Gregson and Gregson (Child support)

[2018] AATA 1228

Gregson and Gregson (Child support) [2018] AATA 1228 (20 March 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2017/SC012656

APPLICANT:  Ms Gregson

OTHER PARTIES:  Child Support Registrar

Mr Gregson

TRIBUNAL:Member J Leonard

DECISION DATE:  20 March 2018

DECISION:

The decision under review is affirmed.

CATCHWORDS

Child support – Departure from assessment – Income and financial resources of parents – Costs associated with special needs of the child – Decision under review affirmed

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. Mr Gregson and Ms Gregson are the parents of [Child 1] (born 2003), [Child 2] (born 2004) and [Child 3] (born 2008). There has been a child support assessment in place for the children, made by the Department of Human Services – Child Support (the Department) since 2011. The assessment is currently based on Ms Gregson having a care percentage of 51% for the children and Mr Gregson having a care percentage of 49%.

2. For the period 4 April 2015 to 3 April 2017 Mr Gregson’s adjusted taxable income was varied to $80,000 by the Department as a result of an application for a departure from the administrative assessment made by Ms Gregson.

3. For the period 4 April 2017 to 30 November 2017 Ms Gregson was assessed to pay child support of $4,533 a year. That assessment was based on Ms Gregson’s 2015/16 adjusted taxable income of $54,645 and Mr Gregson’s 2015/16 adjusted taxable income of $23,941.

4. On 9 May 2017 Ms Gregson applied for a departure from the assessment on the grounds that Mr Gregson’s income, property and financial resources were not reflected in the assessment.

5. On 29 July 2017 a decision was made to depart from the child support assessment from 9 May 2017 by:

   ·     varying Mr Gregson’s adjusted taxable income to $100,000 until the assessment ends;

   ·     adjusting Mr Gregson’s adjusted taxable income each year according to Consumer Price Index; and

   ·     increasing the annual rate otherwise payable by $161 per month for the period 1 July 2017 to 31 December 2018.

6. Mr Gregson lodged an objection to that decision. His objection was partly allowed on 28 September 2017. An objections officer decided that for the period 15 May 2017 to 31 December 2018 Mr Gregson’s adjusted taxable income is varied to $75,000 and for the period 1 June 2017 to 31 May 2019 the annual rate of child support payable by Mr Gregson is increased by $1,450.

7. On 9 October 2017 Mr Gregson lodged an application for a review of the objection decision with the Tribunal. The Tribunal had access to the statement and documents provided by the Department (folios 1 to 364), documents provided by Ms Gregson numbered A1 to A25 and documents provided by Mr Gregson numbered B1 to B15.

8. The matter was heard on 20 March 2018. The Tribunal spoke to Ms Gregson and Mr Gregson by conference telephone.

CONSIDERATION

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

2. A liable parent or a carer may apply to the Child Support Registrar for a determination to depart from the child support assessment under Part 6A of the Assessment Act (section 98B). Section 98C provides that the Registrar may make a determination to depart from the formula assessment and establishes a three step process. The Registrar, and the Tribunal standing in place of the Registrar, must be satisfied:

   that one, or more than one, of the grounds for departure referred to in subsection 117(2) exists; 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 grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Assessment Act. 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 Assessment Act. That section permits a range of determinations, including varying the annual rate of child support payable or a parent’s adjusted taxable income.

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

1. Ms Gregson sought a departure from the administrative assessment on the ground that Mr Gregson’s actual income, property and financial resources were greater than reflected in the adjusted taxable income used for him in the child support assessment.

2. The grounds for departure are set out in subsection 117(2) of the Assessment Act. Subparagraph 117(2)(c)(ia) provides as grounds for departure:

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

3. The term “special circumstances” is not defined in the Assessment Act. In Gyselman vGyselman [1992] FLC 92-279 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.

Mr Gregson’s income, property and financial resources

1. Mr Gregson told the Tribunal that he owned a building business which he operated from 2005 until early 2017. He stated the business was not making money and he came to the conclusion that it needed to cease operating.

2. Profit and loss statements for the [Trust Fund 1] show a net profit of $35,351 in 2015, a net profit of $15,652 in 2016 and a net loss of $56,212 in 2017. Business activity statements support Mr Gregson’s oral evidence that total sales had significantly decreased in the 2016/17 financial year. He stated he receives no benefit from the [Trust Fund 1] and income from his salaried employment is used in part to pay creditors.

