Gerard and Wormald (Child support)

[2018] AATA 948

Gerard and Wormald (Child support) [2018] AATA 948 (5 February 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2017/MC012169

APPLICANT:  Mr Gerard

OTHER PARTIES:  Child Support Registrar

Ms Wormald

TRIBUNAL:Member S Lewis

DECISION DATE:  05 February 2018

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that for the period 18 October 2016 to 31 October 2019, the adjusted taxable income of Mr Gerard is varied to $49,800.

CATCHWORDS

Child Support – Registrar initiated departure determination – Income and financial resources of parent – Business 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 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 application for review has been brought by Mr Gerard who disagrees with a decision made by the Department of Human Services, Child Support (the Department).

2. Mr Gerard and Ms Wormald are the parents of the children, [Child 1] (born May 2015) and [Child 2] (born October 2016).  Ms Wormald has 100% care of the children.  Mr Gerard is the parent liable to pay child support.

3. In July 2016 the Department commenced a Registrar Initiated Change of Assessment (RICA) investigation and on 18 October 2016 the case report of the investigation was completed and a departure considered.

4. At the time of the investigation, Mr Gerard was assessed to pay child support of $408 per annum.  This amount was the minimum annual rate calculated based on Mr Gerard’s 2015 adjusted taxable income of $23,858 and Ms Wormald’s 2015 adjusted taxable income of $26,825. 

5. On 13 March 2017 a senior case officer, acting as a delegate of the Child Support Registrar, found that the ground for departure was established due to the income and financial resources of Mr Gerard.  The senior case officer decided that the adjusted taxable income for Mr Gerard should be varied to $131,839 for the period 18 October 2016 to 17 October 2019.  This decision resulted in annual child support payable by Mr Gerard of $24,074.

6. Mr Gerard objected to this decision and his objection was disallowed by an objections officer on 23 June 2017. 

7. On 22 July 2017 Mr Gerard lodged an application for a review with the Administrative Appeals Tribunal (the tribunal) seeking review of the decision of the Department. 

8. Prior to the hearing of the application for review, directions were issued to both Mr Gerard and Ms Wormald directing them to provide the tribunal with specified documents.  Mr Gerard provided the tribunal with documents (folios A1 to A86).  Ms Wormald provided the tribunal with documents (folios B1 to B16).  Both parties were provided with a copy. 

9. The matter was heard on 5 February 2018. The tribunal and the parties also had access to the statement and documents provided by the Department under subsection 37(1) of the Administrative Appeals Tribunal Act 1975 (folios 1 to 390).  Mr Gerard attended the hearing in person and gave evidence on affirmation.  Ms Wormald was directed to attend the hearing in person.  She failed to do so and she did not answer the telephone when contacted by a tribunal officer.  The tribunal proceeded in her absence. 

ISSUES

1. The statutory provisions relevant to this review are found in the Child Support (Assessment) Act 1989 (the Assessment Act). The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Assessment Act. This requires the application of a statutory formula which takes into account such factors as the number of children, the level of care provided, the income of each parent and the costs of the children.

2. The Registrar may initiate a departure from the administrative assessment of child support under Part 6A of the Assessment Act (section 98K). Subsection 98L(1) provides that the Registrar may make a determination to depart from the assessment and establishes a three step process. The Registrar, and the tribunal standing in place of the Registrar, must be satisfied:

   (i) that, in the special circumstances of the case, the administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child because of the income, earning capacity, property and financial resources of either parent; and

   (ii) that it would be:

   (A)   just and equitable as regards the child, the liable parent, and the carer entitled to child support; and

   (B)   otherwise proper;

   to make a particular determination under this Part.

3. The term “special circumstances” is not defined in the Assessment Act. In Gyselman and Gyselman (1992) FLC 92-279 (Gyselman) 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.

4. In making a determination under section 98L, the Registrar, and the tribunal, must have regard to subsections 117(4) to (9) of the Assessment Act (subsection 98L(2)).

5. If satisfied that the ground for departure exists and that it would be just and equitable and otherwise proper to make a particular determination, the tribunal must make one of the determinations prescribed in section 98S of the Assessment Act. It permits a range of determinations, including varying the annual rate of child support payable or the adjusted taxable income.

6. To deal with Mr Gerard’s application for review, the tribunal stands in the shoes of the Child Support Registrar.

CONSIDERATION

Issue 1 – Does a ground exist to depart from the administrative assessment?

