Joslin and Stetson (Child support) - [2025] ARTA 256

Joslin and Stetson (Child support) [2025] ARTA 256 (24 January 2025)

Applicant/s: Mr Joslin

Respondent: Child Support Registrar

Other Parties: Ms Stetson
Tribunal Number: 2024/SC027924
Tribunal: Senior Member J Longo
Place:Melbourne
Date:24 January 2025

Decision:
The Tribunal sets aside the decision under review and remits the matter in accordance with the order that for the period from 1 December 2022 to 31 December 2025, the child support payable by Mr Joslin is varied to $5,200 per annum.

CATCHWORDS
CHILD SUPPORT – departure from the administrative assessment – income and financial resources – father’s work through corporate entity – personal benefit from business-related expenses – child support payments in arrears – mother’s limited income and assets, and responsibility for most of child’s costs – decision set aside and sent back with direction

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 pursuant to subsection 16(2AB) of the Child Support (Registration and Collection) Act 1988.

Statement of Reasons

BACKGROUND

Mr Joslin and Ms Stetson are the separated parents of [the child] (born 2010). According to the records of Services Australia – Child Support (Child Support), the child support assessment was registered on 12 May 2010. Child Support has been responsible for the collection of child support from Mr Joslin since 18 May 2012. The care attributed to Mr Joslin and Ms Stetson in respect of [the child] has been 21% and 79% respectively.
The most recent administrative assessments, prior to the application for this departure determination, were as follows:
·For the period 11 October 2022 to 31 January 2023, the annual rate of child support payable by Mr Joslin was $1,167, based on Mr Joslin’s 2020–21 provisional adjusted taxable income of $44,127 and Ms Stetson’s 2020–21 adjusted taxable income of $29,150.
·For the period 1 February 2023 to 5 March 2023, the annual rate of child support payable by Mr Joslin was $1,128, based on Mr Joslin’s 2021–22 adjusted taxable income of $43,996 and Ms Stetson’s 2021–22 adjusted taxable income of $22,734.
·For the period 6 March 2023 to 30 April 2024, the annual rate of child support payable by Mr Joslin was $1,337, based on Mr Joslin’s 2021–22 adjusted taxable income of $43,996 and Ms Stetson’s 2021–22 adjusted taxable income of $22,734 (however the amount increased as [the child] turned 13 years of age).
On 2 December 2022 Ms Stetson applied to Child Support for a departure from the administrative assessment on the basis of, in the special circumstances of the case, the administrative assessment being unfair because of the income, earning capacity, property or financial resources of Mr Joslin (reason 8A).
On 10 April 2023, Child Support decided to depart from the administrative assessment and made a departure determination as follows:
·For the period 12 December 2022 until 11 December 2025 Mr Joslin’s ATI shall be set at $139,000.
Mr Joslin objected to the decision on 25 September 2023. An objections officer of Child Support disallowed the objection on 10 November 2023. On 11 March 2024, Mr Joslin lodged an application to the Administrative Appeals Tribunal for review of the objections officer’s decision. Directions for this matter were made on 12 September 2024 and 8 November 2024.
From 14 October 2024, the AAT became the Administrative Review Tribunal (the Tribunal). Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (the Transitional Act), applications for review to the AAT that were not finalised before 14 October 2024 are taken to be an application for review to the Tribunal. This also applies to decisions not finalised before 14 October 2024 being taken to be decisions of the Tribunal. The Transitional Act gives the Tribunal the authority to continue and finalise any aspect of the review not already completed by the AAT. This decision and statement of Reasons is made by the Tribunal.
A hearing of the application occurred on 28 November 2024. In reviewing the decision, the Tribunal considered the documents and information (provided to the parties prior to the hearing)[1] and the sworn evidence of both Mr Joslin and Ms Stetson. Further directions were issued following the hearing for Mr Joslin to provide additional information, which was also provided to Ms Stetson.

