Holcomb and Garrad (Child support)

[2021] AATA 5204

Holcomb and Garrad (Child support) [2021] AATA 5204 (13 December 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/BC021957

APPLICANT:  Mr Holcomb

OTHER PARTIES:  Child Support Registrar

Miss Garrad

TRIBUNAL:Member P Noonan

DECISION DATE:  13 December 2021

DECISION:

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

·For the period 15 January 2021 to 3 November 2021, Miss Garrad’s adjusted taxable income is varied to $89,736 per annum.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the carer entitled to receive – 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. Miss Garrad and Mr Holcomb are the parents of two children who are currently relevant to the child support assessment.

2. A child support case was first registered with Services Australia (the Agency) on 4 August 2020 and child support was also registered for collection by the Agency from that date. The Agency currently maintains a case completion date for this matter of 11 July 2035.

3. On 15 January 2021 Mr Holcomb applied for a departure from the assessment of child support payable at that time. Care of the children at the time of the application for a departure was registered as being equal shared care. At the time of Mr Holcomb’s departure application the applicable assessment of child support payable was:

   ·For the period 4 August 2020 to 3 November 2021, the annual rate is $4,892 based on Mr Holcomb’s 2019/20 Income Tax Declaration of $121,017 and Miss Garrad’s 2019/20 adjusted taxable income of $75,391.

4. On 17 February 2021 an Agency officer, acting as a delegate of the Child Support Registrar, found that a ground for departure was established and decided to depart from the assessment in the following terms:

   ·Miss Garrad’s adjusted taxable income is set at $85,700 from 15 January 2021 until 3 November 2021.

5. Mr Holcomb objected to this decision and on 25 June 2021 an Agency objections officer partly allowed his objection in the following terms:

   ·For the period 15 January 2021 to 3 November 2021, Miss Garrad’s adjusted taxable income is set at $83,931.

6. Mr Holcomb subsequently applied to the Tribunal for an independent hearing of the Agency’s decision. A hearing for the matter was held on 13 December 2021 by conference telephone. The Child Support Registrar did not attend the hearing. Both Miss Garrad and Mr Holcomb attended the hearing and gave evidence on affirmation.

7. Pursuant to paragraph 98C(1)(b) of the Child Support Assessment Act 1989 (the Act), a decision to depart from the administrative assessment may be made if the following 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; …

CONSIDERATION

The parents’ incomes and access to financial resources

1. Subparagraphs 117(2)(c)(ia) and (ib) of the Act, commonly referred to as Reason 8, provide as grounds 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….

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

2. The term “special circumstances” is not defined in the Act. In Gyselman and Gyselman (1992) FLC 92-279, the Full Family Court indicated that for special circumstances to exist, the facts of the case must establish something which is special or out of the ordinary.

3. It is accepted that Miss Garrad is a [occupation] who is employed by a [workplace] and also undertakes subcontract work, utilising her own Australian Business Number (ABN) via the government authority [Agency 1] within the same [workplace]. Mr Holcomb is concerned in this matter that her subcontract work has not been transparently and accurately accounted for.

4. Miss Garrad supplied the Tribunal with a copy of her latest taxation return. Her gross earnings from salary in 2020/21 was $70,570. Her taxable income in total was declared as $89,736. With respect to her ABN activities her personal services income (PSI) was declared as $22,528 with deductions claimed of $2,753, which the Tribunal accepts as reasonable. In addition, Miss Garrad supplied bank account statements showing deposits from [Agency 1] which were reflective of her declared PSI income.

5. The Tribunal has reviewed Miss Garrad’s overall financial circumstances, which will be discussed in more detail later in these reasons. The Tribunal finds Miss Garrad’s 2020/21 taxation return to be a reasonable basis upon which to ascertain her income and overall access to financial resources. While Mr Holcomb noted that Miss Garrad has been incurring ongoing legal costs with respect to actions against him, the Tribunal notes she has declared significant debts and borrowings from family which she submitted were the source of such funds. On the evidence before it the Tribunal accepts this submission as reasonable. The Tribunal finds that Miss Garrad’s adjusted taxable income at the time of the departure application was $89,736 per annum.

6. With respect to Mr Holcomb he has not completed his past two years’ taxation returns. However, he supplied an income statement from the Australian Taxation Office with respect to his employment with [an employer] for the 2020/21 financial year. This reflected a gross income of $125,464.14. There is nothing before the Tribunal to indicate this salary is not a reasonable basis upon which to assess his overall access to financial resources. Allowing for reasonable deductions of $2,000 the Tribunal finds that Mr Holcomb’s adjusted taxable income at the time of the departure application was $123,464. As this is very close to the income used in the administrative assessment an adjustment is not required.

7. Given the above considerations the annual amount of child support payable by Mr Holcomb is $3,914 which is less than the amount of $4,892 payable under the administrative assessment. The Tribunal finds that special circumstances exist because of these circumstances. The Tribunal is satisfied that a ground for departure from the administrative assessment of child support is established on the basis of subparagraph 117(2)(c)(ia) of the Act, in relation to Miss Garrad’s income, property and financial resources.

Other grounds

1. Other departure grounds were raised by Mr Holcomb with the Tribunal relating to the payment of money, goods or property to Miss Garrad for the benefit of the children, and the earning capacity of Miss Garrad.

