Heidrich and Lavoie (Child support)

[2021] AATA 2903

Heidrich and Lavoie (Child support) [2021] AATA 2903 (23 June 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/MC018831

APPLICANT:  Ms Heidrich

OTHER PARTIES:  Child Support Registrar

Mr Lavoie

TRIBUNAL:Member J Thomson

DECISION DATE:  23 June 2021

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that:

• For the period 1 June 2018 to 31 August 2019 Mr Lavoie’s ATI is varied to $33,988;

• For the period 1 September 2019 to 31 August 2020 Mr Lavoie’s ATI is varied to $74,652; and

• For the period 1 September 2020 to 31 August 2021 Mr Lavoie’s ATI is varied to $69,815.

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

1. Ms Heidrich and Mr Lavoie are the parents of [Child 1], born 2008.

2. The percentages being assessed by the Child Support Agency (the Agency) on 19 March 2020, (the decision under review) were as follows;

   ·from 4 July 2016 to 26 September 2019 [Child 1] was in Ms Heidrich’s 67% care and Mr Lavoie’s 33% care;

   ·from 26 September 2019 to 23 March 2020, [Child 1] is recorded as being in Mr Lavoie’s 67% care and Ms Heidrich’s 33% care; and

   ·From 24 March 2020 to 31 October 2021, [Child 1] is recorded as being in Ms Heidrich’s above primary care of 67%, and Mr Lavoie’s 33% care.

3. On 11 September 2019, Ms Heidrich applied for a change of assessment on the grounds that Mr Lavoie’s income, property and financial resources and his earning capacity made the child support assessment unfair, unjust and inequitable (the ground is commonly known as reasons 8A and 8B).

4. The administrative assessment in place at the time of Ms Heidrich’s change of assessment application required Mr Lavoie to pay child support for the period 1 September 2019 to 25 September 2019 at the annual rate of $4,256, based on a provisional income of $50,076 for Mr Lavoie and a 2018/19 provisional income of $20,096 for Ms Heidrich. From 27 September 2019 to 22 October 2019 Ms Heidrich was required to pay child support at the annual rate of $435 (the minimum annual rate), based on a 2018/19 provisional income of $20,096 for Ms Heidrich and a 2018/19 provisional income of $50,076 for Mr Lavoie.

5. On 11 December 2019, an Agency decision maker, [Decision maker 1] found Reason 8A established, but refused Ms Heidrich’s change of assessment application on the ground that it would not be just and equitable to do so.

6. On 6 January 2020, Ms Heidrich objected to [Decision maker 1]’s decision of 11 December 2019, and on 19 March 2020, an Agency objections officer disallowed her objection, affirming the earlier decision of [Decision maker 1] of 11 December 2019.

7. On 14 April 2020, Ms Heidrich applied to the Tribunal for review of the objections officer’s decision of 19 March 2020. The Tribunal heard the matter on 13 May 2021. Ms Heidrich attended the hearing via conference phone and gave affirmed evidence. Mr Lavoie did not attend the hearing despite being given notice of the time and date for the hearing, and the hearing proceeded in his absence.

8. The Tribunal had before it documentation provided by the Agency (Exhibit 1) and documentation provided by Ms Heidrich (Exhibit A). Further documentation was provided by the Child Support Registrar pursuant to the Tribunal’s request under section 95G of the Child Support (Registration and Collection) Act 1988 (the Registration Act) (Exhibit C).

CONSIDERATION

1. In reaching its decision, the Tribunal has considered the affirmed evidence given by Ms Heidrich at the hearing and the documents contained in Exhibits 1, A, B and C.

2. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act). The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Act. A formula is used. It considers variables including each parent’s adjusted taxable income (ATI) for the last relevant year of income, the number of children and the level of care provided by each parent. Part 6A of the Act allows for a departure from the administrative assessment (a process commonly known as a “change of assessment”). Under subsection 98C(1), the Registrar may make such a departure determination if three 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 such 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 a ground or grounds exist and it would be just and equitable and otherwise proper to make a determination, the Registrar 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 ATI or the cost percentage of the child.

