Horley and Aldersley (Child support)

[2018] AATA 1714

Horley and Aldersley (Child support) [2018] AATA 1714 (30 April 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2017/MC013119

APPLICANT:  Mr Horley

OTHER PARTIES:  Child Support Registrar

Ms Aldersley

TRIBUNAL:Member T Hamilton-Noy

DECISION DATE:  30 April 2018

DECISION:

The tribunal sets aside the decision under review and substitutes its decision that:

• For the period 22 November 2017 until a terminating event occurs for [Child 1], Mr Horley’s adjusted taxable income is set at $347,000 per annum;

• From 22 November 2017 to 31 December 2017, the rate of child support is increased by $13,617 in respect of [Child 1’s] schooling costs;

• From 1 January 2018 to 30 June 2018, the rate of child support is increased by $14,026 per annum in respect of [Child 1’s] schooling costs;

• From 1 January 2018 to 31 December 2018, the rate of child support is increased by $4,475 in respect of [Child 1’s] orthodontic costs.

CATCHWORDS
Child support – Departure determination – Special needs of the child – Costs of education for the child – Income and financial resources of parents – 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

BACKGROUND

1. Mr Horley and Ms Aldersley are the separated parents of [Child 2], [Child 3] and [Child 1]. 

2. A case has been registered with the Department of Human Services – Child Support (the Department) since February 2006 and child support has been collectable by the Department since this time.  Mr Horley is the payer of child support in this matter and Ms Aldersley the payee.

3. The Department states that at the time Ms Aldersley applied for a departure determination, the Administrative Appeals Tribunal (the tribunal), differently constituted, affirmed a decision of the Department that from 21 September 2015 until [Child 3] ceased to be an eligible child of the assessment, the annual rate of child support is varied to $10,000.  [Child 3] ceased to be an eligible child on 21 November 2017 and from 22 November 2017 to 31 December 2017 the administrative assessment of child support provided for an annual rate of child support of $13,863, based on Mr Horley’s 2015/2016 adjusted taxable income of $179,491 and Ms Aldersley’s 2015/2016 adjusted taxable income of $57,655.

4. On 1 May 2017 Ms Aldersley applied for a departure determination on the basis that the costs of maintaining the children were significantly affected because of their special needs (called ‘Reason 2’ by the Department); because the children were being educated in a manner expected by the parents (called ‘Reason 3’ by the Department); because of the income, property and financial resources of Mr Horley (called ‘Reason 8’ by the Department); and because of Ms Aldersley’s legal duty to support another person (called ‘Reason 9’ by the Department).

5. On 29 August 2017 a senior case officer of the Department found a ground to depart from the administrative assessment established and made a decision to depart from the administrative assessment on the following terms:

   ·For the period 1 January 2018 to 31 December 2018, the annual rate of child support payable by Mr Horley was increased by $19,508;

   ·For the period 1 January 2019 to 31 December 2019, the annual rate of child support payable by Mr Horley was increased by $15,484;

   ·For the period 1 January 2020 to 31 December 2020, the annual rate of child support payable by Mr Horley was increased by $16,476;

   ·For the period 1 January 2021 to 31 December 2021, the annual rate of child support payable by Mr Horley was increased by $17,549; and

   ·For the period 1 January 2022 to 31 May 2022, the annual rate of child support payable by Mr Horley was increased by $43,380.

6. On 22 September 2017 Mr Horley lodged an objection to this decision and on 31 October 2017 Ms Aldersley lodged an objection to this decision.

7. On 28 November 2017 an objections officer of the Department allowed the objection and decided to make a departure determination on the following terms:

   ·For the period 22 November 2017 to 30 November 2017, Ms Aldersley’s adjusted taxable income is set at $90,071 per annum;

   ·For the period 22 November 2017 until a terminating event occurs for [Child 1], Mr Horley’s adjusted taxable income is set at $347,000 per annum;

   ·From 1 May 2017 to 21 November 2017, the tribunal’s decision of 10 June 2016 is varied and the annual rate determined by the decision of $10,000 per annum is increased by $13,617;

   ·From 22 November 2017 to 31 December 2017, the annual rate of child support payable by Mr Horley is increased by $13,617;

   ·From 1 January 2018 to 31 December 2018, the annual rate of child support payable by Mr Horley is increased by $18,501;

   ·From 1 January 2019 to 31 December 2019, the annual rate of child support payable by Mr Horley is increased by $14,446;

   ·From 1 January 2020 to 31 December 2020, the annual rate of child support payable by Mr Horley is increased by $14,879;

   ·From 1 January 2021 to 31 December 2021, the annual rate of child support payable by Mr Horley is increased by $15,325;

   ·From 1 January 2022 until a terminating event occurs for [Child 1], the annual rate of child support payable by Mr Horley is increased by $15,785.

