Jowitt and Child Support Registrar (Child support)

[2019] AATA 1202

Jowitt and Child Support Registrar (Child support) [2019] AATA 1202 (8 March 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/MC014022

APPLICANT:  Mr Jowitt

OTHER PARTIES:  Child Support Registrar

TRIBUNAL:Member R Anderson

DECISION DATE:  08 March 2019

DECISION:

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

• The adjusted taxable income of [Ms A] is varied to $76,500 per annum in respect of the period 1 July 2018 to 30 June 2019; and

• The adjusted taxable income of [Ms A] is varied to $85,000 per annum in respect of the period 1 July 2019 to 31 October 2020.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of both parents - benefits derived from rental property - a ground for departure established - decision under review set aside and substituted

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

1. Mr Jowitt and [Ms A] are the parents of [Child 1].  According to records of the Department of Human Services – Child Support (the Department), the child support assessment was registered on 30 July 2009. However, it was not until 28 September 2009 that the Department became responsible for the collection of child support from Mr Jowitt.

2. The child support liability is generally calculated in accordance with the administrative assessment, as provided in the Child Support (Assessment) Act 1989 (the Act).  The calculation is based on the income recorded by each parent in their most recently completed tax returns, as lodged with the Australian Taxation Office (ATO), or the most recent estimate accepted by the Department. It is open to either parent to lodge an application for a departure from the administrative assessment under Part 6A of the Act if they consider the administrative assessment results in an unfair amount of child support payable by one parent.

3. Since registration, there have been numerous departure decisions in this case, the most recent affecting the period 6 December 2016 to 30 June 2018, whereby the adjusted taxable income of [Ms A] was varied to $76,403 per annum.  Mr Jowitt’ departure application of 8 January 2018 was lodged on the basis that the administrative assessment produced an unfair outcome due to the income, property and financial resources available to [Ms A] (Reason 8). This was largely due to [Ms A] commencing to rent out an investment property.   Furthermore, the upcoming cessation of the previous departure decision at 30 June 2018 would result in the administrative formula reverting to use of [Ms A]’s 2016/2017 taxable income of $14,082 to assess the annual child support liability.  This meant that the annual rate of child support payable by Mr Jowitt would increase from $3,258 to $5,695.

4. On 5 February 2018, a delegate of the child support registrar found that a ground was established and decided to vary the adjusted taxable income of [Ms A] to $76,403 per annum in respect of the period 1 July 2018 to 31 October 2019.  On 26 February 2018, Mr Jowitt lodged an objection to the decision of 5 February 2018, which was subsequently disallowed by an objections officer on 26 April 2018. 

5. On 9 May 2018, Mr Jowitt lodged an application to this tribunal for an independent review of the Department’s decision.  The directions hearing was conducted by telephone with Mr Jowitt on 15 November 2018.  [Ms A] chose not to participate. Following this hearing, directions were made to both parties requiring them to provide further information and documents. The tribunal notes that while Mr Jowitt largely complied with the directions, [Ms A] failed to comply with any part of the directions, including to provide a Statement of Financial Circumstances.  It is also noteworthy that [Ms A] has failed to provide any written information to the Department in respect of the departure decision under review. 

6. The hearing was held on 5 February 2019. Mr Jowitt participated by conference telephone and gave oral evidence on affirmation.   [Ms A] did not answer the tribunal’s numerous attempts to call her.  Consequently, she did not participate in the hearing.  In an email dated 16 January 2018, [Ms A] stated that she did not wish to be involved in the review process.  However, [Ms A] was still required to comply with the tribunal’s directions and failed to do so. On 5 February 2019, the tribunal decided to remove [Ms A] as a party to the review.

7. The tribunal considered information in the documents provided by the Department in accordance with the Administrative Appeals Tribunal Act 1975 numbered 1 to 352, documents lodged by Mr Jowitt numbered A1 to A44, further documents from the Department numbered C1 to C49 and information from Centrelink, numbered D1 to D7.  All of the documents were provided to Mr Jowitt and the Department prior to the hearing. In accordance with subsection 15(1) of the Child Support Review Directions, the ‘C’ and ‘D’ documents accessed by the tribunal prior to the hearing were also provided to [Ms A].

8. Following the hearing, further documents were received from the Department, numbered C50 to C194 and further comment from Mr Jowitt numbered A45 to A46.  These documents were provided to Mr Jowitt and the Department. However, as these documents were received after 5 February 2019 when [Ms A] was no longer a party to the proceedings, in accordance with subsection 14(2) of the Child Support Review Directions, they were not provided to [Ms A].

