Goeser and Fluitt (Child support)

Goeser and Fluitt (Child support) [2020] AATA 1392 (6 April 2020)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2019/SC016199
APPLICANT:  Mr Goeser
OTHER PARTIES:  Child Support Registrar
Ms Fluitt

TRIBUNAL:Member H Schuster
DECISION DATE: 6 April 2020
DECISION:

The Tribunal sets aside the decision under review and, substitutes a decision to depart from the child support assessment by:

· Increasing the annual rate of child support payable by Mr Goeser by $2,871 from 1 December 2018 to 30 November 2019, and
· Increasing the annual rate of child support payable by Mr Goeser by $1,601.50 from 1 December 2019 to 30 November 2020.

CATCHWORDS

CHILD SUPPORT – departure determination – special needs of child – orthodontic treatment – effect of previous departure determinations – 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

This review is about Ms Fluitt’s application for a change from the administrative assessment of child support made on 23 October 2018.
Mr Goeser and Ms Fluitt are the parents of [Child 1] (born [in] 2000), [Child 2] (born [in] 2002) and [Child 3] (born [in] 2005). There has been a child support assessment made by the Department of Human Services – Child Support (the department) in place since 27 June 2006.
There have been a number of previous decisions made by the department, or on review by the AAT, to depart from the formula assessment for child support.
Relevant to this case, in December 2016 Member Cuthbert of the Administrative Appeals Tribunal (the Tribunal) determined that Mr Goeser’s child support payable in 2017 was to be increased by $2,375, being half of the estimated orthodontic treatment required by [Child 2].
In October 2018 the child support assessment was based on a decision made in September 2018 by Member Kennedy of the Tribunal to depart from the administrative assessment to set Mr Goeser’s adjusted taxable income (ATI) at $132,120 for the period from 1 January 2018 to 31 December 2020. Member Kennedy’s decision was in relation to an application for departure from the assessment made by Ms Fluitt in November 2017.
On 23 October 2018 Ms Fluitt made a new application for a departure from the assessment on the basis that the cost of caring for the children was significantly affected by the cost of orthodontic treatment for [Child 3] and [Child 2] of $9,220.
Mr Goeser was advised of the new departure application on 23 November 2018 but did not provide a response. On 17 January 2019 the Child Support Registrar made a decision to accept Ms Fluitt’s application for departure from the assessment and determined that, Mr Goeser’s child support liability was to be increased by half of the claimed costs, $4,610 over two years from 1 December 2018. The increase was set at $2,871 per annum being applied from 1 December 2018 to 30 November 2019 and the remaining $1,829 was to be paid from 1 December 2019 to 30 November 2020.
Mr Goeser objected to the decision on 8 February 2019. While he objected to the amount of orthodontic fees claimed, a substantial part of his objection was essentially a request to overturn the departure decision regarding his income made in September 2018 by the Tribunal. He also questioned whether Ms Fluitt’s income was properly taken into account.
On 20 March 2019 the objection officer affirmed the decision made on 17 January 2019 and disallowed Mr Goeser’s objection.
Mr Goeser applied to the Tribunal for review of the objection decision.
The Tribunal had as evidence before it the following documents:
·      Bundle of documents provided by the Department, Folios 1-559
·      Documents provided by Mr Goeser, Folios A1-A118
·      Documents provided by Ms Fluitt, Folios B1-B40
In order to deal with Mr Goeser’s submissions, the Tribunal also had regard to the documents considered by Member Kennedy in matter 2018/SC013745.
Mr Goeser and Ms Fluitt gave oral evidence and made submissions to the Tribunal at hearings on 24 October 2019 and 12 December 2019.

