year the net profit was $10,631.[14] Mr Fulbeck did not provide the full P and L Statement and Balance Sheet to the Tribunal for the financial year ending 30 June 2023.
[11] A17 of Mr Fulbeck’s submissions.
[12] A17 of Mr Fulbeck’s submissions and page 335 of subsection 37(1) statement and documents.
[13] Page 437 of the subsection 37(1) statement and documents.
[14] A17 of Mr Fulbeck’s submissions.
The Tribunal notes that Mr Fulbeck had a trust distribution of $27,993 for the 2021/2022 financial year, the Tribunal will add back $3,787 in commercial depreciation and 20% of the costs for the vehicles used for personal use; fuel and oil, $5,393; registration and insurance $4,323 and repairs $1,047. Total expenses for the vehicle are $14,550 and 20% of these expenses are $2,920. Mr Fulbeck also took a further $3,383 as a loan from the business.[15] Accordingly, the Tribunal is satisfied that Mr Fulbeck’s ATI from [Business name 2] for the 2021/2022 financial year was at least $38,083. As Mr Fulbeck did not provide the full P and L Statement and Balance Sheet for 2022/2023 financial year the Tribunal had regard to Mr Fulbeck’s bank statements.
[15] Page 438 of the subsection 37(1) statement and documents. Loan increased from $379,391 to $382,775.
Mr Fulbeck operates [Business name 1] as a sole trader. His tax return for the 2021/2022 financial year shows a loss of $22,438 with net primary production losses carried forward of $102,386.[16] [Business name 1] had a gross business income of $207,602 for the 2021/2022 financial year,[17] with depreciation totalling $16,169, this included motor vehicle expenses of $11,372 and all other expenses of $121,474, which includes wages of $93,973.[18] Mr Fulbeck’s 2021/2022 tax return showed total expenses of [Business name 1] to be $121,474. Primary production losses show sales of $3,273, interest of $6,586, deprecation of $1,219, repairs and expenses of $2,292 and all other expenses totalling $6,746 with total expenses (losses) across primary production and [Business name 1] being $278,149.[19] Taking into account the costs of running the farm and [Business name 1] the total expenses deducted from Mr Fulbeck’s gross income was $278,149 resulting in a loss of $28,890. From a taxation point of view Mr Fulbeck’s income from [Business name 1] for the 2022 financial year was zero. Mr Fulbeck has not yet completed his personal tax return for the 2022/2023 financial year.
[16] Page 300 subsection 37(1) statement and documents.
[17] Page 340 of the 37(1) statement and documents.
[18] Pages 340 and 342 of the 37(1) statement and documents.
[19] Page 340 of the 37(1) statement and documents.
It is well established in case law that there exists a common situation of a self-employed person’s taxable income not corresponding with his or her income or financial resources for child support purposes.[20] In Costa & Fairbank the Court said about the interpretation of the term “financial resources”:[21]
“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.
[20] See Voss v Child Support Registrar & Anor (SSAT Appeal) [2009] FMCAfam 1296).
[21] (SSAT Appeal) [2010] FMCAfam 39.
The courts have also concluded that a “forensic audit” or major investigation of the financial circumstances of a party is not required to be undertaken. Rather, there must be satisfaction on the balance of probabilities as to the party’s income, property and financial resources.[22]
[22] See for example Morse & Potts (SSAT Appeal) [2010] FMCAfam 1305.
In response to the bank statements in the subsection 37(1) Statement and Documents as well as those statements provided by Mr Fulbeck, Ms Duneford provided detailed written submissions after the hearing about some of the deposits into this bank account as well as some of the depreciation deductions in Mr Fulbeck’s financial statements and tax returns. The Tribunal will address some of these issues more generally in the following paragraphs.
Mr Fulbeck’s current bank accounts show regular deposits into the following accounts:[23]
·     [Bank personal account] ending in account number 5492.
·     [Bank business account] ending in account number 7733.
·     [Bank Home Loan] Package ending in account numbers 6085 and 3049.
[23] Page 231 of the subsection 37(1) statement and documents.
Mr Fulbeck provided statements for the [Bank business] account for the period 1 July 2023 to 28 March 2024 which show the following credits and debits for the period:

Date	Opening balance	Total credits	Total debits	Page
1/7/2023 – 31/7/2023	$4,464.16	$17,872.45	$18,749.03	A87 – A89
1/8/2023 – 31/8/2023	$1,868.67	$23,812.34	$25,531.25	A83 – A86
1/9/2023 – 29/9/2023	$1,868.67	$37,289.08	$33,980.68	A79 – A82
30/9/2023 – 31/10/2023	$5,177.07	$38,499.49	$31,010.58	A75 – A78
1/11/2023 to 30/12/2023	$12,665.98	$36,920.67	$40,960.25	A70 – A74
1/12/2023 to 29/12/2023	$8,626.40	$42,896.97	$46,637.51	A59 – A63
30/12/2023 to 31/1/2024	$4,885.56	$38,815.83	$36.792.63	A64 – A68
1/2/2024 to 29/2/2024	$6,908.76	$29,994.28	$33,920.40	A18 – A21
1/3/2024 – 28/3/2024	$2,982.64	$22,350.97	$19,895.18	A90 – A92
Totals	$288,425.10
Projected income	$384,566
71% business expenses deduction on ATO benchmark for [job task 1 work sector].[24]	71% of $384,566 is $273,041.86 Probable business profit: $111,525.