ISSUES

1. When calculation of the rate of child support is based on the usual administrative formula as discussed above, it also takes into account, relevantly, factors such as the number of children, the level of care provided, the costs of the children, the costs of self-support of each parent and the income of each parent. Section 98C of the Act allows for a decision maker to depart from the usual manner of calculating the rate of child support payable by one parent to the other parent for a child after considering the following issues:

   ·         whether a ground exists to depart from the administrative assessment; and if so

   ·         whether any proposed departure is fair to Mr Jowitt, [Ms A] and [Child 1]; and if so

   ·         whether any proposed departure is fair to the public.

CONSIDERATION

Issue 1 – Does a ground exist to depart from the administrative assessment?

1. The grounds for departure are set out in subsection 117(2) of the Act. Each ground is prefaced by the words ‘in the special circumstances of the case’. The meaning of this expression is not defined in the Act. However, the tribunal was guided by the courts, which have concluded that the expression relates to the facts peculiar to each case such that those facts are ‘out of the ordinary’ and set the case apart from the usual case (Gyselman and Gyselman (1992) FLC 92-279 (Gyselman) and Philippe and Philippe (1978) FLC 90-433).

Reasons 8A and 8B – the earning capacity, income, property and financial resources of each parent

1. Subparagraph 117(2)(c)(ia) of the Act provides a ground for departure exists where, in the special circumstances of the case, use of the administrative assessment would result in an unfair level of child support payable by Mr Jowitt because of the available income, property and financial resources available to either parent. The Act goes on to state in subsection 117(7A) that the decision maker must have regard to ‘the capacity of the parent to derive income, including any assets of, under the control of, or held for the benefit of the parent that do not produce, but are capable of producing, income’ and disregard ‘the income, earning capacity, property and financial resources of any person who does not have a duty to maintain the child’. Clearly, the respective partners of Mr Jowitt and [Ms A] have no legal duty to provide for [Child 1], while Mr Jowitt and his current wife have a legal duty to provide for their daughter, born in January 2019.

2. As a PAYG employee, the financial circumstances of Mr Jowitt are transparent and lack complexity.  He has worked in [Occupation 1] for many years. In respect of the relevant period, being the 2017/2018 year, Mr Jowitt was employed by [Company 1], where he commenced in mid-January 2017.   According to his 2017/2018 income tax return, his gross wages were $75,264.  Mr Jowitt has a share portfolio with a corresponding margin loan through [Financial Institution 1].  While dividends are taxable, after loan repayments and associated expenses, the investments remain positively geared. The deductions are unremarkable.   

3. Going forward, according to the most recent payslip provided to 23 November 2018, the year-to-date wages of Mr Jowitt total $31,307.79.  The tribunal calculates this to annualise to $77,212.  However, the annual wage is recorded as $74,204.  Mr Jowitt told the tribunal that he has received a bonus in the past yet is not aware of receiving such a payment since 1 July 2017.   It is noteworthy that an increase of less than $2,000 per annum in the formula impacts the child support liability by less than $5 per week. In any event, the tribunal is satisfied that the annual tax returns as lodged by Mr Jowitt with the ATO provide an accurate reflection of his financial resources, regardless of timing differences between the year the income was earned and the period for which it is used in the administrative assessment, and finds accordingly.

4. The tribunal accepts the written evidence of Mr Jowitt that at 30 June 2018, he held a balance in his [Super] account of $113,145. The tribunal is satisfied that no personal contributions have been made by Mr Jowitt in recent times.

5. The tribunal considered the assets and liabilities of Mr Jowitt. According to his Statement of Financial Circumstances and oral evidence, the assets of Mr Jowitt consist of a small bank balance ($200), the [share] portfolio which at 31 October 2018 had a net value of $17,301 and household contents valued at $20,000.  In addition, Mr Jowitt recently purchased a [vehicle] under finance, with a net value of approximately $6,500. Mr Jowitt has no other liabilities. Therefore, the tribunal calculates the net asset base of Mr Jowitt to approximate $44,000 and finds accordingly.

