Haby and Jobe (Child support)

Haby and Jobe (Child support) [2020] AATA 5563 (4 November 2020)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2019/SC017321
APPLICANT:  Mr Haby
OTHER PARTIES:  Child Support Registrar
Ms Jobe

TRIBUNAL:Member H Schuster
DECISION DATE: 4 November 2020
DECISION:

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

(a) setting Mr Haby’s adjusted taxable income at $75,000 for the period from 1 September 2018 to 31 December 2020.

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 omitted 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 is a review of the objection made on 11 June 2019 to partly allow an objection to a decision made by the Department of Human Services – Child Support (the Department) about a change of assessment decision originally made on 6 March 2019.
Mr Haby and Ms Jobe are the parents of [the child], born July 2016. From May 2018 the assessment of child support was based on Ms Jobe having 65% and Mr Haby having 35% care of [the child].
The child support case was initially registered on 20 March 2017 and under the initial assessment Mr Haby was the liable parent (case [Number 1]). In 2016/17 Mr Haby’s adjusted taxable income (ATI) was $74,172 and Ms JobeJobe’s ATI was $41,340.
In March 2018 Mr Haby ceased employment and commenced a new business.
On 23 April 2018 Mr Haby provided a new estimate for the remainder of the 2017/18 financial year which resulted in the child support assessment being based on his estimate of $10,428 per annum and Ms Jobe’s ATI of $47,340 and reduced his child support liability from $5,593 to $1,390 per year.
On 18 May 2018 Mr Haby lodged his own application for a child support assessment and the reverse case, under which Ms Jobe was liable to pay child support, was registered (case [Number 2]). Around this time his care percentage for [the child] increased from 28 to 35%.
On 13 June 2018 Mr Haby estimated his income for the 2017/18 financial year to be $10,428, based on assumed income of $200 per week.
On 4 September 2018 Ms Jobe applied for a change to the assessment in special circumstances on the basis of high childcare costs (Reason 6), and on the basis that Mr Haby’s income, property and financial resources, or alternatively, his earning capacity, were not properly reflected in the child support assessment (Reasons 8A and 8B). Mr Haby disagreed and cross-applied for a change of assessment on the basis of payments or transfers of property made by him in relation to child support (Reason 5) and Ms Jobe’s income, property, financial resources or earning capacity (Reasons 8A and 8B). At the time of making the application for a change of assessment Ms Jobe was required to pay child support of $877 per annum, based on her 2017/18 ATI of $45,159 and Mr Haby’s taxable income of $10,428.
On 6 March 2019 the Department decided that there should be a departure from the formula assessment of child support. The original decision maker determined that Mr Haby’s ATI should be set at $78,000 from 1 November 2018 to 31 December 2020. This resulted in an annual rate of child support payable by Mr Haby of $5,581.
Mr Haby objected to the decision.
On 11 June 2019 the objections officer set aside the decision and determined that while there were grounds to depart from the assessment, the decision was varied such that from 3 October 2018 to 31 December 2020 the annual rate of child support payable by Mr Haby was set at $5,200 while Ms Jobe’s liability was set to $nil for the same period.
Mr Haby made an application to the Administrative Appeals Tribunal (the Tribunal) for review of the objection decision.
Mr Haby and his current partner had a child on 13 January 2020.
The hearing was conducted on 25 May 2020. Mr Haby and Ms Jobe both participated by telephone and gave evidence on affirmation.
The Tribunal had as evidence before it the following documents:
·      Documents prepared by the Department: Folios 1–577 and 578–625;
·      Documents lodged by Mr Haby: Folios A1–A158;
·      Documents lodged by Ms Jobe: Folios B1–B22.

ISSUES

The statutory provisions relevant to this review are set out in the Child Support (Assessment) Act 1989 (the Act).

Legislative framework and issues for Tribunal to determine

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.
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.
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.

