Kalugina and Kalugina (Child support)
[2025] ARTA 510
•20 March 2025
Kalugina and Kalugina (Child support) [2025] ARTA 510 (20 March 2025)
Applicant: Ms Kalugina
Respondent: Child Support Registrar
Other Parties: Mr Kalugina
Tribunal Number: 2024/SC028175
Tribunal: General Member R Prasad
Place:Sydney
Date:20 March 2025
Decision:The Tribunal affirms the decision under review.
CATCHWORDS
CHILD SUPPORT – departure determination – income, property and financial resources – special needs of the child – special circumstances – children’s sporting costs – significant health needs – reliance upon settlement proceedings – financial resources for the benefit of the children – just and equitable to depart from the administrative assessment – decision under review affirmed
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
Ms Kalugina (the mother) and Mr Kalugina (the father) are the parents of three children born [in] January 2007, [July] 2009 and [July] 2011. Since 1 June 2021, this case was registered with Services Australia – Child Support (Child Support). The existing percentages of care are that the mother has 100% care of the children since the case began.
On 22 November 2023, the mother lodged an application to change the child support assessment (the departure application). On 22 March 2024, Child Support determined that the father’s annual rate payable should increase by $2,933 from 1 February 2024 to 31 January 2026.
On 2 April 2024, the mother lodged an objection. An objections officer, on 25 June 2024, determined that the change of assessment decision dated 22 March 2024 should be set aside and replaced with the decision that the administrative assessment should not change as it would not be just and equitable to do so.
On 2 July 2024, the mother sought review of the objection decision by the Administrative Appeals Tribunal (the AAT).
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. 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 directions hearing was held on 27 November 2024. Directions were issued on 3 December 2024 requiring compliance by 3 January 2025.
The hearing took place on 31 January 2025. The mother attended the hearing by MS Teams audio and provided documentation,[1] as did the father.[2] The Child Support Registrar elected not to be represented at the hearing, but provided documentation.[3]
ISSUES
[1] Folios A1 to A976.
[2] Folios B1 to B55.
[3] Folios 1 to 756.
The issues before me are:
a. does a ground exist for departure from the administrative assessment of child support; and, if so,
b. would it be just and equitable and otherwise proper to make a particular determination.
CONSIDERATION
What does the law say in relation to departure from administrative assessments?
Section 98C of the Child Support (Assessment) Act 1989 (the Act) provides that a decision to depart from an administrative assessment may be made if each of the following requirements are met:
a. at least one ground for departure referred in subsection 117(2) of the Act exists;
b. it would be just and equitable as regards to the child and the parents to the assessment; and
c. it would otherwise be proper.
Section 117 of the Act provides the matters that must be considered before being satisfied in making an order in relation to a child in the special circumstances of the case. The phrase ‘special circumstances of the case’ is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary.[4]
[4] Gyselman and Gyselman [1991] FamCA 93 at [39].
Subparagraph 117(2)(b)(ia) provides that, in the special circumstances of the case, the costs of maintaining the child are significantly affected because of the special needs of the child. This is known as ‘Reason 2’. The term ‘special needs’ is also not defined but there must be evidence of the needs of the child that is out of the ordinary, and can encompass a wide range of needs including a physical, mental or learning disability or a special talent or ability of the child. These costs are essential or desirable for the child’s welfare but are outside the ordinary costs of a child that are catered for within the administrative assessment.[5]
[5] See Lightfoot and Hampson [1996] FamCA 8 at [42].
Subparagraph 117(2)(b)(ii) provides that, in the special circumstances of the case, the costs of maintaining a child are significantly affected because the child is being cared for, educated or trained in the manner that was expected by the parents. This is known as ‘Reason 3’. Once the costs associated with educating, maintaining or training a child in the manner expected by the parents have been calculated, the additional amount must be significant in relation to the assessed costs of the child. If it is not, then the costs of maintaining the child may not be significantly affected and there would be no reason to change the assessment.
Further, in the special circumstances of the case, there is an unjust and inequitable level of financial support to be provided because of either parent’s income, property and financial resources as set out in subparagraph 117(2)(c)(ia), which is known as ‘Reason 8A’, or their earning capacity pursuant to subparagraph 117(2)(c)(ib) commonly known as ‘Reason 8B’. A child support assessment is generally calculated using the parent’s most recent taxable income. This requires consideration of whether a parent’s current income is not adequately reflected in the child support assessment. Special circumstances may exist if one parent has substantial property or financial resources that have not been properly taken into account in the child support assessment.[6] Further, although a parent’s most recent taxable income is used in the child support formula, a parent’s income, earning capacity, property and financial resources which do not necessarily form part of a parent’s taxable income can be added to or excluded from a child support assessment.[7][8]
[6] Ross and McDermott (1998) FLC 98-003.
