Gavin and Sony (Child support)

[2019] AATA 436

Gavin and Sony (Child support) [2019] AATA 436 (23 January 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/PC014876

APPLICANT:  Mrs Gavin

OTHER PARTIES:  Child Support Registrar

Mr Sony

TRIBUNAL:Member S Brakespeare

DECISION DATE:  23 January 2019

DECISION:

The decision under review is varied so that there is a departure determination in the following terms:

·     For the period 1 March 2017 to 30 June 2018 Mr Sony’s adjusted taxable income is varied to $14,034;

·     For the period 1 July 2018 to 31 August 2019 Mr Sony’s adjusted taxable income is varied to $37,000;

· From 1 September 2019 Mr Sony’s liability is to be calculated in accordance with the administrative assessment provisions in Part 5 of the Child Support (Assessment) Act 1989.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – irregular, casual work while in receipt of unemployment benefit – decision under review varied

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

REASONS FOR DECISION

BACKGROUND

1. This review is about whether there should be a departure from the administrative assessment of child support.

2. Mr Sony is the parent liable to pay child support to Mrs Gavin in respect of their child [Child 1] who is 16. [Child 1] is recorded as being in Mrs Gavin’ sole care.

3. On 20 January 2017 Mrs Gavin made an application to depart from the administrative assessment of child support.

4. The relevant administrative assessment resulted in a liability for Mr Sony of $12,206 per annum for the period 5 October 2016 to 28 February 2017. This was based on Mr Sony’s adjusted taxable income of $79,997[1] and Mrs Gavin’ 2015/16 adjusted taxable income of $51,266. Mr Sony’s liability was set to increase to $16,869 per annum for the period 1 March 2017 to 31 December 2017 based on his (indexed default) 2015/16 adjusted taxable income of $114,280 and Mrs Gavin’ 2015/16 adjusted taxable income of $51,266.

   [1] This amount was set via a departure determination made by an officer of the Child Support Agency on 22 April 2015.

5. On 13 March 2017 an officer of the Child Support Agency made a departure determination in the following terms:

   ·     For the period 1 March 2017 to 15 August 2020 the adjusted taxable income of Mr Sony is varied to $84,192.

6. Mr Sony lodged an objection to the decision along with an extension of time application which was granted on 18 June 2018.

7. On 4 August 2018 an objections officer partly allowed the objection and made a departure determination in the following terms (the objection decision):

   ·     for the period 1 March 2017 to 20 June 2017 Mr Sony’s adjusted taxable income is set at $58,371;

   ·     for the period 21 June 2017 to 31 August 2017 the annual rate of child support payable by Mr Sony is set at $1,373;

   ·     for the period 1 September 2017 to 30 June 2018 the rate of child support payable by Mr Sony is $1,390;

   ·     for the period 1 July 2018 to 31 December 2018 Mr Sony’s adjusted taxable income is varied to $37,000 per annum;

   ·     for the period 1 January 2019 to 31 December 2019 Mr Sony’s adjusted taxable income is set at $47,000 per annum;

   ·     for the period commencing 1 January 2020 until a terminating event occurs, Mr Sony’s adjusted taxable income is set at $57,000 per annum.

8. Mrs Gavin lodged an application for review of the objection decision with the tribunal on 23 August 2018.

9. The tribunal held a directions hearing by telephone on 31 October 2018. Mrs Gavin participated. Mr Sony was unable to attend due to work commitments. Directions were issued and have been complied with.

10. The hearing was held on 23 January 2019. Mrs Gavin and Mr Sony attended and gave evidence on affirmation to the tribunal. The Child Support Agency provided documents relevant to the review to the tribunal and the parties[2].  Mrs Gavin and Mr Sony both provided extra documents to the tribunal and these documents were folioed and exchanged with the parties prior to hearing[3].

    [2] Bundles comprising 498 pages in total were provided in accordance with section 37 and section 38AA of the Administrative Appeals Tribunal Act 1975.

    [3] Mrs Gavin’s documents were folioed A1 to A19 and Mr Sony’s documents were folioed B1 to B46.

11. Relevant aspects of the evidence and material before the tribunal will be referred to in the tribunal’s consideration of the issues which it has to decide.

