Gundy and Zachry (Child support)

[2023] AATA 4291

Gundy and Zachry (Child support) [2023] AATA 4291 (24 October 2023)

DIVISION:                   Social Services & Child Support Division

REVIEW NUMBER:             2023/BC026360

APPLICANT:  Ms Gundy

OTHER PARTIES:     Child Support Registrar

Mr Zachry

TRIBUNAL:           Deputy President K Synon

DECISION DATE:          24 October 2023

DIRECTION TO ALTER DECISION:

Pursuant to section 43AA of the Administrative Appeals Tribunal Act 1975, the Tribunal directs the Registrar to alter the text of the decision of the Tribunal as follows:

1. The decision statement of the Tribunal is altered by deleting the date “31 October 2023” and substituting the date “31 October 2024” so that the decision now is:

The Tribunal sets aside the decision under review and, in substitution, decides that for the period 6 March 2023 to 31 October 2024 a nil annual rate of child support is payable by Ms Gundy to Mr Zachry and a nil annual rate of child support is payable by Mr Zachry to Ms Gundy.

Deputy President

K Synon
9 November 2023

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/BC026360

APPLICANT:  Ms Gundy

OTHER PARTIES:  Child Support Registrar

Mr Zachry

TRIBUNAL:Deputy President K Synon

DECISION DATE:  24 October 2023

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that for the period 6 March 2023 to 31 October 2023 a nil annual rate of child support is payable by Ms Gundy to Mr Zachry and a nil annual rate of child support is payable by Mr Zachry to Ms Gundy.

CATCHWORDS

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

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been 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. The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care. The Act also provides for a departure from the administrative assessment in certain circumstances.

2. This case was registered with Services Australia – Child Support (Child Support) on 13 March 2020 and has been collectable since that date. Ms Gundy (the mother) and Mr Zachry (the father) are the parents of [Child 1] (the child) born in July 2016.

3. From 12 September 2020 the child was recorded as being in the 86% care of the father and 14% care of the mother. From 2 July 2022 the care record was amended to reflect that the father had 72% care and the mother had 28% care of the child. The care record was further amended from 6 March 2023 to reflect the child as being in the 58% care of the father and the 42% care of the mother.

4. The father lodged a departure application on 8 August 2022. On 14 October 2022 a case officer refused the application finding that a ground to depart from the administrative assessment was not established.

5. The father objected to that decision in a timely manner and the objection was allowed on 2 December 2022, with the objections officer finding that the assessment did not correctly reflect the mother’s income as she had been working for the previous 18 months and was deriving a regular income through employment. The objections officer determined that the mother’s adjusted taxable income for the period 8 August 2022 to 31 October 2023 be varied to $47,449 per annum.

6. On 23 May 2023 the mother sought further review of the objection decision with the Social Services and Child Support Division of the Administrative Appeals Tribunal (the Tribunal).

7. Directions were issued by the Tribunal on 6 September 2023 which, among other things, advised that the hearing was scheduled for 24 October 2023. The directions required that both parties provide a range of financial documents including recent tax returns. In addition, both parties were ordered to provide a copy of their current rental agreements and the father was ordered to provide information about other sources of income, including from family trusts. Compliance was ordered by close of business on 21 September 2023. The mother and father substantially complied and the documents, after redactions, were exchanged between all the parties on 9 October with the advice that any submissions about the documents could be made orally at the hearing or in writing. No written responses were received.

8. The Tribunal heard the matter on 24 October 2023. The mother appeared by MS Teams telephone. The Tribunal was assisted during the hearing with an interpreter in the Mandarin and English languages. The father did not attend. He advised the Tribunal of this on 5 September 2023 and reaffirmed on 4 October 2023 that he would not be attending and did not want to be called at the stated date and time. He sought confirmation that he would not be called, which was provided to him on 4 October 2023. The Child Support Registrar was not represented at the hearing. In reaching its decision, the Tribunal has considered the sworn evidence of the mother, the papers provided by Child Support (folios 1–280), the mother (folios A1–91) and the father (B1–B175).