[7] Carey and Carey (1994) FLC 92-489.
In deciding whether a decision is fair, consideration is given to the amount and duration of any proposed change and the factors listed in subsection 117(4) of the Act which are relevant to a particular case. Particular factors may be given more weight depending on the circumstances of the case.
Subsection 117(5) of the Act provides that in determining whether it would be ‘otherwise proper’ to change the assessment, consideration must be given to:
a.the nature of the duty of a parent to maintain a child and, in particular, the fact that it is the parents of a child who have the primary duty to maintain the child; and
b.the effect that any proposed change would have on the child or the receiving parent’s entitlement to, or the rate of, an income tested pension, allowance or benefit.
What information has been provided?
There were various matters that were raised by the parties but I will only address those that are pertinent to the issues before me. Further, while I have considered all the information provided, I will refer to some of the relevant information below. Accordingly, while the mother is seeking a change to the administrative assessment from 2021, as her departure application was made in November 2023, I have referred to costs that have occurred since her departure application was made in November 2023 for convenience and will refer to other amounts as required.
The mother is seeking child support payments by the father of $10,000 per month from 1 June 2021, as he stated he would provide this amount in 2021, prior to the settlement proceedings in the Federal Circuit and Family Court of Australia (the settlement proceedings). This document was filed by the father on 15 February 2021, but no final orders were made in this regard and the father asserts that the amount of child support was considered in the proceedings. I note that the Court delivered its judgment on 1 September in the matter Radek & Radek [2023] FedCFamC2F 1153 (the judgment), as published, which I will refer to below where relevant.
Special needs of the children
The mother advised that the oldest and youngest children are talented [sport 1 players] and compete at representative level, including the oldest being part of [an organisation’s] Elite Pathway and playing in [Grade], and the youngest in pre-elite pathway. The oldest child also plays competitive [sport 2] and [won a specified competition] in 2022 and 2023 and named in [a representative] [sport 2] Team recently. The costs for the children include flights and accommodation for frequent travel to [a specified competition], regional, state and national championships. These costs also existed prior to the parent’s separation, which the father previously contributed to. She asserted that her estimate for 2024 was $39,147, which includes amounts reflected in her bank statements, amounts her own mother, [Ms A], has paid directly to providers ($5,319), as well as amounts paid by the pathway program, [named]. The documents indicate that these amounts include expenses relating to herself and the middle child.
The father does not dispute the children are talented [sport 1 players] and compete at representative level and therefore travel frequently to compete. However, he noted that their talent has not been tested. He asserts the Court was apprised of the children’s sporting costs during settlement proceedings, where adjustments were made to cater for the costs in favour of the mother, and that nothing significant has changed since the judgment was handed down [in] September 2023.
In relation to the children’s medical needs, the mother noted the middle child has [multiple specified conditions]. The child sees various specialists and receives NDIS funding, but certain costs are not covered such as some medication, chiropractic treatment, nutritional supplements, and items such as replacement noise cancelling headphones. The youngest child also requires psychology sessions and orthodontic work. A psychologist report dated 12 September 2024 and a mental health plan and report from the child’s general practitioner dated 18 December 2024 was provided, and the mother noted there was an earlier mental health plan. These costs are covered by Medicare but there are some out of pocket costs, which [Ms A] has contributed to ($3,600). She noted that the total amount for these out-of-pocket costs for 2024 total $31,798 ($3,940 paid by [Ms A]). She provided a copy of her and [Ms A’s] bank account statements, which she says shows the costs paid. The mother also advised that there was a cost to supplement the dietary intakes of special needs children of $74.50 weekly as discussed with the middle child’s behavioural paediatrician “in reference to evidence based studies, third party tested products and the additional needs of high performing athletes”. She provided invoices from [Business 1] showing this cost, which was reflected in her bank statements, and noted that the costs were included in the total referred to above.
The father does not dispute the middle child has special needs, but says his conditions are managed under a NDIS plan and any costs are only slightly higher than normal. He noted that appropriate adjustments were made for the child’s medical needs in the settlement proceedings.