ISSUES

1. The statutory provisions relevant to these reviews are contained in the Child Support (Assessment) Act 1989 (the Act).

2. The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act.

3. Under Part 6A of the Act the liable parent or the carer of the child or children may apply to the Child Support Registrar for a determination to depart from the administrative assessment (section 98B).

4. Section 98C provides that the Registrar may make a determination to depart from the administrative assessment and it establishes a three step process such that the issues for determination by this tribunal are:

   ·       whether a ground is established to depart from the administrative assessment of child support; and

   ·       if so, whether it is just and equitable to make a particular departure determination; and

   ·       if so, whether it is otherwise proper to make a particular departure determination.

5. The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.

6. Each ground is prefaced by the words “in the special circumstances of the case”. The meaning of this expression is not defined in the Act, but the Family Court in Gyselman and Gyselman [1991] FamCA 93 has held:

   as a generality 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 court will not interfere with the formula in the ordinary run of cases.

7. Likewise, in Philippe and Philippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”.

8. If the tribunal is satisfied that a ground exists 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.

9. The range of determinations which can be made includes variations to: the annual rate of child support payable; or to the adjusted taxable incomes of the parents and/or carer; or to other components of the statutory formula used to calculate child support.

CONSIDERATION

Issue 1 – Is there a ground for departure?

1. A ground for departure exists where, 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 because of the income, property and financial resources of either parent (subparagraph 117(2)(c)(ia) of the Act).

2. In accordance with the administrative assessment Mr Sony was to be assessed on an adjusted taxable income of $114,280 from 1 March 2017. At the time Mr Sony had not lodged his 2013/14, 2014/15 and 2015/16 income tax returns.

3. The papers indicate that Mr Sony commenced receiving newstart allowance in December 2016. The objections officer found that Mr Sony’s ABN was cancelled from 21 June 2017.

4. Mr Sony’s taxable income, as advised by the ATO, was $0 for 2015/16, $7,448 for 2016/17 and $14,034 for 2017/18.

5. Mr Sony told the tribunal that he ceased being a self-employed[ sub-contractor] as the company he subcontracted to contracted another tradesman and then failed to allocate Mr Sony any more work. Mr Sony said he was unable to source work from other contacts. At the same time his relationship broke up and his situation deteriorated from there. Mr Sony said that he went onto newstart allowance and has since learnt new skills which he hopes will lead to permanent work and a regular income. He is currently undertaking casual [work] and he receives newstart allowance when he is not working. Mr Sony said that since separation he has lived with his parents. Mrs Gavin has suggested that he either worked for the family business or should be working for the family business. Mr Sony said that there was not enough work in the family business for him to be employed.

6. Mr Sony said that he and his ex-partner are currently negotiating property settlement. Their joint home is in his ex-partner’s name only; however it is likely that he will receive some monetary settlement on the basis of being a beneficial owner of that property. Mr Sony told the tribunal that his only other assets are his tools of trade which are currently in storage.

7. The tribunal finds that there are special circumstances which mean that the administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by Mr Sony for the child as Mr Sony’s actual taxable income since March 2017 is likely to result in an annual liability commensurate with the minimum annual rate of child support.  There is no evidence to suggest that Mr Sony had any other income, property or financial resources during that period that should be taken into account for child support.

8. The tribunal is satisfied that there is a ground for departure.

Issue 2 – is it just and equitable to make a particular determination?

1. As the tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable as regards the children, the liable parent, and the carer entitled to child support to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the tribunal to consider the matters discussed below[4], which are as set out in subsection 117(4) of the Act:

   [4] The tribunal is required to give “overt consideration” to relevant factors listed in subsection 117(4) of the Act Tyagi & Meares [2008] FMCAfam 886

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

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

   (b)  the proper needs of the child; and

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

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

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

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

   (i)  himself or herself; or

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

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

   (g)  any hardship that would be caused:

   (i)  to:

   (A)  the child; or

   (B)  the carer entitled to child support;

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

   (ii)  to:

   (A)  the liable parent; or

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

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

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

2. In having regard 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 Act). The tribunal was not presented with any evidence to suggest that there were extra costs to be taken into account in respect of [Child 1]’s needs and therefore it is appropriate to calculate the costs of his needs by reference to Costs of the Children Table.[5]

   [5] Provided for in section 155 of the Act.

