Jeffries and Jeffries (Child support)

[2023] AATA 1046

Jeffries and Jeffries (Child support) [2023] AATA 1046 (22 March 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/BC024753

APPLICANT:  Mr Jeffries

OTHER PARTIES:  Child Support Registrar

Mrs Jeffries

TRIBUNAL:Member S Letch

DECISION DATE:  22 March 2023

DECISION:

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

(a)For the period 1 April 2022 to 31 December 2023, Mr Jeffries’ adjusted taxable income is varied to $78,677;

(b)For the period 1 April 2022 to 31 December 2023, Mrs Jeffries’ adjusted taxable income is varied to $26,000;

(c)For the period 1 April 2022 to 31 December 2023, Mr Jeffries’ annual child support liability is increased by $10,748.

CATCHWORDS

CHILD SUPPORT – departure determination – costs of education - manner expected by both parents - cost of maintaining the children are significantly affected – financial resources of both parents - decision under review set aside and substituted

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been 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 Jeffries and Mrs Jeffries are the parents of [Child 1] (born 2007), [Child 2] (born 2009), [Child 3] (born 2011) and [Child 4] (born 2013). Mr Jeffries seeks a review of an objection decision by the Child Support Agency (CSA) which “allowed in part” his objection to a “change of assessment” decision of 26 March 2022.

2. It is convenient to set out some extracts from the objections officer’s decision dated 12 May 2022 by way of background:

   The assessment
   Assessments subject to this objection required Ms Jeffries in Case 671303493 to pay child support
   for [Child 1], [Child 2], [Child 3] and [Child 4] as follows:
   -From 1 April 2022 until 31 December 2022, an annual rate of $840 per annum based on her ATI of
   $32,013 for 2020-21 and an ATI of $15,879 for Mr Jeffries for 2020-21.

   Case 671303493 was registered with Services Australia - Child Support (the agency) on 1 April
   2022. Child support is transferred privately in this case.

   Case 671303492 was registered with Services Australia - Child Support (the agency) on 25 July
   2017. The agency collects child support on Ms Jeffries’ behalf in this case. As at the date of this
   decision Mr Jeffries has outstanding arrears of $10,524.02.

   The Change of Assessment (CoA) process subject to this objection was the third to proceed for the
   parents.

   On 24 May 2018, Mr Jeffries lodged an CoA application seeking a change to the assessment on the
   basis of Reason 8A. Ms Jeffries formally responded and lodged a cross-application on the basis of
   Reasons 8A and 8B. On 17 August 2018, DM [A] found Reason 8A established in relation to Mr
   Jeffries income and set Mr Jeffries income at $105,000 per annum for the period 24 May 2018 to
   31 October 2019.

   Mr Jeffries objected to that decision and on 7 November 2018, the objections DM [B] set aside
   the decision made by DM [A], replacing it with the decision that for the period from 24 May
   2018 to 23 May 2021, the ATI for Mr Jeffries was to be set to $93,950 per annum.

   There is no record of either parent having escalated this decision to the Administrative Appeals
   Tribunal (AAT).

   On 5 January 2020 Mr Jeffries lodged a new CoA application citing Reason 2, Reason 6, Reason
   8A and Reason 8B.

   On 9 April 2020 DM [C] established Reason 8A and made the following determination:
   -That from 3 April 2020 the Objection Decision dated 7 November 2018 be departed from.
   -That for the period 3 April 2020 to 31 March 2022 the ATI of Mr Jeffries be set at $60,336.
   There is no record of an objection being lodged to DM [C]`s decision.
   I note DM [C] also included a Covid-19 clause to be enacted if Mr Jeffries’
    income reduced by more than 15% of that set for him. There is no indication that Mr Jeffries invoked this clause.

   DECISION UNDER REVIEW

   On 26 March 2022 Ms Jeffries applied for a CoA under Reason 3 and Reason 8A.
   Mr Jeffries responded and lodged a cross-application under Reason 2, Reason 5, Reason 7 and

   Reason 8B.

