Harwood and Harwood (Child support)

[2018] AATA 532

Harwood and Harwood (Child support) [2018] AATA 532 (25 January 2018)

DIVISION:  Social Services & Child Support Division

REVIEW NUMBER:  2017/SC012772

APPLICANT:  Ms Harwood

OTHER PARTIES:  Child Support Registrar

Mr Harwood

TRIBUNAL:  Ms J Cuthbert, Member

DECISION DATE:  25 January 2018

DECISION:

The decision under review is set aside and a decision is substituted that the amount of $1,000 paid to [name] Child Care Centre on 1 August 2017 is not to be credited against Mr Harwood’s child support liability.

CATCHWORDS
Child Support – Non-agency payments – Whether payments for child care are prescribed – 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

ISSUE

1. This review is about whether a payment of $1,000 made to a child care centre can be credited against Mr Harwood’s child support liability.

BACKGROUND

1. Mr Harwood and Ms Harwood are the parents of [Child 1] (born 2000), [Child 2] (born 2001), [Child 3] (born 2008) and [Child 4] (born 2015). At all relevant times Mr Harwood has been the liable parent in a child support assessment made by the Department of Human Services – Child Support (the Department). His liability under the assessment was registered for collection by the Department from 3 August 2016. At all relevant times the child support assessment has been based on Ms Harwood having care percentages of 100% for all four children.

2. On 4 August 2017 a decision was made to credit a payment of $1,000 made by Mr Harwood to [name] Child Care Centre on 1 August 2017 under section 71C of the Child Support (Registration and Collection ) Act 1989 (the Registration and Collection Act). The following amounts were subsequently credited against Mr Harwood’s child support liability:

   31 August 2017          $154.60

   30 September 2017    $154.60

   26 October 2017        $157.85

3. Ms Harwood objected to that decision to allow credit of amounts totalling $1,000. Her objection was disallowed on 25 October 2017. She lodged an application for a review of the objection decision with this tribunal on 26 October 2017.

4. On 26 October 2017 a decision was made by the Department in relation to an application Ms Harwood had made for a departure from the child support assessment. The decision maker determined that there should be a departure from the assessment to vary Mr Harwood’s adjusted taxable income from 1 September 2017. Mr Harwood’s liability was also increased from 1 August 2017 to take into account 50% of the child care costs for [Child 4].

5. Mr Harwood objected to the decision made on 26 October 2017 to depart from the assessment. On 13 December 2017 his objection was allowed. The decision of 26 October 2017 was set aside and the objections officer decided to depart from the assessment by varying Mr Harwood’s adjusted taxable income to $59,803 from 4 August 2017 to 31 October 2019. Mr Harwood has applied to this tribunal for a review of that decision (2017/SC013173).

6. Mr Harwood and Ms Harwood both attended a hearing on 25 January 2017 by telephone. The Child Support Registrar was not represented at the hearing. In addition to oral evidence the tribunal considered documents provided by the Department (folios 1 to 141).

STATUTORY FRAMEWORK

1. The Department (acting for the Child Support Registrar) can credit payments made by a liable parent to a third party against an enforceable maintenance liability.

2. The term “enforceable maintenance liability” is defined in subsection 4(1) of the Child Support (Registration and Collection) Act 1988 (the Act) as a registered maintenance liability. A “registered maintenance liability” is defined by subsection 4(1) as one that is registrable under sections 17 and 18 of the Act. This includes a child support liability that arises under a child support assessment that is registered for collection by the Department.

10.  Section 71A of the Act states that an amount paid by a payer to a third party can be credited provided there is an enforceable maintenance liability and both parents intend that the payment is in satisfaction of child support payable under that liability.

11. Section 71C of the Act allows for the gradual crediting of payments (up to 30% of the child support liability for a period) where they fall into categories set out in regulation 5D of the Child Support (Registration and Collection) Regulations 1988 (the Regulations) regardless of the parents’ intentions. However, section 71C of the Act requires that the liable parent has less than “regular care” of any of the children of the assessment, both at the time the payment was made and when the decision is made to credit the amount. The term “regular care” is defined in subsection 5(2) of the Child Support (Assessment) Act 1989 as a percentage of care of at least 14%, but less than 35%.

12.  The credit must not exceed 30% of the amount payable in the payment period. Excess amounts may be credited against the liability for a later payment period if the criteria are met at that time. No amount can be credited unless the payer has paid the remaining 70% of the liability.

13.  Sections 71A and 71C are subject to section 71D of the Act which provides that the Registrar may refuse to credit an amount under that section if satisfied that, in the circumstances of the particular case, the amount ought not to be credited.

CONSIDERATION

14. The tribunal finds that at relevant times Mr Harwood was the payer of an enforceable maintenance liability. There is no dispute that he made a payment of $1,000 to [Child 4]’s child care centre on 1 August 2017 by means of a direct debit from his bank account. He notified the Department of the payment the same day. Mr Harwood told the tribunal that he always intended that the payment would be treated a prescribed non-agency payment under section 71C of the Act. He acknowledged that he had not discussed making the payment with Ms Harwood prior to doing so.

15.  Mr Harwood does not dispute Ms Harwood’s evidence that there was an arrangement by which they each met 50% of the cost of [Child 4]’s child care by depositing funds into a joint bank account from which the child care expenses were met. Mr Harwood acknowledges that by seeking credit of the $1,000 payment he effectively seeks to transfer the whole cost of child care to Ms Harwood. He said that the earlier agreement was broken from 1 August 2017. 

16.  Ms Harwood states that she was unaware that Mr Harwood would make a payment directly to the child care centre and therefore did not intend that the payment would be in lieu of child support payable. She states that it would not be equitable to transfer the whole cost to her in light of the earlier arrangement.

17.  The tribunal accepts that Mr Harwood has not made any payments to the joint account since 1 August 2017. The payment made by Mr Harwood on 1 August 2017 resulted in the child care account being in a credit by $1,649.39. A statement dated 3 September 2017 indicates that some of that credit has since been absorbed.

18.  The tribunal is satisfied that Ms Harwood did not intend that the payment was in satisfaction of Mr Harwood’s child support liability. The tribunal finds that the payment cannot be credited under section 71A of the Act for that reason.

19. The tribunal finds that the payment was not for “fees charged by a school or pre-school” for [Child 4] (regulation 5D(c) of the Regulations) as the account with the child care centre was in credit and fees were not yet charged. The tribunal finds that the payment was therefore not a prescribed payment for the purposes of section 71C of the Act even though Mr Harwood had a care percentage of 0% for all four children when he made the payment and when he notified the Department.

20. Even if fees had been charged and the requirements of section 71C of the Act were met, that section is subject to section 71D of the Act. The $1,000 payment was taken into account by the decision maker in the decision made on 26 October 2017. However, that decision was set aside on 13 December 2017 and issues concerning the application made by Ms Harwood on 4 August 2017 for a departure from the assessment are to be considered by the tribunal in matter 2017/SC013173. In light of that review and the earlier arrangement, which was ended unilaterally by Mr Harwood, the tribunal also finds that, even if the requirements of section 71C of the Act had been met, in the particular circumstances of this case the amount of $1,000 ought not to be credited.

21. The tribunal finds that the payment of $1,000 made on 1 August 2017 should not be credited against Mr Harwood’s child support liability under section 71C of the Act.

DECISION

The decision under review is set aside and a decision is substituted that the amount of $1,000 paid to [name] Child Care Centre on 1 August 2017 is not to be credited against Mr Harwood’s child support liability.