1. There are a range of circumstances which may support the finding that the administrative assessment would result in an unjust and inequitable determination of the level of child support.  The tribunal referred to case law and the Child Support Guide which sets out government policy in relation to child support.  The tribunal notes that the calculation of income and benefits for the purposes of taxation law does not limit its consideration of the true resources available to a party to child support proceedings and is but one factor to be taken into account in the particular circumstances of the case.

2. It is a long established principle of law that, when a person conducts their business through an intermediary such as a company or trust, it is proper to lift the corporate veil to determine the value of the company or trust to that person.  It is also a well-established principle in the Family Court that the taxable income of a person who is self-employed may not be an accurate reflection of their earning capacity and financial resources (DJM and JLM [1988] FamCA 97; Scott v Scott (1994) FLC 92-457; Carey v Carey (1994) FLC 92-489). When summarised, these cases establish that a ground for departure may be established where self-employed people are able to derive additional benefits from their businesses, and also have greater control over the structure of their finances than a PAYG employee. As is discussed further below, this is evident in this case.

3. In his submissions and evidence to the tribunal, Mr Gerard submitted that the RICA investigation significantly overstates his income and fails to take account of the true nature of the business.  He told the tribunal that he struggled to pay the minimum assessment and has no capacity to pay an assessment which results in child support payable of approximately $24,000 per annum.

4. The tribunal has reviewed the evidence provided by the parties and the evidence arising from the Department’s investigation of the case.  In this case, the tribunal has reached a level of satisfaction required for an administrative decision to be made.

What incomes are used in the administrative assessment of child support?

1. The administrative assessment of child support is calculated for a child support period.    The child support period at the time of RICA investigation ran from 5 October 2015 to 4 January 2017.  The incomes reflected in the administrative assessment at that time were:

   ·       Mr Gerard’s 2015 adjusted taxable income:  $23,858

   ·       Ms Wormald’s 2015 adjusted taxable income:  $26,825

2. The current child support period runs from 5 January 2017 to 4 April 2018.  In the absence of a change of assessment, the incomes which would be reflected in the administrative assessment are:

   ·       Mr Gerard’s 2016 adjusted taxable income:  $23,886

   ·       Ms Wormald’s 2016 adjusted taxable income:  $15,027

3. The tribunal then considered Mr Gerard’s income, property and financial resources. 

Mr Gerard’s income property and financial resources

1. It is also undisputed that:

   ·       Mr Gerard is [an occupation 1] engaged in the [specified] industry.  He conducts his business through a company, [named] (the Company); and

   ·       Mr Gerard is the sole shareholder and director of the Company.  The Company pays him directors’ fees.

2. The tribunal must consider the totality of Mr Gerard’s income, property and financial resources and is not confined to taxable income.  Mr Gerard told the tribunal that the Company operates in the [specified] industry and struggles to meet its expenses from the Company’s resources.  Mr Gerard explained that he relocated from Sydney in 2015 when Ms Wormald moved to [another city] with the eldest child.  At that time, Mr Gerard established a [service] business operated by the Company.  Mr Gerard said that it has been difficult to gain business as he was unknown locally and he had few local contacts.  He further stated that whilst he is [a different occupation] and has completed the necessary study to be a [related occupation], at the time of his relocation he was not a [fully licensed occupation 2].  These circumstances limited the scope and type of projects on which he was engaged.  Mr Gerard explained that he needed to work under a registered practitioner to accumulate the requisite experience for licensing; Mr Gerard finally became licensed in December 2017 and, in recent times, has been tendering for [service] contracts.  This will give him greater scope to make a profit in future.   Prior to this he often worked on small jobs requiring him to supply the materials upfront and pay contractors whilst he sought [service] contracts.  Mr Gerard said that the jobs had limited margins and if the costs blew out elsewhere he would not be paid for the [service] aspect of his role on the [contracts].