   On 22 June 2022 DM [D] found Reason 3 and Reason 8A established in the application.
   Reason 2, Reason 5, Reason 7 and Reason 8B were not established in Mr Jeffries’

   cross-application.

   …

   There is significant evidence in this case to show that a mutual intent was formed. For example:
   - Both parents were actively involved in the enrolment of [Child 1] and [Child 2]. There is no dispute
   that they both signed enrolment forms for these two children.
   -Both parents received independent advice from their lawyers when they entered into a BCSA
   whereby they both agreed to share equally in the ongoing school fees and other related costs as set
   out above.
   -In the email from Mr Jeffries dated 9 November 2022 (as above) Mr Jeffries tells the school he
   would love them to stay. He also notes that if his circumstances change he will again apply for
   the boys to be considered. These do not appear to me to be statements a person who no longer
   wants their child educated in the private system would make. I understand that for Mr Jeffries it is
   about the cost rather than the method of the children`s education.

   I have obtained a fee schedule for 2022 for [School]. For [Child 1], the annual tuition cost
   is $8,740 ($2,185 x 4 terms). For [Child 2], the annual tuition cost is $7,429 ($1,857,25 x 4 terms)
   and for [Child 3] the annual tuition cost is $4,370 ($1,092.50 x 4 terms). A total of $20,539.
   In addition there is an annual [School] Foundation contribution of $160 which is fully tax deductible
   so at Ms Jeffries’ current marginal tax rate she would be able to claim a deduction worth around
   $30.40. Therefore I will consider an amount of $130. There is an annual [Specified]
   contribution of $132. There is a senior school annual levy of $76 for [Child 1] and a compulsory
   building levy of $750. This is a total of $21,495.

   I accept Mr Jeffries believes his responsibility to contribute to [Child 1]`s, [Child 2] `s and [Child 3]`s
   education ended when he advised the school he would no longer be making payments towards the fees...

   I also note the BSCA extends to all four boys, not just to [Child 1] and [Child 2]. Therefore the fact that
   Mr Jeffries did not sign an enrolment form for [Child 3] would appear to be moot.

   I am satisfied [Child 1], [Child 2] and [Child 3] are being educated in a manner intended by their parents.
   The youngest child, [Child 4] is currently being educated in primary education in a public school.
   Unless there is a new BSCA going forward then it is apparent the agreement to share his fees as and
   when they arise will also be covered by the terms of the BSCA as it relates to all four children.
   Again, I confirm that a DM cannot over-ride the BSCA provisions.

   …

   The real issue here is not so much about whether Mr Jeffries’ intentions about how the children are
   to be educated but rather his claims that he can no longer afford to pay the fees. The issue of
   affordability will be discussed under the Just and Equitable provisions in this decision.

   I have calculated the annual costs to be $21,495. The costs of [Child 1], [Child 2] and [Child 3] as per the
   current assessment formula are said to be $15,690. An amount of $21,495 is clearly a significant
   proportionate amount. Therefore I am satisfied that the costs of educating the children are
   significantly affected.

   Reason 3 is established.

   …

   It is a fact that Mr Jeffries operates his affairs through a company…

   Mr Jeffries has lodged his individual income tax return for the 2021-22 year. Mr Jeffries has two
   currently registered ABNs with ASIC. One is for [Business 1], the other for a business as a
   sole trader named [Business 2]. I was unable to locate up-to-date BAS or income
   tax returns for [Business 1] and Mr Jeffries lodges his personal income tax return under the
   [Business 2] ABN. He receives a wage from [Business 1]. In the 2021-22
   year the amount is $12,078. As at the date of this decision there is no income tax return lodged for
   the 2021-22 year for his company. As the sole director of [Business 1] it is a matter for Mr
   Jeffries to determine how much he pays himself. As a DM I am not bound by Section 43 of the
   Act. My delegation allows me to look beyond what is generally accepted as income under Section
   43. Under normal circumstances, without the impact of the CoA and now the objection, Mr Jeffries
   for all intents and purposes has complied with that section of the Act.

   I have examined Mr Jeffries’ personal bank statements for the period 18 May 2022 to 14 August
   2022. There is nothing out-of-the-ordinary about his pattern of expenses.