Grounds for departure

1. Subparagraph 117(2)(c)(ia) of the Act provides as a ground for departure:

   (c) that, in the special circumstances of the case, an 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…

2. The words “in the special circumstances of the case” are not defined in the legislation. Whilst it is not possible to determine 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 legislation in subsection 117(2) must be guided by the qualification that the Tribunal will not interfere with the administrative formula result in the ordinary run of cases. In Gyselman and 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 Tribunal will consider whether the application of the administrative assessment would result in an unjust and inequitable determination of child support payable, having regard to the evidence relevant to the parents’ financial position.

3. Although Ms Heidrich initially indicated she wished to press her claim for a contribution by Mr Lavoie to the costs of their daughter, [Child 1]’ orthodontic treatment, and education expenses relating to [a] course in which Ms Heidrich has enrolled her, she conceded that if the Tribunal were to find a ground for departure from the administrative assessment , and considered it just and equitable, and otherwise proper to give retrospective effect to the departure order, she would not proceed with her claim for contributions by Mr Lavoie to [Child 1]’ orthodontic and education costs.

4. In her evidence to the Tribunal, Ms Heidrich conceded that she had enrolled [Child 1] in the [course] without Mr Lavoie’s consent, and that consequently, there was no evidence of the mutual intention by both parents that [Child 1] be educated in that manner. Accordingly, notwithstanding that Mr Lavoie did not attend the hearing, the Tribunal finds the requirement for mutual consent on the part of both parents to [Child 1] being educated and/or trained in that manner was not established, and accordingly, Ms Heidrich’s case for a contribution by Mr Lavoie toward those education expenses could not succeed.

5. Ms Heidrich gave evidence that for some time prior to her applying to the Agency for a change of assessment on 11 September 2019, she had been endeavouring to ascertain Mr Lavoie’s income, property and financial resources position, but because she believed he was self-employed, operating [a] business, she was unable to obtain evidence sufficient to challenge the incomes reflected in the assessments for the periods 1 June 2018 to 31 August 2019 (his 2016/17 ATI of $17,086), and 1 September 2019 to 22 October 2019 (his 2018/19 provisional income of $50.076).

6. It was also apparent from the objections officer’s decision and the additional income tax information subsequently provided by the Agency as reflected in Exhibit C, that Mr Lavoie’s 2017/18, 2018/19 and 2019/20 income tax returns were not lodged in a timely manner, and certainly not until his accountants did so on his behalf on 24 August 2020.

7. It is clear from his income tax returns that since at least July 2017, he had been employed as a [Occupation 1] with xcfgh[Employer 1]. He would have been aware by June 2018, when he received his PAYG Summary from [Employer 1] for the 2017/18 financial year that his taxable income for that financial year was $33,988, and not his 2016/17 ATI of $17,086, reflected in the assessment. He would also have been aware by June 2019, when he received his PAYG Summary from his employer, [Employer 1] for the 2018/19 financial year that his taxable income for that year was $74,625, and not his 2018/19 provisional income of $50,076, reflected in the assessment, and he would also have been aware when he received his [Employer 1] PAYG Summary for the 2019/20 financial year that his taxable income for that year was $69,518, and not the 2018/19 provisional income of $50,076 reflected in the assessment.

8. Mr Lavoie is required to inform the Agency of material changes to his financial position, including significant changes to his taxable incomes for these financial years, but failed to do so until his accountant lodged his income tax returns for the three years 2017/18, 2018/19 and 2019/20.

9. The Tribunal is satisfied the incomes reflected in the assessment for the financial years 2018/19 and 2019/20 of $50,076 are not reflective of his actual taxable incomes for those financial years of $74,625 and $69,815, making the assessment unfair, unjust and inequitable, and a ground for departure is established.

Just and equitable

1. 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 needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.

2. Ms Heidrich provided a Statement of Financial Circumstances (SOFC) dated 28 April 2020 reflecting her income from government benefits (parenting payment (single) and family tax benefits A and B – $728 per week per week – annualised to $37,856. She listed negligible assets totalling $2,100, including [a] motor vehicle valued at $1,500, and no liabilities. Her average weekly household expenses totalling $679.50, including rental of $360, were unremarkable.