CONSIDERATION

Legislative framework and issues for Tribunal to determine

The statutory provisions relevant to this review are set out in the Child Support (Assessment) Act 1989 (the Act).
Part 5 of the Act sets out the statutory formula under which child support assessments are generally made. The formula takes into account the number and age of children, the percentage of care in relation to each child and the adjusted taxable income of each party. It allocates the costs of supporting the children between the parents according to their care percentages and incomes.
Under Part 6A of the Act a parent can apply to the Child Support Registrar for a determination to depart from the administrative assessment in the special circumstances of a case. Section 98 of the Act requires the Registrar to employ a three-step process before making a determination that departs from the formula. The Registrar, and the Tribunal which stands in the shoes of the original decision maker, must be satisfied:
·      that one, or more than one, of the grounds for departure referred to in subsection 117(2) of the Act exists; and
·      that it would be just and equitable as regards the child, the liable parent, and the carer entitled to child support to depart from the assessment; and
·      that it would be otherwise proper to make a particular determination.
The grounds for departure from the administrative assessment are set out in subsection 117(2) of the Act. Each of the grounds, which for administrative purposes are referred to as reasons, require that special circumstances be established. The term ‘special circumstances’ is not defined in the Act. In Gyselman and Gyselman [1991] FamCA 93 the Full Court of the 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.
If 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 in section 98S of the Act. That section permits a range of determinations, including varying the annual rate of child support payable or setting a parent’s adjusted taxable income.
To deal with Mr Goeser’s application the Tribunal must stand in the shoes of the original decision maker and must decide whether it is satisfied of the three relevant matters set out above. If so, the Tribunal must determine what change (if any) it should make to the assessment.
Effect of prior determinations for departure from administrative assessment
A determination to depart from the assessment was made in September 2018 by Member Kennedy, shortly before Ms Fluitt made a new departure application. Pursuant to section 98J of the Act, the Registrar may refuse to make a determination on a new application for departure from the administrative assessment if, upon consideration of the original application and the subsequent application, it is apparent that no new matters are submitted in support of the claim.
In this case, Ms Fluitt’s new application was made in relation to a matter she had raised to the Tribunal in September 2018 but which the Tribunal declined to deal with due to a lack of evidence. The departure application made by Ms Fluitt in October 2018 provided the required information that allowed the decision maker to quantify the additional expenses for the children. The Tribunal is satisfied that there is no reason to refuse to consider the new circumstances.
Mr Goeser in his application to the AAT was insistent that the Tribunal review the decision made by Member Kennedy in September 2018 which set his adjusted taxable income at $132,120 to the end of 2020. The Tribunal noted that it did not have jurisdiction to review a decision made by another member of the Tribunal and therefore does not propose to review the decision of Member Kennedy.
The Tribunal explained to Mr Goeser that if he wished to have his income and financial resources considered, on the basis that there had been a change of circumstances or that there was further evidence that would allow the Tribunal to determine his income, property and financial resources more accurately, it would require full disclosure of his income, property and financial resources. This was particularly so because in 2018 Mr Goeser had not provide full disclosure of his financial position and had not been able to participate in the hearing before Member Kennedy to answer relevant questions.
Mr Goeser is not employed and his means of support consists of income he derives from private companies of which he is the sole shareholder and director: [Business 1], [Business 2], [Business 3] and [Business 4], as well as rental income from his home from time to time.
As is acknowledged in many decisions of the Tribunal and the Family and Federal Circuit Courts regarding departures from assessment, the taxable income of a person who is self-employed and operates through more complex business structures, or has significant assets, may not accurately reflect their capacity to support themselves or any children. In the Family Court case of Carey and Carey [1994] FamCA 74 the court noted:
The legislation however realises that, whilst the simplest method of calculating child support is to use existing taxation records, the use of taxable income as the sole basis for child support could lead to some inequities and injustices. For a start, the financial position of many members of the community is not accurately reflected in their taxable income; either they manage to evade or avoid their taxation liabilities or they can so structure their affairs so that they are capital rich and income poor.
In the matter before Member Kennedy in September 2018 the Tribunal had to make inferences from partial documentation provided by Mr Goeser, which included income tax returns (obtained from the ATO by the Registrar) for [Business 1], [Business 2] and [Business 3], and bank statements for some but not all of Mr Goeser’s bank accounts, for part but not all of 2017.
Mr Goeser provided spreadsheets which appear to be extracts from bank accounts or credit card statements (Folios A20-A74). Without the bank statements, however, those spreadsheets could not be interpreted by the Tribunal.
On 28 October 2019, after further clarifying Mr Goeser’s position in relation to each of the companies he controls, the Tribunal made a direction requiring Mr Goeser to provide 2017/18 and 2018/19 profit and loss statements and balance sheets for [Business 1], [Business 2], [Business 3] and [Business 4]. He was also asked to provide all bank and credit card statements for the 2017/18 financial year.
Mr Goeser provided financial statements for the 2018/19 financial year for [Business 1], [Business 4], [Business 2] and [Business 3] but no bank statements. At the hearing he advised that he would not be “divulging any more proprietary information” as he was of the view Ms Fluitt should have been required to provide, but had not provided the same information.
The Tribunal finds that Mr Goeser did not comply with the directions or his duty to be full and frank in disclosing his financial circumstances. To the extent that he did provide information or answer questions, any limited conclusions the Tribunal could draw about his financial circumstances they are set out below.

