Howard and Howard (Child support)

[2018] AATA 4163

Howard and Howard (Child support) [2018] AATA 4163 (7 September 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/BC013500 & 2018/BC013520

APPLICANTS:  Mr Howard

Ms Howard

OTHER PARTIES:  Child Support Registrar

MsHoward

MrHoward

TRIBUNAL:Senior Member A Freeman

DECISION DATE:  07 September 2018

DECISION:

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

·         For the period from 18 May 2017 to 30 June 2017, Mr Howard’s adjusted taxable income is varied to $174,000;

·         For the period from 1 July 2017 to 31 December 2019, Mr Howard’s adjusted taxable income is varied to $160,000 per annum; and

·         For the period from 1 January 2018 to 7 September 2018, Mr Howard’s annual rate of child support payable is increased by an amount of $38,000.

CATCHWORDS
CHILD SUPPORT – departure determination – significant educational costs of the children – income, property and financial resources of the liable parent – business income – ground for departure exists – 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 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 Howard and Ms Howard are the parents of [Child 1], [Child 2] and [Child 3].   Ms Howard’s care percentage in relation to all three children is currently recorded for the purposes of assessing child support as 100%.[1]

   [1] The Tribunal notes that as of 7 September 2018 some changes were made to living arrangements for [Child 2] and [Child 3] by virtue of orders made by the Family Court subsequent to the hearing of this application.

2. Ms Howard lodged a departure application with the Department of Human Services (the Department) on 18 May 2017 seeking a departure from the administrative assessment. At the time of Ms Howard’s application, Mr Howard’s liability to pay child support was assessed based upon an adjusted taxable income (ATI) of $137,241 for Mr Howard and $64,423 for Ms Howard which resulted in an annual rate of child support payable by Mr Howard of $20,898.

3. On 8 November 2017, the Department made a decision to depart from the assessment in place and varied Mr Howard’s ATI to $227,000 for a period from 18 May 2017 to 31 December 2018.  The decision also increased Mr Howard’s annual rate payable for 2018 by $38,000, representing a 100% contribution to the private school fees for [Child 1] and [Child 2].  This resulted in an annual rate payable by Mr Howard to Ms Howard of $85,463 in 2018.

4. Mr Howard objected to that decision and on 1 February 2018 an objections officer allowed the objection and varied Mr Howard’s ATI to $160,000 for the period from 1 January 2018 to 31 December 2018.  This resulted in a reduction of Mr Howard’s annual rate to $76,175 for 2018.

5. Both Mr and Ms Howard have sought further review of this decision.

6. Mr Howard submits that an ATI of about $160,000 is reflective of his income but should apply from 18 May 2017.  He also submits that he does not have the capacity to contribute to 100% of the private school fees.   Ms Howard submits that the decision of the Department made on 8 November 2017 that varied Mr Howard’s ATI to $227,000 should remain in place.

7. The Tribunal hearing was conducted on 7 September 2018. Mr Howard appeared before the Tribunal by conference telephone and Ms Howard attended the hearing in person.  In reaching its decision, the Tribunal has considered the sworn evidence given by both parties at the hearing, together with the documentation provided by the Department (exhibit 1), the documentation provided by Mr Howard (exhibit 2) and the documentation provided by Ms Howard (exhibit 3). 

CONSIDERATION

1. The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of child support payable by the liable parent. The Act also provides for a departure from the administrative assessment in certain circumstances.

2. A departure from an administrative assessment may be made pursuant to section 98C of the Act if the following matters are established:

   ·         One or more than one of the grounds for departure referred to in subsection 117(2) exists;[2]

   ·         A departure is just and equitable as regards the children and each parent;[3] and

   ·         It is otherwise proper to make a departure decision.[4]

Issue 1 – Grounds for departure

Costs of educating the children

[2] See subparagraph 98C(1)(b)(i) and paragraph 98C(2)(a).

[3] See sub-subparagraph 98C(1)(b)(ii)(A).

[4] See sub-subparagraph 98C(1)(b)(ii)(B).

1. Subparagraph 117(2)(b)(ii) — commonly referred to as Reason 3 — provides as a ground for departure the following:

   (b) that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:…

   (ii) because the child is being cared for, educated or trained in the manner that was expected by his or her parents;…

2. [Child 1] and [Child 2] currently attend private schools.  [Child 3] is at a public school but Ms Howard told the Tribunal that the intention was for him to attend [School 1] in 2020.