From the Medicare reports, the out-of-pocket costs for the middle child totalled $102, which were for paediatrician sessions. Further, after private health cover, the out-of-pocket costs of $196.80, which were pharmacy and dental costs. For the youngest child, the Medicare reports indicate the out-of-pocket costs was $583 from psychology sessions and other physician sessions. After private health cover, the out-of-pocket costs was $3,237 comprising dental ($3,183) and chiropractic ($54) treatment. The mother also provided details of medical costs for the oldest child and from the Medicare reports, the out-of-pocket costs were $923 comprising psychologist and paediatrician sessions, and after private health cover the out-of-pocket costs were $27 for a dental and podiatric treatment.
The mother advised that she has also had to pay for private health insurance of $10,659 after the father removed the children from his private health insurance. The father advised that he has tried to speak to the mother to change the level of cover for herself and the children as she has premium cover, but the mother refuses to change as she previously worked at [Employer 1].
Education costs
The oldest child has attended Catholic schools from 2020, with both parents signing enrolment forms. The mother advised that she and [Ms A] have paid for all of her school fees from that date, as well as a new school uniform in 2024. The father made a payment of $3,923 after the school fees had been paid and then requested a refund from the school stating that he would instead use the payment to reimburse the mother, but she only received a partial payment of $3,014. The youngest child is now also attending a Catholic school. The total education cost from 2020 is $19,037, with $5,303 being the costs from 2024. She provided a list of the school fees for 2024 and 2025 as shown on the school’s website and an invoice showing payment of $100 for the younger child’s enrolment fee for the 2025 school year. The mother also referred to training costs in relation to the oldest and youngest children’s sporting commitments.
The father confirmed that the oldest child is being educated as both parents intended but that no reason was provided as to why the younger child was changing schools, noting that there was police involvement and the child was subsequently homeschooled for six months. He has, therefore, not signed any enrolment forms for the younger child. He also asserts that the children’s education fees were considered during the settlement proceedings and appropriate adjustments made.
The Child Support papers also indicate that the father was credited prescribed non‑agency payments for monthly school fees of $921.17 paid on 19 August 2024, 19 October 2024 and 19 November 2024.
Earning capacity, income, property and financial resources
The Child Support records indicate that the mother’s taxable income was $40,194 and the father’s taxable income was $310,087 for the 2024 financial year.
In her statement of financial circumstances (the mother’s statement), the mother notes she receives carer payment, carer allowance and family tax benefit totalling $808 weekly and $1,032 in child support weekly. She also receives $37 weekly in dividends from shares, and noted that the oldest child earns $60 a week. The total value of her property, comprising a home, savings, [Employer 1] shares, [Business 2] shares in each child’s names, and household contents, is $2,143,395. She also has $373,598 in superannuation. Her personal liabilities comprise of sporting and medical costs from 2024 totalling $7,857, and property settlement and legal costs she is to pay [Ms A] totalling $481,390 with a note “shares to be sold”. She also makes credit card and health insurance payments of $1,390 weekly.
The mother advised that she last worked in 2016, having worked for the same company for 15 years as [an occupation 1]. She is currently receiving carer payment and carer allowance for the care she provides the middle child. She advised that she has sold around $11,000 in [Employer 1] shares and the balance belongs to [Ms A] as she owes her a lot of money. Accordingly, she advised she owes [Ms A] $481,390 less the value of the [Employer 1] and [Business 2] shares. She provided a statutory declaration dated 10 December 2024 which provides further details in this regard, and states, which is also referred to in the mother’s statement, that she proposes to pay [Ms A] $250 a week. The mother, however, advised that there is no formal agreement and she is not repaying her yet, rather [Ms A] is still supporting her and the children. She also noted that the Court order provides that she is to pay the father $132,984, but she has not sold the shares to pay him and [Ms A] instead made the payment, and therefore the shares are for [Ms A].
The mother advised that the oldest child is working part time during school holidays and might be earning a bit more than $60 a week now. She stated that she drives her mother’s car, but contributes to the upkeep and maintenance as the oldest child also drives the car. She also advised that she received an inheritance from her uncle in 2017 and 2018 of $100,000, which she used to pay her home mortgage and assisted her after the parents had separated. This was noted in her affidavit dated 22 August 2022, which was filed in the settlement proceedings. The mother’s statement indicates that she does not have a home mortgage and owns her home valued at $1,965,000.
