Jansink and Thibault (Child support)

[2021] AATA 3176

Jansink and Thibault (Child support) [2021] AATA 3176 (24 June 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/BC020745

APPLICANT:  Mr Jansink

OTHER PARTIES:  Child Support Registrar

Ms Thibault

TRIBUNAL:Member S Letch

DECISION DATE:  24 June 2021

DECISION:

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

(a)for the period 1 July 2020 to 9 April 2021, Mr Jansink’s adjusted taxable income is varied to $222,337;

(b)for the period 10 April 2021 to 30 November 2021, Mr Jansink’s adjusted taxable income is varied to $90,000;

(c)for the period 1 February 2021 to 30 November 2021, Ms Thibault’s adjusted taxable income is varied to $46,000.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of both parents – redundancy payment –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. Mr Jansink and Ms Thibault  are the parents of [Child 1], born February 2009, and [Child 2], born March 2011. The children are recorded by the Child Support Agency (CSA) as being in the parents’ shared care. Mr Jansink has sought review by this Tribunal of a decision of the CSA to “partly allow” his objection to the assessment of his liability for child support.

2. For the period 15 November 2019 to 18 March 2020, Mr Jansink was assessed to pay an annual rate of child support of $20,202. This assessment is based on a 2018/19 adjusted taxable income of $222,337 for Mr Jansink and a 2018/19 adjusted taxable income of $34,080 for Ms Thibault.

3. For the period 19 March 2020 to 30 June 2020, Mr Jansink was assessed to pay an annual rate of child support of $16,278. This assessment is based on a 2018/19 adjusted taxable income of $222,337 for Mr Jansink and a 2018/19 adjusted taxable income of $34,080 for Ms Thibault. The change to the rate payable arose as a result of a change in the recorded care.

4. For the period 1 July 2020 to 31 October 2020, Ms Thibault was assessed to pay an annual rate of child support of $1,086. This assessment is based on Ms Thibault’s 2018/19 taxable income of $34,080 and a 2020/21 estimate of income of $0 for Mr Jansink.

5. For the period 1 November 2020 to 30 June 2021, Ms Thibault was assessed to pay an annual rate of child support of $1,698. This assessment is based on Ms Thibault’s 2019/20 taxable income of $39,720 and a 2020/21 estimate of income of $0 for Mr Jansink.

6. For the period 1 July 2021 to 31 January 2022, Mr Jansink was assessed to pay an annual rate of child support of $16,388. This assessment is based on Mr Jansink’s 2019/20 taxable income of $292,733 and Ms Thibault’s 2019/20 adjusted taxable income of $39,720.

7. On 25 July 2020, Ms Thibault applied for a change of assessment under what the Department refers to as reasons 8A and 8B. On 5 November 2020, the original decision-maker determined a ground to depart had been established, and decided the following:

   From 1 July 2020 to 9 April 2021, Mr Jansink’s adjusted taxable income is set at $222,337.

   From 10 April 2021 to 31 October 2023, Mr Jansink’s adjusted taxable income is set at $125,528.

   Impact on assessment

   As a result of this decision, Mr Jansink will be assessed to pay an annual rate of child support of

   $16,278 from 1 July 2020 to 31 October 2020, $15,776 from 1 November 2020 to 9 April 2020, and $9,590 from 10 April 2020 to 31 January 2022. The rate from 1 February 2022 will be calculated at a later date. Ms Thibault will not be assessed to pay child support from 1 July 2020. This decision will result in a retrospective increase to the amount payable by Mr Jansink of approximately $5,482 and a retrospective decrease to the amount of child support payable by Ms Thibault of approximately $366. This is the difference between the amount payable as a result of the original assessment and this decision from 1 July 2020 to 31 October 2020.

8. On 27 November 2020, Mr Jansink objected to the decision. On 28 January 2021, an objections officer “partly allowed” Mr Jansink’s objection, deciding the following:

   This objection is partly allowed.

   I have found Reasons 8A and 8B established, as did [Decision Maker A]. However, I have reached a different conclusion about what decision would be just and equitable and otherwise proper. As such, the objection is partly allowed. [Decision Maker A’s] decision is set aside and the assessment is changed so that:

   - Mr Jansink’s Adjusted Taxable Income is set at $222,337 from 1 July 2020 until the case ends.