3. [Child 1] and [Child 2] have attended private schools for about four years including a period prior to when the parties separated.  There was no dispute that both parents were involved in the children’s enrolment in their schools at the relevant time and that the children were being educated in a manner that was expected by the parents. The Tribunal is therefore so satisfied.

4. In 2017 the compulsory fees in relation to the children attending their respective private schools amounted to about $38,097 in total.  These fees were paid out of Mr Howard’s business account by Ms Howard on 30 January 2017, following separation.

5. There was no dispute that the 2018 fees for both children are around the same amount, that is $38,000 in total for the year. 

6. When considering that these expenses amount to almost double the annual rate payable by Mr Howard under the administrative assessment of child support that was in place at the time of Ms Howard’s change of assessment application, the Tribunal is satisfied that these costs significantly affect the costs of maintaining the children. 

7. Therefore, the Tribunal is satisfied that in the special circumstances of this case, the costs of maintaining the children are significantly affected because they are being educated in a manner that was expected by their parents and a ground to depart from the administrative assessment has been established.

8. Ms Howard submits that the annual rate payable by Mr Howard should be increased by 100% of the costs of the 2018 private school fees.  The issue of how these costs should be taken into account in terms of the assessment of child support will be considered below as part of whether a departure is just and equitable.

Issue 2 – Would departure from the formula assessment be just and equitable?

1. Subsection 117(4) of the Act sets out the criteria that must be considered in determining whether it would be just and equitable as regards the children and the parents to make a departure order. This involves a consideration of the following:

   (a)the nature of the duty of a parent to maintain a child (as stated in section 3); and

   (b)the proper needs of the child; and

   (c)the income, earning capacity, property and financial resources of the child; and

   (d)the income, property and financial resources of each parent who is a party to the proceeding; and

   (da)the earning capacity of each parent who is a party to the proceeding; and

   (e)the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support;

   (i)him or herself; or

   (ii)any other child or another person that the person has a duty to maintain; and

   (f)the direct and indirect costs incurrent by the carer entitled to child support in providing care for the child; and

   (g)any hardship that would be caused:

   (i)to:

   (A)the child; or

   (B)the carer entitled to child support;

   by the making of, or the refusal to make, the order; and

   (ii)to:

   (A)the liable parent; or

   (B)any other child or another person that the liable parent has a duty to support;

   by the making of, or the refusal to make, the order; and

   (iii)to any resident child of the parent by the making of, or the refusal to make, the order.

Mr Howard’s circumstances

1. Mr Howard is an [occupation] who operates his own practice via a corporate entity and a family trust structure. 

2. Mr Howard receives an amount each week representing drawings taken from the business which are later calculated as a distribution from the family trust to him for the financial year.  Any net profits remaining in the business are also included in this distribution to Mr Howard at the end of the financial year.  In 2017/2018 this amounted to about $160,000 in total.  Mr Howard estimates a similar amount will be distributed to him for the current financial year.

3. A review of the profit and loss statement for the family trust for 2016/2017 shows that the business made a net profit of about $206,829.  This was then distributed to Mr Howard ($47,779), Ms Howard ($92,000), Mr Howard’s parents ($33,000 each) and his children ($350 each).  Mr Howard also received some income from the dissolution of a previous partnership with a former business partner (about $65,216) which meant his gross income for that year was about $109,696.  The parties separated in late 2016 so part of the income generated by the business was used by the parties to meet their joint living expenses when they were still a family unit. 

4. Ms Howard disputed that she ever received the $92,000 distribution allocated to her that year.  Mr Howard stated that it was made up of the $38,000 that she unilaterally took to pay for the 2017 private school fees following separation as well as money spent by her when they were living together as a family.  Mr Howard confirmed that this amount did not include any payments to Ms Howard following separation with the exception of the payment of school fees mentioned above and about $8,000 Ms Howard took for legal fees.

5. Mr Howard also confirmed that the distribution to his parents in the amount of $66,000 was not actually physically distributed to them but rather is recorded in the company records as a loan which they can call upon at any time.  Mr Howard conceded that the money was used by him and Ms Howard for living expenses that year.

6. In 2017/2018, it can be seen from the company records and Mr Howard’s bank account statements that he was paid about $2,700 per week from the business as drawings.  This amounts to about $140,400 for the year.  Mr Howard also accepted that he received the balance of any net profit made by the business.  According to the 2017/2018 profit and loss statement for the family trust, this would amount to a total of about $163,199 received by Mr Howard as gross income for the year.  Allowing for some reasonable tax deductions, including Mr Howard’s income protection insurance premiums (these amounted to about $2500 for the year in 2016/2017), this would amount to a gross income of about $160,000 per annum.