3. On 15 May 2017 Mr Gregson commenced full-time employment with [Employer 1] as a wage and salaried employee. Mr Gregson’s employer confirmed with the Department that Mr Gregson is employed on a full-time basis earning a salary of $75,000. He is provided with a company vehicle, a fuel card and a mobile telephone. Mr Gregson states that he works Monday to Friday for [Employer 1] and drives his private vehicle on weekends. He only uses the fuel card for work-related travel and does not use the mobile telephone for personal use.

4. Mr Gregson’s 2015/16 income tax return shows distributions from the trust of $16,794, wages of $7,146 and $40 interest resulting in total income of $23,980 for the 2016/17 financial year.

5. The Tribunal finds that Mr Gregson’s income of $75,000 from 15 May 2017 is far greater than indicated by his 2015/16 adjusted taxable income. He is employed full-time and so has no unused earning capacity. He has no property or financial resources that make the assessment unfair.

Does the existing assessment provide a result which is unjust and inequitable?

Ms Gregson’s income, property, financial resources and earning capacity

1. In order to determine whether Mr Gregson’s income and financial resources result in a child support assessment which is an unjust and inequitable determination of the financial support he should provide for the children, the Tribunal considered whether Ms Gregson’s adjusted taxable income are indicative of her income, property, financial resources and earning capacity.

2. Ms Gregson advised the Tribunal that she has been employed full-time for the past four weeks. Prior to this she was working 32 hours per week for the same employer. Any increase to Ms Gregson’s adjusted taxable income as a result of her increased hours of employment is not considerable and will be reflected in the administrative assessment once her 2017/18 income tax return is completed.

3. There is no evidence that Ms Gregson has any unused earning capacity or financial resources which makes the assessment of child support unjust or inequitable.

Are there special circumstances for which to depart from the assessment?

1. Taking into account the objects of the Assessment Act (section 4), including that children should share in the standard of living of both their parents, the Tribunal finds that the income and financial resources of Mr Gregson provide special circumstances for which to depart from the assessment. Mr Gregson would be the parent liable to pay child support if the assessment were based on his actual income rather than his adjusted taxable income. The Tribunal finds that the assessment is unfair to Ms Gregson and the children for that reason and that paragraph 117(2(c)(ia) of the Assessment Act is satisfied.

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

1. 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 Assessment Act.

2. Section 3 of the Assessment Act states that it is the duty of both parents to financially support their children. In accordance with the objects set out in section 4 of the Assessment Act the children should receive a proper amount of financial support from their parents in accordance with their capacity to contribute.

The children’s needs

1. Mr Gregson and Ms Gregson share equally in the costs of private school fees for [Child 1] and [Child 2]. [Child 3] attends the local primary school. Ms Gregson paid for book packs and school uniforms for the children in 2018 at a cost of over $600.

2. Ms Gregson stated she had an out of pocket expense of $647 when [Child 2] [suffered an injury] in November 2017. Mr Gregson stated he shares equally in the care of the children and that he met the cost of the book packs in 2017 and meets unexpected costs when the children are in his care.

3. [Child 1] and [Child 2] commenced orthodontic treatment in December 2016 and May 2017 respectively. After a health fund rebate, Ms Gregson’s out of pocket expenses for the orthodontic work totals $5,800 for both [Child 1] and [Child 2]. Since June 2017 Ms Gregson pays $400 every four weeks for treatment. Prior to [Child 2] commencing treatment the cost for [Child 1] was $200 per month. Ms Gregson will continue to pay $400 for a further six or seven months, after which time the treatment will be fully paid for.

4. Based on the available evidence the Tribunal is satisfied that the orthodontic work for [Child 1] and [Child 2] is desirable for the welfare of the children and the out of pocket expenses incurred by Ms Gregson are outside of the ordinary costs of a child that can be met from the administrative assessment.

5. In respect of the other costs Ms Gregson itemised, the Tribunal considers that Mr Gregson would meet other direct or indirect costs when the children are in his care and declined to change the assessment on this basis.

6. The Tribunal considers it is just and equitable for Ms Gregson and Mr Gregson to share the cost of the orthodontic treatment equally and proposes to increase Mr Gregson’s annual rate by $1,450 over a two year period.