8. On 15 December 2017 Mr Horley made application to the tribunal for an independent review of the Department’s decision.  The hearing was conducted on 28 March 2018, on which date both parties spoke to the tribunal by conference telephone and gave evidence on affirmation.  In hearing the matter the tribunal had regard to documents provided by the Department numbered 1 to 902, documents provided by the applicant numbered A1 to A42 and documents provided by the second party numbered B1 to B21.

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Assessment Act) and the Child Support (Registration and Collection) Act 1988.

2. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Assessment Act. The liable parent or carer may apply to the Child Support Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Assessment Act. Section 98C of the Assessment Act provides that the Registrar may make a determination to depart from the formula assessment and establishes a three step process. The Registrar, and the tribunal standing in the place of the Registrar, must be satisfied that:

   (i)there is a ground to depart from the administrative assessment of child support;

   (ii)it is just and equitable to depart; and

   (iii)it is otherwise proper to depart.

3. The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Assessment Act. Each ground is prefaced by the term “in the special circumstances of the case”. The term “special circumstances” is not defined in the Assessment Act. In Gyselman and Gyselman (1992) FLC 92-279, the Full 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.

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 Assessment Act.

CONSIDERATION

Issue 1 – Is there a ground established to depart from the administrative assessment of child support?

1. The primary issue in dispute between the parties was the schooling costs of [Child 1] and the tribunal therefore considered this ground first.

Education costs of [Child 1]

1. Subparagraph 117(2)(b)(ii) of the Assessment Act provides that a ground for departure exists where, in the special circumstances of the case, the costs of maintaining the child are significantly affected because the child is being cared for, educated or trained in the manner that was expected by his or her parents.

2. The tribunal noted that subparagraph 117(2)(b)(ii) refers to the past expectation of the parents rather than ‘agreement’, current or otherwise: see for example, F & S [2003] FMCAfam 531 per Bryant CFM (as Her Honour then was). The expectation required the tribunal to consider the manner of education. The tribunal needs to consider the type of education expected by both parents, rather than any particular school intended by the parents: see Wild and Ballard (1997) FLC 92-771.

3. The tribunal heard from Mr Horley that there was an aspiration to educate [Child 1] at a private school when she was one year of age.  They had put her name down at private schools but he has no recollection of which ones.  He submitted that, at the time [Child 1] was enrolled at [School 1] by Ms Aldersley, there was no longer any mutual intention.

4. Ms Aldersley stated to the tribunal that the MLC application (on the Department documents) was the only private school for which Mr Horley had signed an application form for [Child 1].  This was because girls’ schools are not as difficult to get into as the boys’ schools. The tribunal heard from Ms Aldersley that she had covered [Child 1’s] school fees for 2017.

5. The tribunal noted that the costs of private schooling for [Child 1] calculated by the Department were not disputed by Mr Horley.  These were found to be as follows:

   ·[School 1] required a non-refundable, one-off entrance fee of $400, non-refundable one-off [School 1’s] Life Membership fee of $300 and for 2017 annual tuition fees of $27,234.

   ·The cost of uniforms are higher than for a public school and the objections officer considered an amount of $300 for 2017 only, taking into account that many items will not be replaceable each year.

   ·The remaining billable fees at the time of the objections officer’s decision, for May and August 2017, were $18,156.

   ·The objections officer increased [Child 1’s] school fees by 3% each calendar year to account for an increase in tuition fees, resulting in Mr Horley’s 50% contribution to the school fees of $14,026 in 2018, $14,446 in 2019, $14,879 in 2020, $15,325 in 2021 and $15,785 in 2022.

