Kelaher and Kelaher (Child support)

[2024] AATA 2544

Kelaher and Kelaher (Child support) [2024] AATA 2544 (17 June 2024)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2024/BC027302

APPLICANT:  Mr Kelaher

OTHER PARTIES:  Child Support Registrar

Ms  Kelaher

TRIBUNAL:  Member P Jensen

DECISION DATE:  17 June 2024

DECISION:

The decision under review is set aside and, in substitution:

• from 1 May 2023 to 10 September 2023, Mr Kelaher’s rate of child support payable is varied to the minimum annual rate; and

• from 11 September 2023 to 19 January 2024, Mr Kelaher’s adjusted taxable income is varied to $102,991 per annum and Ms Kelaher’s adjusted taxable income is varied to $47,572 per annum.

CATCHWORDS

CHILD SUPPORT – particulars of the administrative assessment departure application – minimum annual rate – unjust and inequitable determination – earning capacity, property and financial resources of the child – decision under review set aside and substituted

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

REASONS FOR DECISION

Introduction

1. Mr Kelaher and Ms Kelaher are the parents of three children, the youngest of whom is [Child 1]. The child support case ended on 19 January 2024, which was the day before [Child 1] turned 18. At all relevant times, Services Australia – Child Support (Child Support) recorded Ms Kelaher as providing 100% care for [Child 1].

2. The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care for the child. From 1 September 2022 the administrative assessment was based on Mr Kelaher’s 2021–22 adjusted taxable income of $55,360 and Ms Kelaher’s 2021–22 adjusted taxable income of $21,971. Mr Kelaher was assessed to pay $6,508 per annum in child support.

3. The Act also provides for a departure from the administrative assessment in certain circumstances. Ms Kelaher lodged a departure application on 16 May 2023. An original decision-maker granted the application and varied Mr Kelaher’s rate of child support payable to what is called the minimum annual rate (which, for Mr Kelaher, was initially $459 per annum and later $493 per annum). It was varied from 1 September 2023 until the end of the child support case. Ms Kelaher objected to that decision. An objections officer allowed the objection, set aside the original departure decision and varied Mr Kelaher’s rate of child support payable to the minimum annual rate from 1 August 2023 to 10 September 2023. The ordinary administrative assessment applied from 11 September 2023. Mr Kelaher applied to the Tribunal for review of the objections officer’s decision. I heard the matter on 17 June 2024. Mr Kelaher and Ms Kelaher gave sworn evidence via MS Teams.

4. Paragraph 98C(1)(b) of the Act relevantly provides that a departure decision may be made in respect of a departure application if:

   (i)... one, or more than one, of the grounds for departure referred to in [subsection 117(2)] exists; and

   (ii)... it would be:

   (A)just and equitable as regards the child, the liable parent, and the carer entitled to child support; and

   (B)otherwise proper;

   to make a particular determination under this Part; …

A ground for departure

1. Subparagraph 117(2)(c)(i) of the Act, commonly referred to as Reason 4, provides as a ground for departure:

   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:

   (i)because of the income, earning capacity, property and financial resources of the child; ...

2. There is no dispute that [Child 1] was employed from 1 May 2023 to 10 September 2023 and he earned a relatively high income during that period. For example, the objections officer calculated that his average wage from 1 July 2023 to 10 September 2023 was $1,424 per week. There is no dispute that [Child 1] was able to financially support himself while he was employed and Ms Kelaher did not require child support from Mr Kelaher to assist her in meeting [Child 1’s] costs. Both parents effectively acknowledged that the administrative assessment during that period was consequently unjust and inequitable. In my opinion, those acknowledgements were properly made. Reason 4 is established.

Just and equitable

1. The requirement to consider whether a departure would be just and equitable directs attention to what is fair to the parents and their child. Regard must be had to a variety of factors such as the needs of the child, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.

2. Mr Kelaher’s adjusted taxable incomes from 2020–21 to 2022–23 were $35,249, $55,360 and $169,137. His income dramatically increased when he obtained employment as [an occupation 1]. He remains in that employment. His income fluctuates from week to week due to overtime and the like. He provided a payslip for the week ending 21 January 2024 (being the week in which the child support case ended). His year-to-date earnings during those 205 days were $60,574, which equates to $60,574 / 205 x 365 = $107,851 per annum. His 2022–23 tax deductible expenses (excluding a gift of $30) totalled $4,860. He expects to incur similar tax-deductible expenses during 2023–24. That evidence suggests that his adjusted taxable income during the period from 1 July 2023 to 19 January 2024 was $102,991 per annum. I explained those calculations during the hearing. Both parents agreed with those calculations.

3. Mr Kelaher completed a Statement of Financial Circumstances in January 2024. He lives in rented accommodation. His only income is his wage. He has minimal savings. His only debt relates to his car. His weekly expenses are unremarkable.