Issue 1 – Is there a reason or ground to depart from the administrative assessment?

Before the Tribunal can make only make a decision to depart from the child support assessment if one of the reasons set out in the legislation is found to exist. There must be special circumstances in the case. However, the Act does not define that term. In Gyselman v Gyselman [1992] FLC 92-279 the Full Family Court said that, for there to be special circumstances, the facts of the case must establish something that is out of the ordinary.
Special needs of the children
Section 117(2)(b)(ia) of the Act states that a ground for departure exists where, in the special circumstances of the case, the cost of maintaining a child are significantly affected because of the special needs of the child.
In November 2016 the Tribunal made a determination to depart from the child support assessment by on the basis of increasing Mr Goeser’s liability by $2,375 for the 2017 calendar year, being half of the estimated orthodontic costs for [Child 2].
Ms Fluitt has asked for a further departure on the basis that the actual costs for [Child 2’s] dental treatment was not $4,750 as first estimated but rather $6,835. Furthermore, [Child 3] would also be starting orthodontic treatment estimated to cost $7,135. At the hearing Ms Fluitt gave evidence that the cost for [Child 3] had reduced to $6,860 as he had opted for slightly cheaper braces. Thus, the total cost for orthodontic treatment was $13,695, and the additional costs are $8,945.
Ms Fluitt has asked that the assessment be varied to increase Mr Goeser’s liability by half of the additional orthodontic treatment cost for the children.
Mr Goeser agreed that the dental treatment costs were to be borne by both parents, but was of the view that his share of the costs should be met by his existing support. He alleged that Ms Fluitt may have received a partial refund of the initial orthodontic bills paid after [Child 2] had to change service providers in 2018. He disputed that a further fee of $1,500 charged by the second orthodontist was not reasonable and also alleged that Ms Fluitt had failed to deduct any refund she received from her health insurance. He also argued that it should be taken into account that he was not able to claim for the dental costs from his health insurance and thus he should not be required to pay the higher fees.
Ms Fluitt stated she entered into a contract with an orthodontist ([Orthodontist 1]) for [Child 2’s] braces in 2017. The initial estimated costs were low compared to other orthodontists because she received a discount on the basis of her older daughter having been treated by the same orthodontist. [Child 2’s] braces were fitted in early 2017 and by May 2017 Ms Fluitt had paid $5,335 in fees. By the time [Child 2’s] braces had to be removed the original orthodontist had passed away and when she contacted the practice she was told the work would have to be finished by another provider. She was given a list of three orthodontists in the area and obtained an estimate from [another named Orthodontist] who quoted her $1,500 to complete the work. She was not happy about the additional costs but was told that it was the market rate in the area. She said she asked about a refund from [Orthodontist 1] but was not successful.
The Tribunal is satisfied, on the basis of invoices and Ms Fluitt’s statements that the additional costs in relation to [Child 2’s] dental treatment were unavoidable in the circumstances and thus reasonably incurred.
Ms Fluitt stated that although she had maintained private health insurance with [a named provider] in the past, the coverage did not extend to orthodontic treatment. She provided printouts of her claim history with [that provider] from 2017 to 2019 which confirmed that she had not made any claims for orthodontic treatment for [Child 2] or [Child 3].
Mr Goeser said the Tribunal should take into account that he had been prevented from being able to claim a refund from his health insurance. He gave evidence that his health insurance included coverage for up to $1,500 per child for orthodontic treatment. Mr Goeser was critical of Ms Fluitt entering into the contract with the orthodontists without including him, and he could not claim the cost of treatment on his insurance. Mr Goeser did not provide evidence that showed he had made reasonable request of Ms Fluitt to be included in any contractual arrangements regarding the children’s orthodontic treatment.
Ms Fluitt agreed that she had decided not to enter into a joint arrangement with Mr Goeser, as she found it difficult to communicate with him or to reach agreement. She was concerned that there would be issues about making timely decisions or payment of bills. She also noted that the orthodontist at [Orthodontist 1] had refused to have any dealings with Mr Goeser. The Tribunal finds there was nothing unreasonable about how Ms Fluitt arranged for her children’s dental treatment in the circumstances and is satisfied that the contribution by Mr Goeser should reflect half of the actual costs incurred by her.
The Tribunal is satisfied that the orthodontic treatment undertaken by [Child 2] and [Child 3] was reasonably necessary. Additional costs of $8,945 incurred by Ms Fluitt are about 25% of the total costs of the children allowed for in the child support. The Tribunal finds that the high cost of orthodontic treatment is a special circumstance which substantially affected the costs of the maintaining and that, thus, a reason exists to depart from the assessment.
Mr Goeser’s income, property and financial resources
Ms Fluitt did not ask the Tribunal to vary the current child support assessment with respect to Mr Goeser’s income, which was set by the Tribunal at $132,120 until 31 December 2020.
Mr Goeser’s submissions made in March 2019 concentrated to a large extent on criticising the departure decision made by Member Kennedy in September 2018 and amounted to a request to essentially review or revisit that decision. As noted above, Member Kennedy’s ability to assess Mr Goeser’s financial position was hampered by the fact that only limited income information was provided and the Child Support Registrar or this Tribunal have no power to further review a decision made by the Tribunal.
It is of course necessary for this Tribunal to form its own views about Mr Goeser’s income and resources in considering any new departure application, even where the original application does not ask the Registrar to re-open any existing determinations about a person’s income. However, as explained to Mr Goeser, the Tribunal would not be able to embark on a review of an earlier Tribunal decision, and would be reluctant to make any new determination that had the effect of setting aside an earlier Tribunal decision, if there was persuasive evidence of a substantial change or circumstances or significant new factual information that suggested that the current assessment was no longer appropriate.
As noted above, the Tribunal gave Mr Goeser every opportunity to understand the Tribunal’s limited jurisdiction and encouraged him to provide full and frank evidence about his circumstances to enable the Tribunal to properly examine his assertions. Mr Goeser was vehement in his objection to the Tribunal seeking more detailed information from him and the Tribunal was left to interpret the limited documentary evidence provided by Mr Goeser without his assistance.
Mr Goeser’s assessed taxable income for 2017/18 was $51,618. In his Statement of Financial Circumstances (SOFC) he declared his average weekly income to be $1,500, or around $78,000 per annum. This was comprised of salary of $600 per week and income from investments of $900 per week. He estimated his expenses as $1,200 per week.
There is some discrepancy between the manner in which Mr Goeser declared his income on his SOFC and the financial statements provided: on his SOFC he declared that he was receiving income from [Business 1] but neither [Business 1] nor any other of the companies’ profit and loss statements for 2018/19 show any wage or salary expenses. Mr Goeser denied receiving director’s fees. The Tribunal formed the impression that Mr Goeser operates each company on a cash basis, with intermingling of personal and business expenses in the bank and credit card accounts used by him. There is nothing unusual about such a practice, but this leads to a situation where examination of bank accounts may be necessary to properly establish to what extent business income forms a financial resource of the owner of the companies.