   I have examined the bank statements for [Business 1] for the period 18 May 2022 to
   14 August 2022. I acknowledge that part of this period over-laps that already provided by Mr
   Jeffries’ information regarding the bank statements. As a result, I concentrated on the period 1 July
   2022 to 14 August 2022. This is a period of six weeks and three days. I will call it seven weeks. I
   found:
   -Credits to the account including drawings, transfers and direct credits) of approximately $14,469
   (rounded up). Over a seven week period this equates to a gross amount of $2,067 per week. As Mr
   Jeffries is self-employed and unlikely to be paid if unwell or if he takes holidays, I have calculated
   an annual amount over 48 weeks. This equates to an average of $2,067 per week ($99,216 per
   annum). This does not differ significantly from the gross figure provided by Mr Jeffries for the
   period 28 July 2021 to 30 June 2022.

   Using Mr Jeffries’ last calculations as a guide I have deducted:
   $9,992 GST
   $13,897 Running costs (unable to ascertain what these are given the lack of financial
   disclosure by Mr Jeffries. However, I will use them as a guide.
   $3,800 Accountancy fees (not established, but again I will use as a guide).
   $2,850 Website costs (not established, but again I will use as a guide).

   Total net profit is then: $68,677.

   Mr Jeffries’ business account shows that he uses it for a significant amount of personal and
   discretionary spending. For example he paid rent on his home of $6,246 between 18 May 2022 and
   14 August 2022. According to if available to me from Centrelink, Mr Jeffries also receives rental assistance as well as Family Tax Benefits (FTB) Part A and B. I discussed this with Mr Jeffries who
   says just because he pays the rent from his business account does not mean he will claim it as a
   business deduction. Mr Jeffries says his accountant has advised him not to bother transferring these
   payments to his personal account. Again, without the benefit of being able to see a current profit
   and loss statement or balance sheet, I cannot be sure if Mr Jeffries does claim his rent through the
   business. He says he does not and I will again apply the benefit of the doubt.

   During the period 18 May 2022 to 14 August 2022 I also found an amount of approximately $989
   in discretionary/personal spending. For example:
   -Payments to STAN and Netflix.
   -Purchase from Toyworld.
   -Purchases from Dan Murphy.
   -Spotify charges.
   -Payments to Ladbrokes.
   -Payment to a barber.
   -Multiple payments for fast food/takeaways.

   The business account also pays for fuel and telephone expenses some of which would certainly
   provide Mr Jeffries with a financial resource not generally available to a PAYG employee.
   The statements also show that credit card repayments are made to financial institutions other than
   the one I obtained statements for. I have obtained a copy of recent transactions on one of the credit
   cards. These also show, for the most part, personal expenditure. I can see no evidence of regular
   [business] payments to which Ms Jeffries refers.

   …

   In the absence of full financial disclosure I intend to add back an arbitrary (although I consider
   conservative) amount of $10,000 to the net profit of $68,677 in recognition that Mr Jeffries’
   business is paying a proportion of his rent, telephone, fuel and other motor vehicle expenses as well
   as personal costs. This brings me to an ATI for child support purposes for Mr Jeffries of $78,677.

   The income used in the assessment subject to this objection was $15,879. This is a significant
   proportionate amount which I find gives rise to special circumstances and makes the assessment
   unfair.

   Reason 8A is established.

   …

   As no evidence of any out-of-pocket costs incurred by Mr Jeffries which go over and above that
   agreed to in the parents BCSA, I cannot be satisfied that any of the children have special needs in
   terms of this Reason or that there are any costs to either parent which might make the assessment

   unfair based on the impact such costs have on their ability to maintain the children.

   Reason 2 is not established.

   …

   I am satisfied that Mr Jeffries has paid for private health insurance as per the (BCSA). However,

   this cost was agreed to and therefore does not make the assessment unfair.

   Reason 5 is not established.

   …

   Based on the above information I find Mr Jeffries does have commitments that are necessary and
   reasonable to support himself. However, I am not satisfied the commitments as outlined

   significantly affect Mr Jeffries’ ability to maintain the children.

