Haraghy and Haraghy (Child support)

Case •

[2025] ARTA 1103

•

23 April 2025

Haraghy and Haraghy (Child support) [2025] ARTA 1103 (23 April 2025)

Applicant/s:  Mr Haraghy

Respondent:  Child Support Registrar    

Other Parties:       Mrs Haraghy

Tribunal Number:   2024/BC028634 

Tribunal:  Member S Letch

Place:Brisbane

Date:23 April 2025

Decision:The Tribunal varies the decision under review and decides that Mrs Haraghy’s adjusted taxable income is to be varied to $80,000 for the period 1 January 2024 (not 19 June 2024) to 31 August 2026.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources – multiple income streams – special circumstances – ground for departure – arrears further backdated – decision under review varied

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 pursuant to subsection 16(2AB) of the Child Support (Registration and Collection) Act 1988.

Statement of Reasons

BACKGROUND

  1. Mr Haraghy and Mrs Haraghy are the parents of [Child A] (born [year]) and [Child B] (born [year]). Mrs Haraghy has been assessed by Child Support as liable to pay child support to Mr Haraghy. Mr Haraghy seeks a review of an objection decision which “allowed” his objection to a “change of assessment” decision of 29 June 2024. 

  2. By way of background, it is convenient to set out some extracts from the objections officer’s decision dated 5 September 2024:

    SUMMARY OF OBJECTION DECISION

    Outcome: The objection is allowed.

    I have made the decision to set aside the Change of Assessment (COA) dete1mination made on 29 June 2024. The following objection outcome will instead apply:

    For the period 19 June 2024 to 31 August 2026, the adjusted taxable income for Mrs Haraghy is set at $80,000.

    Impact on assessment:

    The annual rate payable by Mrs Haraghy will increase to $12,390 for the period 19 June 2024 to 31 July 2024.

    For the period 1 August 2024 to 12 June 2025, the annual rate payable will be $12,174.

    For the period 13 June 2025 to 31 October 2025, the annual rate payable will be $13,462.

    Mrs Haraghy will also have an amount of child support arrears created by decision. This will be an amount of approximately $1,569.72 for the period 19 June 2024 to 31 August 2024.

    …

    The assessment

    The child support case has been registered with Services Australia - Child Support (the agency) from 21 October 2022.

    Mrs Haraghy is the parent assessed to pay child support for [Child A] and [Child B]. The ongoing payments have been collected by the agency.

    Prior to the Change of Assessment decision (subject of this objection), the following assessments were in place:

    - For the period 1 October 2023 to 31 December 2024, an annual rate of $3,810 based on the

    2022-23 Adjusted Taxable Income (ATI) of $43,386 for Mrs Haraghy, and $43,772 for Mr Haraghy as determined by the Australian Taxation Office (ATO).

    DECISION UNDER REVIEW

    On 19 June 2024, Mr Haraghy applied for a change to the assessment on the basis of Reason 8A.

    On 29 June 2024, the original Decision Maker (DM) did not establish Reason 8A and the

    application was refused.

    In the absence of a response from Mrs Haraghy, information was gathered from third parties to assist with the decision making process.

    In accordance with the information gathering powers of the child support legislation, information has been obtained from the Australian Taxation Office (ATO). The evidence obtained shows the following:
    - Mrs Haraghy commenced with her different employer on 24 October 2022
    - Mrs Haraghy’s ABN was cancelled on 16 May 2019
    - Mrs Haraghy’s 2022-23 tax return discloses income from three employers totalling $45,958.
    Deductions of $2,572 were claimed bringing Mrs Haraghy’s taxable income to $43,386
    A legal notice was issued to Mrs Haraghy’s employer. Information provided is as follows:
    - Mrs Haraghy commenced on a permanent part-time basis [in] October 2022
    - Mrs Haraghy is employed as a [Occupation 1]
    - Mrs Haraghy is currently paid $2,102.95 per fortnight
    - Wage details were provided for the period 2 July 2023 to 11 August 2024

    A legal notice was issued to Mrs Haraghy’s financial institution. The response provided statements for one account for the period 2 August 2023 to 1 August 2024 (365 days). Analysis of the bank statement disclose deposits from several sources in addition to her pa1t time employment that is declared on ATO records. Total deposits over this period (including part-time employment) are around $83,000.