Mr Goeser initially provided to the Tribunal a summary of his income on a document headed “[Mr Goeser] & Companies UNRELATED income”. He said it included income received from outside sources only, and did not include inter-entity transfers of assets or income. The total gross income according to that statement was $179,543. Against this Mr Goeser listed expenses for each entity but also added as ‘expenses’ tax payments of $31,808, as well as child support payments of $24,453, which would not normally be considered deductions from a person’s gross income to arrive at taxable income. The Tribunal notes that the statement may be an attempt to represent the overall cash flow between Mr Goeser and his associated companies but was of itself not helpful in determining to what extent Mr Goeser’s personal expenses were met by the businesses.
Furthermore, the Tribunal found a number of discrepancies between the income amounts listed for each entity at A99, and the gross income listed on the financial statements later supplied by Mr Goeser before the final hearing. For example, at Folio A99 the income of [Business 2] is stated to be $7,106, while the profit and loss statement for the same period at Folio A113 lists income as $44,682 for the 2019 tax year. Ultimately, the Tribunal determined that the summary at A99 was not helpful and asked for financial statements for each company.
Mr Goeser told the Tribunal that he was not employed but that income is generated from a rental property owned by [Business 2] and shares owned by his companies which he claimed were burdened by margin loans. As Mr Goeser declined to provide the bank statements sought by the Tribunal, the financial statements were of limited utility in determining his income, property and financial resources.
[Business 1]
Mr Goeser explained that [Business 1] was a company used for a [specified] project undertaken in [another country]. The [project] has been completed and [Business 1] owns the distribution rights. At the hearing Mr Goeser claimed [Business 1] was not trading as he had not found a distributor for [the product].
The Tribunal had regard to [Business 1’s] 2017 financial statements (provided for the last AAT proceeding) and compared them to the 2019 financial statements: they show that [Business 1’s] assets had declined but so had its liabilities. As at June 2019 the company had cash and investments of about $84,000 which were offset by liabilities of $111,598, primarily an unsecured loan of $94,195. Mr Goeser declined to give evidence about the nature or terms of the loan, declaring that information to be ‘proprietary information’. Mr Goeser explained that [Business 1] had shares, listed on the ASX, financed through a margin loan. He said in the past year there had been several margin calls which caused him to sell shares at a loss, he did not, however, provide any evidence of the shareholdings or margin loan statements.
At the first hearing Mr Goeser stated that [Business 1] had income of $19,799 in the 2019 financial years but its expenses were about $40,000 which included his wages. However, the 2019 profit and loss statement of [Business 1] shows the company derived income, primarily from dividends, of $17,179. This income was offset by expenses of $44,575. The principal expense was a capital loss of $42,946. Significantly, no wage expense was included, which is inconsistent with Mr Goeser’s initial evidence that he drew a wage from [Business 1]. The Tribunal assumes the capital loss amount was the difference between the purchase and sale price of shares sold in the year. It is an expense for tax purposes but in fact represents a reduction in the value of assets rather than an outflow of cash in the particular year. As Mr Goeser did not wish to answer questions, the Tribunal was unable to make any further determinations about to what extent [Business 1] contributed to Mr Goeser’s financial resources.
[Business 2]
[Business 2] is the legal owner of an investment property at [a location] purchased in 2017 for $704,000 which appears to have generated gross rental income of $38,306 in 2018/19. In addition the company held shares of $531,350 (cost price). There is a mortgage of around $437,000 on the property and Mr Goeser stated that the shares held by [Business 2] were secured by a margin loan. Mr Goeser did not provide details of the margin loan. The balance sheet of the company shows other loans of $501,203. Overall the company made a loss of $9,041.
The company’s 2018/19 gross income from rent and dividends was $46,619.95 and it had expenses of $55,661.80 resulting in a net loss of $9,041. The biggest expenses were interest charges of $20,259 for repairs and replacements of $9,022. Mr Goeser in his evidence made reference to repairs that had to be undertaken to the rental unit. Ultimately, while Mr Goeser gave some evidence about questions asked of him, he declined to answer questions about the 2019 financial statements. The Tribunal is unable to conclude to what extent, if any, [Business 2] is an ongoing source of financial support to Mr Goeser.