[24] align="left">Mr Fulbeck said business income from both [Business name 2] and [Business name 1] including [job task 2] is deposited into the business account. The Tribunal has calculated projected gross business income for the 2023/2024 financial year will be approximately $111,000 based on the annualising deposits into the business bank account for the period 1 June 2023 to 28 March 2024 and deducting 71% in business expenses from gross business income, which the Tribunal has calculated will be in the vicinity of $384,566 minus $273,041.

The Tribunal notes that Mr Fulbeck’s personal account ending in account number 5492 shows the following deposits for the period 10 February 2023 to 6 May 2023:
The Tribunal notes deposits into this account from [Business name 1] as well as deposits for [job task 2].
Mr Fulbeck said the home loan account ending in 3049 is the home loan for the farm and the home loan account ending in 6085 is for the property that Mr Fulbeck lives in. Mr Fulbeck said there is still a mortgage on both properties.
The account ending in 6085 shows regular deposits every seven days, the Tribunal notes the following credits into this account for the period 8 October 2022 to 6 April 2023 of $27,000 with debits of $10,050.99 and excess payments of $17,149.01.[25]
[25] Page 255 of the 37(1) statement and documents.
Mr Fulbeck indicates on his Statement of Financial Circumstances (SOFC) weekly expenses totalling $1,757 which includes home loan repayments of $1,350 weekly or $70,200 annually. As there is evidence that Mr Fulbeck has been repaying his loan above the minimum amount then his income would have to be greater than $70,200 net annually for Mr Fulbeck to be able to meet his mortgage repayments alone. Expenses of at least $1,757 weekly are $91,364 annually. Reducing this amount by his family tax benefit payments of $197 weekly means that Mr Fulbeck’s yearly expenses are reduced by $10,244 because family tax benefit is not income for the purposes of child support. Mr Fulbeck’s net income based on his SOFC would be in the vicinity of $81,120. A net income of $81,120 would indicate a taxable income of about $108,000 annually.
Mr Fulbeck said his SOFC is an accurate reflection of his financial situation. Mr Fulbeck confirmed that he does not have any other children to support.
The Tribunal is satisfied that Mr Fulbeck has access to financial resources greater than those reflected in his taxable income. Given that Mr Fulbeck is likely to have access to financial resources in the vicinity of $111,000 from [Business name 2], once the cost of running the business is deducted (currently the ATO benchmark for [job task 1 work sector] puts this at 71%, see the Table in paragraph 46 of these Reasons). Accordingly, the Tribunal is satisfied that Mr Fulbeck has access to financial resources above his taxable income because he is able to claim expenses in ways that are legitimate for taxation purposes but means he has to financial resources from both [Business name 2] and [Business name 1] not reflected by his ATI.

The income, property and financial resources of Ms Duneford

Ms Duneford said that she has been employed on a full-time basis since October 2021, prior to this Ms Duneford was working on a casual basis as a seasonal worker. Ms Duneford is currently working as [an occupation] as an employee in a permanent on-going position in an on-going [project] in [work sector]. Ms Duneford said she currently works on a two week on/two week off roster where she travels to work from home and stays near the site when she is working her two-week roster 14 days on and 14 days off.
Ms Duneford currently receives a base salary of $118,918.19, payments on top of the base rate include a site fee which is recorded as a project allowance which is paid above the base rate and is part of her total renumeration package of $127,000.[26] Ms Duneford’s income as a casual worker for the financial year ending 20 June 2022 was $162,764.[27] This included withdrawals from her superannuation from MLC and another superannuation fund totalling $11,538 gross, which Ms Duneford said she applied for a withdrawal of her superannuation for medical reasons.[28] Ms Duneford said that following these withdrawals both of those funds were closed. Ms Duneford now has one superannuation fund which is [Superannuation]. The statement from Ms Duneford indicates she has not paid any additional funds to superannuation and all funds were employer contributions.[29]
[26] B32 of Ms Duneford’s submissions.
[27] B18 of Ms Duneford’s submissions.
[28] B15 of Ms Duneford’s submissions.
[29] B25 of Ms Duneford’s submissions.
Ms Duneford’s income reduced once she commenced full-time employment in an area that provides permanency for her and this is the reason she changed from casual employment to permanent full-time employment. Ms Duneford said she works 12-hour shifts when she is on site, but she remains on call on the two weeks she is not on site.
Ms Duneford provided an SOFC which shows that her annual gross income is $133,172.[30] Ms Duneford indicates her share of rent to be $340 and total weekly expenses of $1,060 or $55,000 net.[31] Ms Duneford indicates liabilities of car loan of $19,362, credit card debit of $6,981.18 and an unknown liability of $18,000, with total liabilities of $44,343.36.[32] Ms Duneford said her SOFC is an accurate reflection of income, liabilities and expenses.
[30] B2 of Ms Duneford’s submissions.
[31] B8 of Ms Duneford’s submissions.
[32] B6 of Ms Duneford’s submissions.
Mr Fulbeck disagreed that Ms Duneford would spend $150 a week on vehicle maintenance and submitted that this was an overestimation on a vehicle that is a 2015 model. The Tribunal took this as a submission that Ms Duneford has excess funds once her weekly living expenses are deducted.
The Tribunal is satisfied that Ms Duneford has increased her employment from casual to full-time permanent employment which has decreased her income but has provided more stability for Ms Duneford. The Tribunal is satisfied that this has not been done to effect the administrative assessment of child support.
Ms Duneford confirmed that she does not have another person apart from [Child 1] and [Child 2] who she has a legal duty to support.