4. Ms Kelaher’s circumstances are less clear. Her 2022–23 adjusted taxable income was $23,792. She was directed to provide a copy of her 2022–23 individual tax return but failed to do so. In May 2023 she completed a Statement of Financial Circumstances in which she wrote, and deleted, that her business income was $43,000 per annum. She stated during the hearing that her [business 1] “has not provided me an income”, but in response to further questions she acknowledged that it had in fact provided her with an income. She acknowledged that she received undeclared cash-in-hand. She indicated that if her income from [her business 1] exceeded a certain threshold she would start declaring that income but she was unable to say what that threshold might be. She said she ceased her involvement in the business on 1 July 2023 when she obtained part-time employment as [an occupation 2]. I referred her to evidence that Mr Kelaher had provided which indicated that she continued running her business until December 2023. Ms Kelaher acknowledged that she had in fact continued running her business until December 2023.

5. Ms Kelaher has completed two Statements of Financial Circumstances. In May 2023 she stated that her household expenses totalled $1,380 per week. In January 2024 she stated that her household expenses totalled $1,310 per week and there were no “other income earners in [the] household”.

6. During the hearing I noted the difficulty in quantifying the income and financial resources of a parent who earns undeclared cash in hand. I also noted:

   ·    In May 2023, Ms Kelaher’s household expenses totalled $1,380 x 52 = $71,760 per annum.

   ·    In January 2024, Ms Kelaher was receiving $340 x 52 = $17,680 per annum in family tax benefit.

   ·    In May 2023, Mr Kelaher was assessed to pay, and was in fact paying, $6,508 per annum in child support. (Ms Kelaher claimed that Mr Kelaher was not paying his assessed rate but Child Support’s records show that he was: pages 208 to 211 of the hearing papers.)

   ·    The shortfall is $71,760 - $17,680 - $6,508 = $47,572 per annum.

7. I suggested, and both parents agreed, that within the constraints of the available evidence, $47,572 per annum appeared to be the best calculation of Ms Kelaher’s adjusted taxable income for child support purposes.

8. Ms Kelaher said she lives in rented accommodation. She said the household consists of herself, [Child 1] and her [age]-year-old daughter. Mr Kelaher disputed that evidence but nothing turns on whether other people live in the house. Ms Kelaher is currently working as [an occupation 2].

9. Ms Kelaher lodged her departure application on 16 May 2023, shortly after [Child 1] started his employment. Section 98SA of the Act relevantly provides that if Mr Kelaher was providing less than 14% care for [Child 1], a departure decision cannot reduce his rate of child support payable to less than the minimum annual rate. Both parents agreed that it would be appropriate to vary Mr Kelaher’s rate of child support payable to the minimum annual rate from 1 May 2023 to 10 September 2023.

10. Both parents agreed that it would be appropriate to vary Mr Kelaher’s adjusted taxable income to $102,991 per annum and Ms Kelaher’s adjusted taxable income to $47,572 per annum from 11 September 2023 to 19 January 2024.

11. Those variations would require Mr Kelaher to pay $459 per annum in child support from 1 May 2023 to 31 August 2023, $493 per annum from 1 September 2023 to 10 September 2023 and approximately $15,900 per annum from 11 September 2023 to 19 January 2024. It would reduce his child support liability from 1 May 2023 to 19 January 2024 vis-à-vis the objections officer’s decision by approximately $4,900. Mr Kelaher is up to date with his child support payments. Ms Kelaher received approximately $10,800 in child support in respect of that period, in part because she was receiving a significant amount of child support from Mr Kelaher while [Child 1] was earning an income that enabled him to financially support himself. To the extent that Ms Kelaher has disclosed her income and financial resources, I am satisfied that she has the capacity to repay approximately $4,900 if given time to do so. It is appropriate to make those variations.

12. I considered varying the rate of child support payable prior to 1 May 2023. Mr Kelaher’s   income dramatically increased during 2022–23 but, in the ordinary course, his 2022–23 adjusted taxable income would not be used in the administrative assessment until 1 September 2023. However, Ms Kelaher was aware that Mr Kelaher’s income had dramatically increased and she decided not to promptly lodge a departure application. On 1 December 2022 she phoned Child Support and queried the income that it was using for Mr Kelaher. It informed her that she could lodge a departure application. On 18 December 2022 she provided evidence of Mr Kelaher’s employment. On 6 January 2023 she phoned Child Support and told it that Mr Kelaher had told her that he was earning $3,000 per week. Child Support once again informed her that she needed to lodge a departure application. It noted: “Directed Ms Kelaher to form online.”

13. Child support is intended to assist with the day-to-day costs of the child. Ms Kelaher was aware of Mr Kelaher’s increased capacity to contribute to [Child 1’s] costs but she delayed lodging a departure application for approximately six months. I do not consider it appropriate to vary the rate of child support payable prior to 1 May 2023.

Otherwise proper

1. The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community. It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances and benefits. Parents rather than the community have the primary duty to maintain a child. Ms Kelaher received family tax benefit in respect of [Child 1]. Changing the child support payable by Mr Kelaher will result in a more appropriate apportionment of financial responsibility between the parents and the community. The proposed decision will be otherwise proper.

DECISION

The decision under review is set aside and, in substitution:

• from 1 May 2023 to 10 September 2023, Mr Kelaher’s rate of child support payable is varied to the minimum annual rate; and

• from 11 September 2023 to 19 January 2024, Mr Kelaher’s adjusted taxable income is varied to $102,991 per annum and Ms Kelaher’s adjusted taxable income is varied to $47,572 per annum.