   Reason 7 is not established.

   …

   The income tax return shows Ms Jeffries received income from Australian Government allowances
   of $10,130 and income from Australian Government pensions and allowances of $8,289. She also
   receives some non-assessable benefits to assist with the needs of the children - as does Mr Jeffries.

   Ms Jeffries is self-employed as [an Occupation]. She is a sole trader and therefore has no profit and loss
   statement. It appears she does not utilise the services of an accountant at this stage. However, her
   income tax return for 2021-22 is now lodged and I have accessed that from the ATO. I have also
   accessed Ms Jeffries’ bank statements from a financial institution with whom she is known to hold
   accounts. Net income from her business is said to be $5,495. However, I do not have a list of her
   expenses or details of the gross amount earned.

   I have examined the bank statements and find credits to Ms Jeffries’ account of approximately
   $12,780 for the period 18 May 2022 to 14 August 2022. If this pattern was to continue Ms Jeffries
   could anticipate a gross income over the year (using 48 weeks- the same as applied to Mr Jeffries)
   of around $51,120.

   The bank statements are unhelpful in that it is too difficult to determine which debits relate to Ms
   Jeffries’ business. There are the usual costs of food, utilities and rent and there is also a very
   conservative amount of discretionary spending for such things as fast foods, purchases from
   Sandgate Cellars and entertainment. I cannot see any credits from third parties which might suggest
   she receives regular financial support from elsewhere.

   In the absence of any comprehensive list of Ms Jeffries’ expenses or an explanation of how she
   reached her net income amount for Personal Services Income of $5,495 I have referred to the ATO
   Small Business Benchmarks. I note Ms Jeffries does not earn enough to be required to lodge a
   BAS. The benchmarks were developed in consultation with industry participants, industry associations, trade associations and registered tax agents.

   For [an Occupation] business the ATO benchmarks show that an average expense of [an Occupation] business would be 46% of the gross income. This takes into account the business costs of motor vehicle,purchases etc. When that percentage is applied to the gross amount of $51,120 it would leave a net profit of $27,605. I will then add back the assessable benefits received by Ms Jeffries from

   Centrelink to arrive at an income for child support purposes of $46,024.

   …

   I intend to change the assessment from 1 April 2022 by setting Mr Jeffries’ ATI at $78,677 and by
   setting Ms Jeffries’ ATI at $46,024 from the same date. I will extend the decision regarding the
   parents` incomes through to 31 December 2025. As they are both self-employed there is very little
   likelihood that their incomes as declared to the ATO will be right for child support purposes...

   Regarding school fees I will vary the assessment from 1 April 2022 for consistency and to avoid
   any more arrears than possible. Mr Jeffries will be required to meet 50% of the costs of the
   education which is an amount of $10,748. I note this is in line with the terms of the BSCA.
   I also accept that there will be ongoing costs for [Child 1]`s [Child 2]`s, [Child 3] `s education. My
   understanding of the BSCA is that the agreement to pay 50% of fees extended to all four boys.
   Therefore when [Child 4] commences secondary education the decision will extend to him as well
   unless there is a new BCSA registered in the interim. The costs will extend beyond the 2022
   academic year and that they will potentially continue to attend [School] until the end of
   their secondary education as each completes Year 12.

   It is uncertain at this time what the education costs for the children will be in 2023 or beyond as the
   school will not set the fees until closer to the start of each school year. To avoid the need for the
   parents to return to this process unless absolutely necessary I have determined that Mr Jeffries is
   again to meet 50% per cent of the tuition fees and the levies included in this decision for each
   academic year from 2023 until [Child 1], [Child 2], [Child 3] and (potentially [Child 4]) no longer attend [School]. It is also my intention that the amount to be paid is to be the net cost, i.e. after

   the relevant sibling reductions and/or other discounts or bursaries are applied.

   …

   DECISION

   The objection is allowed in part. This is a contrary decision for Mr Jeffries who would have been
   expecting a reduction to the child support payable.