[Business 4]
[Business 4’s] 2018/19 financial statements show it has net assets of $246,306, principally constituted by a loan of $294,899 made to [Business 3], offset by an unsecured loan of $51,739. Mr Goeser stated that [Business 4] was not engaged in any ongoing business activity. The company had held money in a bank account which was transferred as a loan to [Business 3] to cover margin calls. The company’s income was principally constituted of interest paid by [Business 3] of $6,800. It incurred expenses, principally storage fees of $5,200, though the Tribunal was unable to determine how these, and other expenses, such as telephone and internet, related to the activities of the company. The company made a small loss of $926 in 2018/19. No wages or salaries were paid by the company.
[Business 3]
Mr Goeser explained that [Business 3] was engaged in share trading. As at 30 June 2019 the company had $10,047 in bank deposits and shares valued at their cost price of $2,264,657. The company incurred income of $108,506 from dividends in 2018/19 and incurred expenses of $63,823. Expenses claimed included rental expenses of $26,000.
Mr Goeser was resistant to being asked detailed questions about the business operations. From the statements made by Mr Goeser at the hearing, it appears that [Business 3’s] rent expenses may be in relation to renting Mr Goeser’s home, which he fully owns. If so, this would represent a financial resource of Mr Goeser.
Taking the financial statements as a whole, the Tribunal found that the gross income from dividends, interest and rent across the four entities was $176,887 (which includes interest paid by [Business 3] to [Business 4]). The total net income of the four entities combined was $7,320. While the expenses claimed by each entity, by and large, appeared reasonably consistent by the limited evidence Mr Goeser was prepared to give, the Tribunal had questions about some of the expenses, including the rent paid by [Business 3], the determination of capital losses and whether storage fees, and some other minor expenses, were pure business deductions or whether they formed an indirect financial benefit to Mr Goeser. Ultimately, the Tribunal found that none of the profit and loss statements show a wage or salary being paid to Mr Goeser. He denied he received any director’s fees.
Mr Goeser acknowledged having personally derived rental income while he rented out his home (which is unencumbered) during his overseas travels. He stated that he returned to Australia in about September 2018 and had only undertaken shorter trips since then, remained living in his home and had no intention to depart from Australia for any extended period. Mr Goeser suggested in his evidence that [Business 3] was paying rent to him.
Mr Goeser was strongly of the view that setting his income at $132,1 20 was excessive and exaggerated his capacity to pay child support. At most, Mr Goeser suggested, his income should be set at a level below $90,000.
The Tribunal asked Mr Goeser about a [Bank] loan application he completed in February 2018 (Folio 506-517) in which he declared receipt of a salary of $50,000, income from his companies of $157,000 per year as well as projected rental income of up to $5,000. In total, he declared his net monthly income to be $22,000. Mr Goeser claimed the information was provided on the suggestion of a mortgage broker in order to secure a loan. Mr Goeser strongly objected to any suggestion that having admitted to giving false information on loan documents should raise concerns about his truthfulness in current proceedings.
Ultimately, while it is likely that Mr Goeser’s income, property and financial resources have undergone changes since the September 2018 determination however, the limited information provided by Mr Goeser allowed no proper assessment of his income, property and financial resources. Mr Goeser’s vehement objections to being asked detailed questions about his finances further prevented the Tribunal from reaching a conclusion about whether the changes have led to a significant reduction of Mr Goeser’s capacity to pay child support.
The Tribunal was not satisfied that there was a reason to depart from the income assessment currently in place without full and frank disclosure of Mr Goeser’s financial circumstances.
Insofar as Mr Goeser may wish the Child Support Registrar to consider his financial position, it is open to him to make his own application for a departure from the assessment based on his current circumstances. If so, the Tribunal finds it would be prudent if he were to provide full disclosure to the Registrar.