6. However, following the hearing the tribunal received from Ms Aldersley an email dated 30 April 2018 stating that as of that date [Child 1] had moved from [School 1] to [School 2].  Ms Aldersley had commenced the application for [School 2] the previous week and obtained school related uniforms, laptop and books.  Ms Aldersley stated that [Child 1’s] last day at [School 2] was Friday 27 April 2018, that she had notified [School 1] of [Child 1’s] withdrawal from the school and did not know how much money was still owed to [School 2].

7. The tribunal found from the evidence given by both of the parties that there was, at the time [Child 1] was very young, a mutual intention by the parties that she would be educated privately.  This was consistent with their intention to educate their two older sons also in the private school system.  The tribunal accepted the costs calculated by the Department for attendance at [School 2] and found that the costs are significantly in excess of that of a child being educated within the government secondary school system.  The tribunal found that the costs of maintaining [Child 1] are significantly affected because she is being educated in the manner that was expected by her parents. 

8. As to [Child 3’s] schooling, the tribunal noted that this had been dealt with by way of a previous decision issued by the tribunal, differently constituted, where [Child 3’s] schooling at [School 3] was considered and where Mr Horley’s liability was set at $10,000 per annum and where Mr Horley was meeting [Child 3’s] school costs.  The decision was set until a terminating event occurred for [Child 3].  As [Child 3’s] schooling up until he completed Year 12 was considered in a separate decision issued by this tribunal, with separate appeal rights, the tribunal did not consider the 2017 schooling costs for [Child 3] under this ground.

9. The ground for departure is established in this case in respect of [Child 1’s] private school fees.

Issue 2 – Is it just and equitable to make a departure determination?

1. 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 as regards the child, the liable parent and the carer entitled to child support to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Assessment Act. The tribunal took the following matters into consideration:

The nature of the duty of a parent to maintain a child and the income, earning capacity, property and financial resources of the children

1. The tribunal accepted that [Child 3] was a child of the assessment until 21 November 2017.  The tribunal finds that neither [Child 3] nor [Child 1] has access to any other income, property or financial resources from which to support themselves and that they are reliant on Mr Horley and Ms Aldersley to meet all of their needs.

The proper needs of the children

1. As to the proper needs of [Child 3] while he was a child of the assessment, the tribunal accepted that during 2017 [Child 3] was educated at  [School 3] and that Mr Horley paid the costs of this.   The tribunal accepted that [Child 3] ceased to be a child of the assessment as of 21 November 2017 and that during 2018 he is undertaking an electrical apprenticeship.  Mr Horley stated that he continues to pay for [Child 3’s] motor vehicle costs and registration fees.

2. As to the proper needs of [Child 1], the tribunal accepted that she is under the care of [a doctor] of [a medical clinic].  The tribunal noted that there had been some dispute between the parents as to the medical necessity for [Child 1] to be taking ADD medication, however, on the evidence provided did not find that any medication costs of [Child 1] were significant within the context of her overall expenses.

3. The tribunal also noted that it was agreed between the parents that [Child 1] requires orthodontic work.  The Department found, on documents provided by Ms Aldersley, that the total costs of the treatment are $8,950 after full HCF rebate is claimed.  Mr Horley stated to the tribunal that he should be able to claim back the health insurance rebate if he is required to contribute to orthodontic fees and had not been able to do so as he had not been provided the relevant invoices.  The tribunal was satisfied from information provided by Ms Aldersley after the hearing that these had been provided to Mr Horley such that the health insurance rebate should be taken into account in any contribution made by Mr Horley to orthodontic fees.  The tribunal found from the orthodontic evidence contained on the Department documents that this treatment is a medical need for [Child 1] that increases the overall costs of maintaining her.

The income, property and financial resources of Mr Horley

1. The tribunal noted that the Department has set Mr Horley on an adjusted taxable income of $347,000 per annum for the period 22 November 2017 until a terminating event occurs for [Child 1].  Mr Horley stated to the tribunal that this was “about right”.  The tribunal accepted Mr Horley’s evidence that he is paid on a monthly basis and is then paid quarterly top ups, based on meeting targets.  He accepted that the income attributed to him through the family trust is appropriately attributed to him.  He was, however, overpaid by his employer in 2017 and is required to pay this amount back, which will reduce his component of profit over the next four quarters.  He is in a position where he is unable to pay his income tax and has been issued with legal action which is commencing soon.  Documents provided to the tribunal after the hearing confirmed that Mr Horley owed $16,157 to the ATO as of 6 January 2018.