   The decision made by Decision Maker (DM) [D] on 22 June 2022 is set aside from 1 April 2022
   as it relates to the school costs and the parents` incomes. DM [D]`s decision continues to have
   effect as it relates to school costs from 1 January 2022 to 31 March 2022.

   This decision has no impact on DM [D]`s decision regarding the Reason 3 costs until 1 April
   2022.

   I have found special circumstances exist in this case and that it would be just and equitable and
   otherwise proper to make a change. The change to be made to the assessment is:
   -From 1 April 2022 to 31 December 2025 the ATI for Mr Jeffries is to be set at $78,677.
   -From 1 April 2022 to 31 December 2025 the ATI for Ms Jeffries is to be set at $46,024.
   - From 1 April 2022 to 31 December 2022 the annual rate of child support payable by Mr Jeffries is
   to be increased by $10,748 in recognition of his contribution to the education costs.
   From 1 January 2023 the annual rate of child support payable by Mr Jeffries is to be increased by
   50% of the education costs as per the clause below:

   Either parent can notify the agency when these costs have been advised by the school and then the
   assessment will be adjusted to bring them into account.

   …

   IMPACT: From 1 April 2022to 21 July 2022 the annual rate of child support payable by
   Mr Jeffries will increase from $14,515 to $15,492. From 1 August 2022 the annual rate payable by
   Mr Jeffries will increase from $14,519 to $15,496. There will be additional arrears of

   approximately $409.25 created

   …

3. Mr Jeffries and Mrs Jeffries 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 both parties (including materials submitted following the hearing, referred to later in these reasons).

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)). 

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

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 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?

1. Subparagraph 117(2)(c)(ia) of the Act, commonly referred to by the CSA as reason 8A, provides as a ground 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

2. Subparagraph 117(2)(b)(ii) of the Act, commonly referred to as Reason 3, provides as a ground for departure:

   (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 …

10.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.

The hearing

11.Mr Jeffries told the Tribunal that his income can fluctuate depending on when settlements occur. He said he was “not overly concerned” by the income set by the CSA, although he considered his income was a little less. He told the Tribunal he was more concerned about what he described as “underestimations” made by Mrs Jeffries of her income from [Occupation].

12.Mrs Jeffries told the Tribunal that when she and Mr Jeffries were together, his income was more in the $100,000 range. Mrs Jeffries said she understood how the CSA arrived at its assessment for Mr Jeffries’ income; however, she suggested that Mr Jeffries holds undisclosed bank accounts in which he may receive “[business] payments”. Mr Jeffries denied he held any such accounts, and that the CSA had all his information. He said there is a simple explanation as to why his income is lower – when he was with Mrs Jeffries, he had the flexibility to work late and work longer hours. He no longer has that flexibility as the care for the children is shared on a “week about” basis. Mr Jeffries said that during COVID-19, there was a period of around 7 months where he did not [do a specified business activity]; he is still recovering from that period. He said things are slowly returning to normal.  

13.Mr Jeffries denied receiving undisclosed [business] payments – he said that such payments come with many conditions and lapse [in specified circumstances].   

14.Mrs Jeffries told the Tribunal that the CSA figure of $46,000 for her income is far too high. Last year her taxable income was some $23,000; prior years it was as high as $32,000 when she was receiving “parenting payment single” (with COVID-19 supplements) from Centrelink. She transferred from parenting payment to jobseeker payment. She estimated that her annual profit from her small [Occupation] business derives around $5,000 to $6,000 per year; she said she receives $275 per fortnight [doing her business]. She does not have an accountant; she prepares her own tax returns. The only deductions she claims is [Business-related purchases 1] (and in one year, a [Business-related purchase 2]) – she said she does not claim other expenses such as car-related expenses. Mrs Jeffries said she keeps a receipt book.

15.In relation to credits to her bank account relied upon by the CSA to reach conclusions about her income, she had been transferring money from another bank account (which includes proceeds from the property division) into that account and the CSA has misinterpreted those deposits as income. Mrs Jeffries suggested her jobseeker and an amount of around $6,000 would be representative of her financial resources; she said she has been using dwindling property settlement funds in order to meet living costs.  