CONSIDERATION

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

The Tribunal can only make a decision to depart from the child support assessment if one of the reasons set out in the legislation at subsection 117(2) of the Act is found to exist. There must be special circumstances in the case. What is ‘special’ in an individual case is not defined in the legislation but must be determined having regard to all of the circumstances of the parties and the objects of the Act.
Mr Haby’s income, property and financial resources
Ms Jobe sought a departure from the assessment on the ground that Mr Haby’s estimated income of $10,428 per annum did not properly reflect his capacity to meet his own expenses or support the child.
Mr Haby’s income from employment
Mr Haby is [an Occupation 1] with 15 years’ experience. According to declarations in loan applications, he was employed at [Employer 1] for a number of years as [an Occupation 2] earning around $130,000 to $140,000 per year. In November 2016 Mr Haby commenced employment at [Employer 2] as [an Occupation 1/3]. In 2018 his salary rate was $45,000 plus $13,560 in allowances and $4,275 of superannuation per year. However, he also received commissions: in February-March 2018 he received commissions of $102,917.83 in addition to his base salary. His final ATI for the 2017/18 financial year was $131,770. In 2018/19 his ATI was $59,137.
On 29 March 2018 Mr Haby resigned from [Employer 2] to commence what he said was his own business. For child support purposes he estimated his income going forward to be $10,428 per year ($1,971.42 per fortnight), on the basis that he did not expect to initially profit from his new business and his income would be about $200 per week.
Mr Haby commenced work for [Employer 3] in 2019. Although his stated aim was to create his own business, he is not a shareholder of [Employer 3]. Rather, the company is fully owned by [Company], a company fully owned by his parents. Mr Haby said his parents had provided some start-up capital but were ‘silent partners’ and not involved in the day-to-day operations of [Employer 3]. Opening his own business, albeit under his parents’ umbrella, enabled him to be in control of his work hours and it was a better long-term plan for employment than possibly re-training.
Although Mr Haby is not a legal owner, it was apparent to the Tribunal, that he is instrumental to the creation and ongoing management of the company. The income generated by [Employer 3] is the result of Mr Haby’s business acumen and technical knowledge and the Tribunal is satisfied that insofar as the business derives income, such income would form a financial resource to Mr Haby.
[Employer 3]’s business is the leasing of [equipment] under multi-year contracts for a monthly fee. In addition, a smaller proportion of income is derived from the cost of repairs which are outside the scope of general services offered under the leasing contract. Mr Haby explained that he purchases the equipment he leases outright and then receives a monthly amount as income from his clients from which the business’ expenses are paid. He is able to take on simple service calls himself but a casual employee handles any repairs requiring greater technical skill. He explained that his parents contributed some initial funds for the up-front cost of the equipment he had to purchase.
Mr Haby’s casual worker receives about $40,000 per year, which Mr Haby said was significantly subsidised by the Commonwealth Government and the cost to the business is considerably less than that. In 2018/19 [Employer 3] had gross sales of $74,006 and operating expenses of $149,466 resulting in an operating loss of $78,460. In total, the tax losses of the company were $96,194 in 2018/19. The biggest single expense claimed was for wages and salaries of $82,759, which appears to include Mr Haby’s director’s fee and the remainder, $22,759 being for Mr Haby’s sole casual employee.
Mr Haby stated that the director’s fee of $60,000 declared in [Employer 3]’s accounts and his own tax return was not actually paid to him but rather ‘returned’ to the company. He said that if the company made a profit in future, he would receive the amount. The Tribunal asked whether the manner in which this payment was dealt with in the books of [Employer 3] was by way of creation of a loan by him to the company. Mr Haby stated that he wasn’t sure but believed that it was. His accountant had explained that they would be able to offset the tax loss in future years when increased profits were generated. The Tribunal finds it somewhat significant that Mr Haby, who is solely in charge of making remuneration decisions, would determine this as an appropriate level of remuneration, notwithstanding that it caused the company to incur a significant net loss.
Mr Haby stated that from the beginning of the 2019/20 financial year he was paying himself a regular wage and provided payslips showing he earned $1,260 gross per fortnight or $32,850 per year. The Tribunal notes the amount of income anticipated is considerably less than an average income amount for a worker of Mr Haby’s skill and experience.
The Tribunal is conscious that only one year of income data for [Employer 3] is available and that income in its first year of operation is likely to be underestimating the pro rata income over time, because of up-front equipment costs and the matching depreciation/amortisation costs which are generally higher in the initial year.
The Tribunal found that notwithstanding the loss claimed by the company, Mr Haby derived income of $60,000 in 2018/19, as declared on his tax return.