ISSUES

1. The statutory provisions relevant to this review are outlined in section 98C of the Act, which states that a decision to depart from the administrative assessment may be made if the following three requirements are met:

   (i)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 …

2. Therefore, the issues which arise in this case are:

   ·      Does a ground exist for departure from the administrative assessment of child support? And, if so,

   ·      Would it be just and equitable and otherwise proper to make a particular determination?

CONSIDERATION

A ground for departure

1. Subparagraph 117(2)(b)(ii) of the Act provides a ground for departure if the administrative assessment would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent because of either party’s income, property or financial resources. The central issue in this matter is whether the administrative assessment accurately reflects the mother’s income, property and financial resources.

2. At the time the father lodged the departure application under review on 8 August 2022 there was no child support payable between the parents based on their 2021 adjusted taxable income of $9,200 (the mother) and $27,579 (the father). Neither parent’s 2023 income tax returns were provided to the Tribunal.

3. The father submits that the mother has income and financial resources not reflected in the administrative assessment. In particular, in lodging the departure application, he asserted that the mother had been working in a [business] three days a week for an average of 20 hours a week.  He submitted that this information only became available through the mother’s sworn affidavit evidence to the Family Court dated 27 June 2022.

4. In lodging her objection on 8 March 2023, the mother relevantly wrote:

   Currently I am staying in Australia…and I do not enjoy any financial subsidies in Australia. I can only work only 3 days a week and take care of (the child) for 3 days (average 3 days). My current weekly income is not enough to maintain the normal life of (the child) and me. I have no extra fees to pay [Mr Gundy].

   In my bank account, it is obvious that my salary income in recent weeks is not more than 600 Australian dollars per week (and I am working 4 days a week now), and I will work 3 days a week next, because I have increased the care of (the child), my current rent is 400 Australian dollars per week (this is just a small apartment, barely enough for me and the child) to live in). My current life is extremely difficult. Second, [Mr Gundy] is an Australian citizen. As far as I know, he has various subsidies from the government, and he also has a family fund (this was admitted in the family court), although the manager of this family trust is his eldest daughter, [Ms A], but he gets a lot of money in it every year. [Mr Gundy] controlled my time with (the child) in the family court, and then asked me for fees in child support. My life is hard and I won't pay [Mr Gundy]. I don't know what evidence needs to be provided here. I can provide any information about me. [Mr Gundy]'s information needs to be checked by you and I have no ability to obtain his information. The family dispute between me and [Mr Gundy] has been in the court for three years…

5. The mother provided a Statement of Financial Circumstances dated 16 July 2023.[1] She declared her occupation as a part time [Occupation 1]. Her declared weekly income is $600. She has no assets except $126 in the bank and a [motor vehicle] with no declared value. She declared no superannuation or household contents although she pays weekly rent. The mother reports nil personal expenditure and total household expenditure of $666, of which about $300 relates to her care of the child.

   [1] At folios A1 to A9.

6. In the additional information provision in the Statement of Financial Circumstances form, the mother wrote:

   The following is my situation. I'm not sure if I filled out this document properly, I'm not sure if I put my financial status in the correct place on the form. Because my English level is not enough for me to fill out this form smoothly, and I don't have a lawyer to represent me. Currently, I am staying in Australia on a bridging visa of a student visa. My weekly working hours are also restricted by the student visa. I work about 3 days a week and take care of my children the rest of the time. The account balance I provided is in the form is 126 Australian dollars, which is the balance shown in my bank account on July 16. This is all my deposits. I do not have any other savings or income. I am a [Occupation 1] and a part time employee of a [business]. My current salary is all my income. I don't have any other income.

   Because I am not an Australian citizen nor PR full, I do not have any government subsidies. I am a [Occupation 1], my income is not stable, my income is determined by the number of clients. On average, my weekly income is about 600 Australian dollars.

   In Part B of the first page of the form, there is an item in arrears: I fill in the arrears of about 50,000 Australian dollars. I would like to explain this one: the debt is owed to my parents in China. This is due to the money I borrowed from my parents while I was pregnant, giving birth, caring for my daughter. In addition, during the period 2019 to 2021, I did not have a work permit in Australia. During this period, my parents paid all my living expenses, rent and school expenses. My parents didn't force me to repay this part of the money within a short time, but they told me that this part of the money must be repaid. Also, I'm currently actively applying for a long-term visa and still owe the visa agent $6,000 in fees.