16.Mr Jeffries told the Tribunal that he does not believe that Mrs Jeffries is only doing a couple of jobs a fortnight. He cited a recent example of Mrs Jeffries turning up with [Occupation] gear in her car and in “work uniform”; there was a recent meeting at school for which she was late and she presented as “dressed for work”. Mr Jeffries told the Tribunal he considers there to be no reason that Mrs Jeffries could not work for 60 hours a fortnight or more. He cited many advertisements for vacant [Occupation] positions. He said that Mrs Jeffries’ choices were putting financial pressures on his household.

17.Mrs Jeffries told the Tribunal that she has mental health issues arising from the relationship breakdown and is receiving treatment, including receiving regular counselling. She said she is under stress and is doing as much work as she is able to cope with whilst managing her responsibilities for the children.

18.Mr Jeffries said that Mrs Jeffries had not disclosed all her bank accounts to the CSA – he said a hew account has “just miraculously appeared before the AAT”. Mr Jeffries acknowledged he was sad to hear that Mrs Jeffries is having health issues; however, he  said he should not be responsible for “maintaining two households”.

19.Mr Jeffries told the Tribunal that he cannot afford to pay $10,000 per year in school fees. Mrs Jeffries told the Tribunal that she is satisfied with the CSA decision to increase Mr Jeffries’ liability. The parties had agreed for the children to attend private schooling. Mrs Jeffries told the Tribunal she had “not bothered” to update the CSA with the new (higher) fees for 2023.

20.Mrs Jeffries told the Tribunal she was unsure about the amount of medical expenses she has met for the children. She maintains they have been generally shared; she said Mr Jeffries may be paying a bit more for psychology appointments which she said she asked to be scheduled every three weeks so the parents can share the costs. She said Mr Jeffries has regularly been making claims with the CSA to accept “non-agency payments”; she said she does not think this is fair as he is almost $15,000 in arrears and is not making regular child support payments. Mr Jeffries estimated he has paid some $2,500 for medical costs in the last 7 weeks for which Mrs Jeffries has not made a contribution. Mrs Jeffries responded by observing she has been paying for all the school fees, books, uniforms, extracurricular activities and other related items.

21.Neither Mr Jeffries nor Mrs Jeffries identified any other particularly unusual expenses for themselves or the children. Mr Jeffries suggested that it is Mrs Jeffries’ choice to pay school tuition fees which are unaffordable.  

22.In terms of an assessment going forward, Mr Jeffries suggested it would be appropriate to make an assessment until the end of 2023. Mrs Jeffries indicated she would prefer a longer period to avoid having to engage in another change of assessment process with the CSA.

Conclusion

23.Mr Jeffries argues he should not be liable to make a contribution towards school fees. He suggests he has been given conflicting information by the CSA about the status of the Binding Child Support Agreement (BCSA) made on 22 May 2018.

24.There are limited grounds upon which the BCSA can come to an end – including where there is a terminating event (clause 8 at folio 457 of the CSA hearing papers), and other listed matters – including “if either parent is in receipt of unemployment benefits for a period exceeding 3 months”. That appears to have been so here as Mrs Jeffries has been receiving a “jobseeker payment”[1] (which is clearly intended to be captured by reference to “unemployment benefits”) since November 2021 when her youngest child ([Child 4]) turned 8 years of age.[2]

25.The objections officer in this case concludes that there is a “BCSA in place” (refer to the end of the first paragraph of their reasons at folio 12 of the CSA hearing papers). I do not consider that to be the correct position. However, I do not consider this makes a material difference; the BCSA does not purport to vary the child support assessment, and only concerns the payment of “non-periodic payments” including school fees and other school, activity and medical costs. Subsection 95(3) of the Act provides that the provisions therefore have effect as though they were “a statement made by a court under section 125 in an order made under section 124” – and effectively that if the provisions or the agreement is registered in a court, it may be able to be enforced in a court.

