Garside and Garside (Child support)

[2023] AATA 1790

Garside and Garside (Child support) [2023] AATA 1790 (17 May 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/BC025378

APPLICANT:  Ms Garside

OTHER PARTIES:  Child Support Registrar

Mr Garside

TRIBUNAL:Member S Letch

DECISION DATE:  17 May 2023

DECISION:

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

(a)For the period 27 August 2021 to 28 March 2022, Ms Garside’s adjusted taxable income is varied to $67,000;

(b)From 27 August 2021 to 28 March 2022, the annual rate of child support payable by Ms Garside is reduced by $1,477;

(c)For the period 29 March 2022 to 6 October 2022, the annual rate of child support payable by Mr Garside is $1,521;

(d)For the period 7 October 2022 to 30 June 2023, Ms Garside’s adjusted taxable income is varied to $75,679;

(e)For the period 7 October 2022 to 30 June 2023, Mr Garside’s adjusted taxable income is varied to $3,229.

CATCHWORDS

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

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

REASONS FOR DECISION

BACKGROUND

1. Ms Garside and Mr Garside are the parents of [Child 1], born September 2009. [Child 1] has been recorded as being in Mr Garside’s primary care except for a period of some six months from March 2022 to October 2022 when [Child 1] was in Ms Garside’s care. Ms Garside seeks a review of an objection decision by Child Support which “part allowed” Mr Garside’s objection to a “change of assessment” decision of 5 August 2022.

2. It is convenient to set out some extracts from the objections officer’s decision dated 5 August 2022 by way of background:

   DECISION UNDER REVIEW

   On 27 August 2021 Mr Garside applied for a change to the assessment under Reason 8A.

   On 14 October 2021, DM Maroney found Reason 8A established and changed the assessment as
   follows:

   - For the period 1 August 2021 to 30 September 2022, the adjusted taxable income of Mrs

   Garside is set at $50,572.

   The income used in the assessment for Ms Garside upon Mr Garside`s lodgement of his application to change the child support assessment was her 2019/2020 ATI of $20,404.

   Ms Garside provided evidence of her income at the time which showed she was earning annual
   income of approximately $52,000 per year from [Employer 1] (around $2,000 gross per week).

   Ms Garside has also provided evidence of net business profit of $3,995 for the 2021/2022 year from her business. Business expenses appear reasonable and none appear to unfairly distort the
   appearance of her earnings, noting no depreciation, motor vehicle expenses and only some $574 for phone and internet.

   I accept the business traded at a loss of some $10,000 the previous year. However Ms Garside
   confirms she is in receipt of wages of some $17,096 in the 2021/2022 financial year.

   Allowing for reasonable deductions I consider Ms Garside`s income as approximately $67,000
   ($50,000 + $17,000). This broadly aligns with Ms Garside`s most recent taxable income once the
   capital gain is disregarded.

   I note Mr Garside also claims a capital gain which I will also disregard when I consider his capacity to provide financial support to [Child 1].

   Ideally the child support rate should reflect the financial capacity of each parent to meet the
   children`s needs, on a proportionate basis, which fairly shares the expense. That situation cannot be constantly monitored and incomes and child support assessments do change, and affecting the child support assessment does not always occur when it does.

   For example, as Mr Garside is currently assessed on an income of $0, Ms Garside`s higher income makes no difference to the current child support payable by Mr Garside as at the date of this decision.
   However, from February 2021 to March 2022 Ms Garside was assessed to pay child support to Mr Garside on an income of $20,404 and I am satisfied her income at that time is more accurately
   considered as $67,000, in line with my findings above.

   Substituting the income of $67,000 increases the rate of child support payable from $446 to $6,891.

   This is a significant difference and I am satisfied the resultant child support assessment between
   February 2021 and March 2022 was unfair to Mr Garside.

   I am satisfied special circumstances exist.

   Mr Garside submits he has no income and is surviving on his financial settlement funds. In his
   application form Mr Garside declared living expenses of some $53,000 per annum, which would
   require a taxable income of around $68,000.

   I can accept Mr Garside is utilising settlement funds to live and note he declares some $350,000
   held in trust on his application form.

   Monies or assets which parents may receive as a result of a property settlement decision (due to a distribution of assets) is not considered as an assessable income for the purpose of the child support assessment.

   However, the agency`s usual approach to a situation where a parent`s ATI is less than the
   self-support amount but where they are not in receipt of a Centrelink pension is that they are
   assessed to pay a nominal amount known as the Fixed Annual Rate, currently $1,521.