6. Mr Jowitt told the tribunal that he shares his rented residence with his wife and their daughter, with 50% care of his wife’s children from a previous relationship and [Child 1]. According to departmental records, the care of [Child 1] has recently reduced from 23% to 0% in mid-2018. The relevant care decision is currently on foot with this tribunal (differently constituted). In respect of his expenses, after allowing for his wife’s motor vehicle costs of $120 and the [car] loan repayments, Mr Jowitt estimated the average weekly expenses of the household to be $1,364. Of this, discretionary costs in respect of entertainment/children’s’ activities, holidays and gifts are $150.  The expenses were not allocated across the various members of the household. In response to a question from the tribunal, Mr Jowitt stated that after excluding his motor vehicle expenses and the costs associated with the children, it is reasonable to allocate the remaining costs of the household equally between him and his wife.  He gave oral evidence that he and his wife are in good health.  Furthermore, his wife was earning a wage similar to his prior to more recently commencing receipt of paid parental leave.

7. Therefore, the tribunal calculates the estimated average weekly “necessary” costs of Mr Jowitt to approximate $781 or $40,612 per annum.  This clearly exceeds the self-support amount used in the administrative formula in the 2018 year of $24,535, largely due to the car loan repayments approaching $10,500 per annum. In response to an observation by the tribunal that Mr Jowitt appears to be able to meet the average weekly expenses of the household, both necessary and discretionary, he agreed, albeit stating that he has little in reserve for emergencies. 

8. As noted above, [Ms A] failed to provide any information in respect of her circumstances.  It is evident from departmental records that she purchased [a named Business] (the Business) on 29 August 2016 and operates it as a sole trader. 

9. It is a well-established principle in the Family Court that the taxable income of a person who is self-employed may not be an accurate reflection of their earning capacity and financial resources for child support purposes (DJM and JLM [1988] FamCA 97; Scott v Scott [1994] FLC 92-457; Carey v Carey [1994] FLC 92-489). As discussed at hearing, the role of the tribunal is not to conduct a forensic audit (Podmore & Pillai [2011] FMCAfam 952 and Frost and Frost [2011] FMCAfam 1311). Rather, it is to determine from the available evidence before it the 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.

10. Mr Jowitt asserted that [Ms A] has been far from truthful and does not declare the cash income received in the Business.  While the tribunal is cognisant of the fact that very few cash deposits are evident in the bank statements, the problem remains that accurate information in regard to expenses is also not available.  Furthermore, it is beyond the scope of this tribunal to investigate the cash economy. 

11. Given [Ms A]’s non-compliance and non-participation, the tribunal has no option but to draw inferences and findings from the information available to it.  In K & M (No. 2)[2007] FMCAfam 920 LucevFM in paragraph 9 stated the following:

    The law is clear: there is a duty in proceedings of this type on every party to provide full disclosure of their financial position.  If full disclosure is not provided the Court is at liberty to make appropriate inferences and findings from the non-disclosure, and not to be unduly cautious in doing so when making findings or drawing inferences against the non-disclosing party.

12. Similarly in Humphries & Berry (SSAT Appeal)[2008] FMCAfam 409, SlackFM at paragraph 31 stated the following:

    In financial proceedings under the Family Law Act, the authorities make it clear that a Court ‘should not be unduly cautious about making findings in favour of the other party if it is not satisfied that proper disclosure has been made (see Chang & Su (2002) FLC93-117)”. Such principles, in my consideration, have similar application to these matters before the SSAT.

13. The 2016/2017 and 2017/2018 tax returns of [Ms A] were accessed from the ATO by the Department and the tribunal.  The 2016/2017 and 2017/2018 tax returns record net losses in respect of the Business of $65,421 and $9,201 respectively.  In addition, [Ms A] earns interest on a savings account and declared a net loss on an investment property for the first time in the 2017/2018 year.  Information received by the tribunal from the [rental agent] recorded monthly rent of $1,738. [Ms A] failed to provide information in respect of her assets and liabilities, as directed.  Information provided after the hearing from the Titles office confirmed that [Ms A] is the sole owner of the investment property and holds no interest in any other property in Victoria. Furthermore, information from [Bank 1] confirmed that the investment loan is paid monthly from the personal [Bank 2] account of [Ms A] at the rate of $1,727.  As such, the tribunal is satisfied that the investment property is negatively geared, as reflected in her 2017/2018 tax return.  For the purposes of child support, no allowance is made for such a loss as the investment is considered to be discretionary.  Furthermore, the tribunal is satisfied that [Ms A] has no interest in her current residence and there is no evidence to suggest that [Ms A] has any liability in respect of her current residence.