    I called Mrs Haraghy on 3 September 2024 to explain my findings from her bank statements. Mrs Haraghy assess the following:
    - She concedes some of these deposits were from [jobs] but these have since ceased.
    - She advised that some of these deposits were money she borrowed from friends that she sent to her family from overseas

    - She advised that she is currently only working for one employer.

    The income currently used in the assessment for Mrs Haraghy is $45,121. Considering the circumstances of this case, I am not satisfied this is an accurate reflection of her income and capacity to pay child support.

    In a telephone conversation with Mrs Haraghy on 3 September 2024, she concedes that she was doing additional [jobs] with other employers in the last twelve months but currently she only has her part-time employment which is declared on ATO records. Analysis of the bank statements disclose recent deposits from two additional employers so I am not satisfied Mrs Haraghy currently only derives income from one employer.

    In reviewing the information before me, I am satisfied Mrs Haraghy’s bank statements reveal for the period 2 August 2023 until 1 August 2024 she has relied on financial resources in addition to her part time employment. Such financial resources appear be monies received from employment and/or friends. Given the bank statements show Mrs Haraghy has utilised the funds to meet her self-support I find it fair to consider such funds as a financial resource available to her. The bank statements disclose Mrs Haraghy received a total of $83,000 in deposits from third party sources. It is difficult to differentiate, with any certainty which deposits are derived from employment as Mrs Haraghy asserts that she has borrowed money from friends to send to her family overseas.

    I am satisfied it is reasonable to apportion 80% of these deposits as income from working.
    Therefore, I estimate Mrs Haraghy earned $64,000 in employment income over the period 2 August 2023 to 1 August 2024.

    This is a net value. Given the child support assessment relies on gross incomes, I must calculate the gross equivalent of this income. For any individual to receive $64,000 net, they would require a gross income of approximately $80,000. Based on my calculations, utilising the evidence available at the time of making this decision, I am satisfied Mrs Haraghy’s income and financial resources are more accurately reflected at $80,000.

    If an income of $80,000 were applied to the assessment for Mrs Haraghy, this would cause the annual rate to vary (increase) from $3,998 to $12,174. I find the difference so significant as to demonstrate special circumstances exist that render the assessment unfair.

Reason 8A is established.

As I have examined Mrs Haraghy’s income, I find it reasonable to also examine Mr Haraghy’s current income.

The current assessment relies on 2023-24 ATI for Mr Haraghy at $45,921. Mr Haraghy has provided pay slips for the period 27 May 2024 to 16 June 2024 which disclose his income is in line with that on agency records. Therefore, I am satisfied his income is appropriately reflected in the assessment.
I will now consider how the assessment should be changed based on my findings.
In his application, Mr Haraghy is seeking an increase to the assessment under Reason 8A for the period 1 August 2022 to 30 June 2024. The Act does not allow a change of assessment decision to change a period that is more than eighteen months prior to the day on which the application was lodged, unless a court has granted leave to make a change for such a period. Accordingly, I am unable to make a decision changing any period prior to 20 December 2022. If either parent wishes the agency to consider changing the assessment prior to that date, it is open for them to apply to a court for leave.

The unfairness of a previous and or current assessment is not the sole consideration in determining when a change should be made to the assessment. There is a reasonable expectation parents are able to rely on the assessment that is in place and in force at the time.

Backdating this decision, prior to when Mr Haraghy’s application was lodged on 19 June 2024 will create arrears for Mrs Haraghy, for a period that has already passed. Such an outcome can adversely impact the liable parents ability to meet the increased ongoing assessment.