3. There is no evidence to suggest that [Child 1] has any income, property or financial resources that should be taken into account for the purpose of child support.

4. At all relevant times Mrs Gavin’ adjusted taxable income has been used in the administrative assessment and the amount is not contested. Mrs Gavin stated that her income comes from part-time employment. Her husband runs a business through a family trust but the business is currently running at a loss and Mrs Gavin has not received any distributions in recent years. Going forward the Trust will distribute any profits to Mrs Gavin’s husband only, so as to not interfere with the calculation of his child support income.

5. The tribunal had regard to Mrs Gavin’s Statement of Financial Circumstances and is satisfied that Mrs Gavin does not have any other income, property or financial resources that should be used in the administrative assessment.

6. The tribunal is satisfied that Mr Sony’s income from 1 March 2017 to 30 June 2018 was limited to income support payments. 

7. It is more difficult to work out Mr Sony’s income going forward. Mr Sony has been undertaking [casual employment] on a fly-in fly-out basis. The work has been very irregular and Mr Sony has continued to receive newstart allowance in the periods he is not working. According to his pay advices he earned approximately $7,339 up until 11 November 2018. At hearing he advised that he has worked two more weeks in December and is expecting further work going forward (Mr Sony also undertook to provide his most recent pay advices and Centrelink payment statement to the tribunal but failed to do so). Mr Sony was also hopeful of securing a permanent position in the near future. The tribunal, working on the assumption that Mr Sony is likely to do more [casual] work in the next six months, as opposed to the last six months, as he gains more experience, decided that Mr Sony’s income from employment and newstart allowance is likely to be in the vicinity of $37,000 per annum.

8. At hearing both Mrs Gavin and Mr Sony expressed a concern about the length of time into the future that the departure determination had been made on objection.

9. It is Mrs Gavin’s contention that the earning capacity provisions should apply to Mr Sony.

10. In relation to earning capacity, subsection 117(7B) of the Act requires the tribunal to consider three matters in determining that the parent’s earning capacity is greater than is reflected in his or her income used in the administrative assessment:

• Whether the parent is:

  onot working despite ample opportunity to do so (subparagraph 117(7B)(a)(i));  and/or

  ohas reduced their weekly hours of work to below full-time work (subparagraph 117(7B)(a)(ii));  and/or

  ohas changed their occupation, industry or working pattern (subparagraph 117(7B)(a)(iii));  and

• If the parent’s decision about his/her work arrangements is not justified by either his/her caring responsibilities (subsection 117(7B)(b)(i)) or his/her state of health (subparagraph 117(7B)(b)(ii));  and

• If the parent has not demonstrated that it was not a major purpose of their decision not to work despite ample opportunity to do so or to stop working, reduce their hours of work or change their occupation, industry or working pattern to affect the administrative assessment of child support paragraph 117(7B)(c).

1. All three of the above criteria must be met before a departure determination can be made to take into account whether the parent has a greater earning capacity. If the above criteria are satisfied then the tribunal must determine the actual earning capacity of the parent.

2. With respect to the first criterion the tribunal finds that Mr Sony has been in receipt of newstart allowance since December 2016. The conditions of payment generally rely on a person actively seeking and being available for work, unless they receive an exemption (e.g. due to ill health). There is no evidence before the tribunal to suggest that Mr Sony is not meeting his job search requirements. The tribunal accepts evidence on the file confirming that Mr Sony was unfit for any type of work from 21 October 2017 and subsequently underwent surgery. He received a medical clearance to work on 16 April 2018.  Since the beginning of July 2018 Mr Sony has received a combination of newstart allowance payments and income from casual employment.  The first criterion is not satisfied.

3. The tribunal finds that the second criterion is not applicable in this case.

4. With respect to the third criterion the tribunal finds that Mr Sony was a self-employed sub-contractor. He told the tribunal that he ceased that work because his main contactor stopped allocating him work and replaced him with another tradesperson. The tribunal finds that Mr Sony’s cessation as a sub-contractor was due to decisions made by the contractor to not allocate him work, and was not a voluntary act on his behalf. He has subsequently received [employment assistance] to re-skill to improve his employment prospects. The third criterion is not satisfied.