Mr Haby’s personal 2018/19 taxable income was $26,395 after deductions and a net rental property loss of $29,848. Adding back the property loss results in net income of $56,243. This was the amount of income from [Employer 3] less deductions. Mr Haby claimed deductions of $3,845 including mobile and internet costs of $2,581.20 and depreciation of $300 for printer, desk and mobile phone. The Tribunal was not persuaded that the telephone and internet deductions were reasonable: Mr Haby claimed 90% business usage, notwithstanding that his work is through [Employer 3] which itself claimed office, phone and internet expenses of over $3,000 the same financial year. The Tribunal is not satisfied that Mr Haby’s work-related phone and internet usage was greater than 30%, given that most of his business-related costs appear to have been borne by [Employer 3]. The Tribunal finds that mobile phone and internet deductions should be reduced to $860 and finds that total deductions should be taken to be $1,975 (including the costs of managing tax affairs, computer software and some office depreciation).
Thus, the Tribunal is satisfied that Mr Haby’s ATI, based on his tax return alone, was $58,025 in 2018/19. In addition, Mr Haby has at his disposal substantive assets which, though they do not constitute income, could be reasonably used to maintain a child. The implication of this will be discussed below.
Clearly, Mr Haby’s estimate made in June 2018 of having income of $10,428 is not reflective of his true capacity to support the costs of raising [the child]. The Tribunal is satisfied that the income amount used in the administrative assessment was not a fair reflection of Mr Haby’s income or financial means and rendered the assessment unfair. The Tribunal finds that a ground to depart from the assessment is established and the Tribunal is required to consider whether it would be just and equitable to depart from the assessment and, if so, on what basis. In that context Mr Haby’s other income and financial resources are discussed below.
Other grounds for departure
Ms Jobe’s costs of childcare
Ms Jobe originally claimed that the assessment was unfair as she was paying for most of the childcare fees for [the child]. Mr Haby stated he pays childcare for [the child] on days that he is in his care and Ms Jobe paid for care on the days she had him; this worked out to about 4 days a fortnight for Ms Jobe and 2 days for himself. Ms Jobe stated she pays child support but also receives childcare benefits which reduce her out-of-pocket costs. Ms Jobe did not include childcare costs in her statement of financial circumstances and did not press the ground at hearing.
Under the Act a ground to depart is established if the costs of the child are significantly affected by the price of childcare: subparagraph 117(2)(b)(ib). Childcare costs can only be considered, however, if the child is under 12 years old and the cost of childcare to the parent is greater than 5% of their ATI: subsections 117(3A) and (3B). There is no evidence that Ms Jobe’s out-of-pocket costs for childcare are greater than 5% of her ATI and this ground is not made out.
Ms Jobe’s income and earning capacity
Ms Jobe’s ATI was $41,340 in 2016/17, $45,159 in 2017/18 and $59,285 in 2018/19.
Ms Jobe works part time as [an Occupation 4]. She did not work after [the child]’s birth for some 15 months and recommenced part-time work in 2017, after separation from Mr Haby. She has gradually increased her work hours since her return to work, which is matched by an increase in ATI from year to year. Payslips in respect of December 2018 to January 2019 showed income of about $44,180 per annum on average. She provided payslips for 4 fortnights from 6 January 2020 to 1 March 2020 showing average fortnightly income of $2,079.34 or $54,063 per annum. However, her year-to-date income as at 1 March 2020 was $41,077.94 which, assuming it encompassed the 18 fortnights prior to that date, equates to $59,335 per annum, which closely matches her last assessed income. She has no substantive income from any other source.
Mr Haby stated that Ms Jobe’s assets should be considered in the costs of raising [the child]. The Tribunal notes that Ms Jobe’s statement of financial circumstances shows that of the property settlement with Mr Haby she retains bank deposits of some $101,251, the rest having been spent on living costs and purchase of a car. Ms Jobe does not own any real estate and her only other significant asset is superannuation of about $94,000 which is preserved. The Tribunal notes that Ms Jobe’s ATI for 2017/18 and 2018/19 includes interest from any savings and thus any income from her remaining property settlement funds is included in her income. Furthermore, unlike Mr Haby, Ms Jobe’s savings will not appreciate over time and to the extent that she is providing for [the child]’s costs, she is and has been using some of the savings. The Tribunal finds that Ms Jobe’s capacity to provide for the costs of [the child] are reasonably reflected by her ATI.
Mr Haby made the submission that Ms Jobe’s earning capacity was not fully exercised because she chose to work part time and could earn more with a full-time workload.
A person can be assessed on their earning capacity, rather than their actual income, only if the Tribunal were to find that:
·      The person changed her or his occupation or working pattern; and
·      The change in occupation or working pattern was not reasonably justified by the person’s state of health or caring responsibilities; and
·      The person failed to demonstrate that affecting the child support assessment was not a major purpose of the change of occupation or working pattern.
Ms Jobe gave evidence that she had started part-time work in 2017, when [the child] was around a year old. Prior to 2018 she also had 100% care of the child. Since May 2018 her care percentage has been 65% and she has been able to work increased hours.
The Tribunal found no evidence that Ms Jobe had changed her working pattern in a way that reduces her capacity to provide for [the child] financially nor that was designed to affect the child support assessment. Indeed, Ms Jobe returned to work after the separation and has increased her hours over time. The Tribunal finds that the assessment of child support cannot be based on Ms Jobe’s work capacity, as the legislative criteria for such an assessment are not satisfied.
Mr Haby’s transfer of assets under the property settlement

