Jacox and Jacox (Child support)

[2020] AATA 4777

Jacox and Jacox (Child support) [2020] AATA 4777 (17 June 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/MC018127

APPLICANT:  Mr Jacox

OTHER PARTIES:  Child Support Registrar

Ms Jacox

TRIBUNAL:Member K Buxton

DECISION DATE:  17 June 2020

DECISION:

The decision under review is varied so that:

a.For the period 1 January 2019 to 31 December 2022 Mr Jacox’s adjusted taxable income is to be varied to $65,000 per annum;

b.For the period 1 January 2019 to 30 June 2019 Ms Jacox’s adjusted taxable income is to be varied to $48,726 per annum;

c.For the period 1 July 2019 to 31 October 2020 Ms Jacox’s adjusted taxable income is to be varied to $55,000 per annum;

d.For the period 26 June 2019 to 25 June 2020, the annual rate of child support payable by Mr Jacox is to be increased by $1,112;

e.For the period 26 June 2020 to 25 June 2021 the annual rate of child support payable by Mr Jacox is to be increased by $1,517; and

f.For the period 26 June 2021 to 25 June 2022 the annual rate of child support payable by Mr Jacox is to be increased by $1,900 per annum.

CATCHWORDS

CHILD SUPPORT – departure determination – whether there was a ground for departure – earning capacity of the liable parent – costs of special needs significantly affect the cost of maintaining the children – 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 Jacox and Mr Jacox are the parents of [Child 1], aged 13, [Child 2], aged 11 and [Child 3], aged 9 years. Mr Jacox has sought review by this tribunal of a decision of the Child Support Agency (CSA) about the amount of child support assessed as payable by Mr Jacox to Ms Jacox for the children. The children are recorded as being in the 100% care of Ms Jacox.

2. The administrative assessment of child support calculated the annual rate of child support payable by Mr Jacox for the period 1 January 2019 onwards as follows:

• For the period 1 January 2019 to 22 July 2019, Mr Jacox was assessed to pay an annual rate of child support of $2,769. This assessment was based on a 2017/2018 adjusted taxable income of $34,793 for Mr Jacox and a 2017/2018 adjusted taxable income of $43,126 for Ms Jacox.

• For the period 23 July 2019 to 31 July 2019, Mr Jacox was assessed to pay an annual rate of child support of $3,027. This assessment was based on a 2017/2018 adjusted taxable income of $34,793 for Mr Jacox and a 2017/2018 adjusted taxable income of $43,126 for Ms Jacox and increased as a result of [Child 1] turning 13 years of age.

• For the period 1 August 2019 to 31 October 2020, Mr Jacox is assessed to pay an annual rate of child support of $2,499. This assessment is based on a 2018/2019 adjusted taxable income of $33,505 for Mr Jacox and a 2018/2019 adjusted taxable income of $48,726 for Ms Jacox.

1. Prior to 1 January 2019 an earlier departure decision made by the Administrative Appeals Tribunal had set Mr Jacox’s income at $60,000 per annum for the two year period from 1 January 2017 to 31 December 2018 based on his earning capacity. The annual rate of child support payable by Mr Jacox was increase for that period by $1,723 for the children’s special dental needs. No appeal was lodged in relation to that decision. Prior to 1 January 2017 an earlier departure decision made by the CSA had set Mr Jacox’s income at $60,000 per annum for the period 11 September 2015 to 31 December 2016 based on Mr Jacox’s income and financial resources. No appeal was lodged in relation to that decision.

2. On 20 February 2019 Ms Jacox applied for a departure from the administrative assessment, under Part 6A of the Child Support (Assessment) Act 1989 (the Act), on the basis that the income, financial resources and earning capacity of Mr Jacox were not reflected in the adjusted taxable income used for him in the administrative assessment of child support and to have the children’s special orthodontic costs considered in the assessment. Mr Jacox cross-applied. On 23 September 2019 a delegate of the Child Support Registrar at the CSA determined that a ground existed to depart from the administrative assessment and decided to change the assessment as follows:

• For the period 1 January 2019 to 31 December 2019, the assessment be increased by $1,100 per annum.

• For the period 1 January 2019 to 31 December 2019, Mr Jacox`s adjusted taxable income be set at $60,000 per annum.

• For the period 1 January 2020 to 31 December 2020, Mr Jacox`s adjusted taxable income be set at $65,000 per annum.