   - Ms Thibault’s Adjusted Taxable Income is set at $46,000 from 1 February 2021 until 30 April 2023.

   Impact on the assessment:

   Mr Jansink will be assessed to pay around $16,278 from 1 July 2020. This is the same as [Decision Maker A’s] decision, but a change from the underlying assessment where Ms Thibault was assessed to pay him $1,086 per annum.

   Mr Jansink will be assessed to pay around $15,776 from 1 November 2020. This is the same as [Decision Maker A’s] decision, but a change from the underlying assessment where Ms Thibault was assessed to pay him $1,698 per annum.

   Mr Jansink will be assessed to pay around $14,796 from 1 February 2021. This is a change from the $15,776 payable under [Decision Maker A’s] decision and the $1,698 payable by Ms Thibault in the underlying assessment.

   The ongoing monthly liability will drop from $1,314.67 to around $1,233.

9. On 8 February 2021, Mr Jansink sought further review by the Tribunal. Mr Jansink and Ms Thibault participated in the Tribunal’s hearing by conference telephone. In making its decision, the Tribunal took into account the CSA materials, and the additional materials submitted by Mr Jansink (numbered A1 to A72) and Ms Thibault (B1 to B44).    

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 Child Support (Assessment) Act 1989 (the Act). A formula is used. It 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.

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), the Registrar may make such a departure determination if three matters are established:

   ·      one, or more than one, of the grounds for departure referred to in subsection 98C(2) exists (subparagraph 98C(1)(b)(i));

   ·      a departure is just and equitable as regards the children and each parent (sub-subparagraph 98C(1)(b)(ii)(A)); and

   ·      it is otherwise proper to make a departure decision (sub-subparagraph 98C(1)(b)(ii)(B)). 

3. Subsection 98C(2) provides that the grounds for departure are the same as the grounds set out in subsection 117(2).

13.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 Act. It permits a range of determinations, including varying the rate of child support payable, the adjusted taxable income or the cost percentage for a child.

Issue 1 – Is there a ground to depart?

14.Subparagraphs 117(2)(c)(ia) and (ib) of the Act, commonly referred to by the CSA as reasons 8A and 8B, provide as grounds for departure:

(c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:

…

(ia)      because of the income, property and financial resources of either parent; or

(ib)       because of the earning capacity of either parent

15.The matters which must be taken into account when assessing a person’s earning capacity are contained in subsection 117(7B) of the Act, which provides the following:

In having regard to the earning capacity of a parent of the child, the court may determine that the parent's earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:

(a)  one or more of the following applies:

(i)  the parent does not work despite ample opportunity to do so;

(ii)  the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full-time work for the occupation or industry in which the parent is employed or otherwise engaged;

(iii)  the parent has changed his or her occupation, industry or working pattern; and

(b)  the parent's decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:

(i)  the parent's caring responsibilities; or

(ii)  the parent's state of health; and

(c)  the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.

1. The starting proposition is that the child support formula should apply. Only in special circumstances should a departure be made. 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. That is, the intention of the legislature is that the Tribunal will not interfere with the administrative formula result in the ordinary run of cases. In Gyselman v Gyselman (1992) FLC 92-279, it was held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”. The Tribunal’s approach to the interpretation and application of the particular grounds in subsection 117(2) must be guided by that qualification.

2. Mr Jansink received a substantial redundancy payment in January 2020. In the context of a child support assessment, that is ordinarily regarded as a financial resource available for child support; it is generally assessed over a period of time on the basis of the size of the lump sum and the amount the person was earning. Here, in July 2020, under the formula arrangements, Mr Jansink made an estimate election of $0, with a reduction in his annual liability to some $1,000; the Tribunal considers he should fairly be attributed with an available financial resource at that time, and beyond, which would result in a more than fifteen-fold increase in his liability. The child support formula assessment is rendered unfair; in the special circumstances of the case, and there is a ground to depart from the formula.

Issue 2 – Is it just and equitable to depart from the administrative assessment?