The father asserts that the mother’s home, which is mortgage free, is valued at $2.5 million to $3 million. He noted that she was made sole trustee of the [Business 2] shares, which are valued in excess of $100,000. As noted in the settlement judgment, the [Business 2] shares were purchased for each of the children, whereby the father had invested $500 of his income each month, with any dividends reinvested, since the children were born until they commenced school, and he advised he considered those funds were in place to be used for the education, care and maintenance of the children. He asserts that as the mother has sole control of the shares, she should use it for the benefit of the children’s school fees, and sporting and health costs. He noted that in the transcript of the costs hearing [in] October 2023, the judge stated that the [Business 2] shares are a financial resource and that if the mother “wanted to use those legitimately for the kids to defray some costs, she could. No-one could criticise her for doing that.” He stated that the judgment at [18] specifically states the [Business 2] shares are on trust for the children, and are not for [Ms A]. The mother’s documents show that the shares are valued at approximately $109,526, and this amount remains in trust for the benefit of the children.
In his statement of financial circumstances, the father indicates he is [an occupation 2] working on a full-time basis earning a gross weekly wage of $5,576. The total value of his property, comprising a home, savings, a car and household contents, is $1,185,000 and he has $349,321 in superannuation. The total value of his liabilities, comprising a home mortgage, a credit card debt and a personal loan, is $877,375. He pays income tax of $2,400, superannuation of $529, life insurance premiums of $13, child support of $1,115, and health insurance premiums of $64 weekly. He estimates weekly household expenses to be $1,906, with weekly repayments of $346 for a loan to his parents. The judgment notes that the father conceded there was no enforceable loan agreement in this regard and the Court had disregarded this repayment. The transcript of the costs hearing also noted that the father’s payment of superannuation is into his own superannuation fund.
The father’s bank statements show that he had savings of $201 and $65,510 at 30 November 2024. The home loan accounts show a mortgage balance of $620,595 at 13 January 2025. He noted that he had a significant tax debt, being $54,295 at 14 August 2024, and provided a schedule of payments from December 2024 to January 2027, noting monthly repayments and future tax to be paid, that his accountant had estimated.
The mother stated that the father’s income, property or financial resources have not been correctly reflected in the assessment and has queried the details of his life insurance or superannuation fund held in [Fund 1] accounts, which she says were concealed during settlement proceedings. The father advised that in 2021, his superannuation and life insurance was with [Fund 1]. He was subject to a legal splitting order and then transferred his superannuation to [Fund 2]. I note that the judgment refers to the parties being required to submit a proposed superannuation splitting order giving effect to the reasons. The father has also reduced his life insurance policy, noting the payments to [his insurer] of $27.51 per month shown in his bank accounts relate to his policy.
Should the administrative assessment be changed in the special circumstances of the case?
Has a reason to change the assessment been established?
The objection decision found that Reason 2 had been established in relation to some of the children’s medical conditions. I will therefore consider their medical needs first and if I am satisfied that these constitute a reason to depart from the assessment, I will then consider the remaining grounds in the just and equitable considerations where applicable.
Accordingly, the middle child has [multiple specified conditions] and is being supported through a NDIS plan. The youngest child requires orthodontic treatment and regularly sees a psychologist. While no further information is provided, the oldest child sees a paediatrician and receives psychological therapy. I consider that the children’s medical conditions can be considered to be special needs.
The mother advised that separate to the NDIS funding she manages, the out-of-pocket costs she had in 2024 were $31,798 with [Ms A] paying $3,940. From the information before me, I do not consider all of her purported out of pocket expenses should be considered for the purpose of this assessment. In particular, in addition to NDIS funding, much of the medical costs were also covered through Medicare and private health insurance. Further, there is no cogent evidence before me that indicates that the nutritional supplements are required for the children. I also note having private health insurance does not generally constitute a necessary cost.
The middle child’s treatment are mostly covered by NDIS, Medicare and/or private health insurance and the resulting out of pocket costs are not significant. Since the departure application was made, the oldest child’s psychology and paediatrician sessions were $923 and the youngest child’s psychology therapy and orthodontic treatment totalled $3,763. I consider that these expenses are not insignificant and can be considered. However, the other medical costs were not significant.
Overall, I consider that the ground provided for in subparagraph 117(2)(b)(ia) of the Act is established as the children’s health needs can be considered as special, and some of the costs as noted are significant and affect the costs of maintaining the children.
As a reason for changing the assessment has been established, I must now consider whether the proposed decision to change the assessment is ‘just and equitable’ and ‘otherwise proper’.
Would it be just and equitable to depart from the assessment?
In order to determine whether a departure would be just and equitable, I must consider the factors set out under subsection 117(4) of the Act, as far as they are relevant to this case.