• For the period 1 January 2021 to 31 December 2021, Mr Jacox`s adjusted taxable income be set at $70,000 per annum.

1. Mr Jacox objected to the delegate’s decision and on 10 December 2019 an objections officer allowed the objection in part and decided that:

• For the period 1 January 2019 to 31 December 2021, the adjusted taxable income of Mr Jacox is set at $69,778.

• For the period 26 June 2019 to 25 June 2020, the annual rate of child support payable by Mr Jacox is increased by $1,112.

1. Mr Jacox applied to the tribunal for review of the objection decision. A directions hearing took place on 22 April 2020 in which both Mr Jacox and Ms Jacox appeared by conference telephone. During that directions hearing both Mr Jacox and Ms Jacox consented to the review application being determined without the need for an oral hearing, and consent to proceed in this was way subsequently given by the Child Support Registrar. Mr Jacox and Ms Jacox produced documents to the tribunal and each provided written submissions. In reaching its decision, the tribunal has considered the documentation provided by the CSA (Exhibit 1), Mr Jacox (Exhibit A) and Ms Jacox (Exhibit B) and the written submissions of by Mr Jacox and Ms Jacox.

CONSIDERATION

The legislative framework

1. 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 which takes into account variables including each parent’s adjusted taxable income for the last relevant year of income, the number of children and the level of care provided by each parent. The legislative intent is that the tribunal will not interfere with the administrative formula result in the ordinary run of cases.

2. Part 6A of the Act allows for a departure from an administrative assessment (a process commonly known as a “change of assessment”). Under subsection 98C(1), a change of assessment can be made only if:

   a.    a ground (or more than one ground) for departure exists; and

   b.    departure from the administrative assessment would be:

   i.just and equitable as regards the children and each parent; and

   ii.otherwise proper.

3. Subsection 98C(2) of the Act provides that the grounds for departure are the same as those set out in subsection 117(2). 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 range of determinations, prescribed in section 98S of the Act, which include varying the rate of child support payable, the adjusted taxable income and the cost percentage for a child.

Ground for departure

Income, property, financial resources and earning capacity

1. The Act provides, as grounds for departure from the administrative assessment of child support (in subparagraph 117(2)):

   (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; or

   (ib) because of the earning capacity 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 define 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. In Gyselman and Gyselman [1991] FamCA 93, 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 positions.

Ms Jacox’s income, financial resources

1. Ms Jacox is currently employed on a part-time basis and receives $1,170 per week, or about $60,000 per annum. Allowing for some work-related tax deductions, her 2019/20 income is likely to be at least $55,000, although Ms Jacox noted that her employment may be affected in the future by the economic conditions generated by the COVID-19 pandemic. At the time of her departure application, the child support assessment used 2017/18 adjusted taxable income of $43,126 for Ms Jacox. This was subsequently replaced from 1 August 2019 with her adjusted taxable income of $48,726 for the 2018/19 year.

2. The adjusted taxable incomes of Ms Jacox have reflected her taxable incomes from part-time employment as these incomes have increased incrementally over time. The evidence demonstrates that, for the 2019/20 financial year, her income is likely to be higher to reflect her increased salary and ordinarily this would be reflected in the administrative assessment of child support in the child support period following the lodgement of her income tax return. However, the tribunal is satisfied that Ms Jacox was earning income at about the level of her 2018/19 adjusted taxable income when she lodged her departure application in early 2019 and has been earning income of around $55,000 during the 2019/20 year. Without more information, the tribunal has no basis to conclude that Ms Jacox’s income is likely to change in the foreseeable future, despite the concerns she has mentioned as to economic conditions. Her taxable income for the 2019/20 year will be available for use in the child support assessment shortly after lodgement of her tax return and it is reasonable to estimate that this will have occurred before 31 October 2020.

3. Mr Jacox submitted that Ms Jacox has access to resources from the parents’ property settlement and that these should be considered as relevant to the calculation of child support. However, Mr Jacox did not submit, nor did he provide any evidence to suggest, that child support was expressly provided for in that settlement. It is not the role of the tribunal to re-consider issues that have already been dealt with either by the parents or the court. The tribunal notes that the matter has been raised by Mr Jacox in the context of a previous departure application, and the issues were identified by the Administrative Appeals Tribunal as irrelevant in that application on that basis. In decisions made within the CSA on 9 June 2016 and 25 January 2017 and the same view has been expressed by both the delegate and the objections officer in relation to the subject departure application. The issues arising from the property settlement between the parents are now long settled. It is long established that the settlement dealt with the parents’ property and did not deal with child support.