1. The next relevant consideration for the Tribunal is whether a departure from the administrative assessment is just and equitable. This enquiry directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.

2. Mr Jansink told the Tribunal that he considers the CSA has made many errors and he wants a “fair assessment”. He said in the 2020/21 tax year, his accountant has just advised him that he earned $18,000 for the financial year. Neither Mr Jansink nor Ms Thibault raised any particular issue about the arithmetic applied by the CSA in working out the “redundancy period” (for want of a better way to put that) until 9 April 2021; however, Mr Jansink said that he has always been assessed on “maximum amount of child support”. He considers it fair that the redundancy payments only impact on this assessment until the end of the 2019/20 tax year; he waited until 1 July 2020 to advise the CSA of his “nil” income.  He told the Tribunal that he dissipated the funds on general living expenses, his home mortgage, renovations and car payments, in addition to items for the children such as clothing and computer equipment.

3. Mr Jansink told the Tribunal that Ms Thibault’s suggestions he has been working are unfounded. Mr Jansink told the Tribunal that COVID-19 has had a very significant impact in his industry, and significantly impacted his earning capacity. When he started at [Employer 1] some seven years ago, he was involved with a large project with high value – he said he was paid a “superstar salary” at the time. He said that things are now very different. He is originally from [Country 1], and his [occupation 1] qualifications are not fully recognised here. He is presently undertaking a second degree so he can apply for recognition here; he is hoping that process might be completed by around the middle of next year. Even then, he will initially be required to work under a qualified [occupation 1]; he also said there is a lot of competition in [occupation 1] with job candidates from [another country].

4. Mr Jansink told the Tribunal that he is [an occupation 1 specialty] – he likened it to [an occupation 1 specialty] but involving [specific] work on [specified equipment] and the like. He started looking for work in earnest in March 2020, and is continuing to look for such work. He said the “knock-backs” have been “soul destroying”. He said he even “door-knocked” businesses in Brisbane; he has looked for full-time, part-time and casual work. Ms Thibault suggested that Mr Jansink should be “looking further afield” for jobs beyond his particular area of expertise.

5. Mr Jansink told the Tribunal that his only source of income is from [Employer 2]; he has no connection to that structure other than as a casual employee. His father owns and runs the business. He said his parents arrived in Australia in December 2019; he said his father is “good at the management side of things”. Mr Jansink said that his father has no [occupation 1] qualifications and no experience in the industry. Mr Jansink said he had no income until November 2020 when he started working for [Employer 2], which he said his father had founded. He is presently studying a full-time workload (three units).

6. Ms Thibault observed that the payslips provided by Mr Jansink “do not make sense” – it appears that the second payslip’s “year to date” figure did not include the sum paid on the first payslip. Mr Jansink said there had been “issues” with the payroll system. He received his third (and last) payslip for the financial year on 5 June 2021.  In response to questioning, Mr Jansink could not confirm that he was the only employee of [Employer 2] – he said that it was his father who runs and manages the company and that questions would need to be directed to him. 

7. Ms Thibault told the Tribunal that she was aware, when they were in [Country 1], of Mr Jansink “setting up businesses in the name of family members which were really his businesses”. She suggested that Mr Jansink’s father is not running [Employer 2], and the business is really Mr Jansink’s business. Mr Jansink rejected that suggestion as speculative.

8. Ms Thibault told the Tribunal that when Mr Jansink has the children, he takes them early in the morning to his parents’ home, who take the children to school and pick them up, and make them dinner so that Mr Jansink is able to work in Brisbane. Ms Thibault questioned how Mr Jansink’s father could be “running a business” at the same time as providing care to the children. Mr Jansink said that he leaves the children with his parents as he knows they will be well taken care of. Mr Jansink said he works in the Brisbane offices of companies contracting [Employer 2]; he does not go “on site” due to very stringent COVID-19 protocols.