7. Mr Howard provided to the Tribunal a cashflow projection schedule for the 2018/2019 financial year which estimates a similar income, including the weekly payments of $2,700 to his personal bank account.  A review of his accounts confirms these payments being made.  Mr Howard also provided some documentation regarding the likely fees that the business will generate this financial year to support these calculations.

8. A gross income of $160,000 per annum would result in a weekly amount of $3,076 gross or $2,117 net.

9. Mr Howard lives alone and currently rents his home.  In his statement of financial circumstances, Mr Howard estimated that his average weekly expenses amounted to about $1,003 per week

10. Mr Howard told the Tribunal that his income for the current financial year is likely to remain relatively stable as his practice’s trading conditions are unlikely to change in any great way between now and the end of June 2019. 

Ms Howard’s circumstances

1. Ms Howard is a stay at home mother.  She has qualifications in [a specific discipline] but has not worked since 2014. 

2. Following separation, some joint assets were sold, and Ms Howard received, via court orders made by the Family Court, about $50,000 in spousal maintenance, $15,000 to pay credit cards and about $150,000 for legal costs relating to the property settlement proceedings.  Ms Howard has been living off these funds as well as other money she accessed from joint accounts at separation.  These funds will likely form part of Ms Howard’s portion of the property pool once property settlement is finalised.

3. Ms Howard lives with the children in a rental property.  Up until recently she has paid her rent in advance from funds obtained from the joint property pool following separation and her spousal maintenance payments. 

4. Ms Howard estimated in her statement of financial circumstances that her average weekly expenses amount to about $2,610 per week including private health insurance premiums and schooling costs for the children, but not including private school fees.  Upon closer examination, some of these amounts appeared to be incorrect.  Based on the evidence given by Ms Howard, the Tribunal finds that her average weekly expenses are likely to be as follows:

   ·     $340 per week for food;

   ·     $575 per week for rent;

   ·     $85 per week for gas and electricity;

   ·     $60 per week for mobile phones and internet (based on $160 per month for Ms Howard’s mobile and two for the children and $80 per month for internet);

   ·     $120 per week for costs of running the car (the Tribunal considers $80 per week for petrol to be reasonable along with costs of maintenance and registration);

   ·     $150 per week for children’s clothing and activities;

   ·     $70 per week for medical, dental and optical including private health insurance premiums;

   ·     $115 per week for insurance;

   ·     $200 per week for schooling costs not including school fees (Ms Howard accepted that her original estimate of $820 per week was more likely to be per month);

   ·     $20 per week for chemist expenses;

   ·     $30 per week for repairs and hairdressing expenses;

   TOTAL – $2105

5. The Tribunal finds that the costs associated with food, mobile phones, clothing, children’s activities, school expenses, medical, dental, optical and chemist expenses amount to about $650 to $700 per week for the children.

Consideration of whether a departure is just and equitable

(a) Mr Howard’s income and financial resources

1. Mr Howard’s income is generated from his  [practice] via a family trust structure.  The evidence before the Tribunal suggests that for the 2017/2018 financial year onwards this amounts to about $160,000 gross per annum.

2. Ms Howard provided information regarding a number of company searches which she submitted supported the conclusion that Mr Howard was in fact involved in a variety of other businesses and corporate entities including [Business 1] in [Town 1], [Business 2 in Town 2] and a [Business 3] in [State 1].  Ms Howard provided a spreadsheet which she stated had been prepared by a forensic investigator that, according to her, showed all of the business assets Mr Howard has under his control. 

3. The Tribunal has examined these searches and many of the entities listed have no apparent connection to Mr Howard at all (for example [Company 1] which operated [Business 2 in Town 2] and had a [different person] listed as the director and shareholder). 

4. Ms Howard said that some of them were based in  [State 2] and because Mr Howard’s parents live in [State 2] this was evidence of Mr Howard’s involvement.  Without any other connection to Mr Howard, the Tribunal does not accept this.

5. The only entities that have any apparent connection to Mr Howard are:

   ·     [Company 2] – the entity that runs Mr Howard’s  [practice];

   ·     [Company 1] – the family trust that Mr Howard receives distributions from;

   ·     The Howard Group Superannuation Fund;

   ·     [Company 3] (an entity that Mr Howard ceased to be involved with from 2012);

   ·     [Company 4] (an entity that ceased to exist from 2012);

   ·     [Company 5]  (an entity that Mr Howard ceased to be involved with from June 2017).