2. Mr Horley’s Statement of Financial Circumstances listed weekly income of $224 in rental income and $7,903 from the Horley Trust, which is the owner of equity in [Company 1].  Mr Horley stated that he owns a share in his current place of residence which he estimated at $240,000, a share in a [rental] property which he estimated at $357,500, a motor vehicle valued at $17,850 and estimated interest in the Horley Trust/[Company 1] of $330,000. 

3. As to the rental [property], Mr Horley stated to the tribunal that he purchased this property some 12 years ago and it was 90 to 95% financed through NAB.  In response to further questions by the tribunal he stated that it is a three bedroom, one bathroom apartment.  It was purchased for $560,000 plus $28,000 stamp duty plus mortgage insurance of $15,000 and a loan of $532,000 was taken out to cover it, with the balance put on a credit card.  A second mortgage was taken out on the property to fix it up, and to take out a portfolio loan.  He estimated the value at $750,000 based on an appraisal he had done 24 months ago.

4. The tribunal did not accept this evidence given by the applicant.  The tribunal considered similar properties on realestate.com.au during the hearing and considered that the property is valued significantly higher than that estimated by the applicant, noting that it was purchased for $560,000 over a decade ago, and that a further mortgage was taken out to fix it up. 

5. Mr Horley stated that he moved to [City 1] and that the [property] secures the loan for the [City 1] property.  The tribunal noted Mr Horley’s written submissions that moving to [City 1] was done for financial reasons and was “seen as the only way to reduce expenditure enough to avoid a default on loans”.  The tribunal was unable to see how this was so on the information provided by the applicant.  The tribunal found that Mr Horley is maintaining an investment property with significant equity in it and that this financial obligation does not form part of his necessary expenses for self-support, and does not take precedence over his obligation to provide for [Child 1].  The tribunal noted that the recent loan for a caravan, while a much smaller loan, also indicates a level of flexibility to Mr Horley’s financial arrangements and his ability to meet non-essential expenses over and above his necessary self-support costs.

6. Further, the tribunal noted that Mr Horley took out a personal loan of $200,000 which he stated was to assist with [Child 3’s] school fees which he estimated at $280,000 over a four year period.  The tribunal noted that he also explained his other level of debt on credit cards to be due to the school fees.  He provided a schedule of debt to the tribunal which stated he owes $160,600 on six credit cards.  The tribunal could not ascertain, on the evidence provided, how the totality of the debt could be explained by the school fees.

7. The tribunal found that Mr Horley’s level of income, property and financial resources well exceeds the amount of $179,491 used in the administrative assessment of child support.

The income, property and financial resources of Ms Aldersley

1. The tribunal noted that the Department has set Ms Aldersley on an adjusted taxable income of $90,071 for the period 22 November 2017 to 30 November 2017, on the basis that this was significantly higher than her 2015/2016 adjusted taxable income of $57,655 used in the administrative assessment.

2. Ms Aldersley stated to the tribunal that to increase her income to $90,071 she was working six to seven days per week, and sometimes two shifts per day, which is not sustainable.  She has decreased her income again as she couldn’t sustain the hours she was doing.  This was decreased during 2017 when [Child 3] was having difficulties and was attending psychiatrist [appointments].  She has estimated her 2017/2018 income with the Department of $55,000, which is due to decreasing her work from seven days per week and also due to only doing four days per week at present because of training requirements.

1. Ms Aldersley’s Statement of Financial Circumstances stated that she has been working as [Occupation 1] with [Workplace 1] for eight and a half years and that her current earnings are $1,385 per week, or $72,000 per annum.  She estimated that her car is valued at $11,000, household contents are $7,000 and a trailer at $1,000.

2. In terms of her other property and financial resources, the tribunal accepted that Ms Aldersley resides in a home that is half owned by her mother.  There was some dispute between the parties about the value of the property, however, the tribunal considered that given the property is Ms Aldersley’s principal residence, the value of the property does not provide a level of income or financial resources to her, over and above her employment income, to enable her to support [Child 1].  This is with the exception of Ms Aldersley to draw out equity from the home’s value, which she has done recently, to meet the schooling costs of [Child 1].  Her Statement of Financial Circumstances listed the current Westpac Equity Access Loan as owing $59,920.