26.I consider it clear enough that both Mr Jeffries and Mrs Jeffries expected the children to be educated privately; Mr Jeffries claims he is unable to afford the fees (which is a matter to be dealt with in the context of what is “just and equitable” below). Mrs Jeffries has, since the beginning of 2020, been meeting the full amount of school fees (exceeding $20,000 per year). The child support assessment is rendered unfair; there are special circumstances which give rise to a ground to depart from the formula.

[1] Mrs Jeffries’ 2021/22 income tax return records $8,289 in “Australian Government pensions” (which I assume is parenting payment) and $10,130 in “Australian Government allowances” (which I assume is jobseeker payment: folio 424 of the CSA hearing papers.

[2] A BCSA can also come to an end when parents agree to a new BCSA; that is not the situation in this case.

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

27.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. The Tribunal is obliged to conduct reviews in a way that is informal, quick and proportionate: section 2A of the Administrative Appeals Tribunal Act 1975.

28.Mr Jeffries takes no serious quarrel with the assessment of his adjusted taxable income as $78,677. He was frank in his evidence that he is anticipating improvement in the coming years. Mrs Jeffries suggests there might be other bank accounts which would reveal undisclosed income (including “[business] payments”). There is no evidence to support that contention. I consider a figure of $78,677 is broadly representative of Mr Jeffries’ present financial capacity.

29.Mrs Jeffries disputes an assessment for her income at $46,024. She says her income consists solely of jobseeker payment and an annual profit from her small [Occupation] business of $6,000. She suggests that the CSA has counted deposits in her bank account which were transfers from another of her accounts in which she was holding family law property settlement proceeds. Mr Jeffries observes that Mrs Jeffries had not disclosed the existence of that account to the CSA.

30.The CSA noted that for the period 18 May 2022 to 14 August 2022, there were deposits totalling some $12,780. Mrs Jeffries’ banking records (starting at folio 374) reveal numerous transfers to and from another Commonwealth Bank account (ending in 8146). On balance, I accept it likely that the analysis of the CSA considerably overstates the level of income being generated by Mrs Jeffries from her small business.

31.On balance, I am prepared to accept Mrs Jeffries’ evidence about her business enterprise likely generating only around $6,000 profit each year. Jobseeker payment is presently around $750 per fortnight (at the maximum rate – Mrs Jeffries’ evidence is that she reports income to Centrelink, which is likely to reduce her rate); assuming a maximum rate, Mrs Jeffries would receive around $20,000 per annum. This would bring her total income to around $26,000 (below the self-support amount).

32.I accept the possibility this might understate Mrs Jeffries’ income if Mr Jeffries’ assertion that some “cash income” is being received by Mrs Jeffries. However, I accept that Mrs Jeffries is restricted in her availability for work by care for the children, and the medical issues she identified during the hearing. I note she is under an obligation to accurately report her income to Centrelink; potentially serious consequences arise if she does not do so. If her income were assessed as high as $35,000 per annum, it would only vary Mr Jeffries’ liability by a little over $1,000 per annum. I also observe that it is likely that with an improvement in Mr Jeffries’ financial position (particularly if various contracts Mr Jeffries alluded to come to fruition) will give rise to the possibility that assessing his income at some $78,000 (at least until the end of this year) might undervalue his financial capacity.

33.I therefore conclude on the evidence available to me that a figure of $26,000 is broadly representative of Mrs Jeffries’ financial capacity. Applying a figure of $78,677 for Mr Jeffries results in an annual liability in excess of $7,000 per annum (without any adjustment for school fees, or any other adjustments).

34.I consider that the burden of school fees undoubtedly imposes a burden on both parents – particularly upon Mrs Jeffries who has a very low income. Half of the total tuition fees for 2022 – some $10,748 – is also a significant commitment for Mr Jeffries. It appears Mrs Jeffries is drawing upon proceeds from the property settlement, and perhaps some assistance from family, to “keep afloat”. I note that the child support scheme puts the needs of the children above all else. Under the formula regime, Mr Jeffries is permitted a “self-support” amount of some $27,000, leaving some $51,000 as available as “child support income”. On that basis, he would be deemed to have sufficient excess income to meet both his ongoing child support liability in addition to the additional amount for school fees.