CONSIDERATION

[1] Section 23 and section 25 statement and documents provided by Child Support numbered 1 to 386; Mr Joslin’s documents numbered A1 to A363 and Ms Stetson’s documents numbered B1 to B113.

The legislative framework

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) Act1989 (the Assessment Act). This involves the application of a statutory formula, which takes into account factors such as the number of children, the age of each child, the level of care provided and the income of each parent. The income used in the calculation has a number of components making up the adjusted taxable income, which is worked out using section 43 of the Assessment Act. The general approach is that the Child Support Registrar (the Registrar) will utilise a parent’s adjusted taxable income as assessed by the Australian Taxation Office for the last relevant year of income.
The liable parent or a carer may apply for a determination departing from the administrative assessment under Part 6A of the Assessment Act. Section 98C establishes a three-step process to be satisfied prior to a departure determination being made: that there is a ground for a departure from the administrative assessment; that it is just and equitable to depart; and that it is otherwise proper. Once satisfied, the Tribunal may make one of the determinations prescribed in section 98S of the Assessment Act.
The decision under review has focussed on whether a departure determination ought to be made by considering the following:
·     whether there is a ground for a departure from the administrative assessment;
·     whether it is just and equitable to depart; and
·     whether it is otherwise proper.
Accordingly, the Tribunal first considered whether there is a ground established for a departure from the administrative assessment.

Reason 8: Mr Joslin’s and Ms Stetson’s income, property, financial resources and earning capacity