3. Mr Lavoie provided a SOFC for the purposes of the hearing, dated 27 May 2020, disclosing average weekly household expenses of $867, annualised to $45,084. His taxable incomes for the 2018/19 and 2019/20 financial years were $74,652 and $69,815, reflecting a disposable income of approximately $24,000. Mr Lavoie also disclosed that his parents are contributing $635 to his household costs, and in his affidavit before the Federal Circuit Court, sworn on 27 August 2019, at pages 22 to 27 of Exhibit 1, he deposes to his being employed as a [Occupation 1] with [Employer 1], and residing with his parents in a five-bedroom house while he “continues to save”.

4. He estimated his average weekly income at $1,167, annualised to approximately $61,152. He listed negligible assets totalling $10,650, including [his] motor vehicle valued at $10,000, and a superannuation entitlement of $37,000, and no liabilities.

5. During the 2017/18 and 2018/19 financial years, when Ms Heidrich had the larger (67%) care of [Child 1] – ( the care change reflecting Mr Lavoie’s increased care to 243 nights per annum did not take effect until 18 October 2019, and the care reverted to her original 67% care from 24 March 2020), Mr Lavoie was being assessed to pay child support on his 2016/17 ATI of $17,086 and his provisional income of $50,076, not his respective 2017/18 and 2018/19 taxable income of $33,988 and $74,652.

6. There was no evidence before the Tribunal explaining Mr Lavoie’s failure to lodge his income tax returns for these years in a timely manner.

7. The Tribunal considers it unfair, unjust and inequitable that Ms Heidrich should bear the responsibility of providing, as she did, the larger proportion of the cost of supporting [Child 1] for the 2017/18 and 2018/19 financial years, while Mr Lavoie was underassessed on the lower taxable incomes of $17,086 and $50,076.

8. The Tribunal is not satisfied Mr Lavoie would suffer any significant hardship as a consequence of his ATI for the 2018/19 and 2019/20 financial years being varied to $74,652, and $69,815, to accurately reflect his taxable incomes for those years. Indeed, the Tribunal considers it just and equitable that his taxable incomes should be varied to reflect his actual incomes for those periods.

9. However, in balancing the interests of the parents and the child, [Child 1], in this case, the Tribunal considers it would be unjust and inequitable to consider increasing Mr Lavoie’s child support by ordering a contribution to [Child 1]’s orthodontic costs and her education costs. Instead, the Tribunal will back-date the effect of the income variations to Mr Lavoie’s ATI from 1 June 2018, which is the commencement date of the child support period where Mr Lavoie’s 2016/17 ATI of $17,086 was used in the administrative assessment. The Tribunal can make a decision to depart from the assessment for a period of up to 18 months prior to the date of Ms Heidrich’s change of assessment application on 11 September 2019 under subsection 98(3B) of the Act.

Conclusion

1. The Tribunal has found that Mr Lavoie’s taxable incomes for the 2018/19 and 2019/20 financial years are not accurately reflected in the administrative assessment of child support for the 2018/19 and 2019/20 financial years, making the assessment for those years unjust and inequitable, and a ground for departure has been established.

2. The Tribunal therefore intends reflecting the variations to Mr Lavoie’s ATI as follows:

   ·For the period 1 June 2018 to 31 August 2019 Mr Lavoie’s ATI is varied to $33,988;

   ·For the period 1 September 2019 to 31 August 2020 Mr Lavoie’s ATI is varied to $74,652; and

   ·For the period 1 September 2020 to 31 August 2021 Mr Lavoie’s ATI is varied to $69,815.

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. Varying Mr Lavoie’s income on which child support is calculated from that used in the administrative assessment, based on his income and financial resources that are not reflected in the administrative assessment will result in an appropriate apportionment of the financial responsibility between the parents and the community. Such an outcome would be otherwise proper.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that:

• For the period 1 June 2018 to 31 August 2019 Mr Lavoie’s ATI is varied to $33,988;

• For the period 1 September 2019 to 31 August 2020 Mr Lavoie’s ATI is varied to $74,652; and

• For the period 1 September 2020 to 31 August 2021 Mr Lavoie’s ATI is varied to $69,815.