   I note Mr Garside applied for the Fixed Annual Rate not to apply in May 2022 and this was granted.

   When examining an application under this Reason, a decision maker must be reasonably satisfied on the balance of probabilities as to the state of a parent`s financial position and capacity to provide support to their children, and then consider whether those findings render the assessment of child support unfair.

   Therefore, based upon what is known of Mr Garside`s circumstances and his ability to meet his own needs, I am satisfied that the payment of just over $1 per day in child support is unfair.
   The Minimum Annual Rate (currently $459) provisions are ordinarily reserved for paying parents
   who are on genuinely low incomes and rely upon government benefits.

   This is not the case with Mr Garside. Mr Garside has been able to relocate interstate, undertake
   some international travel and meet his ongoing living expenses. Accordingly, I consider Mr
   Garside`s circumstances are such that application of an annual rate of $1,521 is appropriate.

   I am satisfied special circumstances exist and that the current assessment is unfair to Ms Garside.

   Reason 8A is established.

   On balance, after consideration of the available evidence I am satisfied Mr Garside has rebutted the presumption that the decision to resign his employment in June 2021 was motivated by the effect it would have on the child support assessment.

   Reason 8B is not established.

   I intend to change the assessment in line with my findings outlined under Reason 8A for each
   parent.

   I have found Ms Garside`s income rendered the child support assessment unfair whilst she was
   assessed to pay Mr Garside when he had full-time care of [Child 1]. Mr Garside applied for a change to the assessment on 27 August 2021, however I am not presented with any compelling case to persuade me to backdate a decision and will change the assessment from this date.

   Mr Garside was assessed on an income of $0 from February 2021 and March 2022 and he was
   working until June 2021 prior to leaving his job. Considering I am satisfied he had some capacity to support [Child 1] during that time, I find it appropriate to reduce the annual rate payable by Ms
   Garside by the 2021 FAR rate ($1,477) to reflect that Mr Garside had some financial means to
   support [Child 1] regardless of the fact he has not been working.

   I will commence my decision regarding Ms Garside`s income from 27 August 2021 and extend this until 28 March 2022. Ms Garside`s income makes no difference to assessment from 29 March 2022 onwards.

   From 29 March 2022, Mr Garside became the paying parent. As canvassed under Reason 8A I am satisfied Mr Garside is declaring a zero income whilst not availing himself of Centrelink benefits.

   This gives rise to the application of the Fixed Annual Rate of $1,521 which I will apply from 29
   March 2022 for approximately 12 months, expiring after 31 March 2023.

   My decision is as follows:
   - From 27 August 2021 to 28 March 2022, the adjusted taxable income for Ms Garside is set
   to $67,000;
   - From 27 August 2021 to 28 March 2022, the annual rate of child support payable is reduced
   by $1,477;
   - From 29 March 2022 to 31 March 2023, the annual rate of child support payable by Mr
   Garside is set to $1,521.

   This decision will create $329.25 of arrears payable by Ms Garside and $362.49 payable by Mr
   Garside. Once offset against the other, Mr Garside will have around $33 in additional net arrears

   payable to Ms Garside as a result of this decision.

3. Ms Garside and Mr Garside participated in the Tribunal’s hearing by conference telephone. In making its decision, the Tribunal took into account the Child Support materials, and the additional materials submitted by both parties.

CONSIDERATION

The legislative framework

1. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act 1989 (the Act). A formula is used. It takes into account variables including each parent’s adjusted taxable income for the last relevant year of income, the number of children and the level of care provided by each parent.

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

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

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

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

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

4. If satisfied that a ground or grounds exist and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal may make one of the determinations prescribed in section 98S of the Act. It permits a range of determinations, including varying the rate of child support payable, the adjusted taxable income or the cost percentage for a child.

Issue 1 – Is there a ground to depart?

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

   (c)that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:

   (ia)      because of the income, property and financial resources of either parent; or

   (ib)       because of the earning capacity of either parent

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

The hearing

10.In short, Ms Garside told the Tribunal that when [Child 1] was living with her in 2022, Child Support set Mr Garside’s liability at the fixed annual rate – she thinks that was not fair. She suggested Mr Garside had not been looking for work and was taking holidays.  