6. In relation to [Company 5], Mr Howard told the Tribunal that it was an entity set up by his former business partner, and his involvement was as a director only.  The entity did engage in some business transactions with the accounting practice which are reflected in the business’s income for the relevant financial year, and Mr Howard ceased to be a director from 30 June 2017.  There is no evidence of Mr Howard receiving any personal benefit from his involvement with this entity, or any others apart from those currently associated with Mr Howard’s [practice] as identified above.

7. In these circumstances, the Tribunal is not prepared to draw any inferences that Mr Howard has access to other sources of income or financial resources other than those already identified.  The Tribunal therefore finds that Mr Howard’s income is best reflected by an amount of $160,000 per annum from July 2017.

8. The Department determined in its decision dated 8 November 2017 that Mr Howard’s income was best reflected by an amount of $227,000 per annum.  Ms Howard submits that this is more reflective of Mr Howard’s income and should be his ATI for the purposes of assessing child support.

9. This figure was arrived at by looking at the 2015/2016 financial year’s tax returns for Mr Howard, the family trust and the profit and loss statement for the business as the 2016/2017 financial records were not available.  The Department determined that Mr Howard’s income for the 2016/2017 financial year was likely to be similar to his total available income and benefits as recorded in the 2015/2016 tax returns (being about $139,527 per annum) plus any earnings from the family trust that would previously have been distributed between him and Ms Howard and other members of the family.  The Department therefore added $139,527 with $87,437 and arrived at a figure of about $227,000 for the year.

10. In this review application, the Tribunal has the benefit of having the 2016/2017 financial records available to consider.  A review of these documents demonstrates that for at least half of the financial year, any profits generated by the business were shared by Mr and Ms Howard and spent on joint family expenses whilst they were still married.  These profits amounted to $206,829 gross for the financial year.  Following separation, some monies were transferred out of the business account and the home loan account by Ms Howard to pay for the living expenses of her and the children, including $38,000 for the private school fees for 2017 and her rent paid 12 months in advance.  These amounts will no doubt be subject of consideration by the Family Court when considering a property settlement in due course. 

11. The Tribunal also has evidence before it of Mr Howard receiving about $65,000 from a former partnership which dissolved that financial year.  When this is added to the gross profits of the trust, this amounts to about $270,000.  Deducting the $38,000 used for private school fees and about $50,000 as Ms Howard’s share of the profits for the first half of the financial year,[5] a figure of about $182,000 results.  Ms Howard also accepted that she had the use of about $8,000 for legal fees following separation.  Deducting this amount results in a figure of about $174,000.

    [5] This is calculated by apportioning a quarter of the gross profits of the trust, that being Ms Howard’s half of the first half of the financial year that was spent on joint family expenses.

1. As a result, the Tribunal considers, on the evidence before it, that an ATI of about $174,000 for Mr Howard is reflective of his income and financial resources for 2016/2017 and an ATI of about $160,000 for 2017/2018.

2. If an ATI of $174,000 for Mr Howard was applied to the assessment of child support for the period between 18 May 2017 (when Ms Howard’s change of assessment application was made) and 14 June 2017, it results in an annual rate of about $26,019 or $500 per week.[6]  From 15 June 2017 to 30 June 2017, the annual rate produced is about $41,514 or $798 per week.

   [6] Using an income of $64,423 for Ms Howard (her 2016 taxable income) and a care percentage of 24% for Mr Howard and 76% for Ms Howard as was applicable at that time.

3. If an ATI of $160,000 for Mr Howard was applied to the assessment of child support for the period from 1 July 2017, it results in an annual rate of child support payable by Mr Howard of about $38,175 or about $734 per week.[7] 

   [7] Using an income of $0 and a care percentage of 100% for Ms Howard as was applicable at that time.

4. Mr Howard’s weekly expenses amount to about $1,000 per week.  This would leave at least $1117 per week of Mr Howard’s net income from which child support payments could be met. 

5. Therefore, the Tribunal finds that Mr Howard has the capacity to meet the rate of child support that an ATI of between $160,000 and $174,000 per annum produces for the relevant periods of time identified above. 

6. When the annual rates payable as a result of these ATI’s are compared to that which applied under the administrative assessment of child support prior to Ms Howard’s change of assessment application, being $20,898 from 18 May 2017 to 14 June 2017, $32,211 from 15 June 2017 to 31 July 2017 and $23,889 from 1 August 2017 to 30 June 2018, there is a significant difference such that it is appropriate to vary Mr Howard’s ATI’s to these amounts.