5. This means that it is not open to the tribunal to make an earning capacity determination in this case.

6. With respect to his commitments and expenses Mr Sony indicated that he lives with his parents and his weekly outgoings for day to day costs are in the vicinity of $295 per week. He also has a debt to the ATO which he pays at a rate of $12.50 per week and outstanding fines of $3,223.50 which he pays in instalments of $50.00 per fortnight. These commitments and costs total approximately $17,290 per annum.

7. Mr Sony also provided evidence that he owes solicitor fees of $4,056.00. He said that whenever he works he pays instalments of $500 per pay toward that debt. In respect of child support he pays $49 per fortnight from his newstart allowance payments. The tribunal notes that he has child support arrears of approximately $11,000 and a current liability of $113.00 per fortnight. He does not appear to have made any attempt to reduce his child support arrears or to pay the assessed fortnightly amount, despite his increase in income.

8. Mrs Gavin submitted a list of expenses totalling $53,290 per annum. This included mortgage payments of $1,000 per month. She recorded her gross income as $888 per week ($45,760 per annum) indicating a shortfall in income over expenses.  Mrs Gavin indicated that she had minimal savings but also minimal debts other than her mortgage.

9. The tribunal proposes to make the following determinations:

   ·     For the period 1 March 2017 to 30 June 2018 Mr Sony’s adjusted taxable income is varied to $14,034;

   ·     For the period 1 July 2018 to 31 August 2019 Mr Sony’s adjusted taxable income is varied to $37,000.

10. The effect of the proposed determination is that Mr Sony will be liable to pay the minimum annual rate for the period 1 March 2017 to 30 June 2018. From 1 July 2018 his annual liability will be approximately $2,900 ($56 per week).

11. The tribunal finds it appropriate to end the departure determination on 31 August 2018. This gives Mr Sony the opportunity to lodge his 2018/19 income tax return and for the child support liability to be assessed from that time under the administrative assessment.

12. The tribunal notes that the objections officer set Mr Sony’s liability at the fixed annual rate from 1 July 2017, despite finding that his income would result in the minimum annual rate. The tribunal could find no basis for setting such a rate. The tribunal concludes that from 1 March 2016 Mr Sony’s only income was his newstart allowance, which is approximately $14,000 per annum. His necessary costs equate more than that, despite living with his parents.

1. The tribunal’s determination means that Mrs Gavin is responsible for most of [Child 1]’s costs, particularly prior to 1 July 2018. However, the tribunal is satisfied that the determination will not cause her hardship. Whilst she indicated that her expenses exceed her income the tribunal notes that she has minimal debt other than her (joint) mortgage. From 1 July 2018 each parent will bear approximately half of the costs of [Child 1] as assessed by the Costs of the Children Table.

2. The tribunal finds the proposed determination to be just and equitable.

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

1. 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 Act. Subsection 117(5) sets out the matters that must be considered when deciding whether it would be “otherwise proper” to make a departure determination. It focuses on the balance of support carried between the parents on 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. 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.

2. Neither parent is in receipt of family assistance in respect of [Child 1].

3. The tribunal finds the proposed determination to be otherwise proper.

4. The tribunal therefore makes a departure determination in the following terms:

   ·     For the period 1 March 2017 to 30 June 2018 Mr Sony’s adjusted taxable income is varied to $14,034;

   ·     For the period 1 July 2018 to 31 August 2019 Mr Sony’s adjusted taxable income is varied to $37,000.

DECISION

The decision under review is varied so that there is a departure determination in the following terms:

·     For the period 1 March 2017 to 30 June 2018 Mr Sony’s adjusted taxable income is varied to $14,034;

·     For the period 1 July 2018 to 31 August 2019 Mr Sony’s adjusted taxable income is varied to $37,000;

· From 1 September 2019 Mr Sony’s liability is to be calculated in accordance with the administrative assessment provisions in Part 5 of the Child Support (Assessment) Act 1989.