35.Mr Jeffries committed himself to private education for the children, evidenced by the commitment he made in the BCSA. The interests of the children take precedence. With very careful budgeting, it would be just and equitable for him to contribute to their longstanding and continuing private education. It would be appropriate to add an annual sum of $10,748 – but only from 1 April 2022 (just after Mrs Jeffries made her change of assessment application) as I do not consider there to be compelling grounds to backdate the effect of the departure. In so doing I note that the result is that Mrs Jeffries will have met the full cost of private education from January 2020 until March 2022. Mrs Jeffries has not opted to supply fresh information concerning the fees in 2023 which I expect will be slightly higher; in the circumstances, I consider it appropriate to add an annual sum of $10,748 until the end of 2023.

36.As to the materials from both parents supplied after the hearing, I invited Mr Jeffries to produce an itemised list of “out of pocket” expenses. He instead supplied “Medicare claims history” printouts and copies of some invoices and receipts, including from “Leon’s Tech” for iPhone-related expenses totalling $240 in October 2021; a pharmacy receipt for $230 on 6 June 2022 for wheelchair hire; a receipt for what appears to be school-related items of 4 January 2022 totalling $697; a “list of invoices” in relation to [Child 1] for consultations of $185 each (which did not identify if those costs were “out of pocket” and whether a rebate, or private health rebate, was received); and receipts for what appears to be school-related equipment totalling $400 in October 2022.

37.Mrs Jeffries responded, supplying receipts only from December 2022. She apparently misunderstood as I made it clear that I was seeking materials as far back as late 2021. The limited information provided reveals Mrs Jeffries has paid around $1,000 in February 2023. She observes that in the period December 2022 to February 2023, Mr Jeffries’ expenses appeared to total just over $500. She observes that Mr Jeffries is not making regular child support payments – he is currently almost $15,000 in arrears, which has made it very difficult for her. She advises that she covers the full costs of school fees, books, stationery, shoes, lunch boxes and hats, as well as uniforms.

38.I observe that in a situation where parents share care equally that they will both incur regular medical and other expenses in relation to the children. Mr Jeffries committed in the BCSA to meet half the medical costs in addition to half of the extracurricular activities, sporting costs, school unforms and shoes. Aside from some limited evidence of expenditure in 2022, I accept that since at least the beginning of 2020, Mrs Jeffries has been meeting most school-related costs including uniforms, shoes and extracurricular activities. Based on the materials presented by Mr Jeffries, since the beginning of 2022, the best I can gather is that he may be “out of pocket” for medical expenses up to around $2,000. I find it likely that, on average, the amount expended by Mrs Jeffries for medical costs in addition to school related costs (excluding tuition fees, dealt with separately) is likely to exceed Mr Jeffries’ “out-of-pocket” costs. I note again that Mrs Jeffries has been solely responsible for school tuition fees since the beginning of 2020. Accordingly, I find no basis to make an adjustment in Mr Jeffries’ favour. I observe that even if it were the case Mr Jeffries was meeting a higher proportion of those expenses, given his income greatly exceeds Mrs Jeffries’ income, it is unlikely I would consider it would be just and equitable to make an adjustment in his favour.

39.In my assessment, no other particularly material expenses were raised by either party in respect of their own situations, or in respect of the children, which would warrant any further adjustment. 

40.I consider that I should make a departure varying both parents’ incomes until the end of the 2023 calendar year, at which time information should be available in respect of the 2022/23 financial year. I will also vary Mr Jeffries’ additional liability for school fees until 31 December 2023.

1. The Tribunal is satisfied that with appropriate budgeting, Mr Jeffries will be able to meet his child support liability without suffering severe financial hardship, and that it is just and equitable to make a departure in the terms set out above.

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

42.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.

43.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.

44.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 April 2022 to 31 December 2023, Mr Jeffries’ adjusted taxable income is varied to $78,677;

(b)For the period 1 April 2022 to 31 December 2023, Mrs Jeffries’ adjusted taxable income is varied to $26,000;

(c)For the period 1 April 2022 to 31 December 2023, Mr Jeffries’ annual child support liability is increased by $10,748.

Member S Letch