4. Mr Jacox raised, during the directions hearing, a question as to whether Ms Jacox receives financial resources through what he described as “her parent’s business”. He submitted that the financial resources of their company were relevant to the departure application. Ms Jacox confirmed during that directions hearing that she has assisted her parents in the process of establishing the company called [Company 1] and stated that she did not benefit financially. Ms Jacox was directed by the tribunal to produce a sworn statement from a director of that company identifying any role(s) within that company and any income and other financial benefits provided to her by that company. She did so, and the tribunal accepts the sworn statement of the director (her father) [Mr A], dated 30 April 2020, as evidence that Ms Jacox does not have a role within the business and does not benefit financially from that business.

5. There is nothing in the evidence to suggest that the self-support amount allowed for by the child support formula (of approximately $25,000 per annum) is not an appropriate measure of Ms Jacox’s proper needs. The tribunal notes that Ms Jacox has the three children of the assessment in her 100% care and must therefore meet all of their costs directly. She would need to earn significant additional income in order to impact the assessment of child support through the application of the formula, which ordinarily requires a parent with less care of the children, and therefore fewer direct costs, to contribute to their proper needs through the assessment.

Mr Jacox’s income and financial resources

17.  For the period 1 January 2017 to 31 December 2018, Mr Jacox’s adjusted taxable income for use in the child support case had been set at $60,000 per annum as a result of a departure decision made by the Administrative Appeals Tribunal (differently constituted) on 21 July 2017 and arrived at by considering the unexercised earning capacity of Mr Jacox, who was working part-time as [an Occupation] for [Company 2] at the time of that earlier decision. Before that, Mr Jacox’s adjusted taxable income for use in the child support case had been set at $60,000 per annum for the period 11 September 2015 to 31 December 2016 on the basis that Mr Jacox was generating income at that level from “sub-contracting” at that time. Mr Jacox’s reported taxable incomes have been lower than $60,000 during this period. However, Mr Jacox’s submission that his taxable incomes should instead be used in the assessment of child support have consistently been rejected. This is because, in past periods, a ground had been established to depart from the administrative assessment of child support that would otherwise have utilised those taxable incomes in the calculation of child support.

18.  Most recently, decisions-makers have been satisfied that Mr Jacox has had the capacity to earn at least $60,000 per annum and have determined that a departure ground exists, and that it would be just, equitable and otherwise proper to set his income at least at this level so as to produce a fair rate of child support payable by Mr Jacox to Ms Jacox to assist her in meeting the proper needs of their three children. The history of the circumstances leading to these decisions can be simply summarised. After the parents separated and the [company] they had operated together ([Company 3]) ceased to trade Mr Jacox began “sub-contracting” and was found to be earning gross income of about $60,000. Since then, Mr Jacox has been associated in various ways with a [company] called [Company 2]. For periods when he has stated that he chose to work on a part-time, three day a week basis as an employee of that business and receive a salary of about $35,000, he was set on an earning capacity of $60,000, which equated to his previously established income from sub-contracting, and was roughly equivalent to a full-time pro-rated salary having regard to his part-time salary and his choice to work part-time rather than full-time.

19.  More recently, Mr Jacox has stated that he still works for [Company 2], and is now employed full-time, and receives a salary of $45,000. The tribunal notes that this is far less that the pro-rated full-time equivalent of his part-time salary, and far less than his demonstrated income from sub-contracting of about $60,000 in 2015. It is unclear why Mr Jacox has chosen to earn less than his demonstrated earning capacity. According to publicly available information from data publisher “Payscale”, Mr Jacox’s current hourly rate of $23.90 is significantly lower than the lowest range of average hourly rates for employed [Occupation] in Australia. Payscale published data indicates an average salary for an employed [Occupation] of $61,445 per annum and an average hourly rate of $30.41.

20.  Subsection 117(7B) of the Act sets out three criteria which would allow the tribunal to determine that the parent's earning capacity is greater than is reflected in his or her income used in the administrative assessment:

• Whether the parent is:

  onot 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 (subparagraph 117(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).