3. The tribunal referred Mr Gerard to the bank statements in the documentary evidence.  Mr Gerard told the tribunal that he personally meets expenses of the Company on a regular basis.  The tribunal noted a number of [resource] purchases in the transactions in his personal account.  Mr Gerard said that he juggles funds paid by customers in advance between his personal and the Company’s accounts in order to try and make ends meet.  Mr Gerard said that he is sometimes paid for smaller jobs in cash as is evidenced by the deposits at Australia Post and at ATMs.  He said that he always banks the cash as he is often short on funds to pay the Company expenses.  Further, when his funds do fall short he supplements his funds by drawing from his [Relative A’s] account (this is considered further below).  The tribunal referred to the financial statements of the Company and noted that Mr Gerard’s verbal evidence is consistent with the following observations:

   ·       The Company revenue has increased from $14,118 in the 2015 financial year to $159,302 in 2015/2016 and $130,474 in 2016/2017;

   ·       The Company reported losses in 2014/2015 (of $35,064) and in 2015/2016 (of $2,844) and in 2016/2017 (of $8,067).  The Company had net assets (of $36,755.38) at 30 June 2017.  The carried forward losses will reduce tax payable on future profits;

   ·       The Company owed Mr Gerard $92,722 at 30 June 2015 and this reduced to $37,896 at 30 June 2016  This suggests that Mr Gerard was able to draw additional funds from the Company in that year in addition to his wages;

   ·       In 2016/2017, the Company paid Mr Gerard wages of $18,000.  It also paid finance payments on [a car 1] totalling $24,545.45 and other motor vehicle expenses of $7,472;

   ·       The Company claimed home office expenses of $5,200.  Mr Gerard told the tribunal that his total rental expense is $120 per week.  This means that the Company is claiming $100 per week as a business expense;

   ·       The financial statements indicate an improving but nonetheless financially vulnerable business which is subject to fluctuating fortunes.

4. The tribunal considered Mr Gerard a credible witness.  The tribunal did not consider that the evidence supports that Mr Gerard is withholding significant amounts of cash from the Company for his own benefit. 

5. Mr Gerard reported that he has a personal vehicle (an old [vehicle]) and the [car 1] is a company car.  Mr Gerard said that he usually uses his [older vehicle] for personal use and the [car 1] to attend job sites.  The tribunal accepts that the [car 1] is used for some personal use.  The tribunal was not presented with any evidence which would lead to the conclusion that anything other than a modest value should be attributed to this benefit.  The tribunal considered that it would be appropriate to attribute 20% of the use of the [car 1] as private use to Mr Gerard.  The tribunal calculated that the total outlay was approximately $32,000 of which the tribunal considers $6,400 is the value of the private use to Mr Gerard. 

6. Based on the available evidence, the tribunal was satisfied that Mr Gerard’s interest in the Company is a valuable resource.  The ability to draw funds from the Company and the ability to choose capital payments (for example drawings from his loan account) in lieu of wages and the use of a company car are financial resources available to Mr Gerard which are not reflected in his taxable income and as such they are not reflected in the administrative assessment of child support.  In 2016/2017 Mr Gerard received wages, a car benefit and the benefit of deducting home office expenses.

7. Mr Gerard submitted that he receives support from his [Relative A].  He explained that he supported his [Relative A] for two years whilst he was in Sydney following an accident.  Mr Gerard said that his [Relative A’s] bank account is linked to his.  When he is short of funds, he is able to transfer money from her and he endeavours to pay her back.  Neither he nor his [Relative A] keep records.  Mr Gerard explained that she is his only family in Australia and vice versa.  They look out for each other and she is very keen to help him establish his business.  The tribunal’s review of bank statements revealed that various amounts are regularly transferred to Mr Gerard from an account ending in [number] as well as payments made to “[name]” (for example $9,300 from the [Bank 1] account on 7 February 2017).   Mr Gerard said that these transactions relate to his [Relative A].

30.It is evident that Mr Gerard has financial benefits beyond his income, in the form of the support he receives from his [Relative A].  Paragraph 117(7A)(b) prevents the income or financial resources of another person who does not have a duty to maintain the children from being taken into account, unless there are special circumstances that make it appropriate to do so. 

1. In Jordan & Verne [2012] FMCAfam 21, the Federal Magistrates Court considered the position of a parent who was supported by her spouse, whilst she was unemployed. The Court accepted that the support of the spouse was a relevant financial resource, but noted that spousal support was a usual or ordinary circumstance. In this case, Mr Gerard said that he receives support from his [Relative A]. It is often the case that close family members will provide financial assistance to a relation. It appears that the relationship between Mr Gerard and his [Relative A] is akin to that of parent and child. On occasions, where parents have the financial capacity to do so, they may assist an adult child. The tribunal considered that the extent of the financial support being provided to Mr Gerard by his [Relative A] and her willingness to supplement his income on an ongoing basis is out of the ordinary, and should be regarded as a special circumstance. In any event, what is being considered in these circumstances is not the financial circumstances of Mr Gerard’s [Relative A] as such, but the actual financial support that she provides to him. As there is an arrangement for ongoing financial support of Mr Gerard via transfers from her account, he has that additional financial benefit available to him. The tribunal finds that, as the support from his [Relative A] is linked to past support provided by Mr Gerard to her, this “safety net” should be considered as a financial resource for Mr Gerard.