Issue 2 – Would a departure from the administrative assessment be just and equitable?

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 depart from the assessment having regard to the matters set out in subsection 117(4) of the Act which include, consideration of the following matters:
(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.
Primary duty to support the children
Section 3 of the Act provides that parents have a primary duty to support their children. That duty has priority over all other commitments except those the parent must meet to support himself or herself or another person they have a duty to support.
The children’s needs
As discussed above, the Tribunal is satisfied that [Child 2] and [Child 3] both required orthodontic treatment which increased Ms Fluitt’s costs of their care by $8,945. As this represents the actual out of pocket costs for Ms Fluitt, the Tribunal finds it just and equitable for the costs to be shared, with each party paying $4,472.50 each. The Tribunal acknowledges that if Mr Goeser were to make a claim in relation to his children’s health care costs it would have reduced the overall out of pocket costs. However, if so, half of the insurance benefits would have to be passed onto Ms Fluitt, who pays the bills. The Tribunal finds it just and equitable that the actual costs arising from the orthodontic treatment be shared equally between the parents.
The children’s income, property, financial resources and earning capacity
There is no evidence that either [Child 2] or [Child 3] have sufficient income, property or financial resources that would allow them to meet some of their costs of living.
Ms Fluitt’s income, property and financial resources and necessary commitments
Ms Fluitt’s ATI for 2918/19 was $48,975. This was comprised of employment income as well as rental income from a granny flat.
Ms Fluitt has been a permanent part-time employee with the same employer over the past three years, though she has somewhat increased her hours. She also has some casual income from working at [an agency] on an ad-hoc basis. The Tribunal is satisfied that as a mere employee, her income from employment is properly reflected by her taxable income. There is no evidence that Ms Fluitt has a greater earning capacity that must be taken into account in the assessment.
Ms Fluitt also derived rental income in past financial years from renting out a granny flat which is part of her home. Ms Fluitt and her husband are joint owners of the property. The property is subject to a mortgage of about $560,000.
In the 2017/18 financial year her share of rental income was $14,001 with expenses of $14,301. She explained that the tax returns were completed by a tax agent who also advised them of the proportion of overhead expenses such as utilities and mortgage interest that were deductible. The Tribunal accepts that the 2017/18 tax return shows a net rental properly loss which is added back to Ms Fluitt’s taxable income in determining her ATI.
Ms Fluitt stated that the granny flat was not let out continuously as it was also used by family members. The [rentals] commenced in about 2016 but have since ceased. Ms Fluitt stated that her stepchildren have come to live with them and they are now accommodating Ms Fluitt’s four children and two stepchildren. As the older children live in the granny flat full time, the rental income has ceased.
The Tribunal notes that Mr Goeser’s allegations about Ms Fluitt’s rental income were considered by the Tribunal in 2018.
The Tribunal is reasonably satisfied that Ms Fluitt’s rental income from the granny flat in 2018 was properly reflected in her tax return.
More significantly, the Tribunal is satisfied that no rental income is presently derived from the granny flat and thus finds that it does not pose an ongoing source of financial support to Ms Fluitt.
Mr Goeser alleged Ms Fluitt’s standard of living was not properly reflected by her tax return, and pointed to holidays, the purchase of a caravan and home renovations of being indicators of greater resources.
Ms Fluitt noted that caravan was purchased for $16,000 by her husband, who drew down on their mortgage. She noted that holidays spent with the children were as cheap as they could make them, consisting of caravan holidays or visiting relatives in other states.’ The renovations were undertaken by her husband to create two extra bedrooms by dividing their lounge room. The cost of items like the caravan or home improvements are met out of her and her husband’s income and drawings on the mortgage, when required.