1. When Ms Jacox applied for a departure in early 2019, the earlier decision had ceased and child support was to be calculated using 2017/2018 adjusted taxable income of $34,793 for Mr Jacox. This income was calculated using his salary from part-time work. However, Mr Jacox has since changed his working pattern from part-time to full-time and such an increase in working hours is not justified by Mr Jacox on the basis of either his health issues or his caring responsibilities. When Mr Jacox was first contacted by the CSA in relation to the subject departure application the CSA officer took a note of the telephone conversation with Mr Jacox, in which he was recorded as stating that he had a [condition] and “if this continues” he would “just give up work and go on the dole” resulting in Ms Jacox receiving no child support. Mr Jacox’s history of such comments were noted by the CSA officer and by the Administrative Appeals Tribunal in the decision of 21 July 2017. The tribunal is not satisfied, having regard to this comment, together with the history of interactions with the CSA to similar effect, that the impact on the child support assessment was not a major purpose in Mr Jacox’s decision to accept full-time employment on his current conditions. Mr Jacox has been invited by the CSA to submit medical evidence supporting his claims in relation to his health. The tribunal notes that Mr Jacox has not produced any medical evidence about a  [condition] or any other condition that effects his capacity to work, and further notes that he stated that he now works more hours, not fewer. The tribunal concludes from this evidence that each of the three criteria have been met and it is therefore proper to consider any unexercised earning capacity of Mr Jacox.

2. Mr Jacox stated that, in early 2019, he was in full-time employment as [an Occupation] with [Company 2] receiving income of about $45,000 per annum. Mr Jacox has submitted that his declared income from employment with [Company 2], less his work-related deductible expenses, constitute his only financial resource from which he can meet his expenses and contribute to the expenses of the children. He submitted that his taxable incomes should be used in the child support assessment as a reliable measure of his available income and financial resources. Mr Jacox declared taxable income of $33,505 in the 2018/19 year, comprised of his full-time salary of about $44,740 less total deductions of over $11,000 including motor vehicle deductions totalling $815 and other expenses totalling about $10,400.

23.  The tribunal notes from the available evidence that, at the time of the earlier decision of the Administrative Appeals Tribunal, he was employed part-time by [Company 2] and was earning about a “pro-rata” salary of $34,750 for three days work. His hourly pay rate was around $30 per hour. Mr Jacox has stated that he is now paid less than $45,000 for five days per week, or full-time, work. His payslips state that he works 36 hours weekly at an hourly rate of $23.90. However, as his earlier, part-time, salary was described as “pro-rata” then the pro-rated full-time equivalent of his part-time salary would be about $58,000. Mr Jacox offered no explanation as to why he would accept a full-time role at a substantially discounted hourly rate when compared with that of his part-time work with the same employer.

24.  Further, in the first full financial year of his full-time work Mr Jacox has reported substantial work-related deductions. The deductions include about $6,000 for tools, and the claims also include the cost of a first-aid course and of servicing his motor vehicle. He also claimed the cost of just under $3,000 in insurance premiums for “income protection and TPD” (total permanent disability). It is unclear why a full-time employee would be required to incur such costs in the course of earning his income. The tribunal does not mean to imply that they were not incurred. Rather, it is not clear why the cost of tools and a necessary training course would not be met by an employer. A contractor may be required to supply his own tools and training but one of the classic indicia of an employee is the provision, by the employer, of the tools necessary to perform the job and the requisite training to do so. The tribunal further notes that insurances paid by Mr Jacox constitute a substantial discretionary cost, particularly when regarded as a portion of Mr Jacox’s total disclosed income.

25.  Mr Jacox has submitted that [Company 2] is a company that was started by [Ms B] at the time when she and Mr Jacox were “casual partners”. Mr Jacox stated that whereas they are no longer partners he still works in the business as an employee. Mr Jacox previously informed the CSA that he rented a shed from [Ms B] in which to store his tools, at a cost of $165 per week. During the objection process Mr Jacox produced extracts from his bank statements for the period 28 August 2019 to 25 November 2019. The tribunal notes that Mr Jacox prepared a Statement of Financial Circumstances that he submitted to the tribunal in which he disclosed that his average weekly expenses included rent of $250 and this aligns with the payment for “shed and rent” in his bank statement. It is unclear whether Mr Jacox continues to pay this amount to [Ms B], as he did previously, and if so whether he now pays rent to her for accommodation also, given that he does not identify any other expenses for accommodation in his Statement of Financial Circumstances, or if he has now made alternative arrangements. Mr Jacox also reported car expenses of $100 per week and insurance expenses of $48 per week, which is substantially lower than the reported levels in his income tax returns. There is no allowance in Mr Jacox’s estimated expenses for $6,000 per year for tools, or for $3,000 per year in “income protection and TPD” insurance and no explanation as to how such substantial expenses could have been funded through his modest salary. The bank statements show the regular deposit of salary and regular payments of child support, “[vehicle] repayments” and insurances, including for the [vehicle]. However, significantly, the bank statements show no evidence of the usual living expenses that would ordinarily be regularly met from the salary deposited into the account. No groceries or other food, utilities bills or costs associated with the operation of his motor vehicle like petrol and oil are recorded in the bank statements for the period. It is reasonable to conclude from this fact that Mr Jacox’s regular personal expenses are being met though another source. It is unclear whether they are being met by another person, or from another source of income, or from financial resources available to Mr Jacox that have not been disclosed to the tribunal. Mr Jacox was well aware that the objections officer had identified this fact in the decision under review and Mr Jacox’s submissions in relation to this issue are as follows:

I do not get an extra ‘$25,000’ in income from an unknown source. Why has CSA just ‘invented’ this figure so they can adjust child support amounts? The only money I have is from my weekly pay. Where am I supposed to be getting this extra $25,000 from? (if CSA had bothered to look at my bank statements, they would see I put money aside for my bills/child support and expenses and then transfer it back into my main account when I need to pay the bills!) – there is no extra money.

26.  However, Mr Jacox has not disclosed any other bank statements for other accounts, including the account from which he submits that he transfers money “back into” his “main account”. It would have been a simple matter to provide full and frank disclosure of other accounts but Mr Jacox has elected not to do so. As a result, the tribunal observes that the financial disclosure provided by Mr Jacox appears to be incomplete as it is unclear from the available information how Mr Jacox meets:

a.His regular living costs such as food, fuel and utilities;

b.The costs of income protection and TPD insurance claimed as a tax deduction in the 2018/19 year;

c.The cost of tools claimed as a tax deduction in the 2018/19 year.

27.  Mr Jacox has contended that the [Company 2] business was set up by [Ms B] when she and Mr Jacox were casual partners. Mr Jacox operated a similar business with Ms Jacox before the parents were separated. An analysis of the marketing material used on the website of [Company 2], generated by Ms Jacox and submitted to the tribunal, shows that the business utilised similar, and in some cases identical, claims and information to that previously used in the business operated by the parents. Ms Jacox also stated in her submissions that, although the core work of the business was undertaken by Mr Jacox, she and Mr Jacox would split the income of the business for tax purposes and deduct the cost of their motor vehicle expenses from available profits. In the 2014/15 income year they each earned about $50,000 from the business. The tribunal notes that this submission is consistent with the reported taxable incomes of the parents that are each of about $48,000 for the 2014/15 year.

28.  In earlier decisions it has been recorded that the business initially used Mr Jacox’s mobile telephone number on letterhead and in the “Yellow Pages” advertisement. This appears no longer to be the case. However, Mr Jacox accepts that he continues to hold a requisite [licence] utilised by [Company 2]. There is no evidence to suggest that [Ms B] is also the holder of such a licence. Despite Mr Jacox’s personal connection to [Ms B], and this apparent connection between the business and Mr Jacox when that business was established, Mr Jacox has insisted that he neither owns, nor has any financial interest in, the company beyond his income from employment. Although there is insufficient available evidence from which the tribunal could conclude that Mr Jacox does have a financial interest in the business, there is sufficient available evidence from which the tribunal readily concludes that the employment relationship between Mr Jacox and [Ms B]’s business, [Company 2], is not entirely at arm’s length.

29.  The tribunal directed Mr Jacox to provide to the tribunal, prior to the hearing, a sworn statement from a director of his employer with details of his terms of employment, supervision and direction, and identifying income and any other financial benefits from employment. He did not do so. Instead, he produced to the tribunal a letter dated 8 May 2020 authored by “[Ms B], [Company 2]”, which was unsworn, and provided that Mr Jacox works 36 hours per week, reporting directly to [Ms B], for a set wage of $44,740.08 with leave conditions of approximately four weeks per year. The letter also states:

I have had a request for the above employee for information to provide for his child support assessment. This is the second time I have had to provide a letter of this same information for this employee.

Mr Jacox is aware that he is on limited tenure and his employment conditions may not continue into the future.