2. In Marsh & Eccles [2008] FMCAfam 1417, Riethmuller FM stated, in regard to determining multiple grounds for departure from the administrative assessment, as follows (at paragraph 13):

   Once a “special circumstance” is established, it is then necessary to determine what would be a just and equitable and otherwise proper child support assessment … once a special circumstance has been established for each period, as only one special circumstance in the period is sufficient to satisfy the first step of the departure process.

3. The Tribunal will therefore consider this ground in the context of whether it is just and equitable and otherwise proper to depart from the administrative assessment.

Would departure from the assessment be just and equitable?

1. Both Mr Holcomb and Miss Garrad submitted a Statement of Financial Circumstances for the Tribunal’s consideration. Both parents have mortgages and debts and their respective incomes are just sufficient to meet their overall respective necessary costs of self-support. Miss Garrad confirmed that she has not changed her pattern of work recently. She has a payment plan with respect to her legal fees. The Tribunal does not consider Miss Garrad has a potential earning capacity readily available to her that necessitates further contemplation within the context of her ongoing financial capacity to support the children.

2. Mr Holcomb submitted that the terms of his settlement contemplated his future child support payments. The Tribunal is not satisfied that the terms of the property settlement have conferred an ongoing financial advantage to Miss Garrad such that it is necessary to contemplate those terms within the context of her ongoing financial capacity to support the children. Further, while the payment of private health cover was also raised, that is a discretionary spend and one that parent’s are not obligated to make.

The children

1. In determining the proper needs of the child, it is necessary to have regard to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained, and any special needs of the child (subsection 117(6) of the Act). In Eades & Cadell (SSAT Appeal) [2009] FMCAfam 275, at paragraph 22, Slack FM stated as follows:

   In considering the proper needs of the child [s 117(4)(b)], the SSAT:

   a.    would ordinarily consider the evidence of the parties about the needs of the children to assess the reasonableness and quantum of those needs;

   b.    may have regard to publish guidelines as to the needs of the children (see Hallinan & Witynski at 94.323);

   c.     may also have regard to the costs of children used in the assessment of child support under the existing formula arrangements (although it is not sufficient or appropriate to rely upon the formula to perform that task, Lindenmayer J in Dwyer & McGuire (1993) FLC92-420 (and see also Gyselman (supra) at 79.078).

2. No special needs costs with respect to the children were raised in this matter. Overall, the Tribunal considers this an appropriate case to largely distribute the costs of raising the children using the relevant child support formula, which is based on social science research giving the average costs of children in various family income brackets.

Conclusions

1. The Tribunal considers that it is just and equitable to depart from the administrative assessment of child support payable in this matter with respect to Miss Garrad’s income.

2. With respect to an appropriate date range for this departure determination the Tribunal considers the date range set by the objections officer of 15 January 2021 (being the date of application) to 3 November 2021 is appropriate. This is because Miss Garrad gave evidence that her business income is variable. As such it is appropriate to revert to the administrative assessment at the end of the child support period to enable application of the normal terms applicable to administrative assessments and the flexibility associated with that for both parents. While Mr Holcomb asked for backdating the Tribunal does not consider this appropriate in circumstances where Miss Garrad has shared care of the children and less income than Mr Holcomb and is generally entitled to plan her finances with certainty at least until she is advised there is an objection to the amount of child support assessed as payable to her.

3. As discussed during the hearing the principal object of the Act is to ensure that children receive a proper level of financial support from their parents. Further, the Tribunal notes the statements contained in sections 3 and 4 of the Act to the following effect:

   ·Parents of a child have a primary duty to maintain the child;

   ·The duty has a priority over all other commitments of the parent other than commitments necessary for self-support;

   ·The level of financial support to be provided by parents to their children should be determined in accordance with the legislatively fixed standards; and

   ·The level of financial support is to be determined according to the capacity to provide financial support and noting that parents with a like capacity to provide financial support should provide like amounts.

4. The Tribunal is satisfied that an appropriate departure determination in this matter is as follows:

   ·For the period 15 January 2021 to 3 November 2021, Miss Garrad’s adjusted taxable income is varied to $89,736 per annum.

5. The annual rate of child support payable by Mr Holcomb will be approximately $75 per week from 15 January 2021 to 3 November 2021. From 4 November 2021 the assessment will revert to the administrative assessment of child support payable which will be based upon the most recent care of the children and the adjusted taxable incomes or estimates of the income of the parents.

6. The Tribunal has considered the respective arguments of the parents with respect to hardship. Neither parent provided compelling evidence that the departure application would cause them undue hardship. The Tribunal is satisfied that neither parent will be placed in undue hardship by this decision. Overall, the Tribunal considers this departure determination is a just and equitable outcome, with regard to the respective situations of each parent.

Otherwise proper

1. The Tribunal is satisfied that changing the amount of child support payable will not have any adverse effect upon the community as this decision results in the parents being required to pay child support according to their actual capacity to do so. Such a result would be otherwise proper.

DECISION

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

·For the period 15 January 2021 to 3 November 2021, Miss Garrad’s adjusted taxable income is varied to $89,736 per annum.