14. Departmental records state that [Ms A] had a friend assist her to complete the tax returns.  The tribunal noted numerous errors in the tax returns which lead to a conclusion that the financial information, in particular in respect of the Business, is anything but reliable.  Firstly, the figures have been recorded incorrectly as primary production, the motor vehicle expenses calculated on the basis of the cents per kilometre method, as recorded in the 2017/2018 year, exceed the limit by over $11,000 and while interest was claimed in the 2016/2017 year in excess of $36,000 and nil in the 2017/2018 year, according to departmental records of a discussion with [Ms A], the business loan was an interest-free loan from a friend. Furthermore, the depreciation expenses appear excessive with no supporting schedules provided.  Despite being registered for GST since 25 May 2016, the required business activity statements have not been lodged with the ATO.  As such, the tribunal does not consider that the tax returns provide an accurate indication of the operation of the Business. Therefore, in order to determine the income and financial resources available to [Ms A], the tribunal was required to look beyond her taxable income. In the circumstances, the tribunal turned to the bank statements of [Ms A] and the Business.   

15. It is evident that payments from [Company 2] are deposited directly into two different [Bank 2] business accounts and also into a personal [Bank 2] account of [Ms A]. In addition, funds are constantly transferred between the [Bank 2] business account and the personal [Bank 2] account of [Ms A] and to and from the [Bank 2] account and the personal [Bank 2] account of [Ms A].  The tribunal assumes the latter is likely an attempt to earn greater interest. 

16. Aside from transfers, withdrawals from the business accounts seem largely in respect of payments to [Company 3] and [Company 2], wages, rent and some other random costs such as water and rates.  In respect of [Ms A]’s personal [Bank 2] account, the withdrawals appear to be largely of a private nature for day-to-day expenses.  Furthermore, family tax benefit payments and investment property rent are also deposited into this account. In the period 26 October 2017 to 9 February 2018, deposits into [Ms A]’s personal [Bank 2] account from [Company 2] annualised to approximately $45,000.  In the period 26 July 2018 to 4 February 2019, deposits into [Ms A]’s personal [Bank 2] account from [Company 2] annualised to approximately $39,000.  This contradicts the improved position of the business reflected in [Ms A]’s 2016/2017 and 2017/2018 tax returns, exposing yet another anomaly.  

17. It is evident that the personal and business expenses of [Ms A] are closely entwined.  As a sole trader, such circumstances are not unusual, such an entity is not required to comply with the stricter financial reporting regulations of ASIC.  The tribunal has already noted its concern in regard to ATO compliance of the Business. There is no question however, that [Ms A] receives the benefit of paying no tax on the income she has received from the business since commencement.  Furthermore, she also has the ability to receive benefits from private use of motor vehicles, telephones and the like that are claimed through the Business.

18. Mr Jowitt gave oral evidence that he suspects the financial resources available to [Ms A] from the Business to be between $80,000 and $100,000 per annum, in addition to rental income. The rental circumstances have been discussed above.  The tribunal also notes that [Ms A] left employment with [Company 4] in September 2016 at a salary in excess of $80,000 per annum.  While the tribunal accepts that this decision was in relation to caring for her ill mother, it is difficult to understand why since the passing of her mother [Ms A] would continue to pursue the Business if it was making losses, when she has the ability to work as a PAYG employee earning in excess of $80,000 per annum.

1. Due to lack of accurate financial information, it is impossible to accurately assess the income, benefits and financial resources available to [Ms A] since commencement of the Business. In the absence of reliable and recent financial information, the tribunal is left with no option but to estimate the income available to [Ms A] based on the previous owner’s financial circumstances.

2. The tribunal notes that [Ms A] purchased the business on the basis of a net profit of $68,950.  After allowing for non-cash expense of depreciation, the fact that [Ms A] incurs no interest on her business loan from a friend and non-deductible entertainment costs, the adjusted net profit before wages according to the financial statements of the previous owner is $94,401. Based on the wages paid to employees by the Business in the 2017/2018 year from the [Bank 2] Business One bank statements, they averaged over $32,000.  This results in an estimated adjusted annual net profit in the vicinity of $62,000.

3. [Ms A] has not objected to the Department’s decision to assess her on an income of $76,403. As [Ms A] pays zero tax or Medicare levy, her tax saving on an income of $62,000 is approximately $9,365. After allowing for other benefits of self-employment through private use of motor vehicles, telephones and the like, the tribunal finds that in the circumstances, $76,500 is a reasonable estimate of [Ms A]’s financial resources.