3. The tribunal noted that the administrative assessment of child support used an adjusted taxable income of $57,655 for Ms Aldersley for the period 22 November 2017 to 31 December 2017.  The tribunal was satisfied that Ms Aldersley was not earning $90,000 by November 2017, however, her estimate of income of $55,000 provided to the Department was inconsistent with the information she provided to the tribunal of earning $1,385 per week or $72,000 per annum.  The tribunal noted the discrepancy in evidence given by the parties as to the value of Ms Aldersley’s principal place of residence.  The tribunal noted that Ms Aldersley has accessed equity from the home to meet [Child 1’s] schooling costs.  On the evidence before it the tribunal did not find that the principal place of residence provides to Ms Aldersley any additional financial resources to enable her to support [Child 1].

The earning capacity of the parties

1. As to the earning capacity of each of the parents, the tribunal noted that subsection 117(7B) of the Assessment Act requires the tribunal to consider the following matters in determining that a parent’s earning capacity is greater than is reflected in his or her income used in the administrative assessment:

   ·    Whether the parent:

   oIs not working despite ample opportunity to do so (subparagraph 117(7B)(a)(i));  and/or

   oHas reduced their weekly hours of work to below full-time work (subparagraph 117(7B)(a)(ii));  and/or

   oHas changed their occupation, industry or working pattern (subparagraph 117(7B)(a)(iii));  and

   ·    If the parent’s decision about his/her work arrangements is not justified by either his/her caring responsibilities (subparagraph 117(7B)(b)(i)) or his/her state of health (subparagraph117(7B)(b)(ii));  and

   ·    If the parent has not demonstrated that it was not a major purpose of their decision not to work despite ample opportunity to do so or to stop working, reduce their hours of work or change their occupation, industry or working pattern to affect the administrative assessment of child support (paragraph 117(7B)(c)).

2. The tribunal accepted that Mr Horley has worked as [Occupation 2] with [Company 1] (Vic) Pty Ltd for some 18 years.  The tribunal found it is not open to make an earning capacity determination in respect of Mr Horley’s circumstances.

3. The tribunal accepted that Ms Aldersley has worked as [Occupation 2] with [Workplace 1] for eight years.  The tribunal accepted that in the last financial year Ms Aldersley increased her working hours to six to seven days per week, to meet additional costs of [Child 1’s] schooling.  The tribunal accepted that she has since reduced that, in around mid to late 2017.  The tribunal finds that at this time Ms Aldersley changed her working pattern.  The tribunal found that Ms Aldersley reduced her hours at the time she had significant concerns about [Child 3’s] mental health and found that her change in working pattern was justified by her caring responsibilities.  The tribunal found it is not open to make an earning capacity determination in respect of Ms Aldersley’s circumstances.

The necessary commitments of Mr Horley

1. The tribunal accepted that Mr Horley lives with his current wife and two youngest children and accepted his evidence that the children do not have expenses out of the ordinary apart from [school] expenses of $4,000 per annum.  The tribunal accepted Mr Horley’s evidence that his wife is not currently working but does not have any medical or other reasons not to work and that she has recently applied for employment positions.

2. The tribunal noted that Mr Horley had provided a breakdown of his income and expenses which asserted $184,720 in expenses.  Mr Horley stated that this amount relates to minimum credit card balance repayments, repayment of a personal loan to a friend, his home loan and residential loan and two portfolio loans.  The tribunal did not accept that these amounts correctly represented Mr Horley’s necessary self-support expenses, taking into account that maintenance of a rental property, repayment on finance of a caravan, the support of a wife where there is no legal duty to do so and the support of adult children do not take precedence over Mr Horley’s requirement to assist in maintaining [Child 1].