11.Ms Garside told the Tribunal she agrees with the assessment of her income as $67,000 until March 2022. She said it was difficult for her to nominate a figure for Mr Garside which is representative of his financial capacity. She noted Mr Garside’s expenditure on holidays. She submitted that Mr Garside should effectively make a contribution from his capital reserves from the property settlement towards child support.

12.Mr Garside told the Tribunal that [Child 1] has predominantly lived with him since separation (apart from the six-month “trial” period with Ms Garside from March 2022). Mr Garside takes no issue with the objection decision. He told the Tribunal that he moved to [State 1] as he needed to “get away”; he was genuinely looking for work. The sums he received from the property settlement were expended on the property in [State 1], a car, and legal and living expenses, amongst other things. [Child 1] is now in his 100% care; he has moved to Brisbane due to legal proceedings about [Child 1’s] care – if [Child 1] is ordered to live with him, he and [Child 1] will return to the farm in [State 1] to live.

13.Mr Garside told the Tribunal that the farm is not producing any income at present. It is a “hobby farm” – given legal costs, he does not have the funds to bring up the farm to an operating standard which would generate any income.

14.Ms Garside told the Tribunal she considers Mr Garside should be assessed on his capacity to earn. This is particularly so when she had care of [Child 1]. Mr Garside’s evidence was that he was forced to leave his [Occupation 1] position, and that he had been continuously looking for work after he arriving in [State 1]. He was not able to find work in the [Occupation 1] field – he applied for [Occupation 1] positions but was rejected. His employment agency suggested to him his age was against him. Mr Garside denied the suggestion he had “been on holiday for six months”.

15.Ms Garside told the Tribunal that her income remains at some $1,500 per week. She did not identify any unusual expenses. Mr Garside observed that Ms Garside disclosed she had paid around $140,000 in legal fees in family law proceedings; he suggested she could not afford that sum. Ms Garside said she refinanced a loan and around $50,000 was paid from that source. She said she was very frugal and was able to meet the rest of the expense from her usual income. Mr Garside suggested that Ms Garside always “underestimated” her income; he suggested the figure of some $52,000 she nominated to Child Support as her 2022–23 income was likely to be far less than her actual income.

16.Mr Garside confirmed he has been working as [an Occupation 2] since January 2023 in Brisbane earning around $730 (gross) per week. He expects to continue working there until family law proceedings are resolved. He rents a couple of rooms at a property in the Gold Coast, and is paying $400 per week rent. He did not identify any unusual expenses for himself or [Child 1]; he said he meets all [Child 1’s] school expenses such as uniforms and other necessary expenses.

17.In terms of an assessment going forward, both parties did not indicate a preference for a departure from the formula assessment.

Conclusion

18.For the period February 2021 to March 2022, Ms Garside was assessed to pay child support on the basis of an adjusted taxable income (ATI) of $20,404 (her 2019–20 ATI). Ms Garside was working at [Employer 1] from September 2020 (with an extended period of sick leave shortly after commencement). Her income was in the range of $50,000 (without adding Ms Garside’s business income); adopting this figure results in a material change to the child support assessment. In the Tribunal’s assessment, there are special circumstances which render the child support assessment unfair; there is a ground to depart from the formula.

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

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

20.Ms Garside contends that the funds made available to Mr Garside (which I accept he has expended on a property and car, amongst other things) should be assessed as a resource available for child support. The general principle is that a property settlement is treated separately from the child support assessment; one is based on the division of assets, the other based on income. I see no reason to depart from that proposition; in the same way that assets received by Ms Garside from the property division are not assessed for child support purposes, the proceeds received by Mr Garside should not factor into the assessment.

21.I have no reason to doubt Mr Garside’s evidence that he left his employment on the basis that he had been asked to resign to save being terminated. I accept his evidence that he genuinely sought employment when he arrived in [State 1], and was unable to secure work. I accept his age is likely a factor in his lack of success. Mr Garside’s genuine job-seeking efforts have paid dividends with his regular employment since January this year.

22.I do not consider the stringent requirement for an “earning capacity assessment” are met in this case. Mr Garside was the main caregiver for [Child 1] prior to March 2022. He was forced from his previous employment, and genuinely sought work. I do not consider any of his decisions have been motivated to impact the child support assessment.

23.Consistent with the approach by Child Support, I consider it just and equitable for Mr Garside to be liable to pay the fixed (not the minimum) annual rate of $1,521 for the period [Child 1] was in Ms Garside’s care from 29 March 2022 to 6 October 2022. Similar to the approach taken by Child Support, I consider that, for the period 27 August 2021 to 28 March 2022, Ms Garside’s liability should be reduced by the fixed annual rate of $1,477 (the 2021 figure) to reflect Mr Garside’s capacity to support [Child 1] during that period.  