4. According to Centrelink records, [Ms A] is in receipt of family tax benefit Part A and Part B at the fortnightly rate of $188. For child support purposes, as family tax benefit is an income-tested benefit, it is not considered to be a part of her adjusted taxable income (subparagraph 117(7)(b)(ii) of the Act). Furthermore, family tax benefit is not defined as a tax-free benefit under section 5 of the Act to be included in adjusted taxable income (paragraph 43(1)(e) of the Act).

5. In the absence of any evidence to the contrary, the tribunal finds that [Ms A] is able to meet the necessary costs of herself and [Child 1] on a weekly basis.  The tribunal is also satisfied that [Ms A] incurs no ‘out of the ordinary’ expenses in respect of herself or [Child 1] that constitute special circumstances.  Therefore, the tribunal is satisfied that the costs of self-support in respect of the 2018 year of $24,535, as used in the formula, is a reasonable basis to estimate the average weekly expenses of [Ms A], being $472.  The tribunal makes no finding in respect of the assets and liabilities of [Ms A], other than her ownership of shares in [Company 5], as recorded in her bank statement and her sole ownership of an investment property means that she likely has a positive asset base. 

6. Based on the tribunal’s findings above in respect of the financial resources and benefits available to [Ms A] from the Business, the annual rate of child support payable by Mr Jowitt approximates $3,253, increasing to $6,756 from 10 August 2018 when the care attributed to Mr Jowitt was reduced from 23% to 0%.  This is significantly less than the administrative assessment whereby the adjusted taxable income of [Ms A] is below the self-support amount, resulting in the annual rate of child support payable by Mr Jowitt approximating $5,695 from 1 July 2018, increasing to $7,493 from 10 August 2018. Based on the administrative assessment, the annual child support liability of Mr Jowitt increases following use of his 2017/2018 income of $74,687 on 1 December 2018 to $8,259, again exceeding the liability based on the tribunal’s findings of $7,464.  Following the birth of his daughter in January 2019, the administrative assessment calculates a child support liability payable by Mr Jowitt of $7,021, in contrast to the liability based on the tribunal’s findings of $6,341. 

7. Mr Jowitt has been over-assessed since cessation of the previous departure decision at 30 June 2018, albeit not significantly. However, the tribunal is cognisant of the fact that the outcome in respect of the care decision currently on foot may create a more significant discrepancy.

8. Therefore, the tribunal finds that special circumstances do exist in this case, in that the administrative assessment results in an unfair outcome.  As such, the tribunal is satisfied that a ground for departure is established in relation to subparagraph 117(2)(c)(ia) of the Act.

Issue 2 – Is it fair or ‘just and equitable’ in relation to Mr Jowitt, [Ms A] and [Child 1] to make a particular departure determination?

1. 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 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 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 needs of the children

1. Section 3 of the 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 Jowitt and [Ms A] have the primary duty to financially support [Child 1].

2. In determining the proper needs of the children, it is necessary to have regard to the manner in which they are being, and in which the parents expected them to be, cared for, educated or trained, and any special needs (subsection 117(6) of the Act). [Child 1] is currently 10 years of age. Mr Jowitt gave oral evidence that he was concerned about her health, given a long-lasting cough, and what he perceives to be mental health issues.  Mr Jowitt acknowledged that no specific diagnoses had been made at this point in time. In the absence of evidence to the contrary, the tribunal finds that [Child 1] has no special needs that result in significant costs that impact the overall costs of maintaining her.

3. As Mr Jowitt currently has limited contact with [Child 1], his costs in addition to the child support assessment are minimal.  In considering the proper needs of [Child 1], the tribunal may also have regard to published guidelines as to the needs and the costs of children as used in the administrative assessment (Eades and Cadell (SSAT appeal) [2009] FMCAfam 275). As no evidence was provided by [Ms A], the tribunal turned to the Costs of Children Table for guidance. The administrative formula calculates the maximum cost for a child under 13 years with the combined child support income of the parents of almost $98,000 (based on combined adjusted taxable incomes of $150,000 as estimated by this tribunal in the period commencing 1 July 2018), to approximate $14,500 to $15,000 per annum.

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

1. As found earlier in these Reasons for Decision, the tribunal is satisfied that Mr Jowitt has income, financial resources and benefits available to him which are accurately reflected in his annual tax returns, as lodged with the ATO.