The Tribunal finds that Ms Fluitt’s income, property and resources are properly reflected by her ATI. There is no evidence that she is unable to meet her necessary commitments.
Mr Goeser’s income, property and financial resources and necessary commitments
As noted above, Mr Goeser’s income for the purpose of the child support assessment is based on the Tribunal’s decision made in September 2018, after examination of his financial documents.
Given Mr Goeser’s refusal to allow a comprehensive reassessment of his current financial position, particularly the value of shares and some of the claimed expenses, the Tribunal has found no reason to overturn the determination currently in force to set Mr Goeser’s income at $132,120 to the end of 2020.
Mr Goeser has no care of [Child 2] and has 45% care of [Child 3].
Mr Goeser stated that in the recent past he had had significant capital losses due to investment of shares through margin loans. Notwithstanding this, Mr Goeser continues to manage, either directly or through companies he controls, a significant share portfolio and owns a fully-owned home as well as an investment property. His Statement of Financial Circumstances indicates that he is able to meet his necessary commitments and has the means to meet his child support obligation.
The parents’ duty to support others
Ms Fluitt has the duty to support a five year old resident child who is not a child of this assessment. Her duty to support her youngest child is taken into account in the child support assessment by way of a dependent child amount. Ms Fluitt’s household now also includes two step children, though she did not claim her ability to support her other children was affected by any duty to care for other dependents.
Mr Goeser stated that he also has the duty to support another child, [Child 4], who is 5 years old. The child does not live with Mr Goeser on a permanent basis, though Mr Goeser stated that he had ‘at least’ as much care of this dependent child as he had of [Child 3] of whom he has 45% care. There is no child support assessment in place for [Child 4].
Mr Goeser stated that he had asked the Child Support Registrar to recognise his duty to support [Child 4]. Mr Goeser stated that there was no arrangement for child support in place for [Child 4] but said he had care of [Child 4] of about 50% of the period.
The Tribunal noted at the hearing that to have a child recognised as a relevant dependent an application must be made to the Child Support Registrar to change the particulars of the register. Mr Goeser said he had repeatedly asked the Child Support Registrar to register [Child 4] as a dependent child. The Tribunal noted that [Child 4] was registered as a dependent child in relation to Mr Goeser but is currently assessed as having 0% care. A parent must have at least shared care of a child before it can be recognised as a dependant.
The Tribunal notes that Mr Goeser made some representations to the Child Support Registrar about [Child 4’s] care in a lengthy submission sent on 5 March 2019 (Folio 208). There is no record of the Child Support Registrar having dealt with this submission as notification that Mr Goeser wanted the Child Support Registrar to consider [Child 4] his dependent child: no evidence was sought about care for [Child 4] and no determination appears to have been made about [Child 4’s] care at that time. The Tribunal asked Mr Goeser to provide evidence of his level of care, such as court orders, any written agreement or other evidence regarding the care. He said that there were no formal parenting orders in place with respect to [Child 4] as negotiations were ongoing. He provided no corroborating evidence. The Tribunal finds it inappropriate to make a determination about Mr Goeser’s duty to support [Child 4] without some confirmation of the level of care he provides. This is a matter which Mr Goeser may wish to pursue with the Child Support Registrar directly as it requires a separate determination.
Terms and period of departure
Mr Goeser sought a departure from the assessment for a period in relation to his or Ms Fluitt’s income for child support periods which are already subject to departure decisions. For reasons set out above, the Tribunal does not propose to alter the current assessment with respect to Ms Fluitt’s and Mr Goeser’s income levels which were set until the end of 2020 by the Tribunal decision in September 2018.