26.Ms Thibault told the Tribunal she does not accept that Mr Jansink has only earned $18,000 from [Employer 2] from November 2020 to June 2021. She said that figure is very low for a person of Mr Jansink’s experience and expertise. Upon questioning, Mr Jansink said he keeps a record of his hours to provide to [Employer 2], the figure of $23 per hour was arrived at by determining the minimum hourly rate under a “miscellaneous award” (as there is no specific award for the specialty work Mr Jansink undertakes).  Mr Jansink said that the [specified] industries have been “smashed” and wages are much lower than they used to be. When asked how much he might be expected to be paid if an employer employed him full-time in his area of expertise, he could not speculate on a figure and said in the current climate, he could only be paid “what an employer was willing to pay”.

27.In relation to his Statement of Financial Circumstances, Mr Jansink confirmed his household consists of himself, and the children when he has them. He did not identify any unusual expenses. He said he had paid for his [car] through his redundancy until that had been expunged; he defaulted on a couple of payments, and his parents have now taken responsibility for making his repayments. Mr Jansink also said that [Employer 2] is paying for study expenses, which he said he could not quantify without checking further.

1. Ms Thibault confirmed that her household consists of herself, and the children when in her care. She works 47 hours per fortnight, earning approximately $46,000 per annum. She no longer does any part-time [additional work] due to [specific health] issues, and the small amount she was receiving was no longer worth it. Ms Thibault did not identify any particularly unusual expenses. Mr Jansink suggested Ms Thibault has much higher earning capacity, suggesting [her occupation] should be earning upwards of $80,000 per annum. Ms Thibault said the CSA had assured her that her income was not in issue, and that she has continued the same working pattern in existence when she and Mr Jansink were together.

Mr Jansink’s redundancy payment

1. Mr Jansink suggests the redundancy payment having an effect on the assessment until 30 June 2020 (the end of the 2019/20 tax year) would be a fair assessment of that resource. Ms Thibault indicated she was happy with the way the CSA applied it; neither party raised any particular issues with the arithmetic adopted by the CSA.

2. The CSA objections officer adopted the following methodology in respect of the lump sum received by Mr Jansink:

   In this case, Mr Jansink received gross payments of $144,348 from employment from 1 July 2019 to 24 January 2020. This is equivalent to an income of approximately $243,889 per annum after taking into account the deductions he claimed in the 2019-20 financial year ($144,348/ 208 days x 365 days deductions of $9,414). This is similar to the income he is already assessed on in this period.

   According to ATO records, Mr Jansink received a net income of $176,519 by way of lump sum payments when he ceased employment on 24 January 2020. This is in addition to the regular wage payments referred to in the above paragraph. This consisted of payments totalling $205,320 ($90,004 + $67,438 + $47,878) and tax of $28,801. This means that Mr Jansink received a lump sum payment equivalent to a gross income of $222,337 (the income he was assessed on at the time) for fourteen and a half months from 25 January 2020. On this basis, I consider Mr Jansink`s capacity to support the children is best reflected by an income of $222,337 from 25 January 2020 to 9 April 2021. It`s relevant to note that my calculation takes into account that based on a gross income of $222,337 per annum, Mr Jansink would have access to a net income of $144,741 per annum.

1. The objections officer reached a slightly different conclusion by concluding it would have taken Mr Jansink approximately 16 months to earn the amount he received by way of the lump sum.

2. The Tribunal favours the approach of the original decision-maker and agrees that the lump sum should be considered a financial resource available to Mr Jansink from 25 January 2020 until 9 April 2021 (or a period just over 14 months). Mr Jansink made his own  assumptions about the child support assessment when choosing to expend his lump sum payment; ultimately, the child support scheme is directed to prioritising the needs of the children over all else, who are entitled to expect that a proportion of a lump sum should be set aside for their support. It would be just and equitable in the circumstances of the case to assess Mr Jansink’s adjusted taxable income as $222,237 from 1 July 2020 (when Mr Jansink’s “nil” estimate took effect) and until 9 April 2021.

Mr Jansink’s income from 10 April 2021

1. Mr Jansink’s evidence is that his only income from November 2020 consists of his work as a casual employee with [Employer 2] at what appears to be at, or near, a minimum wage of only some $23 per hour.