Mr Haby submitted he had transferred about $211,000 in assets, including cash of $178,000, to Ms Jobe on the basis of court orders dated 8 May 2018 which set out the terms of the parties’ property settlement and parenting orders. He suggested that the size of the settlement did not reflect Ms Jobe’s contribution to the relationship and was inflated because of provision being made for [the child].
A transfer of money from the liable parent to the payee may be grounds for departure from the administrative assessment, but only if the payment was made to the carer “for the benefit of the child”. While a clause could have been inserted to reflect that sums were paid for [the child]’s needs, no such clause exists. The Tribunal considered the terms of the settlement closely and found no terms that suggested that any part of the final settlement was specifically for the benefit of [the child].
While the settlement sum increased Ms Jobe’s assets in a way that is likely to have enabled her to maintain a certain standard of living, for herself and – by extension – for [the child], there is no evidence that the settlement sum was specifically intended for [the child]. Mr Haby said he was acting on legal advice as to the parameters of an appropriate property settlement based on Ms Jobe’s contribution, weighed up the likely legal costs, and agreed to a figure to end the settlement. Mr Haby’s evidence fell short of claiming that his solicitor told him he would not be liable for child support if the settlement was in the amount ultimately agreed on, rather than some lesser amount. The Tribunal notes that Mr Haby has expressed his dissatisfaction with the legal advice he received and is pursuing a complaint against his legal adviser with the Law Society.
Mr Haby may well feel the settlement is overly generous, however, it is not appropriate to adjust the administrative assessment to reflect one party’s disappointed expectation about a property settlement. The role of an administrative assessment of child support is to ensure that children whose parents have separated have their ongoing costs met in a way that reflects the capacity and financial resources of both parents.
The Tribunal has no specialist knowledge that would allow it to conclude that the mere amount of a property settlement is sufficient to find that particular parts of the settlement were to be paid for the benefit of the child, rather than on the basis of an equitable distribution of the assets of the parties. The Tribunal finds that a ground of departure under subparagraph 117(2)(c)(ii) is not made out.
The impact of Ms Jobe’s assets which arise in part from the property settlement and how it affects her ability to meet [the child]’s costs will be considered below, in the discussion about whether it is just and equitable to depart from the assessment.
Should Mr Haby be assessed on his earning capacity?
A question arises whether Mr Haby had changed his working pattern from being employed with income of over $130,000 per year to self-employment in an effort to minimise his child support obligations. It is clear that in 2018 Mr Haby changed his occupation and this change affected his child support assessment. Mr Haby has stated, and the Tribunal accepts that Mr Haby, like most self-employed people, works full time to manage his business though has greater flexibility in his working hours than an employee. The Tribunal cannot find that Mr Haby has significantly reduced his working pattern.
Mr Haby said the stress of being engaged in family law proceedings was causing him to be ineffective as a salesman and he was no longer capable of working the hours he had previously worked and generating sales to meet his targets. He denied that he had changed his employment in order to affect the child support assessment. He said his anxiety and depression caused him to consider less stressful work options and he cast his change of employment in terms of making a long-term plan for a sustainable career. He provided evidence from a family worker that he attended counselling sessions from March to August 2018 to manage stress and anxiety as well as obtaining support with co-parenting issues and preparation for a successful mediation. He denied that the cost of child support or a desire to affect the assessment factored into this decision.
The Tribunal accepts that Mr Haby obtained assistance in managing a period of stress and anxiety but had no medical evidence that these factors necessitated a change of working pattern. Mr Haby sought to argue that a change in pattern offered him greater control and enabled him to seek greater care of his son. He compared his situation to that of Ms Jobe, noting that if she was working part time then similar considerations applied to him. The Tribunal had no evidence, however, that Mr Haby’s working pattern was justified based on specific caring responsibilities for [the child], particularly when the changes, on his income estimate, would lead to a level of income below poverty levels.
The Tribunal found that the evidence did not establish that Mr Haby’s change of working pattern was justified on the basis of health or caring responsibilities.
However, the Tribunal accepted that his change of employment was not primarily motivated by the desire to affect the child support assessment and that Mr Haby’s aim is to build a profitable business. The Tribunal is satisfied that an assessment based on Mr Haby’s earning capacity is not justified at this time.