24.Child Support varied Ms Garside’s ATI to $67,000 from 27 August 2021 to 28 March 2022 on the basis of her wage (some $50,000) and business income ($17,000). Neither party raised any particular quarrel with that assessment. On the evidence available, I am satisfied that sum is fair representation of Ms Garside’s financial capacity for that period.

25.From 29 March 2022, Ms Garside’s ATI under the formula reverted to $196,728 (her 2019–20 ATI). However, she had 100% care of [Child 1], and Mr Garside was recorded as having a “nil” income (and assessed to pay the minimum annual rate of $459). Consequently, the child support assessment was not unfair given Mr Garside had no income. I consider no change is warranted to the formula assessment.

26.From October 2022, upon the care change being recorded, the figure of $196,728 continued to apply. As a consequence, on 5 November 2022, Ms Garside elected to make an estimate for her (2022–23) ATI (folio 415 of the Child Support papers) of some $52,403. At the time of the hearing, that figure continued to apply to the assessment. From 1 July 2023, Ms Garside’s ATI will be recorded as $75,679 (her 2021–22 ATI).

27.Upon acceptance of Ms Garside’s estimated income of $52,403, Mr Garside’s ATI was assessed as $106,976 (his 2020–21 ATI). Mr Garside’s ATI, from 1 April 2023, was assessed upon his 2021–22 ATI of $3,229. From 1 July 2023, the formula arrangement will assess Ms Garside upon her 2021–22 ATI of $75,679, and Mr Garside upon a figure of $3,229 (his 2021–22 ATI).

28.Ultimately, these decisions prioritise [Child 1’s] interests over all else. He is entitled to a fair level of support on the basis of the respective financial capacities of the parents. I consider Ms Garside’s estimated income of some $52,000, applied to the assessment from November 2022 following the care change, is not reflective of her financial capacity. There is no serious suggestion her financial capacity has materially declined. If Ms Garside’s ATI is some $52,000, and Mr Garside’s ATI some $106,000, liability is in the range of some $400 per month; even if Mr Garside’s ATI were to be recorded as $3,229, that liability increases only by a small sum. However, if Ms Garside’s ATI were to be recorded as $75,679, and Mr Garside’s ATI as some $106,000, Ms Garside’s liability would be over $700 per month; if Mr Garside’s ATI were recorded as $3,229 (or even up to some $37,000 in line with his level of employment income since January 2023), that liability would materially increase to more than $900 per month.

29.I therefore consider it would be just and equitable to assess Ms Garside’s ATI as $75,679 (her 2021–22 ATI) from the date of the care change on 7 October 2022. That income, it seems to me, is the best reflection of her financial capacity. This would reasonably closely accord with the usual rolling formula arrangements where the most recently completed tax year figure feeds into the assessment in October/November of each year on a rolling basis. Mr Garside’s ATI should be assessed as $3,229 (his 2021–22 ATI) from the same date. Given Mr Garside has 100% care of [Child 1], whether his income is assessed as $3,229 or $37,000 makes no material difference to Ms Garside’s liability. Accordingly, I will not change Mr Garside’s ATI from January 2023. I will vary both those incomes until 30 June 2023, at which time the assessment will revert to the formula, which I note is scheduled by Child Support to apply the same figures.

30.In my assessment, no other particularly material expenses were raised by either party in respect of their own situations, or in respect of [Child 1], which would warrant any further adjustment. The effect of this decision will be to increase Ms Garside’s child support liability from 7 October 2022; I am satisfied that, with careful budgeting, Ms Garside will be able to meet her ongoing liability and meet the retrospective increase in her liability.

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

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

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

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

DECISION

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

(a)For the period 27 August 2021 to 28 March 2022, Ms Garside’s adjusted taxable income is varied to $67,000;

(b)From 27 August 2021 to 28 March 2022, the annual rate of child support payable by Ms Garside is reduced by $1,477;

(c)For the period 29 March 2022 to 6 October 2022, the annual rate of child support payable by Mr Garside is $1,521;

(d)For the period 7 October 2022 to 30 June 2023, Ms Garside’s adjusted taxable income is varied to $75,679;

(e)For the period 7 October 2022 to 30 June 2023, Mr Garside’s adjusted taxable income is varied to $3,229.