2. Overall, taking into account his interest in the Company, the tribunal was satisfied that Mr Gerard is largely meeting his personal expenses from his financial resources.  The bank, mortgage and credit card account statements available to the tribunal indicate some current financial distress. 

3. The tribunal finds that Mr Gerard has greater financial resources than those reflected in his taxable income by reason of his interest in the Company and the ongoing reliable financial support from his [Relative A].  It is difficult to calculate the actual annual value of those resources.  The tribunal could not reconcile the income reported in Mr Gerard’s income tax returns with the level of commitments which he stated he is meeting from that income.  This situation is entirely consistent with Mr Gerard’s evidence that his income is supplemented by funds sourced from the Company and his [Relative A]. 

4. The Department calculated an annual income for Mr Gerard of $131,839.  This amount was calculated by extrapolating credits to his personal bank account to arrive at annual revenue of $192,681 and deducting 30% for business expenditure.  This approach fails to take account of movements between bank accounts and may have “double counted” deposits.  Further, the ATO benchmark indicators for carpentry services indicate that average expenses are expected to be 64% of revenue when revenue is in the range of $110,000 to $400,000.  The tribunal calculated that if this level of expenditure was applied to the Company’s 2016/2017 revenue in the financial statements then the profit would be $46,970.  Whilst this is instructive, the tribunal has more recent financial information and the financial statements for the relevant year prepared by an independent accountant. 

5. The tribunal reviewed Mr Gerard’s personal expenses as disclosed in his statement of financial circumstances.  After adjusting for the mortgage payments related to the rental property (discussed below), the expenses extrapolate to an annual amount of approximately $34,684 ($667 per week).  The tribunal considered that the expenses were reasonable for a single person living in shared accommodation.  

6. Given the practice of meeting expenses for the Company from his personal account supplemented by funds taken electronically from his [Relative A’s] account, the tribunal finds that Mr Gerard’s financial dealings are not transparent.  It is clear that Mr Gerard’s personal expenditure is inexplicably entwined with that of the Company and its business; for this reason the tribunal was not persuaded by Mr Gerard’s’ submissions that the true value of his income and financial resources are reflected in an income of about $15,000 to $19,000. 

7. The tribunal considered the better view of the evidence is that Mr Gerard funds his personal expenses from his financial resources derived from his interest in the Company and his employment in the Company’s business and supplemented by his [Relative A’s] ongoing support until the business alone can sustain him.  On balance, the tribunal was satisfied that Mr Gerard has access to income and financial resources sufficient to fund the annualised expenses of $41,084 (being the sum of his personal expenses and the value attributed to the benefit of having access to a company motor vehicle).  Using the Australian Taxation Office Pay Calculator, the tribunal accepts that an ordinary salary and wages employee would have to earn approximately $49,800 per annum to fund this level of expenditure and the lifestyle so reflected. 

1. In summary, the tribunal finds that Mr Gerard’s financial resources allow him to meet expenditure and fund a lifestyle commensurate with an annual income of $49,800.

2. In his Statement of Financial Circumstances (SOFC), Mr Gerard reported that he owns a rental property ($300,000) subject to a mortgage ($250,000) and has bank accounts, household contents and [an older vehicle] with a total value of approximately $6,700.  The taxation records support that the rental property operates at a loss.  Aside from the income and resources discussed above, the tribunal did not consider that any of these items has a significant impact on Mr Gerard’s ability to contribute to the children’s support.  There was no further evidence that Mr Gerard has significant alternative sources of income or additional financial resources.  The tribunal considered that the financial evidence is entirely consistent with Mr Gerard’s evidence that he is building a business following his relocation from Sydney whilst endeavouring to hold onto the rental property which generates a loss.  Mr Gerard told the tribunal that he consolidated his debts and the [Bank 2] mortgage into one mortgage held by [Bank 1].  The pattern of expenditure does not support a finding that Mr Gerard has an affluent or extravagant lifestyle; it is clearly modest.