Furthermore, making a retrospective change would not alter the circumstances of the parents or children at the time. For the reasons outlined above, I am backdating my decision to the date that the application was lodged by Mr Haraghy, this being 19 June 2024.

As Mrs Haraghy’s tax returns are not likely to reflect the income I have calculated for her from her additional sources of income, I intend to set his income for a period of approximately two years, until 31 August 2026.

I intend to set Mrs Haraghy’s income at $80,000 per annum from 19 June 2024 to 31 August 2026 to reflect her additional income sources. By setting Mrs Haraghy’s current income at $80,000 per annum, the annual rate of child support payable by her will increase to $12,174.

I have found special circumstances exist in this case and that it would be just and equitable and otherwise proper to make a change. The change to be made to the assessment is:

For the period 19 June 2024 to 31 August 2026, the adjusted taxable income for Mrs Haraghy is set at $80,000.

  1. Mr Haraghy and Mrs Haraghy (assisted by an interpreter) participated in the Tribunal’s hearing by conference telephone. In making its decision, the Tribunal took into account the evidence of both parties, the Child Support materials, and the additional materials submitted by both parties.

CONSIDERATION

The legislative framework

  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 Act). A formula is used. It takes into account variables including each parent’s adjusted taxable income for the last relevant year of income, the number of children and the level of care provided by each parent.

  2. Part 6A of the Act allows for a departure from an administrative assessment (a process commonly known as a “change of assessment”). Under subsection 98C(1), the Registrar may make such a departure determination if 3 matters are established:

    ·     one, or more than one, of the grounds for departure referred to in subsection 98C(2) exists (subparagraph 98C(1)(b)(i));

    ·     a departure is just and equitable as regards the children and each parent (sub-subparagraph 98C(1)(b)(ii)(A)); and

    ·     it is otherwise proper to make a departure decision (sub-subparagraph 98C(1)(b)(ii)(B)). 

  3. Subsection 98C(2) provides that the grounds for departure are the same as the grounds set out in subsection 117(2) of the Act.

  4. If satisfied that a ground or grounds exist and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal may make one of the determinations prescribed in section 98S of the Act. It permits a range of determinations, including varying the rate of child support payable, the adjusted taxable income or the cost percentage for a child.

Issue 1 – Is there a ground to depart?

  1. Subparagraph 117(2)(c)(ia) of the Act, commonly referred to by Child Support as Reason 8A, provides as a ground 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:

    …

    (ia)because of the income, property and financial resources of either parent; or

    (ib)because of the earning capacity of either parent …

  2. The starting proposition is that the child support formula should apply. Only in special circumstances should a departure be made. The words “in the special circumstances of the case” are not defined in the legislation. While it is not possible to define with precision the meaning of that term, it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the legislature is that the Tribunal will not interfere with the administrative formula result in the ordinary run of cases. In Gyselman v Gyselman (1992) FLC 92-279, it was held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”.

The hearing

10.Mr Haraghy’s position is well summarised in his written application to the Tribunal:

I am requesting that the panel review my bank statement for the same period as my wife
Mrs Haraghy's bank statement. This comparison will highlight the disparity between her financial stability and the hardship my children and I have faced due to her undeclared income and misleading Child Support and the ATO, which resulted in significantly reduced Child Support payments.

Between August 1st, 2022 and September 5th, 2024, Child Support payments were based on my wife's inaccurate income declaration of $45,121, resulting in an initial assessment of $5.12 per day. After a thorough investigation, her adjusted taxable income was set to $80,000, and
payments were then increased to $33.92 per day, reflecting the fairness and accuracy of Child Support's Change of Assessment and Objections process.

However, I am disappointed with the decision that my wife was to repay only 2.6 months of these underpayments, versus the full 18 months of arrears, which comes to $14,057. Instead, only $1,570 was proposed to address the gap, and I have not yet received even that.

I understand that the decision to not enforce payment of past due child support was based on the potential negative impact it could have on her ability to provide for her current needs. I very much disagree with this reasoning as Mrs Haraghy’s financial disclosure has revealed that her earnings were significantly higher than she had declared - approximately $83,000 versus the $45,121 she had admitted. And even this figure does not include her several cash-in-hand jobs.