(b) Ms Howard’s income and financial resources

1. Ms Howard is a stay at home mother.  She is currently living off money that will form part of any property settlement to be finalised between the parties. 

2. Mr Howard submitted that the $92,000 trust distribution to Ms Howard should be included as her income for the 2016/2017 year for the purposes of assessing child support.  Ms Howard disputed that she actually received that money.  At least $38,000 of this amount was spent by Ms Howard on school fees for the children which was a joint expense met by both parties from the business income prior to separation.  Mr Howard also accepted that the rest of the distribution was money spent by Ms Howard on joint family expenses whilst they were still married.  As noted above, the Tribunal finds that about $50,000 (being a quarter of the net profits for the trust that year) is reflective of Ms Howard’s share.

3. Any adjustment to Ms Howard’s ATI for the 2016/2017 year would apply from 18 May 2017 (when her application for change of assessment was made) until 30 June 2017.  Department records show that the administrative assessment of child support for the period between 18 May 2017 and 14 June 2017 was based upon an ATI of $64,423 for Ms Howard (her 2015/2016 taxable income) and then nil from 15 June 2017 to 30 June 2017, such that any changes to these figures would not make any real difference to the annual rate payable by Mr Howard, given the findings of the Tribunal regarding the apportionment of profits to Ms Howard for that year.[8]

   [8] The application of an ATI of about $50,000 for this period of time results in a $70 difference to the amount of child support payable by Mr Howard for the year.

4. In all the circumstances, the Tribunal therefore does not consider it appropriate to make any adjustment to Ms Howard’s ATI for the purposes of assessing child support.

5. Mr Howard submitted that Ms Howard could work but chooses not to.  The Tribunal notes that Ms Howard has qualifications [in a specific discipline] but has not worked since 2014 such that there has been no change to her working pattern in recent times or any evidence to suggest that she has changed her working pattern in order to affect the assessment of child support such that it would be appropriate to vary her ATI to reflect her capacity to earn an income pursuant to subsection 117(7B) of the Act.

(c) Private schooling and other costs

1. [Child 1] and [Child 2] currently attend private schools and have done so for about four years.  Following separation, the costs of such schooling for 2017 were met from money in a joint bank account that Ms Howard transferred unilaterally on 30 January 2017.

2. Ms Howard seeks a 100% contribution from Mr Howard for the 2018 school fees and beyond. 

3. The Tribunal heard evidence that [Child 1] is in year 12 this year so it will only be [Child 2] at a private school in 2019.  Ms Howard stated that the intention was for [Child 3] to attend [School 1] in 2020 like his brother.  Mr Howard raised some concerns about [Child 2]’s lack of attendance at [School 1] this year.  Ms Howard indicated at the hearing that it was likely that [Child 2] would attend a different school next year and the options being considered by her were likely to be much less expensive than [School 1].  She estimated the fees for [Child 2] could be between $8,000 and $15,000 next year as opposed to about $25,000 for [School 1]. 

4. Mr Howard’s position at the hearing was that he could not afford any contribution to private school fees.

5. Child support assessed under the Part 5 formula is intended to assist with the ordinary costs of education but does not contemplate the additional costs of private school education such as tuition fees and compulsory levies.  Costs such as uniforms, books, camps and extra-curricular activities are considered to fall with the ordinary costs of educating a child which are to be met from the usual child support payments made under the Act.  Therefore, only the tuition fees and compulsory levies will be considered by the Tribunal as part of this ground for departure.

6. The Act recognises a general duty by parents to provide for their children and requires a consideration as to what is an equitable sharing of the children’s costs.  Equitable sharing does not necessarily mean equal sharing but that the level of financial support is based on their respective capacity to provide for the child.

7. If 100% of the cost of private school fees for 2018 is added to Mr Howard’s annual rate this would result in an increase of $38,000 per annum or $731 per week to the amount already payable by Mr Howard in child support.  This would make Mr Howard’s total liability about $1,465 per week.  This amount would leave Mr Howard with only $653 per week to meet his weekly expenses.  Since the objection decision made on 1 February 2018, Mr Howard has been meeting this liability and is currently not in arrears.  Mr Howard told the Tribunal that he is about $5 short each week as a result of the objection decision.  This indicates that Mr Howard has the capacity to meet the majority of the private school fee costs.

8. It is apparent that Mr Howard’s capacity to meet these costs is far superior to that of Ms Howard and he should therefore contribute towards the majority of those costs.  The question then becomes how much that contribution should be. 