The necessary commitments of Ms Aldersley

1. The tribunal accepted Ms Aldersley’s evidence that she resides in a house that she has half-ownership of, with her mother owning the other half.  She is paying $240 per week rent to her mother, as there are four children and her mother doesn’t live in the house.  She pays half of the water and rates, and pays the totality of the electricity and gas bills.  The tribunal accepted that [Child 1] is primarily with Ms Aldersley and that household costs for Ms Aldersley, [Child 1] and [Child 3] at the time of preparation of the Statement of Financial Circumstances were estimated to be $1,994 per week.  The tribunal noted that Ms Aldersley’s income is insufficient to meet these household costs.

2. The tribunal accepted that both parties continue to contribute to the financial needs of their adult child [Child 2] who is now 21 years of age.  Mr Horley stated that he pays [Child 2’s] car and registration payments, that [Child 2] is staying with him regularly and that he is providing [Child 2] a weekly allowance of $200 plus the cost of his books.  He distributes [Child 2] amounts from the trust structure which decreases his taxable income.  As to why this should take precedence over [Child 1’s] needs, Mr Horley submitted that if [Child 2] was not listed as a beneficiary, Mr Horley would pay $9,000 more a year in tax and therefore there is no financial difference in terms of his ability to contribute to [Child 1’s] needs.  The tribunal accepted that [Child 2] is with Ms Aldersley mainly on weekends at present and that the expenses she is incurring for him are limited.

The direct and indirect costs incurred by Ms Aldersley in providing care for the children

1. The tribunal found that Ms Aldersley decreased her working hours during 2017 due to concerns about [Child 3’s] mental health.  She is, however, currently working four days per week and participating in training related to her employment for additional hours per week.  The tribunal did not find on the evidence before it that Ms Aldersley is foregoing income in order to provide care for [Child 1] in 2018.

Hardship

1. Paragraph 117(4)(g) of the Act requires the tribunal to consider any hardship that would be caused to the children or to Ms Aldersley by the making of, or the refusal to make, a departure determination; and also to consider any hardship that would be caused to Mr Horley or any other child or other person that Mr Horley has a duty to support, by the making of, or the refusal to make, a departure determination.

2. The tribunal has noted above that Ms Aldersley’s current income is insufficient to meet her household expenses.  Ms Aldersley stated to the tribunal that she has had to take out a loan against her half of the house she resides in to assist paying [Child 1’s] school fees.  She has taken out a line of credit of $100,000 against the house and thinks she has used $80,000 to $90,000 of this.  She paid all of [Child 1’s] school fees in 2017.  Ms Aldersley’s Statement of Financial Circumstances listed debts of $59,920 on the access equity loan, $7,277 on a Visa card, $4,500 for orthodontic costs and $15,107 for [School 1] fees.  The tribunal considered there would be some hardship to Ms Aldersley and to [Child 1] if the tribunal refused to make a departure determination in this case.

3. The tribunal heard from Mr Horley that the last four years has been “brutally expensive” and has depleted his resources to the level where insolvency is questionable.  Ms Aldersley gave evidence in response that Mr Horley has stated every year he is in financial hardship and may have to go bankrupt.  The tribunal noted that Mr Horley declared $8,127 per week income in his Statement of Financial Circumstances and $3,753 per week in expenses and asked how he had accumulated the level of debt he was asserting he had accumulated.  Mr Horley stated that he has paid $280,000 for [Child 3] in school fees over a four year period, for [School 3].  He has paid $300,000 over the life of the child support case and has accumulated “massive amounts” on credit cards.  The tribunal noted that there was also evidence given of a personal loan of $200,000 which Mr Horley stated was from friends for schooling costs.  The tribunal found Mr Horley to give his evidence about the accumulation of his debts in an unclear manner and was unable to ascertain from the evidence given the reasons for the level of debt asserted by the applicant.

4. Given the ongoing level of income of the applicant, his ability to maintain a rental property and contribute to adult children and his ability to purchase a caravan on finance, the tribunal was satisfied there would not be significant hardship to Mr Horley or his two youngest children in departing from the administrative assessment of child support on reasonable terms.  Given Mr Horley’s wife’s ability to obtain employment and current seeking of employment, the tribunal did not find that Mr Horley has a legal duty to maintain his current wife.

What is the proposed departure determination in this case?