My wife’s bank transactions show that she not only has the ability to maintain the current child
support arrangements, but also the capacity to reimburse the entire 18 months back payments. Her bank statement shows that she enjoys surplus resources which have enabled her to gamble, travel, and send money back to [Country 1] while her children and I have been struggling to cover the basics of family life.

I have attached my bank statement to highlight my financial struggles as a result of withheld Child Support payments that my wife could, and should have provided. My wife’s statement reveals that she has avoided contributions she could have made:

Mrs Haraghy’s salient transactions over a 12-month period (02/08/2023 - 01/08/2024):
• Total Deposits approx. = $83,000
• Child Support payments = $3691
• 130 x ATM Cash Withdrawal = $31,825
• ATM Cash Withdrawal Fees = $334
• MoneyGram International Transfers = $10,842
• Person to Person Money Transfers App = $10,791

Mrs Haraghy’s Child Support payment shortfall (02/08/2023 - 01/08/2024):
• Her Child Support payments totalled $3,691
• After the Adjusted Taxable Income, the corrected amount should be $12,390
• Therefore, Child Support arrears owing for this 12-month period are $8,699

Backdated 18 months from the application date of 19 June 2024:
• Child Support payments: $4,519
• After the Adjusted Taxable Income, the corrected amount should be $18,576

• Therefore, Child Support arrears owing for this 18-month period are $14,056

To sum up, I believe the above disclosures show that my wife clearly has the capacity to provide 18 months of back dated Child Support to us, and to fulfil her current Child Support payment responsibilities.

I believe that Mrs. Haraghy has deliberately and cynically obscured her earnings in order to avoid paying her fair share of the children’s welfare and maintenance costs. Her Group Certificates also show significant anomalies, and her tax returns have not shown a true reflection of her earnings. She had not lodged a proper tax return since 2019 and appears to have deliberately failed to declare some or all of her business and personal income.

I believe this shows that my wife has not been willing to fulfil her duty to help maintain our
children. It has been left solely to me to ensure that all the needs of our children are met from my very limited financial resources.

I therefore request the Administrative Review Tribunal to please take into consideration that the outstanding back payment of $1569.72 was unfair, and to reconsider this decision such that the $14,056 owed can and should be paid.

11.Mr Haraghy told the Tribunal that he wants an assessment that is fair to the children and prioritises their needs. He continues to work as a [Occupation 2] in the same capacity and earns the same income. Mr Haraghy suggested expenditures by Mrs Haraghy, including at pubs and clubs, demonstrates her capacity to pay a fair level of child support.

12.In summary, Mrs Haraghy told the Tribunal that she concedes her income was $80,000 “two years ago” but denies that to be so now. She does work for [Employer 1] and has an “ABN for a second job”. She estimated in her Statement of Financial Circumstances some $1,200 per week on average; however, she must pay tax of nearly $5,000 per year. She denied suggestions by Mr Haraghy of regular transactions recorded at clubs on gambling items; Mr Haraghy said that was a “kick in the guts” when he was supporting the children. In response to Mr Haraghy’s observations about monies spent on food and travel, Mrs Haraghy said she is entitled to spend some money to do things with friends. Mrs Haraghy pointed to one instance in which a friend had given money, which was put through her bank account; Mr Haraghy said it was more than one occasion and repeated transactions were made. Mrs Haraghy said she sends $300 to $500 per month to family overseas – sometimes that can be up to 6 weeks depending on her financial position. Mrs Haraghy said she has paid all her child support and is “up to date”; she does not know why Mr Haraghy is “suing her” for more money and does not think the assessment should be backdated. She said she may be forced into a situation where she is no longer able to work. Mrs Haraghy questioned why Mr Haraghy needed more money.