Subparagraph 117(2)(c)(ia) of the Assessment Act provides that a ground for departure from an administrative assessment arises as follows:
(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;
With regard to terminology, the Tribunal also notes that generally, adjusted taxable income is calculated according to section 43 of the Assessment Act and is the total of the following: (a) the parent’s taxable income for the last relevant year of income in relation to the child support period, disregarding the parent’s assessable FHSS released amount (within the meaning of the Income Tax Assessment Act 1997) for that year of income; (b) the parent’s reportable fringe benefits total for that year of income; (c) the parent’s target foreign income for that year of income; (d) the parent’s total net investment loss (within the meaning of the Income Tax Assessment Act 1997) for that year of income; (e) the total of the tax-free pensions or benefits received by that parent in that year of income; and (f) the parent’s reportable superannuation contributions (within the meaning of the Income Tax Assessment Act 1997) for that year of income.
The discretion provided for under section 117 of the Assessment Act provides that the Tribunal can depart from the administrative assessment. This means that the Tribunal can determine that an income amount other than a parent’s adjusted taxable income is to be used for the purpose of calculating the parent’s child support obligation. Where Child Support has referred to adjusted taxable income for the purpose of making the administrative assessment, the Tribunal accepts its calculations. For clarity, the Tribunal will refer to this figure as the parent’s “income for child support purposes”. Another income amount to be referred to in these Reasons is “taxable income” and that is the amount specified in Australian Taxation Office income tax returns.
The term “special circumstances” in paragraph 117(2)(c) of the Assessment Act is not defined. However, in Gyselman and Gyselman (1992) FLC 92-279 the Full Family Court indicated that for there to be special circumstances, the facts of the case must establish something which is special or out of the ordinary.
In considering the above, the Tribunal is mindful of the requirement of satisfying subsection 117(7A) of the Assessment Act having regard to the capacity of the parent to derive an income but disregarding the capacity of anyone who does not have a legal duty to maintain the child. To this end, the Tribunal has considered Mr Joslin’s and Ms Stetson’s circumstances as the parents of [the child].
The Court has observed on numerous occasions that the Tribunal is not required to undertake a “forensic audit” or major investigation of the financial circumstances of a party (Podmore & Pillai (SSAT Appeal) [2011] FMCAfam 952 and Frost and Frost (SSAT Appeal) [2011] FMCAfam 1311). Rather, the Tribunal must be satisfied on the balance of probabilities as to the income, property and financial resources available to the parties for child support purposes, such that a fair decision can be made in respect of the child support liability (Shearer & Benson (SSAT Appeal) [2011] FMCAfam 623).
Mr Joslin’s evidence to the Tribunal was that he is a licensed [occupation 1]. He has been working in this industry for 19 years. Since about 2017, he has undertaken this work through a corporate entity, [Company 1]. Immediately prior to this, he worked as a sub-contractor. He is the sole director and shareholder of [Company 1]. Mr Joslin told the Tribunal that the majority of his work is in [doing job task 1], but he also does some [job task 2] work. The majority of his work is [with existing products] (80%) and some new [products] (20%). He has a labourer who helps him on a casual basis when he needs assistance. There are no other employees of [Company 1], apart from him.
Mr Joslin told the Tribunal that he pays himself a wage from [Company 1]. The financial statements of [Company 1] for 2021–22, 2022–23 and 2023–24 show wages paid in the profit and loss statements. Mr Joslin’s evidence confirms that he is the only employee of the company. His wages from [Company 1], according to the financial statements for the periods from 2021–22 are as follows:
·     2021–22 – $44,530
·     2022–23 – $45,000
·     2023–24 – $31,756.
The Tribunal discussed [Company 1]’s tax return for 2021–22, in particular the temporary full expensing deductions claimed in the 2021–22 financial year.[2] Mr Joslin confirmed at hearing that there were three purchases of equipment: a truck ($40,909), a roof rail ($19,882) and a work car ($5,100). Mr Joslin confirmed that the truck was purchased under finance through a commercial lender while the roof rail was financed from a loan from his partner. He did not use finance for the purchase of the car.
[2] Page A100 of Mr Joslin’s documents.
Mr Joslin stated that the truck was stolen in late 2022 and written off. He received a payout from his insurer for this truck which was used to repay the finance on the vehicle. Mr Joslin stated that the work car’s motor ‘blew up’ and the vehicle was sitting in the front yard. His brother has taken the car, which he was to pay for by instalment but these have been inconsistent. He stated that he borrowed funds in November/December 2023 for the purchase of another truck, however this vehicle is currently not usable as the motor needs to be replaced. He also purchased a vehicle in September 2023 which he uses predominately for work as he travels to [City] and Newcastle for his jobs.
The Tribunal notes that the [Company 1] financial statements show annual expenditure for entertainment in the 2021–22 ($2,535) and 2022–23 ($4,381) financial periods. Mr Joslin also stated at hearing that the vehicle is used for personal use. Ms Stetson also made submissions that Mr Joslin has used his work vehicle for personal use.
It is a well-established principle in the Family Court that the taxable income of a person who is involved in their own business may not be an accurate reflection of their earning capacity, income, benefits and financial resources for child support purposes (DJM and JLM [1988] FamCA 97; Scott and Scott (1994) FLC 92-457; Carey and Carey (1994) FLC 92-489). These principles are applicable in the present matter.
In Costa & Fairbank (SSAT Appeal) [2010] FMCAfam 39, the Court said about the interpretation of the term “financial resources”:
“Financial resource” refers to “something which is not property but from which financial benefit is or may be gained”. In light of the objects of the Act, the term should be broadly defined and would refer to any financial benefit that would enhance the capacity of parents to provide a proper level of financial support for their children.
The Tribunal finds, as discussed above in paragraph 19 and found in the financial statements, that Mr Joslin has been paid a wage from [Company 1] as an employee. The Tribunal is also satisfied that this is not the only benefit he has received from [Company 1]. [Company 1] had the benefit of fully expensing a number of capital purchases. While these deductions are legitimate for tax purposes, the Tribunal finds that the full expensing of these assets, the truck, car and roof rail purchase by [Company 1], does not fully reflect the income and financial resources available to Mr Joslin. In addition, other expense claims such as entertainment expenses and staff amenities, also produce an inaccurate reflection of Mr Joslin’s income and financial resources that are available from [Company 1] above the wages he is paid.
Consequently, the Tribunal is satisfied that the administrative assessment has not produced a fair outcome and accordingly, the Tribunal finds that special circumstances do exist in this case which make the determination of the level of financial support to be provided by Mr Joslin to be unjust and inequitable. As such, the Tribunal is satisfied that a ground for departure is established in relation to subparagraph 117(2)(c)(ia) of the Assessment Act.