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.

The income, property and financial resources and earning capacity of Mr Haby and his necessary commitments

As noted above, Mr Haby’s income from [Employer 3] amounted to $58,025 in 2018/19. In addition to his income from [Employer 3], Mr Haby also runs a business under the name [Business name] which consists of renting out a [vehicle]. In 2018/19 he derived net income of $2,894 from the business.
Mr Haby said that since he commenced [Employer 3] his take home salary has drastically reduced, and he claims the family’s costs of living are met out of his savings as well as relying on his wife’s income to meet costs.
Mr Haby and his wife jointly own their principal home, which was purchased after Mr Haby and Ms Jobe’s property settlement was finalised. Mr Haby also owns five rental properties: a property at [Location 1]; [Location 2] and three units in a property at [Location 3].
In his statement of financial circumstances Mr Haby declared the value of his assets to be $2,645,808 and liabilities as $2,162,000, or equity of $483,808 though it is not clear whether the property valuations represent current values. The Tribunal notes that in discussions with the Child Support Registrar Mr Haby previously claimed to have equity of around $600,000, which may be closer to the true amount. Mr Haby has a substantial asset pool which could, if required, be utilised to support himself and provide for [the child].
In the calculation of adjusted taxable income, net rental property losses are added back to a person’s taxable income as they are not an allowable reduction of income otherwise available to meet a person’s costs.
Mr Haby’s tax returns show gross rental income of $140,336 in 2018/19. Annual interest and other property-related deductions came to $173,078, resulting in a net rental property loss of $29,848. Of the expenses $82,866 (or 48%) was for interest payments and a further $41,803 (22%) was for capital allowances or capital works deductions.
The Tribunal has no reason to doubt that Mr Haby’s accounting of his property expenses was proper and that the resulting tax deductions were legitimate. However, the Tribunal notes that the profitability in Mr Haby’s property investments lies not in the annual income or loss, but in the capital gains expected over time. Thus, especially for negatively geared property, the true extent of a person’s capacity to support themselves may not reflect their taxable income, as rental losses may be deducted from other income and because some expenses, such as for depreciation, are not in fact incurred in cash terms. Mr Haby stated that all rental income flowed into an offset type account and the account was used to meet any expenses arising. There is no separate account or fund maintained to meet depreciation expenses. The Tribunal thus finds that Mr Haby had the ability to utilise some of the rental expenses to meet living expenses and other costs and that at least some of the rental income is available to support [the child].
Although Mr Haby claimed that his change of employment has reduced his financial capacity, the Tribunal finds that there is no evidence that he is unable to meet his living expenses or provide for his youngest child.
There was no evidence that Mr Haby has any unusual costs of living or expenses that could not be met out of his financial resources.
The Tribunal has determined that Mr Haby’s income and access to financial resources was not properly reflected by the estimate of income he provided in 2018 and is higher than the taxable income assessed by the ATO. The Tribunal finds that Mr Haby has reasonably significant assets which could be utilised, if required, to support his family and [the child]. The Tribunal finds that Mr Haby’s assets and income from real estate and his van business, add about $15,000 per year in additional financial resources, either by way of capital gain or by way of use of depreciation expenses which should properly be reflected in his child support assessment. The Tribunal finds an ATI of $75,000 would more accurately reflect Mr Haby’s ability to provide financial support for [the child].
The income, property and financial resources and earning capacity of Ms Jobe and her necessary commitments
As noted above, the Tribunal found Ms Jobe’s capacity to provide for [the child] is reasonably reflected by her ATI as assessed by the Australian Taxation Office.
Ms Jobe has no special needs which would unreasonably increase the cost of her necessary commitments to meet her expenses.
Child’s needs and financial resources
There was no evidence that [the child], who is now 4 years old, has any special needs or expenses that would make the child support assessment unfair. [The child] has no income or other financial resources.
The parents’ duty to support others
Mr Haby is married and gave evidence that, on 13 January 2020 his wife gave birth to a child. The Tribunal notes that any additional dependent children of a parent to a child support application must be notified to the Child Support Registrar. If and when the Registrar becomes notified and accepts that a new dependent child exists, the child support assessment will be amended to reflect the additional cost of maintaining that child. The objections officer noted Mr Haby had not yet formally notified the Registrar of the dependent child. It is a matter for Mr Haby to provide the relevant information to allow the child to be included in the calculation of child support payable by him. Mr Haby said that there were no unusual costs in providing for his dependent child. On that basis the Tribunal finds that it is not necessary to make separate provision for the financial support of Mr Haby’s dependent child.
Mr Haby gave evidence that the household income had reduced due to the birth of the child, as his wife was on maternity leave. There was no evidence about the extent to which Mr Haby’s wife has accessed paid maternity leave or paid parental leave after the birth of their child, nor to the extent of other financial resources available to her to support her necessary financial commitments. There was no evidence that the cost of supporting her had financially impacted Mr Haby’s capacity to meet other costs.