7. During the hearing the mother explained that she first came to Australia on a tourist visa in December 2013 and then travelled into and out of Australia several times on the same visa type before being granted a student visa in 2020.  It was not clear from her evidence what course/s she completed; however, she is now on a bridging visa with work rights as she awaits a decision on a permanent visa application. She gave evidence that her only employers over the past 3 years were [Employer 1] from November 2020 to December 2022 and [Employer 2] from the end of 2022 until now; however, it became clear, when going through her bank statements, that she had also worked, concurrently, for a friend, [Ms B] who started a [business] and from whom she received $6,321.50 in salary in the 2022 financial year. The Tribunal stepped through the applicant’s bank statements with her noting that she had received income of $83,094 in 2 years and $41,202 in the 12 months from February 2022 until February 2023. The applicant responded that she could not have such a large amount of money; this is impossible. Going through the statements she confirmed the names of her various employers (who sometimes deposited money under different names) and that she is currently receiving $600 a week from subletting her home; this relates to 2 deposits. There was also a bond return and some electronics returns. Of significant concern to the Tribunal are large cash deposits of $3,000, $2,500 and $900, which the applicant said were sums borrowed from friends to support rental property applications. However, there is no record of this money being returned so the Tribunal considers that this is a financial resource available to her for the benefit of the child.

8. The applicant asserted strongly during the hearing that she should not have to pay the father any money because her part time job is not stable, and she is not a citizen or permanent resident so receives no payments from the government. She took issue with Child Support's decision, which she said was based on an estimate and average of her income and not on a check of her actual income on her bank statements.  Child Support only looked at a short period of time and her income goes up and down.  From the date of the Court Orders, she has half care of the child for which she provided a break down.

9. After reviewing the applicant’s documents and oral sworn evidence, the Tribunal has arrived at the view that the applicant did not make a full and frank disclosure of her financial affairs.  It has concerns about the amount of money she is receiving from her employment as a [Occupation 1], additional cash deposits into her account and a Chinese bankcard that she uses to make purchases for her work but which she states her parents pay. Her 2021-2022 income tax assessment does not accurately reflect her income during the same period; however, because she only provided the Tribunal with a summary rather than the full tax return (as ordered) it was unable to ascertain the expenses that may have been incurred in the $18,839 declared.  The applicant has not lodged her 2022-2023 income tax return. The applicant’s declared weekly income is $600 and her declared weekly expenses are $666, which amounts to annual expenses of $34,632,[2] leaving a shortfall of $3,432 unaccounted for.  However, of greater concern is the deposits into her bank account of $41,202 in the 12 months, for example, from 10 February 2022 to 15 February 2023.  Even after deducting what the applicant said were deposits for the sublet of her home of $1,260 and the return of a bond of $1,116.43, the applicant still received over $40,000 from salary and cash deposits.  A PAYG salary earner would need to earn about $44,000[3] in order to have access to such income and financial resources.

   [2] Which only includes rent of $310, not her entire rent of $720 as she appears to have deducted the sublet income.

   [3] Based on the tax rates published by the Australian Taxation Office <>

   After considering the totality of evidence before it and particularly the mother’s salary over a 12-month period, the Tribunal is satisfied that this income of approximately $44,000 per annum is in excess of Child Support’s previous administrative assessment of $25,575 by an order of 58%.  The application of the mother’s income and financial resources of $44,000 per annum to the administrative assessment would result in an increase in her annual child support liability to $2,233 per annum. As the mother’s income and financial resources are not properly reflected in the existing child support assessment, there are special circumstances such that the application of the administrative assessment would result in an unjust and inequitable determination of child support payable and therefore the ground provided for in subparagraph 117(2)(c)(ia) of the Act is established. Subparagraph 98C(1)(b)(i) is therefore satisfied.

Just and equitable

1. As the Tribunal is satisfied that a ground exists for departure from the administrative assessment of child support, it turns now to the second limb, which is whether it is just and equitable and otherwise proper to make a new determination.