Ms Ms Wormald’s circumstances

1. Ms Wormald provided a SOFC, her 2017 notice of assessment and a Centrelink statement.  Ms Wormald describes herself as a stay at home mother.   The tribunal is satisfied that Ms Wormald is dependent on income support payments and her current income is less than the self-support amount in the administrative assessment of child support.

2. In her SOFC, Ms Wormald reported that she is renting. She also identified superannuation ($12,611), bank accounts ($500 approximately) and household contents ($2,000) with no liabilities.

3. On the available evidence, the tribunal finds that Ms Wormald’s circumstances are appropriately reflected in the administrative assessment of child support.  There was no evidence to suggest that she has other significant resources.  This was not disputed by Mr Gerard.

Summary and application of the law

1. Having considered the documentary and other evidence, the tribunal is of the view that as a result of the following:

   ·       Mr Gerard’s access to financial resources from the Company supplemented by funds from his [Relative A], which allow him to fund a lifestyle commensurate with an annual income of approximately $49,800; and

   ·       Mr Gerard’s 2015 taxable income of $23,858, which in the absence of a departure determination would have been used in the administrative assessment at the time of the RICA investigation, is only 48% of the annual value of his income and resources;

   there are special circumstances in this case that make the level of child support payable under the administrative assessment unjust and inequitable.  The tribunal considered that the availability of additional resources over and above the income reported in Mr Gerard’s income tax return is significant.  The tribunal calculated that under an assessment varying Mr Gerard’s adjusted taxable income to reflect the value of his additional income and resources, he would be required to pay an annual rate of child support of approximately $6,200 which is significantly more when compared with the administrative assessment of child support requiring him to pay the minimum annual rate.  As a result, the tribunal decided that the ground for departure in paragraph 98L(1)(a) does exist in this case in relation to Mr Gerard’s income, property and financial resources.

Issue 2 – Would it be just and equitable to make a particular departure 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 to make a particular departure determination.  In deciding whether it is just and equitable, the tribunal must have regard to the number of matters in subsections 117(4) to (9) of the Act.  In summary this requires consideration of the parents’ duty to support the children, the income, assets and financial resources of the children and of the parents, the children’s proper needs and self-support costs of either parent.  The tribunal is not limited to exploring these parameters and is required to consider the global circumstances.  In Gyselman’s case the court said:

   However, some of the matters listed in sub-section (4) may overlap with matters already considered under sub-section [117](2) and some of the paragraphs in sub-section (4) may be more significant in one case than they would be in another or of little relevance in a particular case.  It is an essential part of the s.117 exercise to carry out the obligation under sub-section (4).  However, that does not mean that it is necessary in each case to slavishly go through each of the paragraphs.  The extent to which it is necessary to do so will depend upon the facts and conduct of the individual case and the analysis already performed under sub-section (2).

2. The tribunal had regard to the evidence which was presented, including the evidence which has been discussed above under subsection 117(4) of the Act.  This evidence is further considered below. 

The duty to maintain the children

1. Ms Wormald and Mr Gerard each have a duty to maintain the children.  Further, the tribunal notes the statements contained in sections 3 and 4 of the Act to the following effect:

   ·       Parents of a child have a primary duty to maintain the child.  The duty has a priority over all commitments of the parent other than commitments necessary for self-support;

   ·       The level of financial support to be provided by parents to their children should be determined in accordance with the legislatively fixed standards;

   ·       The level of financial support is to be determined according to the capacity to provide financial support and noting that parents with a like capacity to provide financial support should provide like amounts.

Proper needs of the children and the income, earning capacity, property and financial resources of the children

1. Mr Gerard told the tribunal that the children have good health and no special needs.  There was no other evidence presented to the tribunal that the children have anything other than the usual expenses and needs of children of their respective ages; expenses which are dealt with in the administrative assessment and addressed in the cost of children tables. 

2. There was no evidence or suggestion that the children currently have significant independent income or resources.

Other party receiving money, goods, and property for the benefit of the children

1. Given the available evidence, the tribunal concludes that neither party received money, goods or property for the benefit of the children which impacts on their ability to support them.

Income, property and financial resources and earning capacity of each parent

1. Mr Gerard’s financial circumstances have been discussed above and further considered in this context.  Overall the tribunal finds that Mr Gerard has income and financial resources commensurate with a person on an annual gross income of $49,800. 