Issue 2 – Is it fair or ‘just and equitable’ in relation to Mr Joslin, Ms Stetson and [the child] to make a particular departure determination?

As the Tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is fair as regards the parents and the children to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Assessment Act. This in turn requires the Tribunal to have regard to a range of factors, including but not limited to those set out in subsections 117(4) and (6) to (8) of the Assessment Act, such as the needs of the children, the parents’ assets, liabilities, income and commitments and any hardship that would be caused by departing or not departing from the formula. The Tribunal does not propose to explore every matter in detail but will discuss those it regards as pertinent to this application (Gyselman).

The earning capacity, income, property and financial resources and commitments of each parent

The Tribunal found earlier that Mr Joslin’s income through [Company 1], a company for which he is the sole shareholder and director, does not fully reflect the income, property and financial resources available to him. In relation to Mr Joslin’s income, the Tribunal has found that he was paid wages from [Company 1] of $44,530 (2021–22), $45,000 (2022–23), and $31,756 (2023–24). Mr Joslin’s Statement of Financial Circumstances discloses income from [Company 1] of $1,128 per week ($58,656).
Mr Joslin stated that the truck initially purchased in 2022 was stolen towards the end of 2022. The vehicle was irreparably damaged and the insurance on this vehicle was paid out. He stated that the insurance money was used to repay the loan. This vehicle was fully expensed as a depreciable asset in the 2022 financial year, notwithstanding the vehicle was financed and not purchased outright. Similarly, the roof rail and work car were also fully expensed as depreciated assets in the 2022 financial year.
Mr Joslin’s Statement of Financial Circumstances shows his income as $1,128 per week.[3] The financial statements for the income year ending 30 June 2024 show income paid by [Company 1] of $31,756, which equates to approximately $610 per week. In his Statement of Financial Circumstances, he lists his jointly owned home ($460,000), [Vehicle 1] ($25,000), household contents ($3,500) and a boat ($3,000). He has super of $23,084. In regard to his liabilities, Mr Joslin indicated mortgage loans totalling $369,863 and a company tax debt of $98,630, but according to Mr Joslin’s evidence the debt was removed by the ATO due to financial hardship. He also has approximately $31,000 owing to his partner and her company ([Company 2]).
[3] Page A7, Mr Joslin’s documents to the Tribunal.
Mr Joslin indicated in his Statement of Financial Circumstances that his household expenses are $1,318 per week. This includes mortgage repayments which he states he has covered since 2021. In addition to the household expenses, Mr Joslin indicates that he has approximately $454 per week in personal expenditure. This includes income tax and child support payments. Excluding the child support payments to Ms Stetson, these are around $286 per week. Mr Joslin stated that he has separated from his partner but they are trying to reconcile, and while this is ongoing, he is paying child support of $80 per week.
The above payment of personal and household expenses are greater than Mr Joslin’s income as disclosed in his Statement of Financial Circumstances. He stated that his sister has moved into his property and is contributing $300 per week towards mortgage and also contributing towards the utilities. Mr Joslin stated that he had someone boarding for about 12 months, prior to his sister living at the home, who was paying around $60 per week.
The Tribunal has examined the bank accounts provided by Mr Joslin in this matter. While bank statements for [Company 1] were requested, it seems that these have been not been provided. Nonetheless, what the bank statements before the Tribunal show is that Mr Joslin has been able to meet expenses, such as the mortgage repayments, fuel costs and other living expenses. While there have been loaned amounts from his partner and others, these amounts were irregular throughout the 2023-2024 period of the statements and did form the majority of the funds used.
Mr Joslin accepted that he has had private use of the vehicle, a [Vehicle 2], since September 2023, as well as other vehicles owned by the [Company 1]. He estimated that this use was around 15%. The Tribunal thinks that the private use is higher than what has been estimated by Mr Joslin, and has calculated the benefit on a 20% use of the vehicle for private purposes. The Tribunal estimates his benefit from the private use of the previous motor vehicle, based on 20% private use, as approximately $3,500 in 2021–22 and 2022–23 and $3,200 in the 2023–24 financial year.