13.Neither Mr Haraghy nor Mrs Haraghy identified any particularly notable or high expenses. In terms of going forward, neither party expressed strong views about the departure period which is scheduled to end in August 2026. 

Consideration

14.I am satisfied that Mrs Haraghy’s financial capacity is not fairly represented by her adjusted taxable income as assessed by the ATO. For at least some of the period in the past, she concedes that she was receiving income not reflected in her taxable income. The formula assessment results in an unfair level of child support; in the special circumstances of the case, there is a ground to depart from the child support formula.

Issue 2 – Is it just and equitable to depart from the administrative assessment?

15.The next relevant consideration for the Tribunal is whether a departure from the administrative assessment is just and equitable. This enquiry directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula. The Tribunal is obliged to conduct reviews in a way that is, amongst other things, informal and quick: section 9 of the Administrative Review Tribunal Act 2024.

16.I have examined Mrs Haraghy’s banking records (inexplicably not supplied in the original hearing papers) covering the period from August 2023 to August 2024. As a starting position, deposits to that account should be regarded as a financial resource available to Mrs Haraghy. A generous approach is to assess 80% of those deposits as available for Mrs Haraghy’s personal use; a net income of around $64,000 would require a pre-tax income of $80,000.

17.Mrs Haraghy denies that situation is continuing. However, the best evidence available to me is Mrs Haraghy’s banking records. I note Mrs Haraghy’s evidence that she is “up-to-date” with her child support payments; she also has been regularly sending money overseas. I consider her demonstrated financial capacity is consistent with an income in the range of $80,000 per year. I consider varying her income until 31 August 2026 provides an appropriate level of certainty to the parties.

18.In issue is the “start day”. The child support scheme generally has a reasonably strong bias against retrospectivity given the possibility for unfairness. However, there is a discretion to “backdate” assessments in appropriate circumstances.

19.Here, Mrs Haraghy was undeniably in receipt of income “off the books” for taxation purposes. This was not case where, for example, Mr Haraghy had become aware at an earlier stage of Mrs Haraghy’s financial position improving (for example, commencing a new job) and “sat on his hands”.

20.I note that the scheme is concerned with prioritising the interests of the children over all else. This includes Mrs Haraghy’s no doubt understandable desire to continue to send funds overseas. I note that Mr Haraghy receives a modest income; he has 100% care of the children.

21.At the same time, Mrs Haraghy has a higher but not excessive level of income. I consider that backdating the departure 18 months would put Mrs Haraghy in undue hardship. Nevertheless, she does not have “clean hands”. I consider a period of backdating would be just and equitable and reflect the priority of the needs of the children.

22.In my assessment, backdating the departure period to begin on 1 January 2024 represents a fair balance of competing interests in this case. This will increase Mrs Haraghy’s liability by approximately $4,000 in broad terms. With appropriate budgeting, I am satisfied that Mrs Haraghy will be able to meet her ongoing liability and reduce the debt over time.     

23.I am satisfied that Mr Haraghy’s financial capacity is fairly reflected in his adjusted taxable income as assessed under the rolling formula arrangement. Neither party raised any expenses for themselves or the children which would require any further adjustment.

24.Going forward, I consider ending the departure period on 31 August 2026 a fair balance of competing interests. I consider varying Mrs Haraghy’s adjusted taxable income to $80,000 for the period 1 January 2024 to 31 August 2026 to be just and equitable.

Issue 3 – Is it otherwise proper to make a departure determination?

25.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.

26.The rate of child support should reflect the obligation of both parents to take financial responsibility for the children and, where increased, may decrease any income-tested benefits payable. A departure is therefore proper.

27.As I have reached a different conclusion to the objections officer, the decision under review will be varied.

DECISION

The Tribunal varies the decision under review and decides that Mrs Haraghy’s adjusted taxable income is to be varied to $80,000 for the period 1 January 2024 (not 19 June 2024) to 31 August 2026.

Date(s) of hearing: Monday, 14 April 2025
Representative for the Applicant: Self-represented
Representative for the Other party:

Self-represented
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