The children’s income, property, financial resources and earning capacity

1. Ms Gregson advised [Child 1] does a bit of babysitting. There is no evidence that the children have any income, property or financial resources or any unused earning capacity which should affect the child support assessment.

The parents’ duty to support others

1. Ms Gregson does not have a duty to support any other person apart from [Child 1], [Child 2] and [Child 3].

2. Mr Gregson has four stepchildren and three children from his current marriage. The Tribunal is satisfied that Mr Gregson’s duty to support his three younger children is taken into account in the child support assessment for the [Child 1], [Child 2] and [Child 3]. Mr Gregson does not have a legal duty to support his four stepchildren. Mr Gregson’s wife receives an undisclosed amount of child support for her four eldest children.

The income, property, financial resources and earning capacity of Ms Gregson

1. Ms Gregson’s income, property, financial resources and earning capacity have been discussed above.

Ms Gregson’s necessary commitments

1. Ms Gregson lives with her partner. She did not provide details of his income but advised he is employed and earns more than she does. Ms Gregson stated she does not receive family tax benefit for the children as her combined adjusted taxable income is too high. Ms Gregson’s partner does not assist with her mortgage repayments of $281 per week but helps with the cost of food and pays the gas bill. Ms Gregson listed total weekly expenses for herself of $535 per week and weekly expenditure of $239 in respect of the children, including $100 per week for orthodontic costs.

The income, property, financial resources and earning capacity of Mr Gregson

1. Mr Gregson’s income, property, financial resources and earning capacity have been discussed above.

Mr Gregson’s necessary commitments

1. Mr Gregson lives with his wife and three younger children. On alternate weeks he has care of [Child 1], [Child 2] and [Child 3] and his wife has care of her four children from her previous relationship. 

2. Mr Gregson’s share of the mortgage on the property he jointly owns is $236 per week. His other significant expense is $228 per week for his lease vehicle which he entered into in 2014. The vehicle is now used for personal use. If he were to sell the vehicle he would have to pay the balance of the loan out and pay GST and he stated he cannot afford this.

3. The Tribunal is satisfied that Mr Gregson is able to meet the expenses he has for his three children and also to pay child support for [Child 1], [Child 2] and [Child 3].

Terms and period of departure

1. The Tribunal considers that it is just and equitable to depart from the child support assessment from 15 May 2017, the date that Mr Gregson commenced employment with [Employer 1]. The Tribunal proposes not to reduce Mr Gregson’s income of $75,000 as he receives some personal benefit from driving the vehicle supplied by his employer to and from work.

2. The Tribunal considers that it is likely that Mr Gregson’s adjusted taxable incomes for 2017/18 will properly reflect his income, financial resources and earning capacity and so the Tribunal proposes to vary his adjusted taxable income to $75,000 to 31 December 2018 to allow time for Mr Gregson to lodge his 2017/18 income tax return.

3. The Tribunal also proposes to increase the annual rate of child support payable by Mr Gregson by $1,450 per annum for two years representing 50% of the out of pocket orthodontic costs for [Child 1] and [Child 2]. The Tribunal notes Mr Gregson has been paying child support in accordance with the decision of the objections officer and is not in arrears. To shorten the period of departure in respect of the orthodontic costs until the end of 2018 as Ms Gregson proposed would result in a higher annual rate of child support. The Tribunal considers it is just and equitable to spread this expense over a two year period and so proposes to extend the period of departure for two years from 1 June 2017 to 31 May 2019.

Hardship

1. The child support payable on the basis of the decision proposed (about $46 a week) should assist Ms Gregson to meet the children’s proper needs. In view of the findings about his income and financial resources the Tribunal considers that the proposed decision will not result in hardship to Mr Gregson or to his children. 

Issue three – Is it otherwise proper to depart from the administrative assessment?

1. 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 Assessment Act requires the Tribunal to take into consideration the following matters:

   (a)the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and

   (b)    the effect that the making of the order would have on:

   (i)any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or

   (ii)the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.

2. The child support law recognises that each parent has a primary duty to maintain their children. Ms Gregson stated she does not receive family tax benefit for the children and so the decision will have no effect on any income support payments. The Tribunal is satisfied that it is otherwise proper to depart from the administrative assessment in this matter.

DECISION

The decision under review is affirmed.