Terms and period of departure from the assessment

The Tribunal finds it just and equitable that there be a departure from the administrative assessment of child support on the basis that Mr Haby’s ATI be set at $75,000, with effect from 1 September 2018, the beginning of the month in which Ms Jobe’s application for a departure was made. All things being equal, such a change would slightly reduce the annual amount of child support payable by Mr Haby, compared to the objection decision.
Hardship caused by the departure from the assessment
On the Tribunal’s estimate, the departure set by the Tribunal will not cause any significant arrears or child support debt amounts, as the final assessment is very close to the $100 per week liability assessed by the objections officer and no significant arrears will be payable. Mr Haby told the Tribunal he had continued to meet his ongoing child support liability, with the amount of outstanding child support payments being less than $100. The Tribunal is satisfied that the change will not put Mr Haby in hardship.
Ms Jobe said that a reduction in child support or an overpayment would be something she would avoid, as it may affect the overall household income. However, she did not claim any significant hardship if the child support assessment was to reduce her entitlement, provided any overpayment could be repaid or offset over time.
The objection decision set income until 31 December 2020 and the Tribunal proposes to follow that course. The Tribunal discussed with Mr Haby the changes to the overall economic circumstances due to COVID-19 work restrictions. While Mr Haby projected that his business is likely to be affected, it was not clear to the Tribunal that there was a substantive change that could be given effect in this decision. Income from [Employer 3] is based on longer term service contracts of which there are now more than there were in the first financial year of operations. Furthermore, there was no evidence of loss of rental income.

Issue 3 – Would a departure from the administrative assessment be otherwise proper?

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.
Ms Jobe, as the primary carer, receives family tax benefit and childcare subsidy for [the child]. Any increase of child support payable to her will reduce the Commonwealth’s costs of providing for the child. Given that it is the primary duty of parents to financially support children, the departure from the assessment is reasonable and proper in the circumstances.

DECISION

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

(a)setting Mr Haby’s adjusted taxable income at $75,000 for the period from 1 September 2018 to 31 December 2020.

[2020] AATA 5563

Key Legal Topics

Areas of Law

Family Law

Legal Concepts

Jurisdiction

Statutory Construction

Remedies