Section 3 of the Act provides that a parent’s duty to maintain their child has priority over all commitments of the parent other than commitments necessary to enable the parent to support himself or herself and any other child or person that the parent has a duty to maintain. Further, the objects of the Act, among others, are to ensure that the level of a parent’s financial support for a child is to be determined by their capacity to provide financial support, and the change of the assessment provisions are to ensure that parents share equitably in the support of their children.[9] In this regard, I note that the father, as well as the mother, should contribute to the costs of raising their children to the extent of their financial capacity.
[9] Paragraph 4(2)(a) and paragraph 114(b) of the Act.
I have determined earlier that children have special needs based on their medical conditions and that there were necessary expenses. I note that it is not disputed that the oldest child and youngest child are talented [sport 1 players] who play at representative level and the oldest child also plays [sport 2] at representative level, and playing at this level involves frequent travel away from home to compete. While there are differing views as to whether or not their sporting abilities can be considered special needs, I note that for the reason mentioned below, it would not be just and equitable to depart from the assessment, as the costs arising from the children’s sporting commitments can be met through the financial resources that are available for their benefit.
As stated, the evidence before me indicates the children have resources available to them. The settlement proceedings involved property settlement between the parties. I accept that the proceedings did not make any orders regarding the amount of child support that should be paid, rather the Court acknowledged the father was paying child support of $4,431 per month at the time. However, the Court considered the children’s special needs and expenses before deciding how property was to be divided between the parties. In particular, the judgment indicates that shares were purchased for each of the children and the mother was determined to solely manage the [Business 2] shares for the benefit of the children, which was part of the Court’s consideration in its appropriate adjustment assessment.[10] The value of these shares is $109,526. During the costs hearing, the Court noted that the mother is the sole trustee of the shares which is a financial resource available to the mother to use for the children to defray some of those costs. The Court also stated that “If she chooses not to, and to preserve it for the kids, great. That’s probably what she wants to do, but sometimes sacrifices have to be made.”
[10] Judgment at [72], [141].
I accept the mother has faced difficulties raising the children as the sole carer with the middle child having significant special needs and the other children’s sporting commitments. However, in light of the judgment and the further discussions regarding the shares through the costs hearing, I am satisfied that those shares are a financial resource that the mother can use for the benefit of the children and am unable to find otherwise. I do not agree with her assertion that the shares are now [Ms A’s] as the mother owes her considerable money. The judgment makes clear that the shares are to be used for the children and remains a financial resource that is available.
I have also considered the income, property and financial resources of each parent. The Child Support records indicate the mother’s taxable income for the 2024 financial year is $40,194, which comprises of government payments, child support and dividends. There is nothing to suggest that the mother’s income and financial resources are not accurately reflected in the administrative assessment. I note that the father is employed full time and his taxable income reflects the salary he receives, being $310,087 for the 2024 financial year. I am satisfied the father’s income is also correctly reflected in the administrative assessment. The mother has a mortgage-free home, savings, [Employer 1] shares and is able to use [Ms A’s] car. The father has a home with a mortgage of $620,595, a car and savings. Both parents also have superannuation, and I am not persuaded from the information before me that the father has superannuation in another fund apart from [Fund 2]. The mother has a large debt owed to [Ms A] who assisted her throughout the settlement proceedings and has been assisting her by paying for some of the children’s expenses. However, the father advised that he also has a loan from his parents as well as a significant income tax debt which is a necessary expense and ongoing responsibility for the father. I note that there are no enforceable agreement in place in relation to the loans/debts by both parties. In relation to the earning capacity of each parent, the father works full time and the mother receives government payments, child support payments and otherwise cares for the children. I do not consider either parent has any unused earning capacity. As there is a financial resource available to be used for the benefit for the children, I am unable to be satisfied that hardship will be caused by refusing to make a change to the assessment.
Having considered the factors in subsection 117(4), as mentioned above, I am unable to be satisfied that it would be just and equitable to depart from the administrative assessment. Accordingly, I will not proceed to consider whether it would otherwise be proper to change the assessment.
DECISION
The Tribunal affirms the decision under review.
| Date of hearing: | Friday, 31 January 2025 |
| Representative for the Applicant: | Self represented |
| Representative for the Other party: | Self represented |
[8] The mother confirmed during the hearing that she is no longer seeking to rely on Reason 9, being the capacity to support the children is significantly affected by the duty to maintain another person set out in paragraph 117(2)(a)(i) of the Act.
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