Mr Joslin has also had the benefit of fully expensed items in 2021–22 of $65,891, $706 in 2022–23, and $13,636 in 2023–24. While these were expensed fully for tax purposes, Mr Joslin was repaying these amounts over the periods of the loans. In addition, [Company 1] has paid entertainment and staff amenities costs over the same financial years – entertainment costs of $2,535 (2021–22), $4,381 (2022–23), $2,567 (2023–24) and staff amenities costs of $2,011 (2021–22), $4,462 (2022–23), $3,199 (2023–24).
In respect of Ms Stetson, she stated in her oral evidence that she is working casually as [an occupation 2] two days per week. This has reduced recently due to her caring responsibility but she is hoping to increase her hours in the future. Ms Stetson’s Statement of Financial Circumstances indicates $115 per week in income from her [occupation 2] work and the remainder of her income from parenting payment. Ms Stetson’s three payslips provided to the Tribunal show that the average over the period of the three payslips was around $249 per week. Ms Stetson provided her notice of assessments for the 2022, 2023 and 2024 financial periods, which show taxable income of $22,734, $24,866, and $24,899 respectively. Ms Stetson stated that she is living in community housing through NSW Housing and her rent has recently increased. She has pre-approval for a [Finance company] loan for pending surgery. She has some health insurance ($100 per month) for herself.
Her household expenditure is $942 per week, which she is able to meet with her Centrelink payments, family assistance payments and income from her [occupation 2] work. Ms Stetson has not listed any personal expenditure. In relation to Ms Stetson’s assets, these consist of minimal savings ($129) and her motor vehicle (valued at $9,000). Ms Stetson has no outstanding debts and minimal superannuation.

The needs of the children

Section 3 of the Assessment Act makes it clear that the parents of a child have the primary duty to maintain the child, and that this duty has priority over all commitments of the parents other than commitments necessary for self-support or the support of another person the parent has a duty to maintain (Ashcroft and Ashcroft (SSAT Appeal) [2008] FMCAfam 1250). In this case Mr Joslin and Ms Stetson have the primary duty to financially support [the child] and that contributing to their costs should take priority over all other costs other than their “necessary” costs of self-support.
In determining the proper needs of the child, subsection 117(6) of the Assessment Act also requires the Tribunal to have regard to the manner in which the parents expected the child to be cared for, educated and trained as well as a consideration of any special needs of the child. It was undisputed that [the child] is in good health and has no special needs.
The Tribunal has considered the self-support costs for Mr Joslin, based on the income and benefits available to him as discussed above in paragraphs 34 and 35, and the Statement of Financial Circumstances provided to the Tribunal. The Tribunal also considering Ms Stetson’s income and Centrelink payments and the Statement of Financial Circumstances provided to the Tribunal in determining her self-support costs. Mr Joslin has estimated minimal costs for [the child], however indicated at hearing that he has paid some costs relating to [the child]’s extracurricular costs (football). Ms Stetson has indicted that she is also contributing to these costs, in addition to her expenditure for [the child]. Ms Stetson estimated that the household costs are split evenly, therefore the costs for [the child] are estimated at around $314 per week ($15,808 annually).