2. The evidence in this case does not persuade the Tribunal that Mr Jansink is a mere casual employee. His own evidence is that his father has no relevant experience or qualifications in the business activity of [Employer 2]. It appears Mr Jansink is working near full-time in Brisbane, and his parents are providing weekday care of the children in periods Mr Jansink has care. The Tribunal did not find compelling Mr Jansink’s evidence that he had no knowledge of whether [Employer 2] had any other employees and that such a query would need to be directed to his father; the Tribunal finds implausible Mr Jansink’s denial of any knowledge of key arrangements for [Employer 2]. There is no evidence that any person other than Mr Jansink is employed by the business and deriving income for [Employer 2]. The Tribunal did not form the impression that Mr Jansink has been entirely forthcoming about the extent of his involvement and control of the business.

3. Having made that observation, the Tribunal does consider it very likely that Mr Jansink’s earning capacity has been materially impacted by COVID-19 and uncertainty in the [specified] industry as a whole. The Tribunal accepts he has genuinely attempted to secure employment, and accepts he presently has issues surrounding his [occupation 1] qualification and eligibility for [occupation 1] positions; that situation may well change in around 12 months should Mr Jansink secure appropriate professional recognition.

4. Mr Jansink claims to have earned $18,000 as a casual employee from November 2020 to June 2021 (annualised to around $27,000 per annum). The Tribunal does not consider this adequately reflects his financial resources. The Tribunal observes Mr Jansink’s evidence is that he is receiving additional financial support by [Employer 2] meeting study expenses, and his parents meeting his car repayments (there was no suggestion during the hearing this expense was being met by [Employer 2]; financial statements for [Employer 2] for 2020/21 will reveal whether any motor vehicle expenses have been claimed against the income of the business).

5. The Tribunal’s objectives set out in section 2A of the Administrative Appeals Tribunal Act 1975 require it to conduct proportionate reviews in a manner that is fair, just, economical, informal and quick. There is insufficient evidence available to the Tribunal which would allow it to calculate Mr Jansink’s financial capacity with any great precision.

6. The parties did not raise any particularly unusual expenses for themselves, or in respect of the children. Neither party raised any issue with the treatment by the CSA of Ms Thibault’s income (by varying her income to $46,000 from 1 February 2021); the Tribunal considers that a fair assessment of her financial capacity.  The Tribunal observes that there has been no material change to Ms Thibault’s earnings pattern, and no basis to assess her on any “earnings capacity”.

7. In the circumstances, the Tribunal considers that it would be just and equitable to vary Mr Jansink’s income from 10 April 2021 until 30 November 2021, at which time the Tribunal anticipates that financial and taxation records ought to be available in respect of [Employer 2]. The Tribunal is also mindful that setting an assessment too far into the future may not be reactive to change; it may be that Mr Jansink will secure other employment within the next 12 months. Whilst it may be inconvenient for Ms Thibault to be in a position where she will be required to make a fresh change of assessment application near the end of 2021, such an application will present the CSA with an opportunity to consider the available financial records of [Employer 2] and conduct further enquiry into the extent of Mr Jansink’s involvement in the arrangements and financial resources which might properly be attributed to him for child support purposes, and to take account of the circumstances of both parents at that time.

8. Assessing Mr Jansink’s financial capacity at $90,000 per annum would result in an annual liability in the range of $5,000. The Tribunal considers that, with careful budgeting, Mr Jansink should be able to meet that liability for the period 10 April 2021 to 30 November 2021 (in addition to the liability arising as a result of the “redundancy period” from 1 July 2020 to 9 April 2021), at which time any fresh change of assessment application might be made and up-to-date information assessed by the CSA.

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

41.The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community. It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances and benefits. Parents rather than the community have the primary duty to maintain a child.

42.The rate of child support should reflect the obligation of both parents to take financial responsibility for the children and, where increased, may decrease any income-tested benefits payable. A departure is therefore proper.

43.As the Tribunal has reached a different conclusion to the objections officer, the decision under review will be set aside.

DECISION

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

(a)for the period 1 July 2020 to 9 April 2021, Mr Jansink’s adjusted taxable income is varied to $222,337;

(b)for the period 10 April 2021 to 30 November 2021, Mr Jansink’s adjusted taxable income is varied to $90,000;

(c)for the period 1 February 2021 to 30 November 2021, Ms Thibault’s adjusted taxable income is varied to $46,000.