1. The tribunal noted that there is a previous tribunal decision in effect that increases child support payable by Mr Horley for the period until [Child 3] ceased to be an eligible child of the assessment.  The tribunal noted that during 2017 Mr Horley was paying for [Child 3’s] school fees and Ms Aldersley was paying for [Child 1’s] school fees (the evidence before the previous tribunal was that Ms Aldersley had contributed $12,000 to [Child 3’s] school fees in 2014 but had not contributed to [Child 3’s] school fees for 2015 or 2016).  Mr Horley was, in addition, required to pay an amount of $10,000 per annum in child support to Ms Aldersley.  Taking into account the payment by each of the parents of the school fees and the amount of child support payable by Mr Horley in this period, the tribunal was reluctant to interfere with the departure determination set by a previous decision of this tribunal.  The effect of this is that the previous decision of the tribunal is to stand and until 21 November 2017, when [Child 3] ceased to be an eligible child of the assessment, the annual rate of child support is $10,000 per annum.  The tribunal noted that, while this may cause an overpayment to Ms Aldersley for this period, this aspect of the decision will have the effect of reducing the rate of child support owed by Mr Horley for this period and will go some way to ameliorating the debt that he states he has accumulated from the significant schooling costs of [Child 3].

2. From 22 November 2017 the tribunal considered it appropriate to vary Mr Horley’s adjusted taxable income to $347,000 per annum to reflect his level of income and financial resources as being significantly above the amount used in the administrative assessment of child support.

3. The tribunal found it was not just and equitable to vary Ms Aldersley’s adjusted taxable income from 22 November 2017, taking into account the variations in her income due to concerns about [Child 3] and training requirements.  The tribunal considered that the adjusted taxable income calculated by the ATO upon lodgement of relevant income tax returns is the most appropriate way to assess Ms Aldersley’s level of income, property and financial resources for the period from 22 November 2017 onwards.

4. The tribunal considered it is appropriate to increase child support payable from 22 November 2017 to 30 June 2018 to reflect [Child 1’s] significant schooling costs, taking into account Ms Aldersley’s evidence that a level of ongoing payment was required for [School 1] upon removal of a child from the school.  The tribunal considered that a 50% per parent approach was reasonable and that for the period 22 November 2017 to 31 December 2017 child support should be increased by $13,617 per annum and for the period 1 January 2018 to 30 June 2018 child support should be increased by $14,026 per annum. 

5. In addition, the tribunal considered that Mr Horley should contribute to half of the out of pocket costs of [Child 1’s] orthodontic costs of $4,475 per annum for the period 1 January 2018 to 31 December 2018.

6. The tribunal noted that Ms Aldersley sought further time to clarify the costs associated with [Child 1’s] move to [School 2].  These costs, however, relate to a government secondary school which is intended to be covered in the usual administrative formula of child support.

7. Based on the above findings, the tribunal proposes to make the following departure determination:

   ·      For the period 22 November 2017 until a terminating event occurs for [Child 1], Mr Horley’s adjusted taxable income is set at $347,000 per annum;

   ·      From 22 November 2017 to 31 December 2017, the rate of child support is increased by $13,617 in respect of [Child 1’s] schooling costs;

   ·      From 1 January 2018 to 30 June 2018, the rate of child support is increased by $14,026 per annum in respect of [Child 1’s] schooling costs;

   ·      From 1 January 2018 to 31 December 2018, the rate of child support is increased by $4,475 in respect of [Child 1’s] orthodontic costs.

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

1. The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Assessment Act. The tribunal accepted that Ms Aldersley is currently in receipt of family tax benefit. Any departure determination made by the tribunal is likely to reduce the impact on the public purse and the tribunal therefore concluded that it is also otherwise proper to make the proposed departure determination.

DECISION

The tribunal sets aside the decision under review and substitutes its decision that:

• For the period 22 November 2017 until a terminating event occurs for [Child 1], Mr Horley’s adjusted taxable income is set at $347,000 per annum;

• From 22 November 2017 to 31 December 2017, the rate of child support is increased by $13,617 in respect of [Child 1’s] schooling costs;

• From 1 January 2018 to 30 June 2018, the rate of child support is increased by $14,026 per annum in respect of [Child 1’s] schooling costs;

• From 1 January 2018 to 31 December 2018, the rate of child support is increased by $4,475 in respect of [Child 1’s] orthodontic costs.