9. Following the hearing of the review applications, the Tribunal received additional material from both parties indicating that as of 7 September 2018 there was a change in residence for [Child 2] and [Child 3] such that they would be living with Mr Howard full time until further order of the Family Court.  The Tribunal understands the matter is next before the Family Court in October 2018 and the orders contemplate that Ms Howard will spend time with the boys in the not too distant future, but in what capacity is unknown at this point in time.

10. This change in residence has an impact upon any increase to Mr Howard’s annual rate on account of school fees because as of 7 September 2018, Ms Howard no longer has the boys in her care and therefore should not necessarily be in receipt of payments from Mr Howard concerning [Child 2]’s private school fees.

11. The evidence at the hearing as the Tribunal understands it is that [Child 1]’s tuition fees have been paid in full for this year.  There is also the issue of [Child 1] turning 18 in October 2018 which ordinarily will mean that she will no longer be subject of the assessment of child support unless an order is made by the Child Support Registrar under section 151C of the Act.

12. In the circumstances, the Tribunal finds it just and equitable to increase Mr Howard’s annual rate of child support by $38,000 (reflecting 100% of the private school fees) taking into account the fact that Mr Howard has been able to meet the bulk of these expenses since February this year, but that this increase end on 7 September 2018 to reflect the change in care arrangements.  This will result in Mr Howard meeting about $25,400 worth of school fees for the period between January 2018 and September 2018 in accordance with his capacity to do so.

13. As noted above, [Child 1] will not be at school next year and is likely to be attending university.  It is currently uncertain on the evidence what school [Child 2] will be attending or what the costs of such schooling will be.  It is also uncertain on the evidence what will occur with [Child 3] in the coming years, particularly in light of the ongoing family law litigation involving the parties.  As a result, the Tribunal does not consider it appropriate to make any allowance for private school fees beyond 7 September 2018.

14. At the hearing, Ms Howard sought an order that the assessment of child support continue to apply to [Child 1] after her 18^th birthday.  Whilst section 151C of the Act provides the Child Support Registrar with the power to make such a determination, as far as the Tribunal is aware, this has not occurred, and the Tribunal therefore does not have jurisdiction in these proceedings to make such an order.  Ms Howard may wish to raise this with the Department in due course.

(d) Length of decision

1. Ms Howard made her change of assessment application on 18 May 2017.

2. The Tribunal has found, based on the evidence before it, that Mr Howard’s income is best reflected by a figure of $174,000 per annum from 18 May 2017 to 30 June 2017 and $160,000 from 1 July 2017.  Therefore, the Tribunal proposes to vary Mr Howard’s ATI to those amounts from the dates identified.   

3. Mr Howard submitted that given the uncertainties with his business going forward and the impending property settlement yet to be finalised between the parties, the Tribunal should conclude its decision at the end of the current financial year.  The Tribunal considers there to be some merit in this submission.  The Tribunal notes Mr Howard’s evidence that his [practice] was relatively stable in terms of estimating fees to be generated and also the outgoings to be paid.  Therefore, Tribunal considers it appropriate to conclude its decision at the end of 2019 in order to give the parties some certainty in the year ahead but also acknowledging the circumstances of this case where both parties’ financial positions will likely change in the next 12 to 18 months.

Issue 3 – Is a change of assessment otherwise proper?

1. In considering whether a departure is otherwise proper, the Tribunal must take into account subsection 117(5) of the Act which requires the Tribunal to have regard to the nature and duty of a parent to maintain a child and the effect that the making of the order would have on any entitlement of the child or carer entitled to child support to an income tested pension, allowance or benefit or the rate of any income tested pension, allowance or benefit payable to the child or the carer.

2. Ms Howard receives family tax benefits in respect of the children. The decision of the Tribunal has the effect of increasing the annual rate payable by Mr Howard when compared to the administrative assessment in place at the time of the change of assessment application and therefore may result in a decrease to the family tax benefits payable and the cost to the community. The Tribunal is therefore satisfied that the departure decision proposed is otherwise proper in the circumstances of this case.

DECISION

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

·         For the period from 18 May 2017 to 30 June 2017, Mr Howard’s adjusted taxable income is varied to $174,000;

·         For the period from 1 July 2017 to 31 December 2019, Mr Howard’s adjusted taxable income is varied to $160,000 per annum; and

·         For the period from 1 January 2018 to 7 September 2018, Mr Howard’s annual rate of child support payable is increased by an amount of $38,000.