Conclusion

After consideration of the income, resources, benefits and assets together with the commitments and liabilities of Mr Joslin, Ms Stetson and the needs of [the child], the Tribunal considers it is just and equitable to make a departure determination from the current administrative assessment in accordance with section 98S of the Assessment Act. The Tribunal may make one of the determinations set out in section 98S of the Assessment Act. Section 98S sets out a range of determinations, including varying the annual rate of child support payable, the adjusted taxable income of a parent, or the costs of self-support. It is clear that Ms Stetson requires the assistance of Mr Joslin to meet the needs of [the child]. It is also open to both parties to prioritise the “necessary” needs of [the child].
The Tribunal may not make a determination in respect of any period more than 18 months earlier than the date on which the application for a change in the way the child support liability is calculated was made (subsection 98S(3B)). While in this case, the Tribunal is limited to considering any backdating, it has determined that it is not appropriate for any departure to be made prior to 1 December 2022.
The Tribunal considered the circumstances of the parties and on balance, determined that it is more just and equitable to vary the annual rate of child support payable by Mr Joslin. The Tribunal has determined that setting the amount of child support payable from 1 December 2022 is more appropriate than determining an income amount for Mr Joslin. The Tribunal has determined that Mr Joslin’s income and benefits from self-employment are not reflected in his wages from [Company 1]. The Tribunal is not satisfied that the calculations of Child Support of Mr Joslin’s income accurately reflect Mr Joslin’s and [Company 1]’s financial circumstances. Mr Joslin’s income and financial resources are greater than what is declared in his income tax return, but the Tribunal does not accept that they as assessed in Child Support’s objection officer consideration of the departure determination.
The Tribunal has determined that the child support payable by Mr Joslin should be set at $5,200 per annum from 1 December 2022. The Tribunal notes that this is a lower rate than what has been assessed by Child Support, but is satisfied that it is more reflective of Mr Joslin’s financial circumstances and the benefits from [Company 1]. This will equate to approximately $100 per week ($433 per month).
In relation to an end period, the Tribunal is cognisant of the preference of the parties for a degree of certainty going forward. However, the Tribunal is also cognisant that Mr Joslin’s financial circumstances may change in the future. Accordingly, the Tribunal proposes to end the departure decision on 31 December 2025.
Subsection 117(4) of the Assessment Act requires the Tribunal to consider whether any departure determination or failure to make a departure will cause any hardship to the children, the carer, the liable parent or any other person the liable parent has a duty to support.
According to Agency records, Mr Joslin’s child support payments are in arrears. As at 27 May 2025, these were $10,862. Ms Stetson stated at hearing that the only payments received from Mr Joslin have been through the interception of his tax refund. The Tribunal calculates that his arrears will reduce, but he will still have arrears outstanding. While Mr Joslin submitted that he has no surplus at the end of each week, the Tribunal is satisfied that he has access to sufficient income and financial resources to meet a weekly child support liability in respect of [the child] of around $100 per week, in addition to the reduction of his arrears, without incurring hardship. The Tribunal notes again Mr Joslin’s legal duty to prioritise the needs of [the child above all other commitments other than necessary self-support costs.
The Tribunal notes that while they have ongoing household costs, Ms Stetson will bear the majority of [the child]’s costs. Ms Stetson’s income and assets are limited and she is reliant on income support payments and social housing. Despite Ms Stetson not having any debts, the payment of child support by Mr Joslin above the administrative assessment in this departure determination will reduce Ms Stetson’s hardship in supporting [the child]’s proper needs.

Is it otherwise proper to make a particular departure determination?

The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Assessment Act. Subsection 117(5) sets out the matters that must be considered when deciding whether it would be “otherwise proper” to make a departure determination.
Ms Stetson is and was in receipt of family tax benefit throughout the period from 1 December 2022. As such, the Tribunal’s decision will reduce the impact on the public purse as the amount of child support payable will vary the amount of family tax benefit received. Therefore, the Tribunal considers that it is otherwise proper to make the particular proposed determination.
It is open to either party to lodge a further change of assessment application should the future circumstances of either party change significantly from the circumstances upon which this decision is based.

DECISION

The Tribunal sets aside the decision under review and remits the matter in accordance with the order that for the period from 1 December 2022 to 31 December 2025, the child support payable by Mr Joslin is varied to $5,200 per annum.

Date(s) of hearing:	Thursday, 28 November 2024
Representative for the Applicant:	Self-represented
Representative for the Other party:	Self-represented