Ms Fluitt asked for a departure from the assessment only in relation to the additional orthodontic costs of $8,945.
The Tribunal finds it just and equitable to depart from the assessment by increasing the annual rate of child support payable by Mr Goeser by $4,472.50 being half those costs.
The effect of the original decision made in January 2019 was to increase Mr Goeser’s liability such that his share of the orthodontic fees would be paid over two years commencing on 1 December 2018 to 30 November 2020. The Tribunal proposed to adopt the same period and finds that:
· For the period from 1 December 2018 to 30 November 2019 Mr Goeser’s liability for child support is to be increased by $2,871
· For the period 1 December 2019 to 30 November 2020 the liability be increased by the remaining amount, $1,601.50.
Compared to the decision under review, the Tribunal’s decision will result in no change to the assessment for the first year and will slightly reduce Mr Goeser’s liability for the period from 1 December 2019 to 30 November 2020.
Issue 3 – Is it otherwise proper to depart from the administrative assessment?
The final step for the Tribunal to undertake is to determine whether it is “otherwise proper” to depart from the administrative assessment. Subsection 117(5) of the Act requires the Tribunal to take into consideration the nature of the duty of a parent to maintain a child and the effect that the making of the order would have on the receipt of any Government benefits of either parents or children.
The Tribunal finds that as neither Mr Goeser nor Ms Fluitt were in receipt of government benefits, the decision will not affect the community. The Tribunal finds that it is otherwise proper to depart from the administrative assessment.

DECISION

The Tribunal sets aside the decision under review and, substitutes a decision to depart from the child support assessment by:

· Increasing the annual rate of child support payable by Mr Goeser by $2,871 from 1 December 2018 to 30 November 2019, and
· Increasing the annual rate of child support payable by Mr Goeser by $1,601.50 from 1 December 2019 to 30 November 2020.

[2020] AATA 1392

6 April 2020

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Remedies

Judicial Review

Jurisdiction

Statutory Construction