After setting out the terms of his employment, [Ms B] concludes the letter by stating,

A formal complaint has been lodged with the CSA as to why the company financials and BAS returns appear in Mr Jacox’s CSA file that he has shown me. The employee and his wife are not entitled to view any of this information and I am awaiting a response from the CSA privacy department as to why this was downloaded and provided.

These comments are surprising for a number of reasons. The initial comments present as though Mr Jacox is on “thin ice” as a result of enquiries being made of the business that employs Mr Jacox in relation to the terms of his employment. An employer  in [Ms B]’s position should be unsurprised by legitimate enquiries made by agencies such as the CSA in the context of the exercise of their statutory powers, and by the tribunal in a review of the CSA’s decision. There is nothing unusual about the nature of the enquiry. Secondly, [Ms B] was partnered with Mr Jacox when the company was first set up and Mr Jacox gave evidence to the CSA about [Ms B]’s role in establishing the business he was working in, in the context of an earlier departure application about Mr Jacox’s employment with [Company 2]. It is objectively unsurprising to learn that further legitimate enquiries might be underway. Finally, whilst it is a matter for the CSA to deal with any complaints [Ms B] may raise in relation to privacy issues, the fact that Mr Jacox has elected to share with this representative of his employer, [Ms B], information of a confidential nature provided to him by the CSA, such as his “CSA file”, is suggestive of a relationship less at arms-length than that of typical employer and employee. The tribunal is aware that Mr Jacox and [Ms B] have, in the past, been casual partners and the tone of the letter is incongruous with that established fact. Mr Jacox has not provided an explanation as to why he did not provide a sworn statement from [Ms B], as directed. Mr Jacox was provided with the opportunity to provide such a statement so that the tribunal could consider his submission that the decision under review, in which it was determined that he has unexercised earning capacity, was wrong. The statement from [Ms B] does not assist Mr Jacox in advancing that submission.

30.  The Act imposes a duty on each parent to ensure a proper level of financial support for the children, and this support is to take priority over any commitment other than the essential costs of a parent’s self-support. The evidence produced by Mr Jacox indicates that he is able to meet a number of substantial discretionary costs from financial resources that exceed his declared income. The evidence also establishes that Mr Jacox has apparently voluntarily accepted an employment contract on terms, particularly for an hourly rate, that are considerably less favourable than his previous contract with the same employer and that constitutes significantly less income than Mr Jacox was able to earn from sub-contracting five years ago. Mr Jacox is considerably more experienced now and it is reasonable to expect that he could earn in excess of the industry average of about $61,445 per year working as [an Occupation] and given his experience and his status as a licensee. That Mr Jacox chooses to enter into a disadvantageous employment contract with a company operated by a person with whom Mr Jacox has had a close personal connection, and with whom he does not appear to maintain an arms-length employment relationship, is a matter for him. Having regard to these facts the tribunal concludes that, from 2019, Mr Jacox has had earning capacity of at least $65,000 per annum.

31.  The tribunal has noted that Mr Jacox receives around $45,000 per annum in salary but appears to be able to meet the majority of his costs through an undisclosed source of income. There is nothing in the evidence to suggest that the self-support amount allowed for by the child support formula (of approximately $25,000 per annum) is not an appropriate measure of Mr Jacox’s proper needs. The tribunal concludes that it is likely that Mr Jacox has many of his self-support needs met through an undisclosed source and has the additional resource of his salary. If those sums were combined to $70,000, and even allowing for reasonable work-related deductions, it would be reasonable to conclude that Mr Jacox has access to financial resources equivalent to at least $65,000 from which his needs, and the needs of the children, can be met.

32.  However, the tribunal has already concluded that Mr Jacox has unexercised earning capacity of at least $65,000 and this is the finding the tribunal intends to use in order to determine if a ground exists to depart from the administrative assessment of child support. Therefore, the tribunal concludes that it is proper to determine that Mr Jacox’s earning capacity since January 2019 is at least $65,000 per annum and it is reasonable to conclude that this unexercised earning capacity for Mr Jacox is ongoing, for the foreseeable future.

Conclusions in relation to the departure ground

33.  The administrative assessment of child support does not take account of the unexercised earning capacity of Mr Jacox. The administrative assessment of child support calculated the annual rate of child support payable by Mr Jacox of $2,769 for the period 1 January 2019 to 22 July 2019, based on 2017/2018 adjusted taxable incomes of $34,793 for Mr Jacox and a $43,126 for Ms Jacox.