2. The requirement to consider whether a departure would be just and equitable directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the parties’ respective earning capacities, the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula assessment.

3. Section 3 of the Act makes it clear that the parents of a child have the primary duty to maintain the child, and that this duty has priority over all commitments of the parents other than commitments necessary for self-support or the support of another person the parent has a duty to maintain. The father and the mother have the primary duty to financially support the children. The mother did not identify anyone, apart from the child, who she has a legal duty to maintain. As the father declined to appear at the hearing, the same questions could not be asked of him, however there is no evidence to suggest that he has care of any other minor children.

4. The father did not attend the hearing and therefore gave no evidence on oath, so the Tribunal only has his statements to Child Support, his Statement of Financial Circumstances and his brief submission in response to the Tribunal’s orders through which to assess his financial situation. Relevantly, he wrote to the Tribunal:

   I do not have stable employment and no pay slips, but as outlined in my Statement of Financial Circumstances, with the assistance and guidance from Family Services Australia, I started as a sole trader since end of May, offering my [specified] skills to [provide specified service]. It is run partly as a community service as my services are offered to pensioners and people with disabilities on a low to nil fee basis. My availability to attend to jobs is limited to Monday and Tuesday, plus Wed to Fri mornings only (i.e. working around the (child’s) school hours). This is led to me having to pass on some jobs that are more urgent. There is no regularity in work.

   For the last financial year I earned taxable income of $30 from my soul trader business, which is reflected in my 2023 tax return. In the current financial year (2024) so far I have earned net income of $58 after expenses. I currently have two ongoing jobs, once complete, expect to generate an income of approximately $200 total.

   My older daughter [Ms A]…remained on my current lease to help me secure the property as I had difficulty doing so without a stable employment. She does not live with me, she lives in Brisbane with her husband and child. [Ms A] also helps me make shortfalls in rental payments from time to time, only to the extent that it prevents me from being at risk of eviction. This is reflected in my [Bank 1] bank statements as “Linked Acc Trns”.

   This is a legacy arrangement from when we used to live together (from 2002 to 2018 in Australia) and despite having no obligation to do so, she has continued with this legacy arrangement as she does not want to see her father without a place to live.

   My [Bank 2] bank account is the transaction account I currently use for the bulk of my day-to-day expenses (e.g. groceries), I withdraw/transfer cash from the [Bank 1] account and deposit into the [Bank 2] account for these daily expenses, this reflects all cash inflow into this account.

   I have not received any income distribution or disbursement from any other sources including family trust funds between 1 January 2021 and 15 September 2023. I note that any such distribution is taxable and would be included in my tax return. To this end, I have attached my tax return for the last 3 financial years. I also confirm that I have no ongoing eligibility to receive any such income distribution or disbursements, as far as I am aware of.

1. The father’s Statement of Financial Circumstances is dated 28 July 2023.[4] He declared that his usual occupation is home duties and he is self-employed part-time. He declared his weekly income is nil, with $15 a week from his part time employment as a [Occupation 2]. His principal income is from Services Australia comprising a weekly parenting payment of $484 and weekly family tax benefit and rent assistance payments of $194.  The father estimates his total weekly income as $733. His only declared assets are bank balances of $222, household contents of $3,222 and superannuation of $3,670. He records a debt of $145,000 to family and friends. However, the father declares weekly personal and household expenses of approximately $1,020 amounting to $53,040 per annum, which is well in excess of his declared income. A PAYG income earner would need to have access to income of $60,700[5] per annum to cover these expenses. His declared expenses allow only $15 per week in discretionary spending for him and the child; the bank statements in evidence indicate discretionary spending that exceeds his declared discretionary expenditure.[6]

   [4] At folios B1165 to B173.

   [5] Based on the tax rates published by the Australian Taxation Office < At folios B40 to B81.