Conclusion

The objections officer determined the departure period is from 1 April 2023 to 30 June 2025. Mr Fulbeck wanted the departure period to apply from 2021 when [Child 1] commenced [non-Government School]. As this is more than 18 months before Mr Fulbeck’s application to change the administrative assessment of child support and the Tribunal has concluded that Ms Duneford is not required to contribute to the school fees for the children, the Tribunal will apply the same departure period as the objections officer.
Accordingly, the following departure determination is made by the Tribunal:
·For the period 1 April 2023 to 30 June 2025, Mr Fulbeck’s adjusted taxable income is set at $111,000;
·For the period 1 April 2023 to 30 September 2024, the child support assessment is increased by $3,840 for Ms Duneford to contribute to half the costs of [Child 2]’s orthodontic treatment.

Would there be resulting hardship from a departure from the administrative assessment?

Subsection 117(4) of the Assessment Act requires the Tribunal to take into account whether any departure determination or failure to make a departure will cause any hardship to the child, the carer, the liable parent or any other person the parents have a duty to support.
The Tribunal finds that, based on the evidence and information provided to Child Support and the Tribunal, it is unlikely that either parent will experience hardship from this departure determination. This is because Mr Fulbeck is able to reduce his taxable income through his business and as a sole trader, as well as offsetting the costs of primary production. While this is perfectly legitimate for taxation purposes it allows Mr Fulbeck to have access to financial resources in a way that Ms Duneford is unable to. Setting Mr Fulbeck’s income at $111,000 reflects the financial resources available to him through the business which enables him to meet his living and mortgage expenses and will not cause hardship to Mr Fulbeck.
The Tribunal is satisfied that the decision does not cause hardship to Ms Duneford as she is quite happy to contribute to the half the costs of [Child 2]’s orthodontic treatment. This cost has reduced slightly from the objections officer’s decision because the rebate from Mr Fulbeck’s health insurance has been deducted from the total costs of treatment, but the costs for photography and study moulds have been included by the Tribunal.
Once Ms Duneford’s income of $127,000 is applied to the administrative assessment of child support there will be a reduction in the amount of child support payable by Ms Duneford. As she now has 32% care of [Child 1] her child support will reduce from about $24,000 annually to about $19,000. [Child 1] ceased to be a child of the assessment on 18 May 2024. Based on an income of $111,000 for Mr Fulbeck and $127,000 for Ms Duneford and the current care percentages of 100% care of [Child 2] to Mr Fulbeck, Ms Duneford will be liable to pay child support of around $9,000 annually to Mr Fulbeck as a result of this departure determination.[33] The Tribunal is satisfied that this determination strikes a more just and equitable balance for both parties based on the income and financial resources of both parents.
[33] This is based on the calculations using the Child Support calculator for 2024 where Ms Duneford has 0% care of [Child 2] and had 32% care of [Child 1] until [Child 1] ceased to be a child of the assessment. This was calculated using the income of Ms Duneford of $127,000 and Mr Fulbeck of $111,000.

Is it otherwise proper to make a particular 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. Subsection 117(5) of the Assessment Act sets out the matters that must be considered when deciding whether it would be “otherwise proper” to make a departure determination. Subsection 117(5) focuses on the balance of support carried between the parents on the one hand and the taxpayer on the other. It is appropriate for the children to be primarily supported by their parents rather than by government assistance. Paragraph 117(5)(b) of the Assessment Act means that the Tribunal must consider whether the level of a benefit, in particular family tax benefit, received by the party caring for the children may be affected by the level of child support. Irrespective of this, the Tribunal has concluded that it is otherwise proper in the circumstances to depart from the administrative assessment of child support.

The Tribunal notes that it is open to either party to lodge further change of assessment applications should future circumstances of either party change significantly from the circumstances upon which this decision is based.

DECISION

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

For the period 1 April 2023 to 30 June 2025, Mr Fulbeck’s adjusted taxable income is set at $111,000;

For the period 1 April 2023 to 30 September 2024, the child support assessment is increased by $3,840 to cover Ms Duneford’s contribution to half the costs of [Child 2]’s orthodontic treatment.

[2024] AATA 2535

26 June 2024

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Jurisdiction

Statutory Construction

Remedies

Procedural Fairness