2. Mr Gerard reported that his health is good.  The tribunal accepts that Mr Gerard’s health does not impact on his ability to earn an income and he is engaged full-time in the management of the Company and its business.  Mr Gerard explained that he has recently been licensed as [an occupation 2] and hopes this will secure his future and allow him to attract more lucrative contracts.  The tribunal was satisfied that he has no additional earning capacity at this time.  In reaching its conclusions, the tribunal has taken into account that the source of funds to which Mr Gerard has access may vary depending on trading conditions experienced by the Company – some periods may be better than others.  There was no suggestion by Mr Gerard that his [Relative A] proposed funding his lifestyle beyond support in securing the business and funding a modest lifestyle. 

3. Ms Wormald’s financial circumstances have been further considered in this context and are as reflected in the administrative assessment of child support. 

The direct and indirect costs incurred by the carer entitled to child support in providing care for the child

1. The tribunal was satisfied that Ms Wormald is the parent entitled to child support from Mr Gerard for the care of the children.  Given the children’s ages, the tribunal was satisfied that Ms Wormald has forgone significant income or earning capacity in this regard. 

Necessary commitments to support themselves

1. The self-support amount used in the administrative assessment is approximately $23,600.  There was no evidence before the tribunal that either party currently has any extraordinary self-support commitments.

Legal duty to support another person

1. The tribunal must take into account the commitments that are necessary to support any other child or another person that the parent has a duty to maintain.  Such commitments shall not however take priority over the obligation to the child whose maintenance is under consideration.  Neither party reported any legal duty to support another person.  In the absence of any evidence to the contrary, the tribunal was satisfied that neither party has any outlays related to a legal duty to support another person which reduce their ability to support the children.

Hardship that would be caused to the parents and the child

1. If assessments were to be made in which Mr Gerard was assessed on an adjusted taxable income of $49,800 and Ms Wormald on her adjustable taxable income under the administrative assessment, the annual child support payable by Mr Gerard would be approximately $6,200 ($119 per week).

2. The tribunal considers that payment of child support at these levels will not cause Mr Gerard hardship.  He may have to minimise discretionary expenditure and the payment of direct expenses for the children and consider the ongoing need for two motor vehicles.  On the basis of the available evidence, the tribunal is satisfied that there is no evidence to suggest that there would be hardship caused on Ms Wormald or the children by any departure from the child support assessment.  The proposed change in the child support assessment will ensure that both Mr Gerard and Ms Wormald share in the costs of caring for the children at a level commensurate with their resources.

3. After consideration of all of the factors in subsection 117(4), the tribunal is satisfied that it is just and equitable to depart from the administrative assessment.  Having regard to all of the evidence, the tribunal considered that the decision under review should be set aside and a decision made that for the period 18 October 2016 to 31 October 2019, the adjusted taxable income of Mr Gerard is varied to $49,800.

4. Taking into account the totality of the evidence, the tribunal considers it appropriate to determine that the assessment period should extend from 18 October 2016 until 31 October 2019.  The start date coincides with the date set by the Department; it is the date on which Mr Gerard became aware of the RICA investigation and was on notice of a potential increase in child support payable to Ms Wormald.  Given there is some financial uncertainty surrounding Mr Gerard and his business interests, the tribunal considered that the end date does not overreach into the future but permits a sustained period of stability for both parents and the children as well as sufficient time for the Company to finalise 2018 and 2019 financial statements. 

5. In the event that either party’s circumstances change during the assessment period, they have the opportunity to lodge a further change of assessment application.  The tribunal considers these dates to be in the best interests of the children and the parents as they promote certainty and consistency for those concerned.   

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

1. The final step for the tribunal to undertake is to determine whether it is “otherwise proper” to make a particular departure determination.  Subsection 117(5) requires the tribunal to take into consideration whether the proposed departure is "proper" within the context of the public interest and welfare expenditure by the community (see Gyselman).  It is a prime objective of the child support legislation that parents should be obliged to support their own children to the extent of their real capacity, and that that obligation should not be unnecessarily abrogated to the public welfare system when the parents themselves have the capacity to maintain their children.    

2. Ms Wormald receives family assistance.  The proposed departure from the administrative assessment may decrease her entitlement to family assistance but will reflect the parties’ real capacities to support the child.  In this case the tribunal finds that the requirements under paragraph 117(5)(a) of the Act are met.  The tribunal concludes that it is otherwise proper to depart from the administrative assessment.

DECISION

The tribunal sets aside the decision under review and, in substitution, decides that for the period 18 October 2016 to 31 October 2019, the adjusted taxable income of Mr Gerard is varied to $49,800.