2. The Tribunal could not ask the father about some obvious issues with his financial affairs. For example, the Tribunal also holds significant concern about the frequent deposits into his bank account titled ‘Linked Acc Trns’ which, in the period of bank statements provided (that is 29 December 2021 to 23 March 2023) totals $18,640. His explanation was that these payments are made by his adult daughter to “help [him] meet shortfalls in rental payments from time to time, only to the extent that it prevents [him] from being at risk of eviction”. He declares his weekly rent to be $465 and he receives government rent assistance. In a 12-month period from 1 July 2022 to 30 June 2023 deposits into his account with the descriptor ‘Linked Acc Trns’ totalled $12,018. In his written submissions, the father states that this is financial support received from his daughter. 

3. In Humphries & Berry (SSAT Appeal) [2008] FMCAfam 409, Federal Magistrate Slack (as he then was) dealt with the issue of the disclosure of financial information in matters before the Tribunal. His Honour stated that the principle of full and frank disclosure applicable to proceedings in the Family Court was also applicable to proceedings before the Social Security Appeals Tribunal. This principle also applies to a review by this Tribunal. He stated that a Tribunal should not be “unduly cautious about making findings in favour of the other party” when proper disclosure has not been made. A failure to make proper disclosure about income and financial resources allows the Tribunal to accept what evidence there may be with more confidence than would otherwise have been the case: Thomas & Harry(SSAT Appeal) [2010] FMCAfam 310.

4. The Tribunal was unable to reconcile the father’s declarations as to his income and expenses and those outlined in his bank statements. Without corroborating evidence from his adult daughter, the Tribunal was not satisfied that the deposits into his account marked ‘Linked Acc Trns’ were in fact from her. In any event, even if his adult daughter is providing this support, this is a financial resource available to the father to provide for the child. He also declares that his daughter provides him with a motor vehicle, in relation to which he is only responsible for fuel and registration costs. The provision of a motor vehicle is also a financial resource available to him. In the absence of a full and frank disclosure from the father, and inconsistencies between his declarations and bank accounts, the Tribunal was unable to conclude, with any degree of satisfaction, his actual income and financial resources. On balance, the Tribunal finds that the father’s income and financial resources are in the vicinity of $60,700 per annum, consistent with the grossing up of his declared expenses.

The mother identified no health conditions that could affect her earning capacity over the next 12 months and no such claims were made in the father’s written submissions. In this case, given the mother’s bridging visa conditions, the Tribunal does not consider that her earning capacity is significantly greater than her income as assessed by the Tribunal.  The child is in good health and has no other source of income or earning capacity. Neither the mother nor father have other caring responsibilities.

1. It is clear that neither of the parents’ income and financial resources is accurately reflected in the administrative assessment. Amending the assessment on the basis of the Tribunal’s findings would make the mother the liable parent, with an annual liability of $883. From the date of the care change, the father would become the liable parent, required to contribute $2,022 per annum towards the child’s costs.

2. In a context where the Tribunal has assessed that neither parent has been forthcoming in the declaration of their income and financial resources and both have given unsatisfactory explanations or no explanation regarding cash deposits into their accounts, the Tribunal concludes that it is just and equitable that neither parent contribute to the child’s costs from the date that the child was in the parents’ shared care, noting that before this date the mother had a nil child support liability.  The Tribunal extends the departure determination to 31 October 2024 on the basis that that the mother’s permanent visa application may be granted by that date, which will entitle her to government benefits and work rights.   Extending it until this date also means that both parents will have lodged their 2023/2024 tax returns so an accurate assessment of their relative incomes will be possible.

3. The Tribunal is satisfied that the administrative assessment is unfair given the income and financial resources of the mother and father. After due consideration of all the factors outlined in subsection 117(4) of the Act, the Tribunal is satisfied that it is just and equitable to depart from the administrative assessment of child support.

Otherwise proper

1. The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community. It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances and benefits. Parents, rather than the community, have the primary duty to maintain a child. The father is in receipt of family tax benefit in respect of the child. Departing from the administrative assessment will result in a more appropriate apportionment of financial responsibility between the parents and the community.

2. The determination is otherwise proper.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that for the period 6 March 2023 to 31 October 2023 a nil annual rate of child support is payable by Ms Gundy to Mr Zachry and a nil annual rate of child support is payable by Mr Zachry to Ms Gundy.