2. In respect of [Ms A], the tribunal found earlier in these Reasons for Decision that the income, financial resources and benefits currently available to her approximate $76,500 per annum.  It is reasonable to expect an increase in profits from the Business in the years going forward.

3. The tribunal is also satisfied that both parties have the ability to meet their weekly, “necessary” expenses, including those of [Child 1], with no evidence to suggest that either are accumulating liabilities.

Conclusion

1. After consideration of the income, resources, benefits and assets together with the commitments and liabilities of Mr Jowitt and [Ms A] and the needs of [Child 1], 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 Act. The tribunal may make one of the determinations set out in section 98S of the 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. As discussed at hearing, given the uncertainty surrounding the care of [Child 1], it is not appropriate to consider varying the annual rate of child support. 

2. In the tribunal’s view, both parties are in a similar position in respect of their financial circumstances. However, this does not negate the obligation of Mr Jowitt to contribute to the ‘necessary’ needs of [Child 1], in accordance with his capacity.   

3. 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)). The tribunal considers 1 July 2018, following cessation of the previous departure decision, to be an appropriate start date for this departure decision. In order to give a degree of certainty for the parties moving forward, the tribunal proposes to end the departure decision at 31 October 2020.  At this point, the parties have ample time to complete their taxation affairs in respect of the 2019/2020 year,   allowing for a more accurate assessment moving forward. 

4. The tribunal proposes to vary the adjusted taxable income of [Ms A] to $76,500 per annum in respect of the period 1 July 2018 to 30 June 2019 and to $85,000 per annum in respect of the period 1 July 2019 to 31 October 2020.  It is noteworthy that based on the current care registration, albeit it is currently in dispute, even if [Ms A] was assessed at an income level of $100,000, as suggested by Mr Jowitt, the impact on the child support liability of Mr Jowitt is minimal, decreasing by a little over $300 per annum, or $6 per week.  It is also noteworthy that if the 2017/2018 income of Mr Jowitt was applied from 1 July 2018, that is, $74,687, the child support liability payable by Mr Jowitt in the period 1 July 2018 to 30 November 2018 would increase by $290, or $692 per annum. The net result is negligible.

5. According to departmental records, Mr Jowitt had outstanding child support arrears at 20 January 2019 of $1,220. The proposed decision will have a negligible impact on the arrears.

6. Subsection 117(4) of the 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.

7. Mr Jowitt gave oral evidence that his financial circumstances are ‘borderline’ in that he has no excess funds week-in and week-out. This means that should the child support liability remain based on the administrative assessment which prior to the birth of his new daughter exceeded $8,000, then he would most certainly incur hardship.  The tribunal notes that the Jowitt’ household spends $150 per week on discretionary costs.  Furthermore, at 31 October 2018 Mr Jowitt held over $17,000 of equity in his [share] portfolio. It is open to Mr Jowitt to arrange his financial circumstances in such a way that he is able to meet his child support obligations.

8. According to departmental records, [Ms A] has not objected to the prior departure decision of April 2017 whereby her adjusted taxable income was varied to $76,403.  Nor has she raised any objection to the decision under review at the departmental level.  Consequently, the tribunal concludes that [Ms A] considers an adjusted taxable income of $76,403 to be reasonable and that she and [Child 1] are not incurring hardship as a result of the previous departure decision.  There is no evidence before the tribunal to suggest that [Ms A] or [Child 1] will incur hardship as a result of the tribunal’s decision.  In any event, given her discretionary investments, it is also open to [Ms A] to arrange her financial circumstances such that she is able to meet the necessary needs of her and [Child 1].

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

1. 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 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.

2. According to Centrelink records, [Ms A] is currently in receipt of family tax benefit Part A at between the base rate and the maximum rate. In respect of family tax benefit Part B, [Ms A] receives a small reduction from the maximum rate.  Given that [Ms A]’s taxable income is well below the threshold at which family tax benefit is limited to the base rate, any reduction in the child support payable by Mr Jowitt will likely have a minimal impact on the family tax benefit payable to [Ms A]. In the circumstances, the tribunal considers that it is otherwise proper to make the particular proposed determination.

3. 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, in substitution, decides that:

• The adjusted taxable income of [Ms A] is varied to $76,500 per annum in respect of the period 1 July 2018 to 30 June 2019 and

• The adjusted taxable income of [Ms A] is varied to $85,000 per annum in respect of the period 1 July 2019 to 31 October 2020.