34.  If child support were calculated from 1 January 2019 using an income of $65,000 per annum for Mr Jacox, and $48,726 for Ms Jacox, and assuming that the other variables used in the administrative assessment of child support remained unchanged, the annual rate of child support payable by him to Ms Jacox would increase substantially from the rate set out above to about $10,700 per annum for the children. The administratively assessed rate of $2,769 per annum for the same period provides Ms Jacox with substantially less financial support for the children and Mr Jacox has the capacity to provide financial support at a higher level to assist in contributing to the needs of the children. The existence of those factors set this case apart from others, making it special.

35.  The tribunal is satisfied that the administrative assessment of child support produces a result which is unjust and inequitable having regard to the parents’ respective incomes and earning capacities, particularly having regard to the disparity between the annual rate of child support calculated in the administrative assessment and that arrived at with regard to the earning capacity of Mr Jacox. The tribunal therefore finds that there is a ground to depart from the administrative assessment.

Just and equitable

36.  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.

37.  Mr Jacox’s income, earning capacity and financial circumstances have been discussed above. Mr Jacox stated that he is paying $250 per week in rent. He disclosed modest assets. Both parents received payments from the property settlement and it is unclear what has become of the payments received by Mr Jacox. There is nothing in the evidence to suggest that the self-support amount allowed for in the formula (of approximately $25,000 per annum) is not an appropriate measure of Mr Jacox’s proper needs.

38.  Ms Jacox lives with the children in her home. There is nothing in the evidence to suggest that the self-support amount allowed for by the child support formula (of approximately $25,000 per annum) is not an appropriate measure of Ms Jacox’s own proper needs. Ms Jacox produced evidence of various necessary orthodontic costs she had met for the children that have not been considered in previous departure decisions. The objections officer has correctly calculated the cost of orthodontic treatment for [Child 3] and [Child 2] at a total of $2,225 and the receipts produced by Ms Jacox evidence her payment of these amounts in full.

39.  Ms Jacox has also produced documents establishing that [Child 1] is now also receiving necessary orthodontic care and the costs incurred so far for [Child 1]’s treatment are $3,035. Ms Jacox has a further $3,800 in instalments to pay for [Child 1]’s orthodontic care which is scheduled to take place during 2020 and 2021. The tribunal accepts Ms Jacox’s contention that this was not covered by private health insurance and therefore her out of pocket expenses comprised the full cost of the treatment. The tribunal notes that co-payments by health insurers would ordinarily appear on the receipts for professional services and notes for completeness that there is no evidence of insurance co-payments in the material before the tribunal. Mr Jacox submitted that there was insufficient evidence that the expense was necessary as it could have been undertaken within the public system but he has not produced to the tribunal any evidence in support of the availability of this treatment for the children within the public system. Ms Jacox produced letters from the orthodontic practice outlining the necessary treatment for each child and has produced ample evidence of the costs she is incurring as a result. The tribunal accepts this evidence.

40.  The tribunal is satisfied, given the high costs of the treatment, that these special needs fall outside the ordinary needs of all children that would be within the ordinary contemplation of the cost allowed for the children in the calculation of child support. Mr Jacox submitted, in respect of this issue, that he “would happily attend an orthodontic clinic to pay my half of my children’s dental bills if the clinic let me know and my children were receiving the health services. To date CSA have simply given my ex-wife the amounts with no evidence my children have had the health care”. The tribunal accepts Ms Jacox’s submission that she met the costs. The tribunal is satisfied that the costs arise from a special need for the children as the costs are significant and those costs are borne directly by Ms Jacox. Given Mr Jacox’s indication that he would not object to meeting half of the costs, the tribunal is satisfied that it would be just and equitable for him to do so through an adjustment to the rate of child support payable by him.

41.  The tribunal proposes to vary the adjusted taxable income used for Mr Jacox in the calculation of child support payable by him to Ms Jacox for the children to $65,000 per annum for the period from 1 to January 2019 (when the previous decision ceased to apply). Ms Jacox would benefit from whatever financial support Mr Jacox has the capacity to provide for the children’s general needs.

42.  The tribunal proposed to vary the adjusted taxable income used for Ms Jacox in the child support assessment to $48,726 per annum from 1 January 2019 to 30 June 2019 to reflect her actual adjusted taxable income during that period, and to $55,000 per annum from 1 July 2019 until 31 October 2020 to reflect the tribunal’s findings as to her current income and to allow for lodgement of her 2019/20 income tax return to be used in the next child support period.

43.  The tribunal proposes to apply the variations to Mr Jacox’s income to the child support case through to December 2022 in order to provide a reasonable period of certainty for both parents and to apply the variations to Ms Jacox’s income until 31 October 2020. The tribunal considers that the proposed departure will provide for the proper calculation of a reasonable level of financial support to Ms Jacox from which the children’s needs can be met.

44.  The tribunal proposed to increase the rate of child support payable by Mr Jacox to Ms Jacox on account of the proposed 50% contribution to the children’s orthodontic costs. For the period 26 June 2019 to 25 June 2020, the annual rate of child support payable by Mr Jacox is to be increased by $1,112 for his contribution to the costs for [Child 3] and [Child 2]. For the period 26 June 2020 to 25 June 2021 the annual rate of child support payable by Mr Jacox is to be increased by $1,517 for his contribution to the orthodontic costs already incurred for [Child 1] and for the period 26 June 2021 to 25 June 2022 the annual rate of child support payable by Mr Jacox is to be increased by $1,900 per annum for his contribution to the remaining orthodontic care for [Child 1].

45.  The proposed changes to the administrative assessment will produce a just and equitable level of child support payable by Mr Jacox to Ms Jacox have regard to their respective capacities and available resources, the needs of the children and the circumstances of each of the parents.

46.  The proposed departure will create arrears for Mr Jacox when compared to the administrative assessment. The tribunal is not satisfied that any hardship is created as a result of that creation of arrears, particularly having regard to the fact that Mr Jacox has chosen to receive low taxable income from employment and is therefore meeting lower income tax expenses than would be the case if he was earning to his capacity. He may address some of the arrears over time if necessary. It is proper that Mr Jacox is assessed having regard to his available earning capacity, whether or not he chooses to exercise that capacity. The tribunal is satisfied that the proposed departure is just and equitable in all of the circumstances set out above.

Otherwise proper

47.  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. The Act makes clear that the parents, rather than the community, have the primary duty to maintain a child. Increasing the rate of child support payable by Mr Jacox from that calculated 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 financial responsibility between the parents and the community. Such a result would be otherwise proper.

Conclusion

48.  Ms Jacox sought a departure from the administrative assessment of child support in February 2019 at a time when Mr Jacox was assessed to pay child support calculated using an adjusted taxable income for Mr Jacox which did not take into account his earning capacity. Further, the children’s special orthodontic needs are not taken into account in that assessment. The tribunal has found a ground to depart from the administrative assessment and has determined to depart from the assessment as follows:

a.For the period 1 January 2019 to 31 December 2022 Mr Jacox’s adjusted taxable income is to be varied to $65,000 per annum;

b.For the period 1 January 2019 to 30 June 2019 Ms Jacox’s adjusted taxable income is to be varied to $48,726 per annum;

c.For the period 1 July 2019 to 31 October 2020 Ms Jacox’s adjusted taxable income is to be varied to $55,000 per annum;

d.For the period 26 June 2019 to 25 June 2020, the annual rate of child support payable by Mr Jacox is to be increased by $1,112;

e.For the period 26 June 2020 to 25 June 2021 the annual rate of child support payable by Mr Jacox is to be increased by $1,517; and

f.For the period 26 June 2021 to 25 June 2022 the annual rate of child support payable by Mr Jacox is to be increased by $1,900 per annum.

The tribunal has found that a departure in those terms is just and equitable and otherwise proper.

49.  As the tribunal reached a decision that differs from the decision under review, that decision is varied to reflect the tribunal’s findings.

DECISION

The decision under review is varied so that:

g.For the period 1 January 2019 to 31 December 2022 Mr Jacox’s adjusted taxable income is to be varied to $65,000 per annum;

h.For the period 1 January 2019 to 30 June 2019 Ms Jacox’s adjusted taxable income is to be varied to $48,726 per annum;

i.For the period 1 July 2019 to 31 October 2020 Ms Jacox’s adjusted taxable income is to be varied to $55,000 per annum;

j.For the period 26 June 2019 to 25 June 2020, the annual rate of child support payable by Mr Jacox is to be increased by $1,112;

k.For the period 26 June 2020 to 25 June 2021 the annual rate of child support payable by Mr Jacox is to be increased by $1,517; and

l.For the period 26 June 2021 to 25 June 2022 the annual rate of child support payable by Mr Jacox is to be increased by $1,900 per annum.